1,000 RAD Rehabs

7 min read

Public-private partnerships to preserve Baltimore  

A hugely ambitious public-private partnership is starting to see some big preservation projects getting finished in Baltimore.

The Housing Authority of Baltimore City (HABC) has sold off minority ownership interests in 17 of its public housing projects, to 11 developers, to raise the money for badly needed and court-ordered repairs.

The financings have used the four percent Low Income Housing Tax Credit, and Federal Housing Administration mortgages in a Department of Housing and Urban Development demonstration program.

All told HABC envisions Baltimore’s participation in the HUD Rental Assistance Demonstration program (RAD) will result in the rehabilitation of more than 4,000 units at a hard cost of more than $330 million. More than 950 have been completed to date at a total cost of more than $100 million. It is envisioned that as many as 24 projects will be rehabbed in two phases through these RAD deals.

Rededications have been held within the last year at such projects as:

  • Allendale Apartments, a 164-unit development at 3600 West Franklin St. Enterprise Homes did the rehab at a cost of $27 million. The project reopened May 9, 2017.
  • Hollins House, a 130-unit development at 1010 West Baltimore St. CPDC (Community Preservation Development Corp.) handled the rehab at a cost of more than $10 million. The project reopened May 17, 2017.
  • Primrose Place, 125 units at 820 South Caton Ave. Community Housing Partners/The French Companies did the $7.4 million rehab, which reopened June 6, 2017.
  • Bernard E. Mason, 225 units at 2121 Windsor Lane #1, Gwynn Oak. PIRHL did the $31 million rehab, which was completed at the end of 2017.
  • Pleasant View Gardens, a 311-unit development at 201 North Aisquith St. done by Michaels Development Co. for $48 million. Reopened Dec. 20, 2017.

There’s a long backstory to the RAD projects, going back at least to 2004. That’s when the Bailey Consent Decree was signed, giving the housing authority ten years to make up for HABC’s “failure to provide accessible housing to persons with disabilities.” In 2014, when the ten-year period was up, HABC was found to be in noncompliance with the decree, although a substantial amount of progress had been made. A supplemental decree was signed emphasizing housing for non-elderly disabled (NEDs) and seniors and having long-term affordability (LTA) of 40 years. To get the work done, though it has been chronically underfunded for maintenance and repairs, HABC decided to raise money through private developers.

The idea was to turn public housing into project-based rental assistance developments, keeping them affordable for current tenants who would not be subject to being displaced.

David Uram, principal and co-founder of developer PIRHL, Cleveland, has worked on two of the properties and calls RAD “a wonderful process but a long process.”

Bernard E. Mason, a 225-unit property, was finished last year, and the second, Govans Manor, with 191 units, is set for completion by the end of this year.

PIRHL put in a request for proposal (RFP) on Bernard E. Mason in 2012. The work started in 2015 and involved gutting all units, replacing the core and making a new community space. Costs averaged $65,000 per unit and the building was reopened in 2017, after a five-year timeline. (Technically, none of these projects really closed. Residents were moved from their units to other units in the project freed up by attrition, or to places nearby, and moved back when their units were completed.)

“The tenants were in place while the work was going on,” Uram says. “People lived in the middle of chaos. It’s tough to have construction in your house for 24 months. But by and large it went really well.”

Uram says HABC has been one of the leading housing authorities in the RAD program. “Developers were all working together, unified,” he says. “I’ve never seen anything like it.”

He notes that Bernard E. Mason “had no soft money from the state. You don’t do this kind of thing unless you believe in it. NEDs (non-elderly disabled) mixed in with seniors can be problematic.”

The NED/senior mix at Bernard E. Mason is 80/20, while at Govans Manor it is 60/40.

According to a presentation Uram made at the National Housing & Rehabilitation Association’s annual meeting in Palm Beach, FL, the 11-story Govans Manor will have hard costs of $90,000 per unit and an 18-month construction schedule.

Of a total cost of $40.5 million, the HUD (FHA) 221(d)(4) financing is $16 million, $11.1 million is coming from tax credit equity, $12 million is from a seller’s note, and $1.2 million is from interim income. The 221(d)(4) is a multifamily construction loan.

The work at Govans Manor is set to be done in four sequenced stacks of about 50 units apiece. This includes roof, exterior, plumbing, HVAC, interior, elevators and exhaust.

Explaining the structure of the deals, Uram says, “HABC has 51 percent ownership of the general partnership, the developer 49 percent. We operate the property and share the developer’s fee. We brought in a third-party property manager. We are a general contractor.”

Uram calls the RAD projects “satisfying but difficult. PIRHL is very passionate about affordable and workforce housing. We’re also focused on the supportive services element of the project. It’s the right thing to do.”

Milton Pratt Jr., senior vice president at Michaels Development Co., echoed many of Uram’s sentiments. “They were challenging but good quality programs,” he said of Pleasant View Gardens, which was actually two developments of the same name, 110 units for seniors and 201 family townhouses. “We have a very pleasant outcome for all parties.”

In-place rehabs “always make me feel great,” says Pratt.

“That’s what the culture at our business is all about,” he says. “No involuntary relocations whatsoever. Vacate units through attrition and then move other tenants in and back again. I understand how difficult it is for these families. We’re going to do this with compassion.”

Michaels, based in Marlton, NJ, is also the developer on a second RAD property, Rosemont Tower, a 203-unit project.

The RAD project has not been without controversy, however. David Prater, an attorney for Disability Rights Maryland, wrote an op-ed for the Baltimore Sun asking for more transparency and accountability from the project.

“While significant rights were guaranteed to residents and applicants on paper, much work still needs to be done to ensure that RAD-converted properties operate in the public interest, maintaining safe, decent, affordable and accessible housing for Baltimore residents,” wrote Prater.

Disability Rights Maryland recently filed a HUD complaint on behalf of seven residents it says were unfairly evicted from their units, according to an article in the Sun. The group, under its former name, the Maryland Disability Law Center, is one of the parties to the Bailey Consent Decree.

At the Hollins House project, CPDC said “all apartments received new windows, upgraded floors, kitchens, bathrooms and HVAC. The enclosure of the balconies solved existing water infiltration problems and expanded the indoor living space in each apartment, enhanced the building’s energy efficiency, and significantly improved the building’s exterior appearance.

“Additionally, first floor common areas were substantially upgraded to include an expanded vestibule, a new game room, a library with computer stations, new and expanded community program space, resident services office and seating areas. The leasing and management office mailroom and laundry room were also updated, along with a new door entry and security system.“

Story Contacts:
David Uram
Principal and Co-founder, PIRHL, Cleveland, OH
[email protected]

Milton Pratt Jr.
Senior Vice President, The Michaels Co., Marlton, NJ
[email protected]

Sources of funding
HUD (FHA) 221(d)(4): …………………………………….. $16 million
Tax credit equity: ……………………………………….. $11.1 million
Seller’s note: …………………………………………………. $12 million
Interim income: ………………………………………….. $1.32 millio
Deferred fees: …………………………………………………. $430,000
Total: ………………………………………………………….. $40.5 million

Mark Fogarty has covered housing and mortgages for more than 30 years. A former editor at National Mortgage News, he has written extensively about tax credits.