Six years after an old public housing project was demolished, Park Terrace has opened its doors to residents in High Point, N.C.
The new 172-unit development is built on the site that was long occupied by the old Clara Cox Homes.
The High Point Housing Authority (HPHA) began its efforts to reposition the distressed project nearly 30 years ago, demolishing 110 units in 1984, believing that reducing the density would improve the living environment. However, that wasn't the case, and housing officials decided a larger redevelopment effort was needed.
HPHA then received a federal HOPE VI demolition grant in 2004 and soon removed the remaining 140 units, but finding the money to rebuild proved to be an enormous challenge. The housing authority pursued HOPE VI implementation grants with several different developers for several years but could not secure one of the highly competitive awards.
As a result, the 20-acre site in the middle of a neighborhood sat vacant for five years awaiting a viable redevelopment plan and the needed financing. Many in the community lost hope that a new project would ever be built.
“In many respects, the site was like the hole in the middle of a doughnut,” says Dionne Nelson, principal and CEO at Laurel Street Residential in Charlotte, N.C., the developer behind Park Terrace.
A new effort
In 2007, HPHA issued a request for a new developer partner that would try to build a project using low-income housing tax credits (LIHTCs) without the substantial financing that comes with a HOPE VI grant.
That's when Laurel Street Residential, which worked under Crosland at the time, entered the picture. The team secured a tax credit award for the project in its first try in 2008, receiving a forward commitment of 2009 credits for the project's first phase from the North Carolina Housing Finance Agency (NCHFA).
However, just when the situation was starting to look up, things went south. The downturn in the economy hit the LIHTC market, and the project lost its initial investor and prices plummeted. “We had priced conservatively in the $0.70s, but then pricing fell into the $0.60s,” Nelson says. That left a gap of nearly a million dollars in Park Terrace's phase one budget.
The development then received a second tax credit allocation for the second phase of the project in 2009, giving the developer two phases to try to finance.
Fortunately, Congress passed the American Recovery and Reinvestment Act that year, creating the Tax Credit Assistance Program (TCAP) to aid LIHTC deals that had been derailed by the recession.
The shovel-ready Park Terrace project received about $8.5 million in TCAP funds for the second phase from NCHFA.
The project's new syndicator, Red Stone Equity Partners, repriced both phases on a blended basis, working to get the LIHTC price back up to the mid-$0.70 range.
TCAP was critical. It was used to bridge a portion of the equity, allowing an equity contribution to be pushed to a later time. The delayed equity provided for higher pricing and supported the closing of both phases. The TCAP funds will be repaid to the state, so it has the option to recycle the funds to another project, according to Nelson.
The other move that Laurel Street made was to partner with Norsouth Construction, a multifamily builder out of Atlanta with extensive affordable housing experience. Norsouth, the general contractor, provided a co-guarantee alongside the developer, creating a strong team and helping secure the financing needed for the development.
The $20.2 million Park Terrace targets working families earning a range of incomes, with 50 units affordable to residents earning no more than 30 percent of the area median income (AMI); 36 units for households earning no more than 50 percent of the AMI; and 86 units for residents earning no more than 60 percent of the AMI.
The development cost per unit was about $117,415.
Thirty-two units are reserved as public housing units. In addition, 10 percent of the homes are designated for persons with disabilities or formerly homeless, an NCHFA requirement.
The development has a good mix of one-, two-, and three-bedroom apartments and offers both townhomes and flats.
“It was a dream delayed but not deferred,” says Angela McGill, CEO of the housing authority. McGill grew up on the site of the old Clara Cox Homes.
That barracks-style public housing project where she lived has been replaced by a community that is indistinguishable from a market-rate development, she says.
“Park Terrace will be the flagship for the housing authority,” says McGill. “The bar has been set.”
More than a pretty picture, the property is livable, adds Nelson.
The many design features and amenities, including a swimming pool, add up to create a quality community for residents and the neighborhood, she says.
Park Terrace's reach is also felt in the larger neighborhood. A community center asked if it could operate its children's summer program out of the property's clubhouse, so neighborhood children along with residents are enjoying the new development.
The development has teamed with several area service agencies to provide residents with educational programs and support.
The property is the first by Laurel Street Residential, which was founded in 2011 by Nelson, John Crosland Jr., and others who used to work at Crosland.
The new firm purchased the multifamily affordable housing development division from Crosland when the company was divesting several of its divisions last year.
Although Park Terrace did not win a LIHTC reservation this year, the developer still hopes to leverage a future tax credit award for a 78-unit third phase.
Laurel Street Residential has several other projects in the pipeline, including two major redevelopments— The Renaissance in Charlotte and Dove Street in Richmond, Va.