Heatherstone, the largest affordable housing community in the Pacific Northwest, has undergone a major transformation.
After acquiring the 455-unit development in Kennewick, Washington, Security Properties implemented an ambitious business plan that included rehabilitating the vast property and overhauling operations. What was once a troubled project that struggled with occupancy and delinquency, Heatherstone is now 100% leased and one of the most desirable affordable housing communities in the region, according to the team.
“Security Properties took over the development with the intent to preserve it as affordable housing and set it up for long-term success,” says Bryon Gongaware, managing director.
The team also took an innovative approach on the financing. Security Properties acquired the property with bridge financing but simultaneously forward rate-locked on a Freddie Mac TEL (tax-exempt loan) to be used as the permanent financing under a 4% low-income housing tax credit resyndication. This allowed the new owners to begin making operational improvements during the bridge period, which were critical to support the permanent financing needed to execute the 4% resyndication.
As part of the $85.2 million project, the homes received a comprehensive renovation with new flooring, cabinets, countertops, light fixtures, doors, carpet, and appliances. Stricter housekeeping rules and oversight have also made a big impact, including a reduction in crime.
Heatherstone is home to residents earning 50% and 60% of the area median income, with about 10% of the units reserved for people with disabilities and 10% for large households. More than 1,000 children and teens live at the property.
“It’s a night-and-day difference from what it was when we acquired the property,” says Brandon Musser, investment manager at Security Properties, adding that the prominent project has helped kick-start other improvements in the neighborhood, including the opening of an adjacent Boys & Girls Club.