Gloucester, Mass.—Local affordable housing developer Cape Ann Housing Opportunity, Inc. (CAHO), filed for Chapter 7 bankruptcy protection Jan. 7, claiming debt of up to $500,000 and assets of just $50,000.
The filing comes as no surprise to housing watchers. CAHO struggled for years to sell condominiums at its mixed-income Pond View Village property here, which started selling in August 2006, just as the condominium market began its collapse. See related article at http://www.housingfinance.com/ahf/articles/2008/jan/POND0108.htm.
“The condo market softened, and we took our licks,” says Joe Flatley, executive director of Boston-based Massachusetts Housing Investment Corp. (MHIC), a major investor in Pond View.
CAHO planned to use the proceeds from the sale of 81 planned condos to help pay for millions of dollars of work the nonprofit did to prepare the long-vacant, historic LePage Glue factory for redevelopment, including 43 affordable rental apartments that are finished and fully occupied. Pond View was CAHO’s first development, though the local nonprofit was formed with help from Wellspring House, a respected Boston-based nonprofit affordable housing developer.
The bankruptcy comes after construction lender MHIC foreclosed last summer on land that CAHO had already prepared for a third phase of 40 condominiums at Pond View.
MHIC had already taken a $2 million loss on its investment in the $36 million Pond View development, its first loss in 18 years of investing in affordable housing.
The firm has taken over the entire project and is acting as general partner for the affordable rentals.
However, despite the housing crash and deepening recession, the condos in the 41-unit second phase are more than half sold, with two closing their sales to homebuyers in December. The remaining 18 condos include seven workforce housing units with two bedrooms priced at $150,000 and 11 units at market prices ranging from $159,000 for a one-bedroom to $235,000 for the largest two-bedroom.
“[Pond View] is well-regarded in the community,” says Flatley. Most of the buyers so far have been locals familiar with the project, which has water views and is located about a quarter mile from a commuter rail station.
MHIC plans to sell the land for the third phase at Pond View to Community Economic Development Assistance Corp., a Boston-based nonprofit, to develop affordable rental housing, probably with financing from low-income housing tax credits.