A rundown public housing site in Arizona’s Maricopa County has been replaced with 143 newly constructed units of affordable housing and a host of amenities and services that previously were not available.
Built in 1973, the former 77-unit Madison Heights public housing development in Avondale was built as barrack-style units with swamp coolers spread out over 10 acres.
“The development suffered from typical aging infrastructure and a lack of funding for capital improvements,” says Brian Swanton, Arizona market president for Gorman & Co.
Gorman & Co. answered a request for proposals from the Housing Authority of Maricopa County to help reposition its portfolio and identify ways for improving its public housing stock.
The Rental Assistance Demonstration (RAD), a program rolled out by the Department of Housing and Urban Development in 2012, was just what was needed for an extensive redevelopment of Madison Heights. The RAD program allows public housing authorities to convert their public housing units to project-based Sec. 8 contracts to provide properties with more stable and long-term funding.
Madison Heights is the first RAD project to be completed in Arizona as well as one of the first deals where there was a transfer of assistance. Subsidies from three public housing developments in different locations were bundled together and used on Madison Heights, which is the largest of the three sites and close to shopping, schools, and public transportation.
This enabled Gorman & Co. in partnership with the housing authority to double the density of the site, with 143 one-, two-, three-, and four-bedroom units in two-story garden walk-ups with extensive supportive services.
All of the units are for residents earning 60% or less of the area median income, with 30 units set aside for the chronically homeless. In addition, 70% of the residents who live there today were former residents of Madison Heights or one of the two other public housing developments that transferred their subsidies under RAD’s right to return policy. The development, which was completed in December, is 100% leased and has a waiting list of approximately 1,000 families.
“RAD was the exact right tool we needed,” says Swanton.
Prior to the redevelopment, the site didn’t even have a functioning playground. Now residents have a wealth of services and amenities. On-site services are provided through nonprofit A New Leaf, which is a homeless service provider, and the Valley of the Sun United Way, which helps with job and computer training as well as financial literacy.
Outdoor amenities include a multi-use sport court, a splash pad, barbecue areas with picnic tables, a large playground, a community garden, and exercise stations on a walking path. Indoors, there’s a 5,500-square-foot community center with a large multipurpose facility for after-school programming, a computer lab, a fitness center, a teen room, and a community kitchen. Washers and dryers, dishwashers, and microwaves also are included in the energy-efficient units.
“It has just been a remarkable transition of what was there before to what is there now,” says Swanton. “The residents are ecstatic and so excited to be in their new environment.”
Because the Madison Heights project was so large, the development team broke the development into two phases and applied for two separate 9% low-income housing tax credit (LIHTC) allocations from the Arizona Department of Housing (ADOH), which they received.
“The state housing department added points for RAD projects, which really helped this development get over the hump in getting allocations,” Swanton says.
The two phases of the $30 million development were virtually the same, with the LIHTCs purchased by Affordable Housing Partners, a Berkshire Hathaway company, as the lion’s share of the financing. BMO Harris Bank provided a construction loan, and Community Development Trust provided the permanent loan. Maricopa County Human Services Department provided HOME funds, as did ADOH for gap financing.
