Pullman Wheelworks, a historic factory–­turned–apartment development, has undergone a $30 million acquisition and renovation. The effort preserves the affordability of 210 units and serves as an integral piece in the renewal of Chicago’s Pullman community.

Built in the 1920s, the factory was part of a large company town established by George Pullman, builder of the Pullman sleeping cars. Converted into housing in 1980, the development faced an uncertain future when Mercy Housing Lakefront and National Housing Trust/Enterprise Preservation Corp. stepped in to revitalize the 294,000-square-foot building.

“The entire project is preservation—of both the physical structure and affordability for the existing residents,” says Linda Brace, vice president, real estate development, at Mercy Housing Lakefront.

During the process, developers pioneered a new financing structure. The property had two existing Department of Housing and Urban Development (HUD) notes totaling about $8 million that had been restructured through the Mark-to-Market (M2M) program.

The team arranged a short-term sale of the M2M notes to a community–based lender that managed a funding pool in which a government entity invested. This was possible under rules allowing notes to be transferred to other government bodies. Then followed the sale of the property to Mercy Housing and the low-income housing tax credit partnership. HUD also agreed to “write down” most of the debt.

The team obtained a 20-year extension of the project-based Sec. 8 contract.