Urban Housing Solutions has acquired the 45-year-old Parliament Place apartments in Nashville, Tennessee, to preserve the property’s affordability.
Freeman Webb Co. Urban Housing Solutions has acquired the 45-year-old Parliament Place apartments in Nashville, Tennessee, to preserve the property’s affordability.

The affordability of 165 homes for low- and moderate-income residents in Nashville, Tennessee, has been preserved with the help of a unique collaboration.

Urban Housing Solutions (UHS), the area’s largest nonprofit provider of affordable housing, recently acquired Parliament Place and Southwood Park, two neighboring and naturally occurring affordable housing apartment communities.

The deal brought together four Nashville-area nonprofit foundations—The Memorial Foundation, The Healing Trust, the James Stephen Turner Family Foundation, and the Kharis Foundation—which used their endowments as collateral for a $19.2 million acquisition loan made by Regions Bank.

This collaboration comes at a time when high real estate costs are making it difficult for nonprofits to buy properties, and new financing models are required.

The two developments did not have any affordability restrictions on them, so they were at risk of being purchased by firms that could have raised the rents, displacing many of the residents. The majority of people living at the properties earn around 60% of the area median income.

The idea for the unusual loan guarantee came from UHS founder and former executive director Rusty Lawrence, who pitched the idea to the foundations about two years ago. All the parties then worked together to craft an agreement.

UHS was arranging the financing to buy the 80-unit Parliament Place in December, but around the same time the nonprofit learned that the neighboring 85-unit Southwood Park also was coming up for sale.

The foundations’ loan guarantee was originally going to cover just the Southwood Park acquisition, but as officials worked on the deal, they decided to expand it to the Parliament Place loan.

“The acquisitions happened so close together that the team was able to combine the deals, and, by April, we closed on both properties,” says Kevin Clavin, development coordinator at UHS.

The loan guarantee allowed UHS to act quickly and compete with offers from other potential buyers, he says. It’s a model that other communities can look at with their area foundations to help preserve needed affordable housing.Historically, nonprofits have relied on grants and other gap financing, which often have longer timelines that can be difficult to align for a fast closing.

Another key piece in the deal is Tennessee’s Community Investment Tax Credit, which financial institutions can obtain to use against their state franchise and excise tax when they make qualified loans to nonprofits involved in eligible housing activities.

In exchange for getting the credit, a bank has to provide a loan below prime interest. This was critical to making the deal work and allows the organization to hold rents steady at the properties, explains Clavin.

The nonprofit will be able to develop a long-term preservation strategy for the communities. Parliament Place is 45 years old, and Southwood Park is 36 years old. UHS plans to refinance the developments in about two or three years, and, at the time, the foundations’ guarantee will be removed. However, the model has been established, and the door is open for the partners to collaborate on other deals.