World War II-Era Public Housing in Ohio Gets RAD-ical Makeover
Coopermill Manor, the flagship property of the housing authority in Zanesville, Ohio, is getting a significant facelift, making the World War II-era complex a model for the U.S. Department of Housing and Urban Development’s (HUD’s) Rental Assistance Demonstration (RAD) program.
“To me, this is proving out RAD and what it’s intended for,” said David Burg, principal at Cleveland-based developer PIRHL LLC. “This is a case in point for why housing authorities should take a strong look at moving into this [program] sooner rather than later. Coopermill Manor is setting up apartments and families in need for many decades to come. RAD is not the solution for ever property in the national public housing inventory, but where it works, it can be transformative on a lot of levels.”
The renovation of Coopermill Manor, which was built in 1941 and has 324 apartments that are historically at least 98 percent occupied, began in late 2015 following a couple of years of development work. Through nine construction phases, the low-income housing tax credit (LIHTC) development is on schedule to finish in early 2017, giving residents a dramatic upgrade in a complex operated by the Zanesville Metropolitan Housing Authority (ZMHA).
A Flagship in Zanesville
“From the time I became executive director in 2009, this is what would keep me up at night,” said Steve Randles, chief at the ZMHA. “How do you replace 324 units of housing if there’s no money in the federal budget for it?”
Burg describes Coopermill Manor as the flagship property of ZMHA. “They’re very well-built, masonry structures, with 59 residential buildings spread over a 19-acre campus,” he said. “It’s stood the test of time and has been well-maintained. The value of Coopermill Manor is that it served families and seniors who were most in need and it almost always stayed 100 percent occupied.”
But it was time for an improvement. “It was outdated with energy-inefficiency,” Burg said. “It needed love and attention. There were some system issues related to the plumbing that put the viability of the property at risk.” So his company worked with ZMHA to go through the RAD process and bring significant redevelopment to the property.
Bryan Kilbane, director of acquisitions at Red Stone Equity Partners, the investor in the LIHTCs, said the development took a long time to come to fruition–which he attributed to the timeline to gain agency approval for the LIHTCs, get HUD approval and other items. “I give PIRHL and the housing agency a lot of credit,” he said. “This was complex.”
Making it Happen
Randles said it took a while for him to warm to the new RAD program–and an additional year to convince his organization’s board. He said the board was concerned with how changing the development from public housing to a tax credit property with project-based vouchers would affect tenants, the ZMHA and the community in general. “But my point was that there is an opportunity cost if you don’t do this,” Randles said. “There is money to do renovations [under RAD], but if you don’t do it, you’re hostages to the (federal government) appropriations process.”
The board approved. And Burg said the resident meetings required under the RAD program helped the developers discover what residents most wanted: Bigger stoves and refrigerators and more cabinet and countertop space in the kitchens.
The larger renovation items included replacing windows, storm doors and lighting fixtures; laying LVT flooring; painting; replacing bathrooms, sinks, toilets, kitchen cabinets and appliances; modernizing the five boiler rooms and storm and sanitary drains; and transforming 18 apartments into fully accessible units, including new accessible route and parking. A number of smaller items–from tuck-pointing to replacing lintels to waterproofing to roof cleaning–completed the rehab scope. Burg said the plumbing issues–involving 75-year-old plumbing stacks between units–created the most difficulty due to the unpredictability. But the developers found a cost-effective way to address the issue while making significant changes.
“PIRHL and ZMHA raised enough sources to do about $46,500 per unit in pure hard cost [renovations],” Burg said. “We did the 18 fully handicap-accessible units, where we started with the shell and made them work. There was a lot of site work, which impacted seven of the 59 buildings on campus. All five playgrounds were retrofitted for accessibility.” Burg said the addition of the commercial luxury vinyl tile flooring “more than anything changed the look of the property.”
The buildings were still in good shape on the outside, which helped focus the renovations and upgrades to the unit interiors. “This didn’t need a lot of rehabilitation on the exterior,” Kilbane said. “The rehabilitation cost was $45,000 to $50,000 per unit hard cost, so there was a lot of updating systems. A ton of rehabilitation went into the units at the end of the day.”
Randles said the ZMHA had used capital funds to address significant upgrades over the years, but that his organization considered three areas for additional upgrades: roofing, plumbing infrastructure and air conditioning. Ultimately, ZMHA stayed with the existing roofs (which should last several more decades), elected not to install air conditioning due to the major electrical renovation required and cleaned up and updated the plumbing where needed.
PIRHL was an early adaptor to RAD, getting involved in 2012. This fall, PIRHL will close financing on its fourth substantial rehab RAD transaction financed with 4 percent credits and bonds. “We set out to try and work with a number of housing authorities in a few states,” Burg said. “In the initial stages, PHAs weren’t really game, because taking public housing stock away from Section 9 funding and into privately held partnership was such a radical change. Today, we are working with more and more PHAs who are following ZMHA’s lead, investing time and resources to analyze the potential transition of their public housing units through RAD.”
Burg said that RAD was a program that kept changing. “Dealing with RAD itself was an evolutionary process,” Burg said. “PHAs had to evolve with HUD’s changing regulations. At the outset, the program was kind of the Wild West, but quickly became more predictable and will only be more user-friendly over time.”
ZHMA’s Randles said his team learned from the transaction. “What you understand and appreciate about RAD is that it requires unusual cooperation,” Randles said. “It touched on every department we had.”
Moving Families during Construction
Preparing for the renovation, ZMHA stopped moving in new families and created 40 to 50 vacant units over several months. Burg said PIRHL had a relocation team in place, including all members of the project team and a relocation specialist hired by ZMHA.
“I refer to it as a 324-piece chessboard. We’re managing a 324-piece chessboard with real people and real human needs attached,” Randles said.
“We try to minimize the number of families that have to move more than once,” Burg said. “It’s gone well, although not without a few hiccups. We have an experienced construction staff in rehabilitation and preservation. Between that and a highly experienced management team, we haven’t had any huge surprises so far. There are always challenges … but we’re on scheduled and moving through in an aggressive way.”
Renovations were made possible through RAD, with RedStone Equity investing $11.3 million in the LIHTCs, along with a $12 million mortgage from Red Capital, a seller’s note from ZMHA and other income.
“This was our first project with PIRHL and as they partnered with ZMHA, it was an opportunity to begin a relationship with them,” Kilbane said.
Kilbane said the investment came from one of Redstone’s multi-investor funds. “It was a complex transaction, but a good partnership,” Kilbane said. “It was a pleasure to work with PIRHL and the housing agency.”
Just over halfway done, Coopermill Manor is impressing residents.
“Coopermill Manor is an extremely important property for ZMHA and the Zanesville community and it was important to preserve and enhance it,” said Amanda Read, a principal in the Cleveland office of Novogradac & Company LLP, which was a consultant on the development. “This is a great example of what the RAD program can do to benefit cities and the residents of public housing.”
With several months to go, things seem to be going well at Coopermill Manor. “By and large, obviously, the residents are very pleased,” Burg said. “Some residents didn’t want to leave their unit, but they’re all more than happy once they move into a new apartment.”
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