Chapter 15/Mark-Up-To-Market Secures Preapproval of Post Rehabilitation Rents to Facilitate Extensive Project Renovations
Admiralty Apartments is a 48-unit affordable housing community located in Port Townsend, Washington overlooking Port Townsend Bay and is a contributing property to the Port Townsend Historic District. Originally constructed in 1928 as a hotel, it was converted to affordable senior housing in 1972. Thirty-eight units are subsidized under a Project-Based Section 8 Housing Assistance Payments (HAP) contract.
The project includes two 24-unit buildings. One building, which sits over the Puget Sound, suffered severe damage and was uninhabitable. Renovation costs were extensive due to these structural deficiencies as well as a long-deferred need for modernizations and upgrades to preserve the project and improve resident living conditions.
HAO worked with Redwood Housing through a challenging HUD process to obtain the approvals needed to acquire the project, reclaim the uninhabitable subsidized units, secure a long-term HAP contract, and restabilize the project as high quality affordable housing for the community’s low-income senior residents.
Applicable HUD Programs
- Project-Based Section 8
- HAP Renewal
- Chapter 15/MUTM Rent Increase
Approvals Needed for a 20-Year HAP Renewal with Post-Rehabilitation Rent Increase
To support the rehabilitation, HAO obtained approvals to renew the HAP contract for a 20-year term with a Chapter 15, post-rehabilitation rent increase. This was needed to support the new financing required to save and rehabilitate the project.
HUD changed important program rules midway through the application process with an adverse impact on the project. This necessitated a creative and quick reworking of certain project amenities to respond to HUD’s rule changes, while still securing project rents sufficient to support the renovations.
The Transaction and Project Outcomes
Historic and LIHTC Tax Credit Financing Utilized
The rehabilitation of the project was financed with tax exempt bonds as well as equity from 4% low income housing tax credits and historic tax credits. HAO worked with Redwood Housing to obtain the necessary approvals, including HUD’s consent to the assignment of the HAP contract as security for the new financing.
Revitalization and Preservation of an Important Community Asset
With limited affordable senior housing in the community, Redwood Housing’s renovation of Admiralty Apartments preserves a vital community asset that will be a high quality, amenity-rich and long-lasting resource for Port Townsend’s seniors.
View Examples of Our Other Work
Our partnership with Redwood Housing shows how HAO guides clients through complex, multi-phase projects. See other examples of our work by viewing our project portfolio.