Creating the Blend
7 min read
Versatile HTG Brings Fresh Approaches to Affordable Communities. Since its founding more than 20 years ago, Coconut Grove, Fla.-based Housing Trust Group has completed upward of $2 billion worth of transactions. HTG’s 5,900-unit portfolio spans Florida, the Southeast and Arizona, and includes market-rate, affordable and student communities. Its development pipeline exceeds $235 million. HTG President & CEO Matthew Rieger recently discussed development, affordable housing and strategy with MHN.
Versatile HTG Brings Fresh Approaches to Affordable Communities
Since its founding more than 20 years ago, Coconut Grove, Fla.-based Housing Trust Group has completed upward of $2 billion worth of transactions. HTG’s 5,900-unit portfolio spans Florida, the Southeast and Arizona, and includes market-rate, affordable and student communities. Its development pipeline exceeds $235 million. HTG President & CEO Matthew Rieger recently discussed development, affordable housing and strategy with MHN.
Q. Considering the diversity of HTG’s portfolio, what characteristics do your projects share?
A. One of my goals has been to blur the lines between market rate and affordable housing. I was convinced that it’s possible to develop affordable communities that are as nice as—if not nicer than—many market-rate apartments, and I’m certain that we have succeeded in doing that. Our affordable communities exhibit high-quality construction and offer amenities like Wi-Fi lounges, computer labs, large and varied social rooms with kitchens, fitness centers, jogging paths, and numerous free programs for residents.
I love delivering for my investors and partners, but it feels just as good, or better, to welcome a hard-working person or family into a home they can take pride in.
Q. What are the most challenging issues for affordable and mixed-income housing developers?
A. A big concern for us is the considerable market uncertainty regarding the timing and amount of future corporate tax rate changes. Increases in yield thresholds have led to less favorable equity pricing and constrained liquidity in the lending market, which is making the financing climate very challenging.
Q. What are HTG’s preferred financing sources?
A. LIHTCs—particularly the 9 percent tax credit—are a critical piece of our financing formula, and typically represent about 80 percent of funding for a new affordable housing development. We also seek out and utilize a variety of other state and local financing initiatives, including tax-exempt bonds, SAIL and SHIP financing from the state of Florida, as well as HOME and Surtax financing from counties and cities.
Q. What policy changes do you think would encourage affordable housing development most effectively?
A. Advocacy, public awareness and policy are a big focus for the industry in 2017. We’re supporting a bipartisan bill now working its way through Congress that could raise the annual allotment of LIHTCs 50 percent over five years. That would have a huge impact on our ability to create affordable housing today. Florida developers could create approximately 4,200 affordable units each year, compared to the approximately 2,800 or so units created now.
We would also like to see affordability restrictions—the number of years new developments are required to remain affordable—reduced to 30 years across the board, and a real estate tax abatement of 50 percent after the expiration of the compliance period, (because) keeping aging properties up to leasing standards requires significant, ongoing capital investment.
Q. Would you give us a recent example of a creative financing that met the demands of a challenging situation?
A. A good example is Wagner Creek Apartments, a 73-unit, $23 million apartment building we opened in February in Miami’s burgeoning Health District. Fast-rising construction costs (which increased upward of 1 percent per month for two years) nearly caused HTG, Miami-Dade County and the city of Miami to lose over $18 million in federal investment in the Health District. HTG’s third-party professionals and in-house staff value-engineered the development to save significant costs, while still keeping all green building features. HTG secured multiple additional sources of funds, including a HOME loan from the city of Miami and Miami-Dade County Surtax financing, to make this important development a reality.
Q. Could you zero in on a couple of Housing Trust Group’s most innovative, challenging projects, and explain what makes them stand out?
A. One of our passion projects is Courtside Apartments, a new-construction, 84-unit, $22.8 million affordable housing community in the historic Overtown neighborhood of Miami. This was a unique public-private partnership (bringing together) HTG, NBA Hall of Famer and Miami Heat legend Alonzo Mourning, the city of Miami and Miami-Dade County to revitalize a chronically underserved, low-income neighborhood. Despite the Great Recession, and several years in which LIHTCs were not allocated in Florida, HTG fought to secure financing, and (the project) was finally completed in September 2016, almost 10 years after it was initiated.
Courtside has some unique characteristics, such as four live-work units catering to growing the small business community and a Miami Heat-branded basketball court. It was built adjacent to the Culmer Neighborhood Community Service Center, which provides social services programs to low-income families. As part of the development, we improved access to an on-site Head Start Day Care Center (at the Neighborhood Community Service Center), and built a new state-of-the-art playground for the children. The second and third phases of the community would introduce approximately 200 affordable units for the elderly, veterans and foster children who have aged out of the system.
Q. What are the challenges of developing communities that are both affordable and green?
A. The main challenges are (upfront) cost, lack of choice and increased maintenance costs over the long term. But to date, HTG has constructed 31 buildings with 5,043 units that are certified by the National Green Building Standard (NGBS), the leading national green home certification program, or are LEED-certified.
Q. What are the most effective ways to make it happen?
A. We are very aware of the need to be … vigilant in our product selection to ensure the best value alternatives, not only for the initial development but also for future maintenance and replacement costs. Every project is scrutinized with the intent to maximize the inclusion and implementation of green initiatives, (including) lighting, landscaping, materials and alternative power. We never stop trying, and we press our third-party partners to maximize the efficiency of our projects while striving for sustainable energy and an overall decrease to our carbon footprint.
Q. Tell us about Housing Trust Group’s senior communities. What makes them distinct from other projects in the category, and how do they meet their residents’ needs?
A. Village Place, located in the fast-growing Flagler Village district of Fort Lauderdale, is HTG’s masterpiece senior affordable development. … This unique community, in a residential urban infill area, strikes a balance between modern elegance and affordable housing. The design and materials create a luxurious neighborhood feeling and grand sense of scale. Units surround a central courtyard, allowing residents to enjoy open views on both sides of their homes. (Some) units offer a two-story loft townhome design, while the rooftop pool area offers views of the Atlantic Ocean—both unheard-of amenities in the affordable housing world.
(Both Village Place and Veranda Senior Apartments, located in Homestead) offer on-site management and supervised activities, nutrition classes and access to health-care services such as health screenings, flu shots, and vision and hearing tests. Group activities bring residents together and encourage community pride.
Q. What are Housing Trust Group’s goals for the next few years?
A. We want to operate expertly in both (market-rate and affordable housing). That versatility allows HTG to source and deliver on various development opportunities, which effectively serve either, or both, sources of future … demand. We are on track to complete more than 460 units that began construction or rehabilitation in 2016, as well as closing on financing and beginning construction of an additional 694 affordable units this year.