Niche Development Creating Unique Flavors of Affordable Rental Housing

9 min read

Across much of the country, apartment communities developed with federal tax credits are frequently plain vanilla – simple, high-quality affordable garden-style complexes or mid-rises for families and seniors.

And then there are the niche developments – projects that stand out because of special types of structures or narrower resident populations.

A few interesting and creative examples are redeveloped historic buildings such as former mills, housing for persons with physical disabilities, and multi-generational apartments.

A Record of Mill Redevelopment

While it undertakes more traditional types of rental housing projects, Boston-based WinnDevelopment has established a lengthy track record in the successful rehabilitation and adaptive re-use of historic buildings into attractive, unique apartment communities. These renovations have included numerous former mills (e.g., textile, cotton), as well as factories, schools, and other types of unusual or significant properties.

“We’ve done 18 of these in recent years,” says Larry Curtis, President and Managing Partner of WinnDevelopment.

The mill conversion properties are in New York State and New England, with the bulk in Massachusetts, including the communities of Fall River, Lawrence, Lowell, Ludlow, New Bedford, Springfield, and Worcester. WinnDevelopment has redeveloped mills into 100% affordable apartments, a mix of affordable and market-rate apartments, and mixed uses that include apartments and commercial space.

According to Curtis, former mill buildings, frequently located along rivers, “are often pretty nice pieces of real estate” and can be redeveloped into “great places to live.” Post-rehabilitation, the renovated buildings and apartments are unique, feature varied floor plans, and often boast large and numerous windows, high ceilings, and exposed brick walls.

Federal tax credits (historic, low-income housing), often supplemented with state historic tax credits, generate much of the funding for these projects. Rooftop solar panels, qualifying for federal energy tax credits and generating additional equity, have also been installed at some properties.

Curtis indicated that local officials and residents in many communities are receptive to projects that will renovate a vacant, weed-strewn, large old mill or factory building into a vibrant and attractive new apartment complex that generates real estate taxes and contributes to revitalization of the area. “What these communities find is that development begets other development,” he comments. In addition, a successful project can build a reputation for the developer that leads to similar deals, in the same community or elsewhere. “Successful redevelopment begets new opportunities.”

However, Curtis pointed out that not every old mill is a good candidate for successful conversion into apartments. “It’s important to pick those mills that are truly historic, iconic. Not just brick buildings from a hundred years ago that exist everywhere and may be historic.”

In addition, some properties may have serious environmental issues that rule them out, while other buildings may have physical characteristics that make them unsuitable for conversion to housing. “We try to find the buildings that are sensibly convertible to housing,” says Curtis, while also noting, “We like to see proximity to jobs.”

Some mill buildings may simply be too large for the local market (i.e., the project would produce more apartments than can be absorbed during a reasonable period). And finally, the total development costs for a project must be commensurate with viable rents in the particular market.

A Sampling of Projects

Curtis’s favorite mill redevelopment is Boott Mills in Lowell. This iconic former cotton mill, which operated for more than 120 years before closing in 1955, has been renovated by Winn Development in four phases into affordable and market-rate loft-style apartments and commercial space. The National Park Service owns and occupies one of the buildings at the complex as its headquarters for the Lowell National Park. Winn has also relocated some of its Boston staff to the complex.

Curtis said the city of Lowell has made investments that have enhanced the Boott Mills complex, including the construction of a public parking garage across the street, as well as a nearby park.

Some of WinnDevelopment’s other completed historic rehab projects include:

  • Loft 27, in Lowell, a 173-unit mixed-income apartment building created from the rehabilitation and adaptive re-use of a four-story brick mill building originally constructed in the 1920s. Several years after the conversion, Winn added a solar energy system.
  • Canal Lofts, in Worcester, which involved the rehabilitation and repurposing of an historic mill building into 64 affordable apartments. The development achieved LEED Gold certification.
  • Curtain Lofts, in Fall River, which contains 97 affordable and market-rate apartments for seniors aged 55 or older, created from the renovation of a former textile mill.
  • Voke Lofts, in Worcester, 84 mixed-income apartments fashioned from the rehabilitation and adaptive re-use of the former Worcester Vocational Technical School.

Current projects include Counting House Lofts in Lowell, a 52-unit mixed-income apartment community being created from the renovation of a brick mill building originally used to manufacture cotton and woolen goods; a mill redevelopment in Lawrence called Stone Mill; the renovation of the Sibley’s building in Rochester, N.Y. into apartments and offices; and the second-phase redevelopment of the Ludlow Mill in Ludlow to create independent senior apartments.

