Gardner, Mass. When WinnResidential took over management of Olde English Village here in 2004, the property had 30 vacant apartments, three unrentable units that had plumbing problems, a large and inefficient maintenance staff, unattractive grounds and a poor reputation.
Today, it’s a different story.
Within a month after WinnResidential stepped in, 10 families moved into the vacant apartments, the unusable apartments were repaired, and each of the 200 units was inspected to identify maintenance problems. The maintenance program was restructured and streamlined, with the staff reduced from seven to four.
The dramatic reversal at Olde English Village has been recognized by the National Affordable Housing Management Association (NAHMA). Each year, the organization dedicates one of its annual Communities of Quality (COQ) awards to the Outstanding Turnaround of a Troubled Property.
“Successfully turning around such properties is worthy of praise,” said Kris Cook, NAHMA executive director.
Olde English Village, which earned the award in 2005, stands as a good case study on how to transform a neighborhood eyesore and drain on a management company’s books into a high-functioning and profitable resource.
The 31-year-old, 200-unit garden-style apartment complex features 22 buildings. The development is 100% affordable housing, targeting renters earning no more than 60% of area median income. It was purchased as part of a larger portfolio by OEV Gardner Associates, L.P. Winn-Residential of Boston is an affiliate of OEV Gardner.
The site’s financing “was a bit of an odd duck,” said Jon Rudzinski, senior vice president for Winn-Development, the real estate development affiliate of the WinnResidential property management company. “It had been an old Department of Housing and Urban Development (HUD) Sec. 236 property. Then, after 15 or 20 years, it was sold, and the new owner did a tax-credit-funded rehab in the mid-1990s. When we showed up, most of the units were Sec. 8, but it was also going through HUD’s Mark-to-Market process as well as a Sec. 236 decoupling deal.”
“With so many financing pieces having to fit together intricately, the deal – and the turnaround of the Olde English Village – almost collapsed under the weight of the complexity of the financing,” Rudzinski said. “The closing was delayed for six months after it was determined at the last minute that elements of the Mark-to-Market financing would ‘taint’ the existing low-income housing tax credits.”
Working with HUD, the team managed to overcome that problem.
WinnDevelopment completed the Mark-to-Market process and then began spending nearly $3 million on the still problem-plagued property, according to Rudzinski.
“Our company has a long and successful history of buying and repositioning troubled properties,” said Mike Martin, senior vice president of Winn-Residential. “Typically, you have to make this kind of an investment up front. Returns, from the property management perspective, tend to come in years three to 20 and not in years one and two.”
From a rehab point of view, the biggest challenges were plumbing problems. The piping and risers within the walls had deteriorated to such an extent that leaks were beginning to plague the property. “We became aware of the extent of the problem soon after purchasing the property, as our rehab plan was being finalized,” Martin said.
“We adapted our rehab plan so that we would spend significantly more on fixing the plumbing problems while the kitchens were already being torn apart prior to being replaced.”
But the physical change was just the beginning.
The property underwent an occupied rehab beginning in March 2005. All apartments received new smoke detectors, upgrades to cable television and air conditioner sleeves (eliminating unsightly plywood, cardboard and plastic that had been securing air conditioning units).
Sixty-five apartments in seven buildings received new kitchens, baths and plumbing stacks, Martin said. Even in apartments that didn’t need an extensive overhaul, residents got at least new appliances. The interior hallways in all 22 buildings received a fresh coat of paint. New boilers improved safety and reduced heating costs.
Outside, drainage problems were corrected, dumpster enclosures were installed, and exterior screens and glass were replaced. The grounds were landscaped and a beautiful new playground was installed, giving the complex’s nearly 250 children an on-site place to play for the first time in many years.
In addition, a centrally located building was constructed that houses the management office, a community room and the office of the Greater Gardner Community Development Corp., which operates a neighborhood computer learning center in the complex.
While all of these physical changes contributed to a highly visible and tangible turnaround of the property, “It was the invisible aspect of the turnaround – the human-relations element – that mattered most,” said Patricia Hickey, senior property manager.
“The residents here had heard a lot of empty promises,” she said. “They felt disenfranchised. There were a lot of deep-seated issues.”
Hickey took the direct approach. “I’m a firm believer in getting to know the residents,” she said. “I told them, ‘We’re going to bring you a higher standard of living and better quality of life, but you have to do your part. We won’t tolerate bad behavior, drug dealing, etc.’
“My method is to be firm but fair,” she said. “I have high expectations for ourselves and for them.”
Safety was one of the first things Hickey tackled. “We went to the city and said, ‘We have this innovative program that works: We’ll pay the salary and overhead of a police officer for three years. You get to increase your police force and focus energies on one of the most troubled parts of the city.’ They went for it.”
For the first year, the services of a full-time security staff, supported by the police presence, resulted in some turnover and evictions, “but it proved to the residents that we meant what we were saying.”
Next, Hickey and her staff began teaching residents to take pride in their apartments. Staff maintains a very visible presence in the buildings and on the grounds. New residents are acclimated via a two-hour orientation prior to move-in that has them review the lease agreement, tour the property and watch a video that outlines proper procedures for maintaining appliances and apartments.
All residents benefit from a new focus on communications and community building. A full-time resident services coordinator issues a monthly newsletter that promotes meetings and workshops (always with refreshments), GED classes, conversational English classes, a homework center, babysitter training, computer training, youth programs and celebrations.
Olde English Village’s selection as NAHMA’s COQ winner for Outstand-ing Turnaround of a Troubled Pro-perty is one indication of this development’s success. More importantly, “Over the course of the last year, we’ve heard from numerous sources that the perception of Olde English Village in the community is changing for the better,” Martin said.
Catherine A. Smith is president of Community-Based Communications, LLC, of Cheverly, Md. Her e-mail is [email protected] She is editor of two National Affordable Housing Management Association newsletters.