For The Pacific Cos., 2018 was a year of milestones. The Eagle, Idaho–based developer celebrated two decades in the affordable housing industry and had the most unit starts and completions in its history, topping the AHF 50 Developers list.
“Over the past 20 years, we have really tried to focus on sustainable, gradual growth. We never set out to be the biggest and best at anything, just to live in a commitment to do our best,” says president and CEO Caleb Roope. “The benefit of this steady approach has been an ability to more easily adapt to changing times, like recessions and tax reform, because we aren’t focused on achieving lofty goals or taking on more than we can reasonably handle.”
In 2018, the firm started construction on 15 affordable housing developments with 2,501 units and completed another 14 developments with over 1,300 units.
Roope credits strong partnerships with both developers and capital providers for achieving this record volume.
“From a strategy perspective, our continued commitment to partnerships with other developers really paid off. I have always appreciated the partnership approach, especially with nonprofit organizations, because they bring their special capabilities to the effort,” he says.
“I also give great credit to our capital providers. … We could not have closed the projects we did this past year without early and frequent engagement with them. And from an innovation perspective, we would have had no chance to start construction on this many units without bringing nontraditional, private capital sources into the mix to provide long-term subordinate financing that earns returns based on project cash flow.”
Citi Community Capital is one of the lenders that has worked with The Pacific Cos. for over 15 years. “Creating affordable housing is Caleb’s and The Pacific Cos.’ top mission. It’s the passion, it’s the drive, and it’s the work ethic that I value in Caleb and his team,” says Mike Hemmens, managing director at Citi Community Capital.
Brenda Champy, senior vice president and director of acquisitions at syndicator Boston Capital, also credits The Pacific Cos. for its early involvement and problem-solving on transactions.
“Caleb is a true partner at every level,” she says. “He’s very transparent.”
Hometown Impact
While The Pacific Cos. does the majority of its work in California, it also helped achieve a major milestone for its home state of Idaho in 2018.
It co-developed, with Boise-based Northwest Integrity Housing, the state’s first permanent supportive housing development for the chronically homeless. The 40-unit New Path Community Housing, just under 10 miles from The Pacific Cos.’ headquarters, opened its doors in Boise in November.
“What attracted me most to doing this project was the tremendous will across a broad spectrum of stakeholders to get something done for the local homeless population. We were fortunate enough to come into a process where the state housing agency, city, county, housing authority, service providers, homeless advocates, nonprofit organizations, and local hospitals had already demonstrated a commitment to facilitate and fund a project,” Roope says. “I think the biggest lesson that I learned from this endeavor is that almost anything is possible when a diverse group of parties are able to unite around a common cause.”
Just months after opening, the Housing First development is having a positive impact on residents.
“The last time I had a home was 11 years ago,” says a resident named Troy.
After receiving the keys to his apartment on Dec. 14, he says he stood there for at least 45 minutes. “It was a lot to take in. I’m dumbfounded that I’m not homeless anymore,” he adds. “I’m moving up.”
It’s also been beneficial for resident Dalan, who moved in on Nov. 30 after living in his truck with his dog, Dusty, for many years in several states. “It’s helping to get my life back in order,” he says, adding that it’s provided stability and allowed him to see doctors to focus on his health.
The Pacific Cos. and Northwest Integrity Housing also are partnering with Thomas Development Co. on the 134-unit Adare Manor across the street from New Path Community Housing. The 100% affordable development is under construction on a city-owned parcel and will be available to families this fall.
Forward Focus
While Roope doesn’t expect to repeat last year’s production numbers, he anticipates moving forward on approximately 15 new construction projects in Alaska, California, and Idaho this year.
The firm, which also develops market-rate apartments, charter schools, and commercial projects primarily on the West Coast, will prioritize advocacy for federal legislation, including a provision establishing a 4% floor for tax-exempt bond projects, and on the state level in California, which is facing a housing crisis.
“It’s really tough to watch lower-income families suffer with skyrocketing housing costs, overcrowding, massively long commutes, and the cascade of consequences that come with these problems,” says Roope.
In another move to deal with the rising construction costs and lengthy building processes, The Pacific Cos. is building a modular factory that will be fully operational in April 2020 in nearby Nampa, Idaho. He anticipates modular building will help reduce construction costs by 10% to 30% and shave 25% off of schedules.
“Roope is definitely one step ahead, thinking about how things are evolving,” adds Citi’s Hemmens. “He’s not afraid to make changes and plan for the future.”
Dating back to 2005, The Pacific Cos. has used modular construction techniques on over a dozen developments, learning from its successes and failures along the way.
“I never wanted to be in the modular manufacturing business. It has truly been born out of a tremendous frustration with the seemingly never-ending and rapid cost escalations coupled with construction schedules that continue to grow longer with each year,” he says. “I decided to build a modular factory because I realized that if I was going to make a major commitment to this, I needed to have a supplier that I could rely on.”
He adds that there aren’t enough factories in the western United States with enough capacity to serve the needs of the market, especially with the hospitality sector turning to modular.
To diversify the factory away from sole dependence on The Pacific Cos., it plans to build for other affordable housing developers throughout the West, including those who have co-invested in the plant.
As the company has evolved and grown over the past two decades, so, too, has Roope’s view of his work. In the early years of his career, he says he was mainly focused on earning a living to care for his family and enjoying the work.
“While the first two reasons still motivate me, I see our work as more of an opportunity to help people—help low-income families and seniors live a better life, help lenders and investors deploy capital and fulfill their missions, help local governments build better communities, and the list goes on,” he says. “This is the real privilege of the work we do, and it’s hard to imagine wanting to do something different.”
