McCormack Baron Salazar is helping rebuild New Orleans. It recently completed Harmony Oaks, a 460-unit mixed-income development that replaces the C.J. Peete public housing complex that was closed after Hurricane Katrina.
Courtesy McCormack Baron Salazar McCormack Baron Salazar is helping rebuild New Orleans. It recently completed Harmony Oaks, a 460-unit mixed-income development that replaces the C.J. Peete public housing complex that was closed after Hurricane Katrina.
The firm is led by (from left) Tony Salazar, Kevin McCormack, Vince Bennett, and Richard Baron.
Dilip Vishwanat The firm is led by (from left) Tony Salazar, Kevin McCormack, Vince Bennett, and Richard Baron.


These are just a few of the cities where McCormack Baron Salazar (MBS) is building or will soon be launching major affordable housing developments.

One of the most active developers in the nation, the St. Louis-based firm specializes in turning around distressed urban neighborhoods with its mixed-income and mixed-use developments.

“In terms of mission and focus, I think we have stayed pretty true to what we have been doing,” says Richard Baron, company co-founder and chairman, who became interested in community development when he was an Oberlin College student in the 1960s and volunteered at a school in a Cleveland neighborhood struggling with poverty and riots.

Since its establishment in 1973, MBS has developed more than 16,000 residential units, working in 35 cities in 17 states. In 2011 alone, the company started seven new developments with 895 units, making the firm the No. 2 developer on AFFORDABLE HOUSING FINANCE's Top 50 list. It also completed five projects with 505 units.

This year is shaping up to be even busier. The company anticipates starting eight projects with 873 aff ordable homes and completing another nine developments with more than 1,000 units.

However, it is not just the number of units that stand out. It is also the depth of the firm's developments. MBS' sweeping projects have featured new schools, significant retail space, job training opportunities, and links to transportation.

“We specialize in urban development, revitalizing urban neighborhoods with affordable and mixed-income housing,” says President Kevin McCormack. “For it to be a neighborhood, it needs to be more than a place to sleep. It needs amenities to keep it attractive.”


MBS has been critical in the rebuilding of New Orleans after Hurricane Katrina. The firm, with its partners, recently completed the $172 million Harmony Oaks mixed-income development to replace the notorious C.J. Peete complex, one of the big four public housing developments that closed after the hurricane.

Harmony Oaks features 460 mixedincome apartments and townhomes in 116 residential buildings, a community center, a pool, a fitness center, and numerous playgrounds. Thirty percent of the units are unrestricted, a part of the eff ort by MBS and the Housing Authority of New Orleans to create a more livable, mixed-income neighborhood.

“The other important piece to Harmony Oaks is the integration of human capital and the partnerships forged with foundations and state and public agencies,” says Vince Bennett, COO. “We have very lowincome households that have a number of needs, whether it is workforce development, health, or other needs. Working with the nonprofit agency, Urban Strategies, we have helped put together a comprehensive plan for residents to be successful.”

MBS and the nonprofit engaged the Recovery School District at the start of the revitalization eff ort to include partnering with Knowledge is Power Program, a charter school operator, to plan the reopening of a K-8 neighborhood school across the street from the site, which will also include a health suite for its students and health services for families. The school is under construction and scheduled to be completed by the fall.

The firm continues to play a big role in New Orleans. It is rebuilding its second public housing site, B.W. Cooper, into the 400-unit Marrero Commons. MBS has completed approximately 175 units there, with the balance being built this year.

In California, the firm and the San Francisco Housing Authority were one of only five applicants to receive a federal Choice Neighborhoods grant in 2011. The $30.5 million award will allow the team to transform the blighted Alice Griffith site in the city's Bayview neighborhood. The plan calls for not only developing 504 housing units but also an early childhood learning center.

Building on the old HOPE VI program that revitalized distressed public housing projects, the Department of Housing and Urban Development launched Choice Neighborhoods, a more comprehensive approach to transforming troubled areas into mixed-income neighborhoods. The program aims to bring a wide variety of public services and improvements to blighted areas.

It was natural for MBS, which has been involved in 29 HOPE VI projects, to leap into the new Choice Neighborhoods program.

MBS has been very competitive in rebuilding public housing developments and incorporating them into their surrounding neighborhoods, says Tony Salazar, president of West Coast operations.

“We have never been afraid of public housing,” he says. “We know how to integrate it into a larger project. We know how to convert it into mixed-income. We know how to take land that was poorly designed and reintegrate the streets into the community.”

