MassHousing has closed on $49.3 million in affordable housing financing to help WinnCompanies preserve affordability for lower-income households at The Tannery in Peabody, Mass.
WinnCompanies purchased the 284-unit affordable housing community under Chapter 40T, preventing the conversion of affordable apartments to market rates and protecting the tenancies of dozens of low-income residents.
The financing will enable Boston-based WinnCompanies to preserve affordability at The Tannery for at least 45 years. The transaction will also result in substantial rehabilitation to the property.
“This is a terrific outcome for the lower-income residents of The Tannery, who will continue to be able to live affordably in downtown Peabody,” said MassHousing executive director Chrystal Kornegay. “Everyone involved in this transaction was committed to making sure that The Tannery did not convert to market rates and remained a long-term source of affordable housing in Peabody.”
MassHousing is providing a $28.3 million construction and permanent mortgage, $17 million in bridge loan financing, and $4 million in Sec. 13A preservation and tenant protection financing.
The transaction resolved the expired Sec. 13A affordable financing on 235 units at The Tannery, creating residency protection for the existing 13A legacy tenants.
The commonwealth’s Sec. 13A program was created by the Massachusetts Legislature in the 1970s to provide low-interest mortgage financing to affordable housing communities. Today, 13A communities serve some of the lowest-income and most vulnerable populations in Massachusetts, including many elderly residents. The mortgages on these 13A housing communities are nearing maturity, and no federal resources are available for their preservation. In response, MassHousing and the Massachusetts Department of Housing and Community Development (DHCD) have committed a total of $100 million in capital to help protect vulnerable residents and preserve affordable 13A units that otherwise could convert to market rates.
DHCD additionally provided $9 million in Sec. 13A-specific financing and allocated federal and state low-income housing tax credits that generated approximately $25.5 million in equity for the transaction. Additional financing sources include $1.7 million from the city of Peabody, $1.3 million in net operating income during construction, and a $1.1 million deferred developer fee.
WinnCompanies purchased The Tannery through Chapter 40T, a state law designed to help prevent affordable housing from being sold and converted to market-rate rents. DHCD administers Chapter 40T and has the right of first refusal to purchase publicly subsidized housing through a designee such as WinnCompanies.
The Tannery was built in the late 1800s as an industrial leather tanning complex and was home to the former AC Lawrence Tannery for many years. The property was converted to housing in the 1970s and originally financed by MassHousing through the Sec. 13A program.
Of the 284 apartments, 84 will be subsidized through the Massachusetts Rental Voucher Program, 116 apartments will be affordable for households earning at or below 60% of the area median income (AMI), 35 apartments will be affordable for households earning at or below 80% of the AMI, and 49 apartments will be rented at market rates. The AMI for Peabody is $113,300 for a family of four.
There are 20 studio apartments, 234 one-bedroom apartments, and 30 two-bedroom apartments contained in three residential buildings. The community is being managed by WinnResidential, the nation’s largest operator of affordable housing.
“We expect to announce our plans for the renovation of The Tannery later this month,” said WinnDevelopment senior vice president Adam Stein. “The support we have received from MassHousing and the Bettencourt administration will be reinvested in an improved quality of life for residents for years to come.”
