The vacant St. Charles Hospital building has been rehabilitated into affordable senior housing in Aurora, Ill.
The first residents have recently moved into the renovated building that dates back to 1932. Designed by Wybe J. Van der Meer, the art deco building long served as a general hospital. However, the prominent structure stood vacant since 2010, the year it was named to the National Register of Historic Places.
“It was in pretty rough shape,” says David Block, director of development for Evergreen Real Estate Group. “It had been vacant and largely open to the elements for about five years.”
Even before it was abandoned, the building was starting to decline. After years as a hospital, the property was used as a nursing home for roughly a decade. During this time, the deferred maintenance needs mounted, and the nursing home eventually went out of business, according to Block.
A $24 million redevelopment effort by Evergreen has revived the dilapidated building into 60 studio, one-, and two-bedroom apartments for seniors. Fifty-six of the homes at Aurora St. Charles Senior Living are affordable, with 44 units receiving project-based Sec. 8 contracts from the Aurora Housing Authority. Chicago-based Evergreen, which partnered with nonprofits Invest Aurora and Northern Lights Development Corp. on the project, likes to create mixed-income properties, so there are four market-rate units as well.
The team took care to preserve key elements of the historic hospital. The building’s corridors were originally designed to be about 10 feet wide whereas a typical multifamily housing building has corridors that are closer to 6 feet.
State historic preservation officials wanted the developers to keep the original wide hallways in at least a portion of the building. As a result, the corridors were maintained on three floors in one wing of the building. The team also preserved other historic elements, including transom windows above the doors and terrazzo and stone floors in the common areas. “It gives you a sense of what the building was like as a hospital,” Block says.
The team was able to narrow the corridors in the rest of the building to give more space to the apartments.
Another key move was to convert the hospital chapel into a large community room, which houses a library and a separate fitness room. “It was an important part of the historic preservation of the building,” says Block.
In addition to giving residents a spectacular room for activities, it will be a community resource for local events.
Unique financing
To finance Aurora St. Charles, the team assembled an innovative set of funding sources.
A little over $3 million was obtained through the Illinois Department of Commerce and Economic Opportunity’s River Edge Redevelopment Zone program, a special tax credit that helps revive historic properties in five cities adjacent to rivers in Illinois. The program was set to expire at the end of 2016 but has been extended for one year.
The development is also the first multifamily development to use the Illinois Housing Development Authority’s (IHDA’s) Credit Advantage program, a first-mortgage product, with low-income housing tax credits (LIHTCs) from IHDA. The agency awarded housing tax credits to the project in June 2015, leaving the developers just 18 months to close the deal and complete construction.
Recognizing the tight timeline, IHDA officials proposed using Credit Advantage. By working with the agency on both the tax credits and the first mortgage, the developers were able to increase efficiency by reducing some of the requirements for due diligence and reviews. “IHDA moved mountains to unroll this new program,” says Block, explaining that the new first mortgage provided approximately $3 million and was obtained at competitive rates.
“We’re excited to offer this new first mortgage program, which delivers the flexibility our partners need to build and preserve quality affordable housing throughout the state,” says Audra Hamenik, IHDA executive director. “Our streamlined process means fewer moving parts, faster execution, and ultimately less time and money spent getting a deal to the closing table.”
National Equity Fund and JPMorgan Chase were also critical, providing about $18.8 million in total tax credit equity, including $12 million in LIHTC equity, $3.7 million in federal historic tax credit equity, and the approximately $3 million in River Edge credit equity.
In addition, Aurora St. Charles uses $840,000 from the Federal Home Loan Bank of Chicago’s Affordable Housing Program through member bank BMO Harris. The bank was also the construction lender. The city of Aurora contributed $500,000 in HOME funds, and IFF provided predevelopment funds.
Block also credits the Illinois Historic Preservation Agency, which administers the federal historic tax credit in Illinois, for its role in helping preserve the building.“Affordable housing developments like St. Charles Senior Living help strengthen communities like Aurora by allowing seniors across all income levels to lead active, engaged lives while remaining close to family and friends,” he says.
