Washington, DC Developer Working on Preservation Projects While Managing Challenges
By A. J. Johnson & Caitlin Jones
3 min read
Tax Credit Advisor, February 2009: Washington, DC developer Gerry Joseph is calling on his more than 30 years’ of experience in the affordable housing and community development industry as he navigates his way through today’s stormy financial and economic challenges.
Joseph, Vice President and Director of Real Estate Development of Community Preservation Development Corporation (CPDC), a Washington, DC-based nonprofit, oversees CPDC’s real estate development operations, which are concentrated in the Washington, DC metropolitan area.
Joseph has deep roots in the nonprofit world. He began in the late 1970s as a VISTA volunteer in Springfield, MA for Brightwood Development Corporation, a nonprofit, working on youth programs and community organizing in an Hispanic community. “After spending a couple of years on the service side,” Joseph explains, “they had a housing and economic development emphasis, and I kind of glommed onto that as something that fit my interest, in terms of bricks and sticks and having more tangible outcomes. I became the development project manager there working on housing.”
After a few more years Joseph then ran a small CDC in rural Massachusetts for about eight years. “We did some small-scale housing developments; some multifamily rehabs and single-family,” he says. After this, Joseph went to work for The Community Builders, the large nonprofit, in its Springfield office, working in a variety of capacities for 13 years before moving to CPDC in 2004.
Joseph is now overseeing three major multifamily preservation projects, all under construction in Washington, DC. They include:
- Mayfair Mansions, a two- phase rehabilitation of a distressed former HUD Section 236 project. CPDC, brought in as purchaser and developer by the tenants under the local right of first purchase law, is partnering with another local nonprofit, and is the lead in the renovation of 12 buildings with 410 units into long-term affordable apartments. The second phase, with another 160 units, was originally to be redeveloped as condos, including a portion affordable to tenants, but the sagging local homeownership market has prompted a change in plans and long-term rentals are more likely now.
- The renovation of the former Parkside Terrace, a failed former Section 8 property that was empty. CPDC acquired the property in 2006, closed the financing in 2007, and is nearing completion of a gut renovation that will produce 316 affordable apartments for seniors and families. The low-income housing tax credit is part of the funding mix.
- Wheeler Terrace, another renovation and preservation development that will provide 116 affordable apartments, again a situation where CPDC was brought in by the residents to be the developer. Once completed, the development will be the city’s first LEED-certified green affordable housing project.
Asked to identify his biggest challenges today as an affordable housing developer, Joseph replies simply: “Everything.” He explains, “There’s been a dramatic reversal in terms of the capital market.” Tax credit equity is harder to secure, tax credit prices are much lower, and fixed-rate tax-exempt bond financing (a popular funding source for CPDC) isn’t currently viable. Joseph says CPDC’s bond financing options now are “very limited.”
On the upside, the rougher economy is starting to reveal a silver lining. With the downturn of the once-hot local real estate market, Joseph said he’s beginning to see some opportunities to acquire existing properties for new deals at reasonable prices. At the same time, construction costs have retreated. So much so that Joseph says CPDC may keep upwards of 50% of the cost savings under some of the guaranteed maximum price construction contracts it negotiated.