It's rare when nominees for Multifamily Executive's Executive of the Year award receive more than one or two recommendation letters with their nominations. But this year's winner, Arthur Evans, president of A.F. Evans Co. Inc., had overwhelming support from industry executives.
With more than a dozen support letters, it was evident that Evans is not simply an owner and developer of multifamily properties; he is an industry leader who believes in providing services that improve the quality of life for his residents.
Whether developing low-income housing in the inner-city, senior housing, or for-sale and rental units in suburban areas, Evans is guided by a strong sense of meeting the needs of diverse individuals and communities. "He leads by vision and by thoughtfulness," says Margaret Schrand, vice president at Wells Fargo Bank, Real Estate Group, Community Lending Division, which has completed several deals with the company. "He's not just thinking about his particular project, but how it fits into the community and how it meets the community's needs."
Evans was chosen as this year's Executive of the Year because of his "never say no" attitude toward challenging projects, as well as his determination to build projects that have never been done before.
The Beginning A.F. Evans was formed in 1977 after Evans left the San Francisco Redevelopment Agency. The original employees were Evans; William McClure, the current senior vice president; and a secretary. Today, the company has more than 500 employees, says McClure.
A.F. Evans owns and manages 6,204 units, and has an additional 2,258 in the design or construction phase. Its projects are primarily in California and Washington.
Evans, who is 63 years old, became interested in housing through his fascination with how cities operate. "I've always been interested in why certain neighborhoods thrive and others die," he says. After leaving the redevelopment agency, working on Section 8 housing projects was a natural progression.
He quickly developed a reputation for knowing and understanding the issues of community development, says Linn Warren, director of multifamily programs at the California Housing Finance Agency (CHFA), which has worked on several projects with the company.
When Evans started his company, he did several equity syndication deals. He would form a joint venture with a company which would provide the seed money for the deal, and he would construct the development.
One of his early partners was Dick Kadish, president and CEO of CAPREIT. Kadish first met Evans when Kadish flew to San Francisco to close a deal in which Evans was only a 25 percent partner.
However, When Kadish arrived, the general partner wasn't there. Instead, it was Evans waiting for him at the airport, and Evans who took him to the property, went through the plans and introduced him to the architect, builder and lawyers.
Throughout the day, Evans assured Kadish that the deal was fine. After about 10 hours, the general partner, a former CHFA employee, still hadn't showed up. But when Kadish finally asked what was going on, Evans explained that it was the general partner's first deal; there was a gap in financing of $100,000 and the general partner was nervous, because he thought $100,000 was a large amount.
"To us, that was nothing," says Kadish. "It was a quarter on the table. Art was trying to cover for this guy who got so nervous that he didn't know what to do. The deal closed on time. It was because of Art that the deal went through. And it was very successful; everyone made money. I thought [Evans] was something special, because he did what he did to protect his friend." Kadish did $200 million in equity syndications with Evans from 1981 through 1994. Evans knows that the key to success is personal contact, and dealing with issues and concerns up front. Instead of letting a deal fall through, he takes it upon himself to smooth everything out. And he does that with all of his deals.
Building Support He was dealing with not in my back yard attitudes long before the industry even recognized it as a problem, says Schrand, of Wells Fargo.
"In locations where there is a community group – and they're in almost all the places we work – we try to meet with the community groups before the project is proposed and solidified," says Evans. And, when the company takes over a problemed property, it works with recognized neighborhood groups, social service agencies, the police department and the local government to formulate a plan of turning around the troubled project.
For instance, when the company ac-quired Lake Washington Apartments, a tax credit project in Seattle, the neighborhood sentiment was that the community would be better off getting rid of the project completely. Instead, A.F. Evans, together with a local nonprofit, demonstrated to the neighborhood that once the revitalization of the community was completed, the property would serve working people supporting the community and not be another public housing project that attracted undesirable residents.
The community requested that social programs be added to the project. So, A.F. Evans included an on-site child care facility at the property and an on-site social services director, who tapped into other available programs like Meals on Wheels and senior programs to serve the residents and community at large.
The overall project was successful because it was a joint venture deal with Southeast Effective Development, a non-profit developer, which had access to those programs, says Evans.
