..as reported in Affordable Housing Finance
BY DONNA KIMURA
MERRYPLACE’S AMBITIOUS GOALS
WEST PALM BEACH, FLA.- MerryPlace, a newly completed 130-unit affordable housing development, is a cornerstone in the revitalization of one of the oldest neighborhoods in the city. The apartments are the first step in a lofty plan to bring new rental and for-sale housing to a blighted section of West Palm Beach that has seen little development in recent years. The first affordable housing development to be certified green by the Florida Green Building Coalition, MerryPlace also tapped a unique state brownfield tax rebate to help finance the project.
“MerryPlace has completely changed the neighborhood,” says Laurel Robinson, executive director of the West Palm Beach Housing Authority, which co-developed the project with Banc of America Community Development Corp. (CDC).
When Robinson walks through the area, she sees a brand-new community. “We have 13 buildings there, and you see families coming in with their groceries, kids laughing and enjoying the attractive surroundings,” she says.
Robinson recalls recently seeing a little boy on his balcony, blowing bubbles through the rails. “That’s why we do this,” she says.
The project began with the housing authority acquiring nearly 100 parcels from 72 owners over fours years to assemble the 14 acres needed. The area had been made up largely of vacant lots and abandoned homes.
The site is in the city’s Pleasant City neighborhood, a historically African- American community that dates back to about 1910.
The housing authority sold five building sites to the local school district to build a new campus. That sale resulted in not only a new school for the neighborhood, it also provided the seed money for MerryPlace, where 128 of the apartments are for families earning no more than 60 percent of the area median income (AMI). About 15 percent of those units have even deeper income targeting and are reserved for those earning no more than 30 percent of the AMI.
“We knew we had to have a good solid rental component,” Robinson says, explaining that it was important to bring stable and diverse housing options to the neighborhood. “We had been saying that all along.”
The project, designed by James, Harwick+Partners, Inc., is loaded with green features.
Creating an environmentally friendly and sustainable development was one of the two primary aims of the development team. The other was to avoid creating a place that looked and felt like a high-density apartment complex, says Ron Harwick, principal and vice president of the Dallas-based architectural firm. To achieve that goal, all of the buildings at MerryPlace were designed to look like townhomes, with the design and colors relating to the existing neighborhood, he says.
Harwick also incorporated key concepts of New Urbanism, a movement that aims to create diverse, mixeduse, and walkable neighborhoods. MerryPlace avoids gates and fences, the buildings are close to the street, and parking is tucked behind the project.
The project’s green features start with it being built on an urban infill site that is a mediated brownfield.
In addition, the project has tankless gas water heaters, a high degree of insulation, low-flow plumbing fixtures, paints with low volatile organic compounds, and native landscaping, says Roxanne Amoroso, senior vice president and manager of the Florida division of Banc of America CDC, a developer of affordable and mixed-income housing.
Banc of America CDC, a subsidiary of the national bank, is a co-general partner in the deal and helped to align the different financing for the $22 million project. Bank of America provided about $12 million in bridge and construction loans.
Additional financing for MerryPlace included $13 million in low-income housing tax credit equity syndicated by MMA Financial. The credits were allocated by the Florida Housing Finance Corp., which also provided a $1 million loan. The city of West Palm Beach funded critical infrastructure improvements for the new development.
The partnerships involved in the project were key, says Steve Napolitano, managing director at MMA. “We had a local group that was passionate about getting this project done,” he says.
The green building features also distinguished the deal, he adds, noting that investors and state housing finance agencies are putting more emphasis on green design.
Other financing for the project included $225,000 from a state brownfi eld tax rebate program that allows developers to capture the sales tax on all the building materials used for a project on a designated brownfield, says Amoroso. The program requires gathering all of the receipts from the subcontractors to submit to the state. Florida then rebates all the sales taxes that had been paid on the building materials.
Amoroso calls it “patient capital” because it takes time to raise. Developers have to fund the dollars, spend them, and then wait to be reimbursed through the program, which can take a year or longer, she says. However, it is often a critical source of funding for affordable housing developers who need to assemble multiple pieces of financing for their deals. She has used the rebate program to raise funds for other deals in the state.
MerryPlace is important because it will be a launching pad for a much larger development.
The apartments opened in the summer of 2008, a highlight for the housing authority, which was shaken by a brutal attack on a mother and her son at one of its public housing communities the year before.
The overall plans also call for 52 condominiums, 47 townhomes, and 16 single-family homes. The condominiums, which will comprise the next phase, are expected to target families earning no more than 140 percent of the AMI. Unit prices start from about $119,000. The housing authority is developing the homeownership phases on its own.
Robinson expects to have the first two condominium buildings, which will have 20 units, completed this year. The housing authority has been criticized in the local press because more condos have not been sold, but Robinson remains upbeat that half of the first 20 units have been pre-sold.
“I think it’s difficult to sell from a picture,” she says, explaining that she expects sales to pick up once the first condos are built.
Florida has been particularly hard hit by the real estate crisis. The median sales price for a condo in the Miami area was $159,000 in the third quarter of 2008, nearly a 15 percent drop from the year before, according to the National Association of Realtors. Nationally, condo prices were down about 7 percent in the same period.
Robinson is aware of the grim market conditions but is confident that the remaining phases will be finished and will be as successful as the recently completed apartments.
What the condo phase will have going for it is that it will be a new product and subsidies will be available for the buyers, says Robinson.
The community has a long history of single-family houses and homeownership opportunities. For Robinson, building the condos and the singlefamily houses would be a fitting finish to the project and a way to bring the neighborhood’s journey full circle.