Nonprofit affordable housing developer Community Housing Development Corp. (CHDC) has completed a $26 million renovation of Unity Place Townhomes in Brooklyn Center, Minn. The effort ensures the 40-year-old property will continue to provide sustainable, affordable living options for area families.
“We dramatically improved the community life at the property and ensured the assets remain strong for decades,” says Dan Walsh, CHDC vice president of housing development.
Developers took several steps in order to renovate the community, including pursuing the long-term renewal of a project-based Section 8 contract under Chapter 15 of the renewal policy guide with a new Department of Housing and Urban Development (HUD)-insured first mortgage, which captured the value of the new and upgraded amenities and resulted in adequate funds for the renovation activities, according to Walsh.
Unity Place was a 100% project-based Section 8 development that had never used tax credits before, so it also offered an opportunity to utilize the new income-averaging option in the low-income housing tax credit (LIHTC) program. Maximizing the LIHTCs increased funding for the needed renovation activities while minimizing disruptions to residents’ lives and allowing for a larger mix of incomes in the future, Walsh says.
“However, it was lonely being one of the first projects to get this new set-aside through various credit committees and allocating agency processes,” he says. “We couldn’t rely on precedent, and it is a testament to Unity Place’s strong financing team that we took the leap together.”
A highlight of the redevelopment is a newly constructed community building that features a leasing office, a fitness room, a meeting room, an outdoor patio, and a gathering space with a kitchen and fireplace. Exterior upgrades include resurfacing of the asphalt drive and parking areas, new landscaping, a new playground, and the addition of walkways, benches, and a pergola.
Upgrades inside the site’s 112 units include cabinetry replacement and new dishwashers, the addition of in-unit washers and dryers, and new flooring. Air-conditioning units and furnaces were also replaced, and LED lighting was added.
CHDC’s previous renovations of the Unity Place property occurred in 2013 and focused on exterior upgrades to the townhome units.
The team assembled multiple sources of financing for the project, including $12.8 million from a HUD Section 221(d)(4) first mortgage from Dougherty Mortgage; $7.4 million in 4% LIHTC equity from Enterprise Housing Credit Investments; $4.9 million in short-term, cash-collateralized tax-exempt bonds from the state of Minnesota and city of Brooklyn Center; $3.5 million from a CHDC seller loan; a $120,000 sales tax rebate from state of Minnesota; and $1.3 million in deferred developer fees from CHDC. Bridgewater Bank also provided a $12.5 million bridge loan.