Talk about being in it for the long haul. Bev Bates, senior vice president of development operations for Boston-based The Community Builders (TCB), spent as long working on her firm's Charlesview development in Boston as a two-term president spends in office.
In 2003, Bates began working with non-profit interfaith group Charlesview, which had developed the affordable 213-unit Charlesview Apartments 40 years ago. Harvard University, the major stakeholder in the area, had been interested in getting control of the Charlesview site for many years, but the non-profit, consisting of three churches that owned the site, wanted to refinance the property and make some repairs. It brought TCB onboard as a consultant, and TCB negotiated with Harvard for the site in a land swap and got an equity contribution. After eight years of work, the site finally began construction.
Bates took some time to talk to Multifamily Executive senior editor Les Shaver about the $207 million project.
MFE: How difficult was it to make this project a reality?
BATES: In Boston, developing multifamily housing, especially if it’s affordable, is usually pretty involved. In our case, it was complicated by having several stakeholders. First, we came to terms with the community-based non-profit, Charlesview. Forty years ago, that interfaith group developed the complex we’re replacing. Then, we negotiated the terms of a land swap with Harvard. Meanwhile, we engaged in a lengthy community planning and entitlement process. This part of Boston has a very activist neighborhood with lots of players. We also worked with the Boston Redevelopment Authority, the city agency that approves where and when things get built. There was lots of back and forth about density, height, open space, income and home ownership mix, and on how to connect the site to the Charles River.
Of course, in the past few years, it’s been challenging to get any multifamily deal financed. For New Charlesview, MassHousing provided tax exempt bond financing as part of a construction loan package of $106.2 million. It was their biggest construction loan in about 25 years. We also had new issue bonds, with interest rates that were a godsend. Also, HUD came in with a 90 percent risk share guarantee on the construction and permanent debt. Raising tax exempt financing in 2008 put us out in the market at just about the worst time. Our deal called for more than $25 million in equity, a big bite for any one investor. But Google stepped up. The company, which has a major office presence here, also has a newly launched housing investment fund.
MFE: Now that you’ve started construction, how long should the project take?
BATES: It broke ground in June, and there’s a three-year construction process. The actual vertical construction is a two-year process. It will take the better part of a year to do site preparation, demolition, environmental remediation, and put in the garage deck before we can start to go vertical. There are two home ownership components that will follow construction of the rental apartments. We’ll do the piece adjacent to the rentals first. The other ownership piece is a mid-rise. We’ll build that as we near completion of the rentals and hopefully, as the market continues to improve. We’re doing a structured underground garage. We’ll start to build that after we complete environmental remediation on the site.
MFE: How did you get the unit mix?
BATES: We’re porting 213 Section 8 subsidies, so you’re talking about replacing the existing Section 8 units one for one with the same exact unit mix and amenity package as they have at the old site. We then proposed 282 rental units (more than 400 units total), but that was decreased to address density concerns. So we got up to 240 on the rental side and 100 on the ownership side. The overall resident population became more mixed by adding a significant amount of market rate home ownership.
MFE: In three years, it might be a good time to introduce condos in Boston. Do you feel like your timing could be good on that?
BATES: We think this project will transform the Western Avenue Corridor. Given appropriate market and economic conditions, there should be great demand for the condos as well as rentals in this prime location.