KANSAS - Developer Ryan Hudspeth managed to get a property owner to donate six apartment complexes in six rural towns here to a fledgling nonprofit in Topeka, Neighborhood Renaissance Foundation. Hudspeth’s firm, RAH Investments, then began the tedious process of securing tax credit and U.S. Department of Agriculture (USDA) financing to rehabilitate the properties into 76 affordable units. The income limits at the properties were set at no more than 60 percent of the AMI. However, all households at the six developments in central Kansas that make up Rural Housing & Development earn no more than 30 percent of the AMI, said Hudspeth.
The project was the first housing development in the nation to receive funding from a joint venture between USDA Rural Development (RD) and the Housing Assistance Council (HAC).
“It’s not a sexy project,” said Bill Caton, executive vice president with Midwest Housing Equity Group, Inc., the project’s tax credit syndicator. “But it’s the first to combine this kind of financing, and it should be a model for other aging Rural Development projects.”
Monthly average rents at the properties, originally built in the 1970s, range from $453 to $512. Apartments measure between 625 square feet and 900 square feet. Before the renovation, occupancy rates for the portfolio were in the low 80 percent range. Currently, occupancy is well above 90 percent.
“The project was three years in the making,” said Caton. “Since this project is a pilot, really, it received double the scrutiny, double the skepticism of most affordable projects.”
One of the biggest challenges was dealing with the distance between the scattered developments, said Caton. It is 206 miles between the apartment communities in the Kansas towns of Minneapolis and Oberlin. The average distance between the developments is roughly 125 miles. It is unusual that a group of buildings in a single project are spread out over such a distance.
“I put many miles on my car inspecting the properties,” said Caton.
The properties are: Apple Junction Apartments in Wakeeney; Beloit Center Apartments in Beloit; Harvestwoods Apartments in Phillipsburg; Parkview Apartments in Oberlin; Pheasant Run Apartments in Minneapolis, Kan.; and Wheatland Manor in Ness City.
The project received $2.3 million in equity from the sale of LIHTCs. It received a $504,000 loan through the Sec. 515 program, administered by RD. HAC provided a $303,000 loan. Neighborhood Renaissance Foundation offered up a $90,000 general partner contribution.
“Collaborating with all the agencies was a very difficult, time-consuming process,” said Hudspeth. “Once we got the financing together, it was a cake walk.”
The rehabilitation included new playgrounds, carpets, cabinets, windows, exterior siding, community rooms, and energy-efficient heating and cooling systems.
“When we can reduce someone’s utility bill from $80 per month to $40 per month, that’s significant for someone who is making $6 an hour,” said Caton.
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. Rural Housing and Development, L.P., is the first-ever consolidation of six projects into one for Kansas USDA Rural Development, and is the Housing Assistance Council’s first project to receive funds from the Preservation Revolving Loan Fund. This project is the first in the nation to be structured with these various pieces and will most likely be used as a model for other renovation projects for the aging Rural Development affordable rental housing stock.
The project consists of 76 multifamily units scattered through six rural towns in central and east-central Kansas. Each of the properties went through extensive renovations to rejuvenate the units inside and out. Putting the project together was complex and difficult at times, but the benefits in the end were worth it, and Rural Housing should receive the recognition it deserves.
Q. How does this project represent an innovative solution to a specific development challenge?
A. This project included many groundbreaking firsts that will hopefully be modeled in the future. The consolidation of the six projects into one was cost-efficient, and will help out on certain expenses in the future. This project preserved and improved the quality of six rural properties for their communities while still keeping them affordable for residents.