History
Commonwealth Multifamily Housing Corporation is a corporate consolidation of more than 37 years of involvement in national affordable housing policy, community development, resident services and residential financial strategies. Beginning with the formation of a national nonprofit organization in Washington, D.C., the principals of Commonwealth have created and revitalized affordable housing communities from coast-to-coast utilizing a uniquely entrepreneurial and business-oriented approach to affordable and workforce housing.
Commonwealth Multifamily Housing Corporation was formed as a nonprofit corporation under the laws of the state of Pennsylvania in July of 2000 with the initial mission of creating affordable housing for seniors in the Mid-Atlantic States. Prior to embarking on its plans there, Commonwealth was presented with the opportunity to participate in an exciting project in Texas. In a true collaboration of public, private and nonprofit organizations to carry out legislative intent, Commonwealth joined forces with a Dallas home builder, a national bank and a state of Texas bond issuer to design, finance, develop, construct and lease up White Rock Apartment Homes , a 336-unit affordable multifamily community in northeast San Antonio.
Originally designed by Centex Homes for the upscale multifamily market, White Rock stood to benefit from favorable Texas property tax laws implemented to encourage the creation of affordable housing. A search went out for experienced nonprofit professionals capable of meeting the federal and Texas requirements for operating a Community Housing Development Organization (“CHDO”). White Rock needed to be owned by a CHDO to qualify for a 100% ad valorem property tax exemption (the “CHDO Exemption”) that would make construction and operation of the property feasible.
The search settled upon John Carlisi and David Cole, senior executives of Neighborhood Development Collaborative, an affordable housing and community developer-operator organized in 1978. Carlisi and Cole then took the helm of Commonwealth to guide it towards creation and ownership of White Rock. The organization joined in the process of garnering all of the necessary government approvals and community acceptance for the new apartment property.
Commonwealth’s first priority was obtaining certification as a CHDO for itself and its new single-member, limited liability company (the “Company”) that would take title to White Rock. Initially, this required recruiting qualifying directors for Commonwealth and the Company to represent the interests of future low-income residents of White Rock and the surrounding community. Once accomplished, along with the adoption of appropriate bylaws and regulations, certification as a CHDO was promptly granted to both by the Texas Department of Housing and Community Affairs (“TDHCA”). Preliminary recognition of the CHDO Exemption for White Rock quickly followed and the path was then paved for financing commitments.
Commonwealth applied for and was approved for construction-permanent financing through the sale of $22,000,000 in two tranches of IRC Section 501c3 tax-exempt bonds to be issued by the Texas State Affordable Housing Corporation (“TSHAC”). The construction phase for White Rock was backed by a commitment for a $20,000,000 letter of credit from Bank of America, which substantially removed the construction and lease-up risk from the bondholders. With that security in place, Charter MAC, a large owner-syndicator of municipal bonds, committed to purchase the senior tranche of bonds. Centex Homes then provided additional financial support by committing to purchase the junior bonds to round out the permanent financing. The bonds were issued and sold in mid-December of 2001 and the real property acquired immediately thereafter.
With financing securely in place, Centex and Commonwealth teamed up with Greystone Development & Construction and Greystone Property Management to build out and lease up White Rock. With the exception of going from two swimming pools to one, the architectural layout and design of the buildings, units and amenities were not diminished in the transition from upscale to affordable. Commonwealth looked forward to White Rock becoming the perfect example of how affordable housing can be developed to be indistinguishable from, and sometimes better than the general market.
The Commonwealth team became involved in much of the site development process, primarily working with federal and local government authorities. These activities ranged from what became extensive drainage issues from the city planners’ view to assuring that no endangered species of wildlife were threatened by the new project. Unique amenities such as the car wash facility, trash compactors, garages, storage units and a nature area brought unique challenges as well as benefits for affordable housing.
After breaking ground in January of 2002, the first group of units were ready to rent in January of 2003. During the construction phase, the Greystone Management team embarked on an energetic mass-marketing campaign to generate great interest in the new property. This effort was augmented with some of the first Internet marketing for apartments driven by Intradel Corporation, a apartment and telecomm consultant working closely with Commonwealth. Intradel’s novel approaches to telecomm and Internet business applications made White Rock a leader in online marketing and leasing. By the time the staff began taking leases, it had over 200 active renters in the pipeline. Ironically, the major issue facing the leasing agents was the reluctance of low-income renters to apply because they thought the property “looked much too expensive.”
By mid-summer of 2003, White Rock was over 90% leased and was ready to convert to the permanent phase of the financing at year’s end. Commonwealth then focused upon enhancing the property’s place in the community. Bordered on three sides by single-family homes, the team had to ensure its neighbors that fears of disruption of their tranquil neighborhoods were unwarranted. Working closely with officers of the respective neighborhood associations, Commonwealth dealt successfully with a variety of concerns including storm water control, noise, visual privacy, cutting across lawns and fence preservation. In the ultimate commitment to neighborhood cooperation, Commonwealth shares equally in the maintenance costs for one association’s fence that separates its single-family homeowners from White Rock. After 13 years, the homeowners and the renters continue to live in peaceful coexistence.
Three months after closing on the tax-exempt bonds for White Rock, the Commonwealth team found itself closing on a much bigger challenge. Having proved its capability to wend its way through the complexities and intricacies of 501c3 bond financing for one property, the team was approached to use its newly acquired expertise in acquiring a six-property multifamily portfolio with 1,470 units. Instead of constructing a new property, this effort necessitated converting the portfolio from market-rate to affordable housing.
