Emerald Springs is a step in Detroit’s comeback.
In a city that has become synonymous with urban decline, the new 158-unit development has risen on a 26-acre site where part of a World War II-era public housing project was demolished nearly a decade ago.
“We came in to redevelop an area that was 50, 60 years old and made an oasis within the city,” says Brian Stoy, CEO of Unified Property Group in Brighton, Mich.
Developed by Unified Property and the Detroit Housing Commission (DHC), Emerald Springs has been selected best overall development in Affordable Housing Finance’s Readers’ Choice Awards this year. It was also named best family project.
“As everyone knows, Detroit has had its share of challenges,” Stoy says. “Emerald Springs is a real win for the city.”
The team created an entire new neighborhood, calling upon 11 different building types, including single-family homes, duplexes, and townhomes. The developers also established new public streets, green spaces, and a community building, changes that were needed to blend the once blighted and isolated site into the surrounding neighborhood.
Lining up the streets and adding the other touches were important in making the development part of the community, says Nick Kolb, development officer at Unified Property.
At its core, the project is designed for families, with the different building types providing options for both large and small households.
All the homes are affordable, including 75 units that are reserved as public housing and 16 that are for special-needs residents.
As much as Emerald Springs is a story about rejuvenation, it is also about perseverance.
Many people doubted that the $33.1 million development would get built. It received a low-income housing tax credit reservation from the Michigan State Housing Development Authority at the height of the financial crisis. The large award, more than $29 million, was more than most investors wanted. And, the project was in a city that many were avoiding.
To keep the deal alive, developers exchanged their 2009 reservation for 2010 credits in order to extend the placed-in-service date. After approaching numerous investors, they finally secured AEGON USA Realty Advisors as its direct tax credit investor. Great Lakes Capital Fund, which usually serves as a syndicator, this time helped introduce AEGON to the deal and the market.
Soft financing from DHC, the city of Detroit, and the Michigan Economic Development Corp. helped Emerald Springs to avoid hard debt, according to developers. JPMorgan Chase provided a construction loan, and the Department of Housing and Urban Development (HUD) provided replacement housing funds.
“The development had a solid financial structure that would not require must-pay debt,” says Gary Howe, associate director at AEGON. “It was a chance for AEGON and our partners to say that we believed in Detroit and in the tax credit program at a time when most capital markets were frozen and the real estate markets were in turmoil.”
In addition to the financial structure, Emerald Springs had well-designed housing and strong partners in a city that needed quality real estate, says Chris Long, vice president, community investments, at AEGON.
Residents have been offered a variety of services, including educational and vocational training. The team has also made safety a priority and is working to dedicate space in the community building for a mini-station that police officers can work out of, but this is still in the planning process.
More than 1,000 applications were submitted for the 158 homes.
Emerald Springs also marks a fresh beginning for DHC, which is transitioning back to local control after federal housing officials took over the agency in 2005. Earlier this year, HUD leaders toured the development as part of their visit to announce a transition plan.
And, there’s more work to be done in this blue-collar city. The team plans to start construction on a second phase of 48 units next year.