Historic Buildings Combined, Renovated to Provide Quality Apartments, Space for Artists
By Caitlin Jones
4 min read
Tax Credit Advisor, October 2009: Providing housing for the homeless while simultaneously igniting an artists’ renaissance in a downtown Grand Rapids, Mich. neighborhood seemed like the perfect use for the low-income housing tax credit (LIHTC).
Jarrett DeWyse, director of housing development for Dwelling Place Inc. (DPI), said her organization saw a growing need to combat homelessness in an area of the city that was undergoing a rise in the number of creative artists who wanted studio space.
The result was a newly rehabilitated 116-unit development, Verne Barry Place, which provides supportive housing for homeless single adults and veterans. The $19.2 million award-winning project, financed with a mix of tax credit equity, grants, and low-interest loans, also includes seven commercial spaces and two artist live/work units. The project made use of both federal housing and historic rehabilitation tax credits.
“We saw this as not only housing, but as a part of the whole economic development and neighborhood revitalization that we were involved in,” said DeWyse.
The project was developed by Heartside Nonprofit Housing Corp., a subsidiary of DPI. It received the 2009 Charles L. Edson Tax Credit Excellence Award as the top LIHTC project in the Metropolitan/Urban Housing Category.
Coveted Neighborhood Today
Completed in June 2008, Verne Barry Place is located in the Avenue of the Arts, an area coveted by artists and young professionals looking to live in large downtown lofts. But when the building was originally constructed in the early 1980s, the neighborhood might have been considered part of skid row. Serving the homeless then simply meant putting a roof over their head, DeWyse said.
The original development, the Dwelling Place Inn, consisted of three historic building (Brunswick, Carlton, and Kenwood Hotels) containing 88 total units. DeWyse said the units lacked individual kitchens and had 10 residents sharing each bathroom.
Verne Barry Place was created by combining the three buildings and an adjacent parking lot, reconfiguring 88 existing units into 44 new studio apartments. The renovations included installing new roofs, plumbing, electrical systems, kitchens, and bathrooms. A new five-story brick mid-rise building was constructed as an addition, which includes another 72 studio units, the two artists spaces, five commercial spaces, and a two-story, 44-space parking deck. Units generally range from 240 to 450 square feet.
The development is the first LEED Gold certified supportive housing project in the state.
The new building features two elevators in a five-story glass elevator shaft serving both the new and historic buildings, a rooftop atrium, and an open courtyard.
“People have asked, why are you making all this for the homeless,” says DeWyse. “Well, everyone needs a place where they can feel comfortable and safe, and it’s affordable.”
Income Targeting, Services
All apartments are LIHTC units with project-based Section 8 rental assistance. Fifty-nine units are affordable to tenants earning 30% of less of the area median income (AMI); 42 units, 45% of AMI; and 15 units, 60% of AMI. Residents must be homeless and have a disability. Some residents receive federal SSI payments or state disability benefits that help pay for part of their rent.
Two full-time staff members coordinate services for residents, such as rehabilitation, computer classes, nearby health care, transportation, and mental health counseling.
The commercial spaces are now occupied by a photographer, video company, clothing store, and local street ministry.
Mike Jacobs, midwest regional vice president for the National Equity Fund, Inc. (NEF), which syndicated the tax credits for Verne Barry Place, said the financing for the development was completed before the current downturn in the equity markets.
NEF was also the syndicator for the original development as well. When the original 15-year tax credit compliance period ended, NEF was willing to re-syndicate
to help fund an update of the development.
NEF didn’t view the project-based Section 8 contracts as a financial liability for the new transaction, Jacobs explained. The underwriting considered the possibility of the Section 8 going away after three years. Consequently, DPI was required to maintain 12 years of operating reserves, with part to be released to cash flow each year if the project maintains break-even status.
Funding Sources
The project had hard construction costs of $12.5 million for the affordable housing units and $1.1 million for the commercial spaces.
The multiple funding sources included $12.9 million in equity generated by the LIHTC and $1.5 million in equity generated by the historic tax credits. The state of Michigan provided $3 million, including state brownfield tax credits, state historic tax credits, federal HOME funds, and a grant. The city of Grand Rapids provided $2.4 million from federal HOME funds, brownfields tax increment financing, tax abatements, and a facade grant.
Other sources included $368,458 from local philanthropic sources, a $500,000 Federal Home Loan Bank Affordable Housing Program grant, and $400,000 from HUD’s Supportive Housing Program.
-Stephen K. Cooper
