Newport, R.I. – A new multi-phase development, Newport Heights, is replacing public housing serving very low income families with 425 new units of mixed-income housing
The pre-World War II public housing, Tonomy Hill, was “a sore thumb,” said Kenan Bigby, project manager for developer Trinity Financial. Conditions were so bad that one-third of the residents left after just one year.
“Newport Heights is recognized as the cornerstone for development not only in this area, but in the city of Newport,” reported Chris Barnett, communications director for the Rhode Island Housing and Mortgage Finance Corp. (RI Housing). The increased confidence and community support from municipal leaders that the project has brought led city leaders to prepare a master plan for the area.
The $15.7 million Phase I consists of 81 one- to five-bedroom colonial-style units overlooking the Narragansett Bay, 64 of which are affordable. It was completed in June 2004 and was 98% occupied at press time. This marks the start of an ambitious plan that includes multiple allocations of 9% and 4% low-income housing tax credits and a HOPE VI grant. The last phase will include some single-family homes.
Phase I had a combined $7.8 million in 9% and 4% tax credit equity from AEGON USA Realty Advisors, Inc., some of which paid off the tax-exempt bonds used for construction financing. Other financing included $5.2 million in capital funds from the Housing Authority of the City of Newport, and a $1 million loan from RI Housing.
Bifurcating most of the phases into subphases is enabling the project to earn both 9% and 4% tax credits. “There was an overwhelming demand for 9% tax credits [in the state],” said Barnett. “We blended in the tax-exempt bonds to take advantage of the 4% tax credits. We had to be creative.”
The $33 million second phase, consisting of 147 units, is expected to be completed by December 2005. AEGON is providing tax credit equity for that phase also. The $24 million third phase, to be completed by the third quarter of 2006, also received tax equity financing, but the investor this time was MMA Financial. “We took the highest offer,” said Bigby.
Trinity Financial has begun work to improve the property’s infrastructure. Streets are being redesigned so that buses will be able to drive through the development, and power lines will be laid underground. The housing authority is relocating the Sunset Hill tower, a war monument, to be used as a gateway for a large, adjacent park and recreation area.
Newport Heights’ success is accelerating more development nearby. According to RI Housing, developers are looking to build condominiums and a hotel in the north end of the city. A community college is scheduled to open near the site in September 2005.
Newport Heights, Phase I
Developer: Trinity Financial
Number of units: 81
Number of affordable units: 64
Unique feature: Bifurcated phases allowed the project to receive both 9% and 4% low-income housing tax credit allocations as well as tax-exempt bonds.
Key sources of financing
Tax-exempt bonds allocated from Rhode Island Housing and Mortgage Finance Corp. (RI Housing) for Phase IB: $3 million
Low-income housing tax credit equity from AEGON USA Realty Advisors, Inc., $7.8 million ($3 million of which paid off the tax-exempt bonds): $4.8 million
Capital funds from the Housing Authority of the city of Newport: $5.2 million
30-year targeted loan at 5% payable from cash flow only (gap financing) from RI Housing: $1 million
40-year first mortgage at 7% from RI Housing: $800,000
30-year HOME loan at 0.01% from RI Housing: $500,000
City of Newport revolving loan fund: $400,000
Total sources: $15.7 million