An affordable housing development has more than a new name in Knoxville, Tenn.
Formerly known as Townview Towers, the 299-unit property has undergone a major turnaround, with an extensive building renovation and the introduction of a new supportive services by owner LHP Capital.
“The before-and-after appeal of living there is probably the most night-and-day transformation I can ever remember being a part of here at LHP,” says Carr Hagan, president of LHP Development.
Made up of one-bedroom and efficiency apartments, the large development was built under the Department of Housing and Urban Development’s Sec. 236 program in the 1970s. People believe it was constructed as senior housing, but any regulatory documents that restricted the property seem to have been lost over time. As a result, the property grew to have a diverse mix of residents.
“What you had was a lot of one-person households really in need of deeply subsidized housing regardless of age,” Hagan says.
Located near the edge of Knoxville’s downtown and close to public transportation, the development is an important source of affordable housing in an area seeing a rise in high-end condos. However, the building was showing its age and getting close to the end of its useful life when LHP acquired the property in 2014.
To preserve the community, which has been renamed The 1100 Studio Apartments, LHP set out to renew the property physically and to give it a new attitude.
The $20.1 million effort included major upgrades to modernize and overhaul the living spaces as well as the building exterior. The apartments received new flooring, paint, and lighting. The kitchens and bathrooms also were updated.
The renovation also allowed for the addition of a computer learning center and additional offices for resident service coordinators.
“It’s a lot better than it used to be,” says Lewis Parks, a 53-year-old resident who moved to the apartments in 2005. The addition of a dishwasher, new kitchen cabinetry, and a more powerful microwave are among the updates to his efficiency apartment that he appreciates.
He even recommended the development to a friend who recently moved to the property.
Giving residents new services
With its resident mix, The 1100 Studio Apartments needed a range of supportive services, more than what would be offered at an age-restricted property. The programs, which range from job assistance and budgeting workshops to yoga classes and food distribution, are making a big difference, according to Hagan.
It’s not just one single program but the full suite of services that’s making a difference, he says.
The changes have been good for the residents as well as the property owners.
From 2014 to 2016 (pre- and post-renovation), The 1100 Studio Apartments has experienced an 80% reduction in rent delinquencies and a 20% decline in annual turnover, reports LHP, which specializes in preserving affordable housing developments.
Overall, occupancy increased from 95% to 97%.
Crime at The 1100 Studios property, which was the site of a fatal shooting last year, has declined. The Knoxville Police Department recorded 78 offenses at the property during the first six months of 2014 and only 30 for the same time period in 2016, a decrease of 62%, according to LHP. An offense is any crime against persons, property, or society.
Resident Lloyd McMahan, 60, says he was looking at moving before rehab, but the renovations have convinced him to stay.For him, the most important changes have involved safety.
“It is safer here now than it was before,” he says. “There were times when I felt intimidated to come out of my apartment just because of the people out in the halls and what was going on. But now with the new camera system and the police presence, I feel a lot safer coming and going. There’s been a big improvement.”
The financing for the effort included an $11.9 million Federal Housing Administration 221(d)(4) mortgage originated by Walker & Dunlop as well as a simultaneous issue of $9 million in tax-exempt multifamily bonds allocated by the Tennessee Housing Development Agency. In addition, approximately $6 million in low-income housing tax credit (LIHTC) equity was provided by First Tennessee Housing Corp. in its role as investor limited partner.
“But the property’s renovation could not have been financially feasible without a PILOT (payment in lieu of taxes), which assured that the LIHTCs themselves were not considered in the value of the real estate for ad valorem tax purposes,” said Hagan. “LHP partnered with the Knoxville Community Development Corp. to help facilitate the PILOT, which was critically important in making this deal work.”
