ROCHESTER, N.Y. - A public housing redevelopment in this economically depressed city is opening new connections between a downtrodden neighborhood and a gentrifying area nearby.

For decades, the long blocks of the Kennedy and Olean Townhouses formed a wall between Plymouth/Exchange, or “Plex” neighborhood here, and the restored Corn Hill historic district to the north. But that changed starting in January 2006, when a private developer, Rochester’s Cornerstone Group, Ltd., opened the first new homes at Plymouth Manor and Carlson Commons less than three years after the Rochester Housing Authority won a 2003 HOPE VI grant from HUD.

New houses in groups of five or six now fill once-abandoned lots in the Plex, patching old holes in the fabric of the blighted neighborhood. The homes are part of a 144-unit redevelopment of the Kennedy/Olean project and are split between rental housing affordable to low-income families and public housing rentals, which carry deeper rent subsidies.

Most HOPE VI redevelopments replace concentrations of public housing with communities that mix public housing on the same site with low-income housing, market-rate rental housing, and new for-sale housing.

In Rochester, though, only about half the new units that replaced the crumbling public housing apartments in the Kennedy/Olean development were constructed on the old site. Over the years, the city had built up a portfolio of foreclosed and abandoned homes in Plex, and it gave 68 of those scattered lots to Cornerstone to build single-family homes as part of the HOPE VI redevelopment.

Cornerstone finished and leased all 67 new homes and townhomes in the Plymouth Manor development, which served as phase one of the revitalization project, by July 2006. Just seven months later, about a year ahead of HUD’s five-year deadline, work was finished on the 77 homes and townhouses in the second phase, known as Carlson Commons. The 70 public housing units distributed throughout the project’s various sites replaced about two-thirds of the original 111 public housing apartments.

Plymouth Manor and Carlson Commons were completed well under budget, though not without a fight. After Cornerstone closed its financing, labor officials changed the prevailing wage that the developer would have to pay its contractors under the federal Davis-Bacon law. In some cases wages doubled. “Our painters went from $12 an hour to $33,” said Roger Brandt, president of Rochester’s Cornerstone Group. Suddenly, the project had a $5 million hole in its budget. It took six months to get the project exempted from the wage increase. But by then, the rising cost of construction had created another $1 million shortfall.

Fortunately, tax credit investors were willing to pay the high price of $1.06 per dollar for the development’s tax credits. The Richman Group Affordable Housing Corp. and WNC & Associates, Inc., were the syndicators. Plymouth Manor and Carlson Commons also saved more than $400,000 by building the new roads that cut through the old public housing site, instead of paying the city to do it. Cornerstone saved even more when the developers finished the new community two months ahead of schedule.

The cost cutting was more successful than the developer anticipated. Cornerstone planted a string of evergreen trees on the border between the new townhouses and a branch of the Rochester Public Library.

The planting helps remind Brandt of how he beat the budget crunch. “I think of it whenever I drive by,” Brandt said.

Additional project information, as provided in application by the nominator.

Q. Why does the nominated project deserve to be recognized based on the award criteria of this contest?

A. The Plymouth Manor and Carlson Commons project is changing the face of Rochester, NY’s southwest neighborhoods. It has lowered density in two former public housing sites, provided for the economic integration of public housing and tax credits throughout the neighborhood, and created secure, comfortable living space for residents. The project is an urban infill, mixed-finance, mixed income affordable rental units for families.

Plymouth and Carlson sits in the Plymouth/Exchange neighborhood in downtown Rochester, a Qualified Census Tract, Community Development Target Area, and a Renewal Community. South Plymouth Avenue runs through the neighborhood; the city of Rochester renovated it in 2004 to 2006 with new paving, curbs, a traffic circle, walks, trees, and a reduced street width to calm traffic. The new housing is on a bus line, and within walking distance of shopping, schools, churches, and a library.

As manager of the project, Providence Housing marketed the units to families who may not have applied to live in housing of this kind. The 70 public housing units were marketed to those on the public housing wait list, giving preference to former residents of the original housing. Priority for the remaining units was then given to persons on the Rochester Housing Authority wait lists for subsidized housing, and those whose current housing failed to meet health and safety standards.

The project obtained an annual operating subsidy from HUD to allow the development to serve the lowest-income families. These 144 affordable rental units deconcentrated and diversified the current public housing population; provided HUD subsidies of about $233 per unit per month for 70 public housing units; offered a total of 19 project-based Section 8 vouchers to low-income tenants; built 76 new, attractive townhouses and 68 single-family rental houses on scattered, infill sites, eliminating vacant lots; and rehabilitated vacant housing by creating seven units of newly renovated rental housing, and providing larger units of up to five bedrooms to low-income families, with the opportunity for lease-to-own units for 28 households.

The Plymouth and Carlson revitalization project completely changed the nature of an entire community by meeting its various needs. The project involved removing derelict, unsafe homes and replacing them with new housing; privately remediating subsurface environmental hazardous conditions; constructing a new community center; and constructing thee new streets, then dedicating them to the city. This was the first time in decades that the city allowed a private developer to built streets and the associated infrastructure. The net result was the transformation of an urban neighborhood, evidenced by immediate reductions in crime and drug trafficking, increased private investment in homes, and a new sense of community interest and concern.

The development team utilized several unique funding and operating models that proved to make this project successful. The team obtained almost $640,000 in HUD HOPE VI grants to fund the demolition of the existing units, and HUD provided an operating subsidy for 70 public housing units. They received a $1.7 million subsidy from a local housing authority, and Rochester Housing Authority permitted, for the first time, a private nonprofit agency to manage public housing units.

The overall design concept was to create the appearance of a neighborhood similar to surrounding neighborhoods. A “New Urbanism” approach included varied building elevations, window placement, pitched roofs, front and rear porches, and setbacks akin to surrounding properties. The furnaces are 90 percent energy-efficient, and all windows are Low-E insulated glass. Each unit contains a fully insulated basement with washer/dryer hookups, and ENERGY STAR appliances. Plymouth and Carlson replaced the city’s oldest family pubic housing project.

In a difficult urban neighborhood, with vacant boarding houses, other houses slated for demolition, no market real estate activity, and obvious drug trafficking, building 689 scattered-site units was challenging. The development team chose lots in some of the neighborhood’s roughest areas, intending to effect positive change. Through a well orchestrate plan, despite drug raids, a shooting, and some vandalism, all 68 units were completed on time and on budget.

Q. How does this project represent an innovative solution to a specific development challenge?

A. Finding creative funding sources, responding to a documented need, and replacing dilapidated housing with new, updated product on not only two primary development sites, but also on 68 additional scattered sites throughout the neighborhood were all challenges that the Plymouth and Carlson team not only met, but exceeded expectations of all parties involved.