Built in 1973, the French Villas, a 184-unit public housing complex in St. Petersburg, Fla., had developed significant structural problems over the years, including a failing sewer system.
Norstar Development USA partnered with the Pinellas County Housing Authority to redevelop and modernize the community. The development team had lined up the financing for the $24.3 million redevelopment, which included the award of low-income housing tax credits, but ran into difficulties when it proposed to convert 46 of the public housing units to project-based Sec. 8 to allow the deal to support some debt. The only way to get relief from the Department of Housing and Urban Development's (HUD’s) requirement that there be a one-for-one replacement of public housing units was to meet certain standards designed for demolition with new construction rather than substantial rehabilitation in mind, including the requirement that following the rehab of the development, tenants would not want to return to the site.
Instead, the team determined the project was a good candidate for HUD’s Rental Assistance Demonstration (RAD) program. When a development obtains long-term rental assistance through RAD, it has a more stable funding platform, which puts the property in a better position to leverage additional financing to perform capital improvements. Because public housing subsidy is a break-even proposition, there is no income available to pay debt service on financing for a rehab of a 100% public housing development. With HUD’s capital fund program severely underfunded, the RAD program fills a critical need by allowing public housing authorities to access conventional financing through rents that are subsidized up to fair-market rent levels rather than merely covering, at best, operating expenses.
“We ended up being the first Florida RAD conversion to close,” says Paula Rhodes, Norstar’s director of development for the Southeast. “All of the units were converted from public housing to project-based Sec. 8 through RAD.”
Renamed Landings at Cross Bayou and completed in April, the redevelopment included the replacement of the entire sewer and potable water systems as well as roofs, the gutting of the 184 units to create more efficient floor plans with Energy Star appliances and programmable thermostats, and the construction of a new community center and a laundry/maintenance building.
A basketball court, a playground, a fitness center, and Wi-Fi in common areas also have been added for the residents. “We really enhanced the amenities on the entire property,” says Rick Cavalieri, development manager at Norstar.
Many of the residents of the French Villas, who had been relocated during the renovations, returned to the development. “They are thrilled with the new project,” says Rhodes.
