Half a million dollars doesn’t go far. Not when you have to maintain 458 apartments in aging buildings, some of them more than fifty years old. That’s the situation in Dover, New Hampshire, but the Dover Housing Authority has been working on a solution.
“Housing authorities across the nation are faced with capital needs that are not being met,” said Allan Krans, Dover Housing’s Executive Director. “In order to lessen our dependence on federal capital grants, we turned to RAD.”
The Rental Assistance Demonstration program (RAD) was started by the Department of Housing and Urban Development (HUD) in 2012 to allow public housing agencies to leverage private debt and equity to reinvest in their old properties – and to improve and preserve them. RAD is a budget-neutral program, meaning that it doesn’t involve federal funds but rather a loosening of federal regulations to allow for public-private collaborations.
Whittier Falls is the first project in New Hampshire to undergo a RAD conversion. In Dover, two developments stand side by side: Mineral Park, built in 1953, has 124 units and Whittier Park, built in the early 1960s, has 60 units. Krans anticipates that the upgrades – new roofs, siding, windows, kitchens, bathrooms, and energy efficiency measures – will make the residents of Whittier Falls proud to call it home.
Shifting from public funding to bank loans, bonds, Housing Tax Credits, and other financing vehicles common in the private sector doesn’t happen quickly. The process typically takes about two years, said Krans, but for Dover Housing it took a bit longer as they transitioned “from being managers of housing to real estate developers.”
When asked for advice for other housing agencies considering RAD conversion, Krans said: “Communicate early and often with your stakeholders, especially residents and town leaders. Explain clearly what your goals and intentions are, then listen closely to dissect what’s really important to the residents. Their priorities should become your priorities.”
Dover Housing worked “shoulder to shoulder” with HIF Consulting throughout the conversion process. The consultants helped to develop a specialized team, starting with the right legal support, architects, and general contractor. According to Steve Schuster, who manages projects at HIF Consulting, it was important to get the design team together early to determine an approach for the renovation to high-quality looking apartments.
Another important introduction that HIF Consulting made was to Julie Jussif, Director of Secondary Mortgage Market/Financial Analysis at the New Hampshire Housing Finance Authority (NHHFA). Krans and Schuster brought the project to NHHFA in 2016. After visiting the property and discussing how the RAD program could be utilized, Jussif says the decision to collaborate on the project was easy.
“Based upon the size of the project, income restrictions, and level of rehab required, our tax-exempt bond program works well for this project,” said Jussif.
NHHFA’s tax-exempt bond program also qualifies the project for 4% Low-Income Housing Tax Credits (LIHTC), which brings cash equity into the deal, helping to reduce the debt burden on the project.
When the Whittier Falls deal closed in 2017 it represented the culmination of many months of cooperation between housing professionals: The Dover Housing Authority, HUD, NHHFA, and the LIHTC program, facilitated by the experts at HIF Consulting.