It's common for A.F. Evans to put these types of programs into its projects. In the Tenderloin district in San Francisco, where Evans has several projects, the community wanted a child care facility, explains Schrand. Although the facility threatened the feasibility of the project, it was still constructed. Evans was able to obtain a grant from tax credit investors, which was used to set up a scholarship fund for resident children to attend the day care.
Community residents also wanted a retail store for the area. A. F. Evans ended up financing a small sandwich shop, which gave people a place to go for coffee, ice cream and a bite to eat, says Schrand.
It's not just the low-income properties that are contributing to the community. In Fremont, Calif., where Mission Wells, a high-end property, is located, the company participated in a welfare-to-work program. The company rented a few units to program recipients at a price break.
"Not only do you build good will in the community, but you build some morale in the company when you do things like that," says Evans. "As a business, the more you're involved in the neighborhood and build your reputation, the more projects and more opportunities that occur. So, it's satisfying and it's also good business sense."And, since a majority of the A.F. Evans' senior staff comes from the public sector or the nonprofit world, having a social conscience is very important to them.
"I think that's what's unique about us," says Jack Robertson, vice president of A.F. Evans Development Inc. "We have a social purpose in mind, rather than just straight business. ... We do a lot of joint venture projects to accomplish these goals."
Monterey Pines, an affordable housing complex in Richmond, Calif., is a prime example. The company secured a combination of government-insured loans and tax credit equity investments to extensively rehabilitate the project, which previously was known as JFK Manor.
When the affordable housing project was completed, 12 units were rented at half-price to teachers in the community. In exchange for the cheaper rent, the teachers provided tutoring service two hours per week for residents. "The teacher housing program was very successful," says Robertson, "not only for the teachers, but also for the kids, by having role models live at the property."
Redevelopment Before A.F. Evans acquired Monterey Pines, the U.S. Department of Housing and Urban Development (HUD) considered it the most troubled project in the Western region. "Based on our reputation, HUD allowed us to step in and buy the property," says Robertson. "We put together a strong financial plan to raise money to do [$25 million worth of] improvements to the property."
With all of the company's projects, the team has a clear focus on what it needs in order to develop and finance a project, says Warren from CHFA. "They're very practical and pragmatic. When issues and problems arise, they have solutions and they are reasonable ones that everyone [working on the deal] can live with."
The typical projects the company acquires are not badly maintained, they're just 20 to 25 years old, explains Evans. If the budget allows, new energy efficient windows are added. However, upgrades usually include renovating kitchens and bathrooms and changing the carpets and painting, he says. More common exterior improvements include replacing siding, adding pitched roofs and balconies and redoing the landscape, adds Robertson. When appropriate, the company adds a swimming pool and community center.
At several properties, the company installed computer technology centers that allow residents to obtain computer literacy training, give them access to the Internet and offer literacy classes.
A minimum upgrade will cost the company anywhere between $3,000 to $5,000 per unit. More comprehensive rehabs can cost between $20,000 to $30,000 per unit.
Future Prospects In an age of economic uncertainty, Evans is glad that he designed the company so that overhead costs are paid from the cash flow and property management fees. As a result, the company is not compelled to develop anything, he says.
"Right now, interest rates are low and, although the economy is down, we're still looking at developing properties that will come on line two years from now," says Evans. In addition, the company continues to look for acquisition opportunities [in its current region as well as Arizona and Las Vegas], but will acquire only at a cap rate of 8.5 or better.
And in the true spirit of a medium-sized company, A.F. Evans will continue to take opportunities as they come along. In the early '80s, the company became more involved in market-rate projects. In 1989 A.F. Evans took on an assisted living project because it was being developed in Walnut Creek, Calif., close to where Evans lives and he was very familiar with that particular area.
The company's goal is to build more inner-city developments or market-rate housing, less affordable housing, some homeownership – either condominium or single family – and at least a few more senior projects. However, the future plan will be to focus on "opportunities that present themselves," he says.
No matter which direction the company chooses, some things will never change, such as the struggle to raise capital. "We're constantly looking for sources of capital and partnerships," says Evans. "Some companies do it by merging or going public and that is not something that we want to do. We want to stay private and, therefore, we have to generate all of the capital internally."
Having more access to capital will ultimately allow the company to be able to construct bigger inner-city projects on its own, which is what Evans would like to see the company accomplish.
The combination of staying private and having greater access to capital will allow A.F. Evans to continue to meet its mission – to provide innovative solutions toward the fulfillment of diverse housing and community development needs.