New York—Thanks to a public-private partnership, a 256-unit affordable housing community in Colorado Springs, Colo, will continue to provide housing for low-income families and individuals. Community Development Trust (CDT), a REIT that provides capital for affordable housing preservation and development, and nonprofit affordable housing owner and developer Volunteers of America (VOA), teamed up to recapitalize Summit Apartments, a 30-year-old complex at 2796 Reeve Circle. The Colorado Springs Housing Authority is also a partner in the joint venture.
CDT and VOA plan to preserve the community for families and individuals making 50 to 80 percent of the area median income and to complete a $1.5 million renovation of the property, including kitchen updates, new windows, energy upgrades and new retaining walls.
“The planned improvements at the property are designed to make the property more sustainable and energy efficient and position it for long-term ownership,” Brian Dowling, senior vice president of community investments at CDT, told MHN.
This property is CDT’s first investment in Colorado, which is a market the firm has “been working to get into” and part of its strategy of expanding “in the Mountain West region in general,” Dowling said. “There are many submarkets with stable and steadily growing populations and good employment markets with a need for affordable housing.”
VOA purchased the property in 1993 from Resolution Trust Corp. using financing from the Colorado Housing and Finance Authority.
The two firms mutually selected Summit Apartments as its first joint venture, Dowling told MHN. “Most importantly, (VOA) has had a long history with the property and it has provided high-quality affordable housing in Colorado Springs for many years,” he said, adding that part of CDT’s model “is to work with operating partners with strong experience in regional markets.”
The Colorado Springs Housing Authority (CSHA) brought the efforts of a public organization into the project, facilitating a tax exemption to the partnership that expanded and extended the level of affordability at the community. Now, 85 percent of units serve families at or below 50 percent of area median income and 15 percent of units are for those at or below 80 percent of AMI.
“As there is a shortage of affordable housing in our community, the preservation of existing affordable units is critical to our goal of providing quality housing for low-moderate income families,” said Chad Wright, executive director of the CSHA. “The ability to create strategic partnerships in the pursuit of this goal is essential. This collaboration exemplifies that approach and will benefit families in Colorado Springs for many years.”
Like many cities, Colorado Springs is facing an affordable housing shortage, and civic leaders there have made accommodating low- to moderate-income families in Colorado Springs and El Paso County a high priority. In the county, about half of renters and a third of homeowners with mortgages are cost- burdened, meaning they spend more than 30 percent of their income on housing, according to an October 2014 affordable housing needs assessment commissioned by city and county leaders.
One approach recommended by that report was to acquire, rehabilitate and preserve its existing affordable housing stock by partnering with a nonprofit developer or entering a limited partnership. This is because the high cost of land and Colorado Springs, increasing construction costs and other factors make it difficult to build new affordable housing.
The partnership in this transaction is an example of a for-profit, nonprofit and public entity collaborating to preserve affordable housing. CDT invested about $2 million in the partnership. CDT and VOA closed on an acquisition bridge loan funded by CDT in June before closing on permanent financing in July. Wells Fargo provided the Freddie Mac financing.
Other recent projects for CDT include its partnership with Jonathan Rose Cos. to preserve a 32-building affordable housing community in Fairfax County, Va.