The numbers are down. This year’s AHF 50 developers started construction on 212 new developments with 16,393 affordable housing units in 2013.
Perhaps a sign of a changing landscape, the total number of units is nearly 13 percent below what last year’s group of AHF 50 developers started in 2012. And the number of projects dropped nearly 20 percent.
The decline is even more dramatic when you consider that there are 56 companies—35 for-profit and 21 nonprofit—making the list this year because of several ties. Last year, there were 53 firms.
The only list of its kind, the AHF 50 reveals how many units are under development by the leading national and regional developers. The ranking is based on the number of new affordable housing units started in 2013.
The AHF 50 captures only a small segment of the affordable housing being built each year. It’s a window into a moment in time, this year capturing the sure dusk between yesterday’s budget cuts and the uncertain dawn of tomorrow’s program changes. Thankfully, low-income housing tax credit (LIHTC) capital and affordable debt remained available in 2013.
Several factors may have contributed to the lower numbers: Some firms have become more focused on acquisitions than new construction projects. Deals may also have been affected by budget cuts to federal and regional housing programs. In addition, many developers were very aggressive in getting deals started the prior year to meet the deadlines for using the temporary 9 percent flat rate for housing tax credits, so 2012 saw a large number of projects breaking ground.
If expectations hold true, production will be back up this year. The AHF 50 developers project starting construction on more than 20,000 units.
Although the overall numbers are down, many of the top companies, such as Cleveland-based NRP Group, which leads this year’s developers list, continued to roll.
“Each year provides ground-up LIHTC developers certain challenges, and 2013 was no different,” says J. David Heller, a principal at The NRP Group. “States were very competitive with their qualified allocation plans, so NRP decided to really target its applications, in states where we have a significant footprint and presence, with a proactive approach to adding bond deals back to our tool belt. Building costs continue to increase along with labor, so being fully integrated helps NRP control costs while keeping our deals healthy.”
The firm was among those working to balance their portfolios last year.
“NRP has always been committed to affordable housing and will continue that commitment, as it is the core of our company,” Heller says. “We believe diversification on multiple fronts is good business.”
In all, 102 firms took part in the AHF 50 survey. Developers and owners with general partner interests are urged to take part in next year’s survey.
Top 50 Developers Spotlight
#8 Herman & Kittle Properties
2013 was a year of many firsts for Indianapolis-based Herman & Kittle Properties. The firm received its first 9 percent low-income housing tax credit (LIHTC) allocations in Michigan and Wisconsin and its first LIHTC allocation in Georgia.
It also closed on its first adaptive-reuse projects. Herman & Kittle started construction in the fall to transform a former hospital in Hartford City, Ind., and a former garment factory in Clinton, Ind., into LEED-certified affordable housing.
Moving up eight spots on the top developers list, from No. 16 to No. 8, H&K started 535 affordable housing units and acquired another 2,022 units last year. The acquisitions were a mixture of performing and nonperforming properties. The firm’s geographic growth now reaches from Florida to Texas to Wisconsin to Ohio.
“We’ve been able to put good people in place to help us grow,” says Jeffrey Kittle, president and CEO of the firm.
And 2014 looks like it’s shaping up to be another strong year. The developer’s strategic plan is to close on 19 properties, which include a combination of 9 percent LIHTC transactions, 4 percent LIHTC transactions, general partner acquisitions, and a workforce deal financed without tax credits. The firm anticipates it will submit LIHTC applications in 15 states this year.
Twelve of the 19 projects are expected to be acquisitions, with the remainder being new construction. “Our plan is to grow the acquisition side,” Kittle says. — Christine Serlin
#22 Conifer Realty
Conifer Realty has a busy year ahead of it. The Rochester, N.Y.–based developer plans to start 17 affordable housing projects with 1,447 units in four states in 2014.
“We’re off to a good start and feel good about our closing schedule,” says Andrew I. Crossed, executive vice president.
The firm closed financing on Wincoram Commons, a two-phase mixed-income development in Coram, N.Y., in February. The project, which is replacing an old, blighted movie theater site, will provide 176 units of affordable family housing.
Conifer also received Superstorm Sandy financing to start another six projects—four new and two adaptive-reuse—in New Jersey.
“The New Jersey Housing and Mortgage Finance Agency has done a tremendous job getting Sandy money out for housing—specifically, for affordable housing,” says Crossed.
Conifer, which owns 11,717 affordable units in 187 properties and ranks No. 13 on the AHF 50 owners list (see page 44), also expects to close on a U.S. Department of Agriculture Rural Development redevelopment transaction that would preserve seven properties in its portfolio.
The developer, which has mainly concentrated its business in Maryland, New Jersey, New York, and Pennsylvania, also has a new market on the horizon.
“Our specific growth strategy for the near future is to apply and get funded in Virginia for the coming year and grow a portfolio there,” says Crossed. — Christine Serlin
#29 Gorman & Co.
Gorman & Co., based in Oregon, Wis., isn’t just a housing developer. The company considers itself a community developer, too, building in revitalizing areas in Arizona, Florida, Illinois, and its home state. One of Gorman’s major accomplishments for 2013 was finding new sources of financing for that work.
“We have to be prepared if there are real jolts to traditional funding, like low-income housing tax credits [LIHTCs] or historic tax credits,” says COO Tom Capp. “That’s a bit of the motivation why we’re looking at new sources.”
The firm has had recent success with the government’s EB-5 program, which offers foreign citizens a Green Card if they’ll invest $1 million in an American project that creates or preserves jobs primarily in community development areas.
Gorman is redeveloping the Pabst Brewery site in Milwaukee with three projects. The first was Blue Ribbon Lofts, 100 affordable units financed with LIHTCs and historic tax credits. The second was a historic hotel and restaurant, where the company utilized the EB-5 investments. The third will be market-rate workforce housing with equity from a Chinese developer.
“These financial sources are fueling projects like workforce housing and elements communities want to see us executing in the revitalizing areas,” says Capp. “These sources are touching housing, but not intermingling with the LIHTC.”
The firm has also received approval from HUD’s Rental Assistance Demonstration program for a 300-unit public housing development in Phoenix. — Christine Serlin
Top 10 Public Housing Authorities
Here are the top 10 PHAs in the nation based on their number of low-cost units (Sec. 8 units are not included), according to the Department of Housing and Urban Development:
1. New York City Housing Authority, 178,815
2. Puerto Rico Public Housing Administration, 55,129
3. Chicago Housing Authority, 24,838
4. Philadelphia Housing Authority, 15,011
5. Housing Authority of Baltimore City, 11,506
6. Boston Housing Authority, 11,186
7. Cuyahoga (Ohio) Metropolitan Housing Authority, 10,178
8. District of Columbia Housing Authority, 9,144
9. Miami–Dade Public Housing and Community Development, 9,062
10. Atlanta Housing Authority, 8,437