In Los Angeles, the firm has been involved in a number of transit-oriented developments. It is currently building the 172-unit MacArthur Park Apartments above the Metro Red Line subway station at Westlake/MacArthur Park. The project will feature about 40,000 square feet of retail space as well as a parking garage. The first phase is wrapping up, and the second phase will begin this summer.

In Phoenix, the team recently worked with the city to build The Symphony Apartments, an $18.4 million, 83-unit development. It replaces the distressed Krohn West public housing project. The Symphony follows the completion of the large multi-phase Matthew Henson HOPE VI redevelopment.

“MBS is a terrific partner in revitalizing public housing and entire communities. MBS focuses on excellent design, community partnering, sustainability, and on the people we all serve,” says Kim Dorney, city of Phoenix housing department director. “They are second to none in creating stateof- the-art communities that all income groups find desirable. Henson Village and our most recent Symphony developments with MBS serve as beacons of reinvesting in people and places—right next to our vibrant downtown.”

Looking ahead, the biggest opportunity for MBS is in Texas, according to Bennett.

The firm's last development there was around 1995, but it is returning to the state in a big way.

MBS has been invited by the Galveston Housing Authority (GHA) to partner in its strategy to rebuild mixed-income housing after Hurricane Ike blew through the island in 2008. The company will be involved in building 700 to 800 units of mixed-income housing.

A debate over rebuilding public housing in the community has been intense. The opposition to the housing authority's overall plan predates MBS' selection as master developer.

“We have worked closely with the mayor, the GHA, the supporters on the City Council, and advocates to communicate to stakeholders and the public the facts versus myths of mixed-income housing,” Bennett says. “It has been important to sift through the debate and use market and economic data and highlight national best practices to dispel the misinformation being circulated by opponents to mixedincome housing and GHA's plan.”

MBS also has been selected to assist the San Antonio Housing Authority with two of its initiatives and will be working with a nonprofit in Houston.


Despite the weak economy and the ups and downs of the low-income housing tax credit (LIHTC) market, MBS has managed to be very consistent in its production, starting 739 units in 2010, 895 units in 2011, and another 873 on the way this year.

“We look at a 24-month development cycle,” McCormack says. “If we look at a running 24 months, our volume tends not to vary that significantly. We have a fairly long lead time because we are dealing with complicated deals. We were fine in 2008 and 2009 because we had subsidies lined up for those deals. We will be fine in 2012 and 2013 because we have the subsidies lined for these deals. It is further out that becomes an issue. What is going to happen in 2014 and 2015 is going to depend on what we do this year and the next.”

In recent years, the firm has made several strategic moves to strengthen its position.

In 2010, Goldman Sachs acquired a minority interest in MBS.

“My previous existence was as a banker,” McCormack says. “From my point of view, they are a great partner. They are fast, flexible, and very sophisticated investors. In addition to being a shareholder in the company, they have invested approximately $150 million in partnerships and funds since they have come on board.”

The partnership began with Goldman Sachs' $60 million LIHTC investment in Harmony Oaks. It is also the equity investor in the MacArthur Park development in Los Angeles.

MBS has also worked closely with a number of other financial partners, including Bank of America, Citi Community Capital, SunAmerica AIG, and U.S. Bank.

In another new move, the firm has become a significant player in the New Markets Tax Credit (NMTC) arena, receiving five allocations totaling $220 million in credit authority.

The federal NMTC program, which aims to spur economic development in low-income communities, arms the firm with another financial tool.

Although McCormack, Baron, and Salazar are not planning to retire soon, they have begun developing a new team of executives and preparing an overall succession plan.

The executive team includes Bennett, who has been with the firm since 1993; Hillary Zimmerman, president of the asset management division and general counsel, who joined the firm in 1984; Tim Zaleski, president of McCormack Baron Ragan Management Services, who joined in 2011; and Al Ragan, who was president of the management firm and then became president of MBS Capital Corp. last year.

In the meantime, there are no plans for the firm to slow down.

“We have a lot left to do in terms of rebuilding America, so we are at it,” Baron says.

By the Numbers

Ӣ Total development investment:
$2.5 billion

Ӣ Residential units developed:

Ӣ Commercial space:
1.3 million square feet

Ӣ Development city locations:

Ӣ Development state locations:

Ӣ Hope VI developments: