A 47-year-old former public housing development is undergoing significant rehabilitation with the help of the federal Rental Assistance Demonstration (RAD) program in Deerfield Beach, Fla.
The 96-unit Stanley Terrace project was built in 1969 as a traditional public housing development, but in 2014 the Deerfield Beach Housing Authority was approved for the RAD program by the Department of Housing and Urban Development (HUD).
Under RAD, public housing authorities can convert their public housing units to project-based Sec. 8 contracts, a move that provides the properties with a more stable and long-term funding platform. This is critical because it puts the housing authorities in a better position to leverage additional financing to perform needed capital improvements.
To help finance the Stanley Terrace rehabilitation, Bruce Gerhart, Midwest regional director at Love Funding, closed a $5.3 million loan through HUD’s Sec. 221(d)(4) substantial rehabilitation program in combination with short-term tax-exempt bonds from the state and 4% low-income housing tax credits (LIHTCs). This was the first RAD conversion in the state to utilize 4% credits and bonds, according to Love Funding.
Additionally, the firm worked with its parent, Midland States Bank, to make a “one-day” loan to facilitate the release of the short-term bonds and to recognize the contributed value of the property from the housing authority to the new partnership. The technique, which was necessary for the transaction to be completed, will soon be replicated on a similar transaction in New York.
“Since its introduction, the RAD program has proven to be a highly effective financing mechanism to modernize public housing and place it on a market-based economic operation like all other rental housing,” Gerhart said. “To its credit, Deerfield Beach Housing Authority recognized this and helped push the number of housing units preserved through the program to more than 30,000 nationwide since the RAD program’s inception.”
Darren Smith of Smith & Henzy Advisory Group and C. Ray Baker & Associates were instrumental in helping guide the housing authority through the transaction. The financing will help the authority implement a wide range of repairs and renovations to the property’s units, including remodeled kitchens and bathrooms, window and roof replacements, and the repair of all existing mechanical and electrical systems.