Case Studies

Public Housing Repositioning Case Studies

Housing Authority of the City of Austin (HACA), Austin, Texas

Recap has been working with HACA since November of 2015 on a RAD Portfolio Conversion of all 1,928 public housing units encompassing 13 AMPs and 18 properties, including 22 scattered site homes. HACA received CHAPs for 8 properties early in 2015 prior to hiring Recap. Recap played a major role in the initial strategic review of HACA’s public housing portfolio to determine whether converting to Project-Based Section 8 assistance (PBRA) under RAD was feasible given the time constraints of a Portfolio Award at that time. Recap reviewed the physical needs, the current financial performance, and operating needs of each property as well as the potential to increase density on certain sites and the possibility of disposing of the scattered site through Section 18 or transferring assistance to other properties.

HACA is a strong PHA with a highly active nonprofit development arm. Recap was instrumental in the underwriting and lender negotiations on the 14 deals HACA self-developed. To date, HACA has successfully closed 16 RAD transactions that utilized a combination of 9% LIHTC, 4% LIHTC, Debt-Only, and No-Debt conversion as well as a RAD/Section 18 Closeout Blend. In fact, HACA closed the 100,000th unit under RAD!

The Housing Authority of the City of Bessemer, Bessemer, Alabama

Recap assisted the Bessemer Housing Authority (BHA) with the RAD conversion of two properties consisting of 198 units using 221(d) (4) FHA financing and housing authority reserves, which closed in March 2015. Throughout the implementation process, Recap prepared and managed the financial proformas and the transaction structure, working closely with BHA’s team. Recap ensured coordination between the RAD PCA, architectural designs, and general contractor pricing, participated in negotiations with the FHA lender, managed the RAD milestones, guided BHA through the RAD requirements, prepared HUD submissions for specific to the RAD milestones, and participated in regular team meetings.

New York City Housing Authority, Palmetto Gardens and Bushwick Gardens, New York City

The New York City Housing Authority (“NYCHA”) solicited proposals from Development Teams to assist with the preservation of over 15,000 units of public housing over the next ten years. Recap along with Pennrose Properties, LLC and Acacia Network (the “Team”) responded to and won an RFP to redevelop 1,315 units in Brooklyn, NY (“Bundle 3”) using a combination of Section 18 and RAD. The transaction will be a 4% LIHTC combined with new debt that will support $145,000 per unit of much needed rehab. The tenants will remain in place during construction because of the limited supply of housing in Brooklyn. Recap’s role in the transaction includes: Working with NYCHA and Acacia to conduct resident meetings, informing them of their continued resident rights; Working with the NYCHA legal team to untangle the regulatory barriers when combining Section 18 with RAD; Working with NYCHA and the Development Team to submit the RAD Financing Plans and Section 18 Disposition applications; Working with the Development Team to accurately underwrite the Transaction and secure HUD approvals to close.

Villages at Westview, San Buenaventura, California

In 2012, The Housing Authority of the City of San Buenaventura (Ventura) engaged Recap in preliminary conversations to discuss RAD and provide a framework for considering candidate properties. As a result, Ventura determined they would submit a request for a Portfolio Award covering a total of 520 units. To date, Recap has been the RAD consultant for Ventura on a 9% LIHTC elderly project that closed in 2014 and two 4% LIHTC/tax exempt bond deals that closed in 2015 and 2016. Recap is now assisting Ventura navigate the complexities of a three-phase new construction RAD conversion. Phase 1 will be completed in June, 2018. Highlights of this transaction include demolition of 180 public housing units located on a 20 acre site that will be replaced with 320newly constructed LEED Certified RAD, LIHTC, and homeownership units.

Spartanburg Housing Authority, Spartanburg, South Carolina

Recap replaced a previous consultant for SHA in December of 2018. SHA was awarded 9 CHAPs between 2014 and 2015, but due to turnover in development staff and Executive Directors, SHA was unable to move the deals forward. Recap has been and continues to work with SHA to build development capacity. Recap assisted SHA to untangle and close the first two RAD transactions that transferred Section 8 assistance to other mixed income sites. Recap also project managed and helped SHA close a third Mixed-Finance RAD transaction using an FHA 223f first mortgage. SHA’s fourth RAD conversion, Victoria Gardens, was a 9% LIHTC substantial rehab of an existing 80-unit site. The transaction began as a RAD/Section 18 PBV Blend, but COVID and soaring construction prices left a gap in funding, so the team pivoted to a RAD Opportunity Zone rent boost to secure additional financing. Throughout the conversion, Recap made sure that SHA’s interests were well represented in the development partnership. Recap is working with SHA on the refinancing and repositioning of the remainder of their portfolio.

Chickasaw Housing Authority, Chickasaw, Alabama

CHA owns and manages 287 units of public housing for both family and elderly residents. The units are a combination of single family, duplex, triplex, and quadplex homes scattered across 70 acres, but considered one site. There is a main office and community building as well. CHA was able to convert its entire portfolio to Project-Based Section 8 (PBRA) through the Rental Assistance Demonstration Program using only its exiting operating reserves and capital funds. CHA will complete some modest repairs post-conversion. Recap assisted CHA with a feasibility analysis and then implementation of the no-debt RAD conversion. The only issue CHA encountered was a portion of the acreage is in a 100-year flood plain. Since there were no buildings on that parcel, CHA was able to carve that parcel out of the conversion. The transaction closed in September 2020.

Multifamily Affordable Housing Preservation Case Studies

Brookside Terrace Apartments, Southbridge, Massachusetts

The Property, a 166-unit affordable multifamily property built in 1972, was acquired and rehabilitated by the Partnership in 2000 using LIHTC and financing from the Massachusetts Housing Financing Agency (MHFA) and the Department of Housing and Community Development (DHCD). The Property had an Interest Reduction Agreement with MHFA and HUD in accordance with Section 236 of the Housing Act, an un-insured Section 236 mortgage with MHFA, and a Rent Supplement Contract for 45 units that was scheduled to terminate in 2014.

Recap helped the Client: convert the Rent Supplement contract to a Section 8 project-based voucher contract with Boston Housing Authority through HUD’s Rental Assistance Demonstration (RAD) program, Component 2; decouple the IRP from the 236 Mortgage Note; close a Bridge Loan with MH in order to trigger the RAD conversion; underwrite the financial transaction totake out the Bridge Loan; assist with the buy-out of the limited partner; request debt deferral from MH and DHCD; and close on a $7.5M loan.

Starrett City, Brooklyn, New York

When the proposed sale of Starrett City was blocked in mid-2007, Recap was retained to find a solution that would allow the owners to realize their equity while maintaining affordability for the existing residents. In pursuit of these objectives, we first developed a Memorandum of Understanding (MOU) as a framework for a transaction that could be supported by the owner and the four government housing agencies regulating the property. We then represented the owner in designing, negotiating, and completing a successful transaction.

While originally planned as a sale, the property was ultimately refinanced as a result of the dislocation in the financial markets that intensified in late 2008. At $531 million, the Starrett City transaction represents the largest single-property financing ever completed by Freddie Mac. Closing was achieved in December, 2009.

Riverplace Towers, Lowell, MA

On expiration of an LIHTC compliance period, Recap assisted the general partner of this 448-unit complex in buying out the project’s limited partner and carrying out a $30 million recapitalization of the property. Recap developed recapitalization strategies and implemented the selected transaction – refinancing of the existing debt with 4% LIHTCs and tax exempt bonds, issued through the local HFA’s federally insured risk-share loan program with HUD.