Thursday, January 27, 2011

RENTAL DEVELOPENT: A rental revival

Years of dormancy in affordable housing construction may be ending as contractors complete new apartment projects in the region

In its better days, the Pickle Factory housed, by turns, a once illustrious brewery, a national sheet music publisher, and the R & S Pickle Works, its namesake. Now, after lying vacant for nearly three decades, the Pickle Factory is again humming with activity.

Affordable housing projects are underway again, thanks to an infusion of federal stimulus funds and the return of banks and other real estate investors that had been traditional financiers of such developments.

Mission Hill
62 mixed-income units, plus three artist living/work spaces

Jamaica Plain
30 affordable units

Jamaica Plain
36 low-income units

48 units

Fall River
97 mixed-income units for seniors

75 units

350 units, 25 percent affordable

220 units, 25 percent affordable

75 units for seniors

SOURCE: Development firms
Its brick facade is being cleansed of accumulated graffiti, while construction crews for the WinnCompanies are busily finishing 60 apartments and several artist studios, which will be dubbed the Oliver Lofts — a nod to the printing company, Oliver Ditson.

Across from a city housing project at the borders of Mission Hill, Jamaica Plain, and Roxbury, the area is hardly up and coming. Down Heath Street, for example, the American Brewery Lofts is still auctioning off unsold condos, four years after the building opened.

But the Oliver Lofts building is different in one fundamental way: All of the units are apartments, and most will be geared toward those with limited incomes. And in this way, the building represents a revival in residential construction in communities across the state.

Dead in their tracks just two years ago because of the financial crisis, affordable housing projects are underway again, thanks to an infusion of federal stimulus funds and the return of banks and other real estate investors that had been the traditional financiers of such developments.

While commercial builder EA Fish Development has a number of projects on the drawing board, managing director Matt Mittelstadt said, “The only ones that are really getting done are affordable housing.’’

The additional housing comes at a crucial time: “The demand has been staggering,’’ said Richard Thal, executive director of Jamaica Plain Neigh borhood Development Corporation, which is completing two low-income apartment buildings on Centre Street.

A lottery the organization held for 30 units yielded more than 1,400 applicants.

That kind of demand helped persuade investors to return to the affordable housing market. Many of these developments finance construction by selling federal tax credits to banks and other lenders and specialized investors. But the credit crisis of 2008 wiped out demand for the tax credits. For example, the largest buyers of the credits, the mortgage backers Fannie Mae and Freddie Mac, were taken over by the US government in 2008 and pulled out of the tax credit market.

“We had the dubious distinction of having more delayed affordable housing projects than anyone else in the Commonwealth,’’ Thal said of his Jamaica Plain organization’s standing at the time.

While developers such as Thal have been able to sell tax credits again, they’re not getting as much money for them, leaving gaps in financing that the builders have to scramble to fill.

What’s helped is that over the past two years Massachusetts received more than $170 million in federal stimulus money for affordable housing and has also provided additional resources to help finance projects and leverage private investment. This has resulted in the creation of more than 2,000 affordable rental units, according to the state Department of Housing and Community Development.

The financing situation has improved to the point where even several long-planned, controversial projects in wealthier towns and suburbs, where there tends to be stronger resistance to large apartment-style buildings, have been able to get going. In West Concord, for example, the Trammell Crow company finally began work on a 30-acre site for a 350-unit apartment complex, while AvalonBay Communities Inc. broke ground late last year on a 220-unit complex in Cohasset. As required under the state’s 40B affordable housing law, 25 percent of the units in the Concord and Cohasset developments will be rented at lower prices for qualifying tenants.

The apartment sector is also benefiting from the fallout from the subprime mortgage crisis and the economic recession. With many more middle-class residents shut out of home ownership, demand for reasonably priced units is not just from the poor.

For example, the builder of the Oliver Lofts in Jamaica Plain initially planned that all 60 apartments would be reserved for low- and moderate-income tenants. Now though, about a quarter of the units will be rented at market rates, eight reserved for formerly homeless families, and the rest for low-income applicants.

“We wanted the building to reflect the diversity of the area,’’ said Gilbert Winn, managing principal with the company.

Ted Siefer Boston Globe January 13, 2010

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