CASE STUDY: All the Folks & All the Credits
By Mark Olshaker
9 min read
Widespread collaboration preserves Phoenix barracks
When the Coffelt-Lamoreaux public housing project was built in 1953 for veterans returning from the Korean War and migrant seasonal agricultural workers, its 38-acre site on the southwest corner of Buckeye Road and 19th Avenue was considered country by locals and wasn’t even within the Phoenix, AZ city limits. Now, the south Phoenix location is part of Central City South. But this first example of Maricopa County’s concern for sheltering the indigent local population had become so rundown and unsafe by 2012 that the county’s housing authority was ready to shut it down and relocate its 800-plus residents. There simply wasn’t the money to redevelop. The saga of how Coffelt-Lamoreaux was transformed into a modern, vibrant community on the National Register of Historic Places is a model of vision, commitment and the complex interworking of public and private sectors, local, state and federal actors, and the residents who lived there.
Coffelt-Lamoreaux doesn’t look like most of the public housing projects put up in the 1950s. Those 38 acres comprise 151 individual duplex buildings: military-style barracks designs of 296 one- to four-bedroom units. “It’s a unique, open-space post-World War II pattern: a lot of green but not the most efficient use of space by modern standards,” says Brian Swanton, who was Arizona market president for Gorman & Company, the development partner. Gorman sees its mission as specializing in downtown revitalization, the preservation of affordable and workforce housing, and the adaptive reuse of historic buildings. Swanton has since become Gorman’s president and CEO.
The potential closing of Coffelt-Lamoreaux and a sell-off of the land to private developers represented multiple problems for the city. It was the oldest and largest holding in the Housing Authority of Maricopa County’s (HAMC) portfolio. Phoenix, the county’s seat and the fifth largest city in the U.S., listed ninth on a national list of municipalities where the average wage made it most difficult to afford the average rent. Maricopa County is the fastest-growing county in the country. This huge population growth has resulted in older buildings being torn down regularly to make way for newer, more expensive ones, so affordable housing was already in short supply. Just as important to residents of the fully-occupied Coffelt apartments, tearing down the development would have also meant the closing of Arthur M. Hamilton Elementary, a kindergarten through eighth grade school about 75 percent populated by Coffelt residents.
“They didn’t want the school to close, and there was a lot of pressure on the housing authority,” Swanton says. The Maricopa County Board of Supervisors deemed saving the homes a top priority, and HAMC asked Gorman to help find a way to make it work. Swanton, who graduated from Arizona State with a bachelor’s degree in urban planning and a master’s in public administration, had served in the government sector as housing development manager of Scottsdale, and wanted to pursue the project. His response was, “’Let’s leave it up to the residents.’ The residents didn’t like the conditions but didn’t want to move. The resident engagement became massively important.”
Public partners
Completing the development partnership were the Arizona Department of Housing, the city of Phoenix and HUD’s RAD program. Together, they began to put together the close to $50 million needed to transform Coffelt into a modern development.
Coffelt was the first affordable housing project in Arizona to use RAD, HUD’s Rental Assistance Demonstration program, which allows public housing agencies to leverage public and private debt and equity in order to reinvest in the public housing stock. “We secured an early RAD commitment with the second round of applicants, in 2013,” Swanton recalls. Still, the funding package that had to be put together was almost mind-bogglingly intricate.
According to a statement released by lender Paragon Mortgage Corporation of Phoenix, “The mixed-financing structure included a HUD Section 221(d)(4) [HUD-insured loan to facilitate new construction or substantial rehabilitation for affordable, senior or handicapped housing] construction and permanent loan, CDBG [Community Development Block Grant] Funds from the City of Phoenix, State Housing Trust Funds from the Arizona Department of Housing, Federal Home Loan Bank AHP [Affordable Housing Program] Funds, two seller carryback notes and Historic Tax Credits. The developer is utilizing four percent [Low Income Housing] tax credits and cash-collateralized tax-exempt bonds. This structure combines tax-exempt, short-term bonds with a taxable permanent loan which are both credit-enhanced with FHA mortgage insurance and a GNMA mortgage-backed security, all under a master lease arrangement.” (See Sources and Uses Sidebar below.)
Tom Capp, Gorman’s vice president and chief strategy officer, suggested going for historic designation so they could apply for Historic Tax Credits, which initially met with Swanton’s skepticism. “But we got in touch with SHPO – the Arizona State Historic Preservation Office and brought them out to the site. SHPO was impressed with the open green space; the fact that it was so representative of an innovative post-war building style; that it was the county’s first commitment to subsidized and affordable housing; and that the project was designed by the Phoenix architectural firm Lescher and Mahoney, a historically significant partnership responsible for such local buildings as the Orpheum Theatre, the Brophy College Chapel and the majestic Spanish art deco Maricopa County-City Administrative Building, all of which are on the National Register of Historic Places, along with other Lescher-
Mahoney designs. SHPO worked closely with us to get this property listed.”
