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Super NOFA takes off

Developers, architects and construction firms eye their slice of the affordable housing pie.


COURTESY: HOME FORWARD - Portland's Home Forward will build and run Block 45 at 1010 - 1034 NE Grand Ave, which will be a mixed-income,  mixed-use development located on a Portland Housing Bureau owned site near the Oregon Convention Center. The 204-unit development will include 127 affordable units, some of which will be reserved for vulnerable populations, including chronically homeless persons and survivors of domestic violence. The architects for the project are LRS Architects and Lever Architecture.

In the last five months, both private and nonprofit developers have been frantically busying themselves coming up with land, designs and funding as they tried to land some of the contracts to build, own and manage affordable housing — apartments that rent at reduced rates for families making up to 60 percent of the median household income.

A total of $61.6 million was made available in the super Notice of Funding Ability (NOFA). The Portland Housing Bureau awarded eight project proposals for $47 million. A ninth is still being negotiated.

The Business Tribune talked to three of the owners about how they got the work, and why.

Forward march

For 75 years, Home Forward was called the Housing Authority of Portland (not to be confused with the City of Portland Housing Bureau). It changed its name because it serves Multnomah County, not just Portland, and wanted to sound less HUD-like, less projects-y.

“We think of ourselves as a social housing provider, we own real estate that serves low income people,” Mike Andrews, Home Forward’s Director of Development and Community Revitalization, told the Business Tribune.

When PHB put out its super NOFA last December (its biggest NOFA ever), Andrews says Home Forward went to work deciding which of the nine projects it could best bid on.

“In this NOFA, the city had five sites. We looked at the physical conditions, size, zoning, known soil contaminants, the neighbors. And then the city or the city and the PDC set goals, the things they wanted to see.

So on Grand Avenue they wanted a mixed use building. There were some must-haves and some aspirational, like, ‘Here’s what we’d like to see.’ It’s a competition, we put our thinking caps on, how to go about building the best building possible given the constraints.” Home Forward bid on renovating Gladstone Square/Multnomah Manor and building Block 45 at 1010 to 1034 N.E. Grand Ave. They won both.

Winning ways

Block 45 will be a mixed-income, mixed-use development, located on a Portland Housing Bureau owned site near the Oregon Convention Center. The 204-unit development will include 127 affordable units, some of which will be reserved for vulnerable populations, including chronically homeless persons and survivors of domestic violence. The architects for the project are LRS Architects and Lever Architecture.

It’s the first affordable housing in the new Lloyd District, which is otherwise being developed as a mid-to-high end market rate housing district designed for inner-city pioneers.

Gladstone Square/Multnomah Manor is a recapitalization project, costing $18 million total, $1 million to renovate and preserve 102 affordable units serving low-income families which Home Forward already owns and runs. They are in Lents and Montavilla.

Need a good story

“We will invest in the physical needs of these buildings,” said Andrews. One is 20 years old, the other is pushing 40, which is old for the western U.S. where housing is still almost disposable.

“It’s a way we reinvest so they will continue to be safe, decent, affordable housing. Our solution is not to raise rents,” he said.

They put together a team of engineers, architects and finance people, and came up with “a good story.” They had to show a vision of how the tenants would fit into the neighborhood in 15 years’ time. And they had to show they have a track record of achieving visionary buildings.

Home Forward owns 6,500 units in hundreds of properties, with more under construction. At Block 45 they are building a mix of market rate and affordable units, to hit the sweet spot where the buildings scales but remains viable.

Instead of going for high rents and selling the building at a profit in the mid term, Home Forward intends to hang on to the property for the long term and keep rents low.

“Our model is different, we buy to hold. We’re not looking to harvest value through a sale.”

They use the low income tax credit as a key financial tool. Investors get their return in the form of a reduction on their Federal tax bill. It’s a lot less than the 14 percent an investor might get in the free market, but Andrews says there is much less risk.

“An investor might worry, ‘Maybe I missed the market, or maybe my building’s a real dog, and everyone else’s around it is a real nice place. With us there’s not a lot of market risk, and you accept a lesser return.”

$9,000 a year

He says a lot of banks are motivated by the Community Reinvestment Act, which mandates banks make investments in the community in which they have branches. Either in the form of low interest loans and grants, or real estate investment.