Multi-Generational Apartments

Indianapolis-based Herman & Kittle Properties, Inc. is incorporating a unique dwelling type – multi-generational rental units – into a new low-income housing tax credit (LIHTC) development in Freemont, Ohio, between Cleveland and Toledo.

Commons at Little Bark Creek will include two components: a three-story apartment building with 60 units targeted to seniors 55 or older, and three duplexes, each with two multi-generational units that can accommodate a family and the elderly parent(s) of the family.

According to Kyle Peterson, Vice President of Development at Herman & Kittle Properties, each duplex unit will be two stories with about 1,700 square feet. The first story will contain a living room, dining room, kitchen, bathroom, and separate wing with a bedroom, bathroom, and sitting area with kitchenette. Upstairs will be another three bedrooms and a bathroom. The design provides for shared common spaces and gathering but also for privacy for the two households.

“The concept is derived from my personal situation and the design of our house,” Peterson explains. The design allows for sharing of the house by his family and his mother-in-law, who has a separate wing on the first floor. Following a stroke that left his mother-in-law unable to live on her own, Peterson and his wife set out in search of a home that would meet their needs. After viewing many houses, they were discouraged to find that there was only one option that could accommodate their family. “There’s a lack of housing stock out there that contemplates and is designed for this multi-generational concept,” he says.

Peterson adds, “Some of my colleagues have faced a similar tough decision about whether or not to put their parents into assisted living or a nursing home. I’ve found that more folks are deciding to move their parents in with them or look for housing options where they can live within the same residence and take care of their mother or father.”

Herman & Kittle is partnering on development of the LIHTC project with WSOS, a community action agency. Construction should begin next spring or early summer and be completed in the spring or summer of 2016.

Funding sources include equity generated by federal housing tax credits, state trust fund dollars, a deferred developer fee, and a USDA Rural Development Section 538 permanent mortgage. Peterson said the company is looking for a tax credit equity investor for the project.

The Ohio Housing Finance Agency (OHFA) awarded 9% housing credits for the project under a set-aside, Peterson explained, for “a campus-style concept for senior housing, where there are uses surrounding the site that create synergies, such as services and other housing types.”

Commons at Little Bark Creek will rise on the last available piece of land within an existing subdivision that already contains single-family houses, conventional and Section 8 apartments, an assisted living facility, and an early childhood education center operated by WSOS.

Peterson praised OHFA officials for encouraging developers to be more innovative and creative in their designs for new LIHTC projects.

He believes that the multi-generational rental unit that Herman & Kittle has planned will be a model that other developers can replicate, and a housing option that strikes a chord with consumers. “I see an opportunity for more of this type of housing and the demand for it continuing to grow.”

Supportive Housing Development

In Toms River, N.J., a nonprofit called Project Freedom, Inc. is developing its eighth “barrier-free” LIHTC development. When completed, the townhome-style complex, called Freedom Village at Toms River, will contain 72 one-, two-, and three-bedroom apartments with accessible bathrooms and kitchens, lowered light switches, and other non-traditional touches.

According to Tim Doherty, Executive Director of Project Freedom, and Tracee Battis, Director of Housing Development, the nonprofit specializes in building affordable rental housing designed for low-income persons with physical disabilities to enable them to continue living independently. As such, apartments are designed to make life easier for a resident in a wheelchair, though Doherty notes, “We accept people with all types of disabilities.”

Once the new Toms River project is finished, Lawrence, N.J.-based Project Freedom will have completed more than 400 units of barrier-free rental housing – all in New Jersey, and all LIHTC units restricted to individuals or households making no more than 50% or 60% of the area median income. Each property has an on-site social worker – an employee of Project Freedom –who doubles as the property manager. They help residents with problems with Social Security, Medicare, Medicaid, or the like, as well as coordinate services.

“For us, the mission of the organization is to help people and not put up further barriers to their success,” says Doherty, adding, “There’s a big need for accessible housing in the state of New Jersey.”

Project Freedom has received 9% housing credits for some projects under a separate application round held by the New Jersey Housing and Mortgage Finance Agency for supportive housing projects. The round requires at least 25% of the units in each proposed project to be designated for persons with special needs. Project Freedom typically receives help in making new projects pencil out from the state Division of Develop-mental Disabilities, which commits to take a certain number of units in each project. The state agency funds a 30-year rent subsidy for these units as well as supportive services for the residents.

In addition to equity generated by federal housing tax credits, the funding sources for the Toms River project, expected to be completed next fall, include federal Hurricane Sandy CDBG dollars, a soft loan funded by a Federal Home Loan Bank Affordable Housing Program grant, a soft loan from the Township of Toms River, and a deferred developer fee. The township donated the land. National Equity Fund syndicated the housing tax credits for the project.