SHPO secured Historic Register designation for Coffelt in 2014, leading to securing Historic Tax Credit authorization.
The tax credits were sold to Stearns Bank, which has branches in Minnesota, Florida and Arizona, raising more than $5 million in private equity. It was the first historic credits in the bank’s portfolio.
Kimberly Taynton, a Paragon MAP (HUD Multifamily Accelerated Processing Approved Lender) underwriter, called the deal “one of the most complex rehabilitation projects in the history of Arizona.”
The complexity went far beyond the financing stack. There were numerous cracks in the non-insulated walls, so wood-frame walls were constructed inside the block walls and the space between filled with insulation. All of the cracks were tucked and pointed. Because of the historic designation, the exteriors of the buildings were kept as close to the original design as possible. The numerous potholes were patched, and new sidewalks installed.
Inside, says Swanton, a “gut rehab” was undertaken. This included new flooring, plumbing, electrical systems, kitchen cabinets and appliances, washers and dryers, doors and double-glazed windows. The community center was completely overhauled. But the most formidable challenges were heating, air conditioning, and water.
Creating water savings
Throughout the Southwest, water is always a major topic of concern. When it was built, the land around Coffelt-Lamoreaux was largely agricultural, and the site was designed to take advantage of a flood irrigation system that literally inundated arable land periodically, but by the 1980s, it had so deteriorated that it had to be abandoned.
The original air conditioning alternative was by roof-mounted swamp coolers, also known as the evaporative cooling method, and works on a similar principle to perspiration. Water is forced through the filtration system and evaporates as soon as it hits the dry desert air. But as the area population burgeoned, and as grass and more trappings of civilization took hold, humidity levels steadily rose, and the swamp cooling functionality decreased. With no usable flood irrigation, Swanton reports, “They were using massive amounts of water. The project’s bill for municipal water soared to $400,000 per year.”
Gorman’s gut rehab included new piping and a comprehensive new flood irrigation system. Yards were bermed and regraded to establish water retention basins and a 1.4-acre park was revitalized in the middle of the property, as well as a community garden. An extensive planting of trees created a canopy against the harsh desert sun and helped protect the air from emissions from the surrounding industry, street traffic and freeways. The project is no longer as dependent on city water. The yearly bill is now downto $120,000. Modern, ground-mounted HVAC units replaced the old system and are far more energy efficient.
Working with LISC Phoenix – the Local Initiative Support Corporation, HAMC also commissioned a health impact assessment, “looking through the healthy community lens for considerations in the rehabilitation effort, to make this the healthiest community we can possibly make it,” says Swanton.
The complicated fundraising and planning process extended over several years. During that time, new leasing was suspended, and attrition led to a 50 percent vacancy rate. That and the phased construction plan allowed for on-site temporary relocation of remaining residents.
You don’t have to move…
The new Coffelt-Lamoreaux Apartment Homes was dedicated on April 20, 2018. Board of Supervisors member Steve Gallardo, an avid affordable housing supporter declared, “This is a perfect example of what a public-private partnership is all about.”
The new development has 301 units, the original number. Decades ago, five were taken over for nonresidential use but are now back as apartments. The tenant population is approximately 1,050 and about 680 of them are children. All of the residences are LIHTC income-restricted, with 28 set aside for adults with developmental disabilities, through a partnership with the Arizona Department of Economic Security’s Division of Developmental Disabilities.
“The beauty of this project is that it maintains the feeling of community that’s always been there at Coffelt, while also making significant improvements to residents’ daily quality of life,” Gloria Munoz, executive director of HAMC, told The Arizona Republic.
Swanton sums up the entire effort succinctly, with an observation that can serve as a national guideline: “Why did we save Coffelt? Our mantra is, You don’t have to move to live in a better neighborhood.”
Story Contacts:
Gloria Munoz
[email protected]
Brian Swanton
[email protected]
Coffelt-Lamoreaux Funding
Sources
Low Income Housing Tax Credit Equity……………….. $17,836,237
Historic Tax Credit Equity…………………………………….. $5,228,608
First Mortgage………………………………………………….. $14,150,000
City of Phoenix CDBG………………………………………….. $1,000,000
Arizona Department of Housing State
Housing Funds……………………………………………………. $1,000,000
Federal Home Loan Bank of San Francisco AHP……….. $1,500,000
Housing Authority of Maricopa County Loan…………. $2,102,000
Seller Carryback Note………………………………………….. $4,900,000
Deferred Developer Fee…………………………………………. $833,586
Total Sources……………………………………………………. $48,550,431
Uses
Acquisition…………………………………………………………. $4,900,000
Hard Costs……………………………………………………….. $31,102,604
Soft Costs…………………………………………………………. $11,330,527
Reserves……………………………………………………………. $1,217,300
Total Uses………………………………………………………… $48,550,431