“Banks have a lot of CRA tests to pass and take them very seriously, they want to get a good score.”

Just to put things in perspective, Andrews says the average household income of folks in Home Forward properties is $12,000 per year. Sixty percent of them are elderly or disabled, or have a disability or an addiction.

“And that’s the average. If you’re on $9,000 a year you don’t have a lot of options. For them, success is stable housing, getting to doctors’ appointments, having some friends and not stressing about where you’ll live next.”

BRIDGE to the 21st Century

BRIDGE Housing Corporation, based in San Francisco, serves low and very low income families’ housing needs. BRIDGE won the bidding to build North Williams Center.

Kevin Griffith, BRIDGE’s Director of Business Development, says he sees it everywhere, all up and down the west coast: the cost of housing going up while middle class wages stagnate.

“Even Portland is not keeping up,” Griffith told the Business Tribune.

Griffith said BRIDGE didn’t know exactly what parcels of land were coming up, but though its relationship with the architect, Ankrom Moison, they had a good idea about the N. Williams property. They have since returned the favor, bringing Ankrom Moisan to the Bay Area to design affordable housing in San Leandro near the BART station.

“Our antennas are out for these kinds of opportunities,” he said. “Some of the folks in our Portland office had met with the Albertina Kerr folks and talked to the county about it, so it wasn’t a big secret.”

The NOFA came out in early winter, the response was due in January and the interviews were in March.

Because they didn’t own the land, there was more of a feeling of competition about who would get to develop it. BRIDGE has built the soon-to-open Abigail apartments in the North Pearl.

For those afraid of being overrun by Californians, Griffith says PHB is implementing some local preferences, meaning Oregonians will get priority over out of staters.

Bridge has not selected a construction firm yet. They will put that out to bid soon. It’s a small job, just 61 apartments in a four-story building.

Griffith says they will look at all proposals, not just those who promise the lowest cost but who can deliver the lowest cost. “The city has expectations about the use of local firms, and local workforce,” he adds.

REACH in

REACH CDC is known for some interesting projects, including the country’s biggest passive house apartment buildings the Orchards at Orenco in Hillsboro.

REACH just won the 72foster development, which will include 108 units of affordable housing. They will partner with Asian Health & Services Center (AHSC) to provide resident services, on Portland Development Commission owned land at 7104 - 7130 S.E. Foster Rd.

The Director of Housing Development, Jessica Woodruff, has led the development of 10 affordable housing properties totaling over 500 units in her decade there.

She has overseen all financing, construction and lease-up, securing more than $44 million in grants, loans and equity to fund the projects.

Woodruff told the Business Tribune that they saw the NOFA as a competition. “We looked at all the funding and items that PHB put out and what fit best with our goals,” she said. They tried for two projects and got one.

“What we do is build affordable housing, but it’s not easy. The rents we charge are not enough to pencil out.” She says they are in it for the long haul, not the quick sell out. “We own it forever and maintain it as a public asset. “

Cash from China

REACH has seven projects under development in the metro area.

Woodruff says a lot of time developers do the research on the zoning and the financial package, “Then the authority, such as PHB, says ‘You tell us what your vision is for the site.’ It’s open-ended.”

Now is a unique time in this housing emergency. “There is the political will and resources to put to the issue. But it’s also at a time when land and building prices are at an all-time high. It’s great and it’s hard, because we are competing against private resources.”

When she started in the Great recession it was hard to get a loan. Now REACH is competing with cash offers from investors from New York and China.

REACH too uses federal tax credits as an incentive to investors. They sell the credits on the open market. “In most cases the biggest buyers are the big banks.”

The other source of funding is construction loans.

She stresses that REACH is a nonprofit — any income goes back into housing, not into REACH’s pocket.

“We are nonprofit but that doesn’t mean we’re not trying to structure the project to be financially strong. The intent is to hold it forever and maintain it as affordable housing. If we run it at a loss we won’t be able to maintain it.”

2015 was a way busier year than normal in her world. And that’s a good thing.

“It’s good for Portland. The city is working to try to address what’s going on, the lack of opportunity.”

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