First Affordable Family Housing Development outside the City of Reading in Decades

First Affordable Family Housing Development outside the City of Reading in Decades

In February 2018, Housing Development Corporation MidAtlantic (HDC MidAtlantic), a nonprofit affordable housing development group, celebrated the completion of its affordable housing project in Berks County, Pennsylvania. Located between Reading and Birdsboro, River Run Meadows Apartments offers one-, two-, and three-bedroom units. All 58 units are affordable to households earning less than 20 to 60 percent of the area median income (AMI). The development is the first affordable housing project in the rural area of Berks County in more than 10 years.

River Run Meadows Apartments

Berks County experienced a significant slowdown in new housing construction following the nationwide economic downturn, with a decline in new units beginning in 2009 and continuing through 2015. River Run Meadows was built on a site where development plans had failed a decade before due to a lack of financing. A former developer introduced this site, vacant and bank owned, to HDC MidAtlantic, which acquired the site in December 2015. With easy access to major highways and retail and commercial jobs, the site had potential for multifamily affordable housing development. HDC MidAtlantic followed the previous development plan, which had already gone through the county’s land use approval and entitlement process, to speed development.

The six residential buildings at River Run Meadows provide 58 affordable rental units ranging from 640 to 1,225 square feet. The units consist of one- and two-bedroom apartments and two- and three-bedroom townhomes, including nine units that meet Americans with Disabilities Act requirements for accessibility and two units that are accessible to residents with hearing or vision impairments. All units are reserved for households earning incomes at or below 20, 50, and 60 percent of AMI. Monthly rents fall between $195 and $950 depending on household income and unit size. The level of affordability is dictated by tax credit requirements. Although HDC MidAtlantic expected to serve families who moved from Reading to send their children to schools in Berks County, River Run Meadows has attracted a variety of residents, including seniors and young professionals.

Constructed to meet ENERGY STAR^® Version 3.0 standards, residential units are equipped with ENERGY STAR appliances and central heat and air conditioning. Community amenities include onsite laundry facilities, a community center with kitchenette, a multipurpose athletic court, a surveillance system, and 24-hour emergency maintenance. Residents can access the nearby Schuylkill River Trail for jogging, walking, and biking.

Environmental Preservation Efforts

The original site of River Run Meadows encompassed more than 50 acres straddling two distinct types of land: one consisting of steep, wooded hills, and another type that was flatter, more suitable for development, and closer to highways. The wooded area was a part of an adjacent site that was already owned by Natural Lands Trust, a nonprofit land conservation group that protects forests, fields, streams, and wetlands. The Schuylkill River Trail connects the developer’s site to all parts of the Natural Lands Trust’s site. HDC MidAtlantic agreed to sell the wooded portion of the site to Natural Lands Trust, leaving 20 acres for the River Run Meadows development. Both parties benefited from the transaction: Natural Lands Trust was able to complete its greenway using the parcels acquired from HDC MidAtlantic, and HDC MidAtlantic was able to reduce its liability by selling the undevelopable land. Ultimately, this land and the site acquired by Natural Lands Trust will be transferred to the state of Pennsylvania for preservation. Because of the need to meet state and local requirements, the land sale took approximately 7 months.

Financing

Recognizing the critical need for affordable housing in rural areas, the Pennsylvania Housing Finance Agency awarded the development $1.1 million in low-income housing tax credit equity, and the Berks County Redevelopment Authority awarded the project $400,000 through the HOME Investment Partnerships program. With a permanent first mortgage loan and additional funds such as deferred developer fees, the total development cost of River Run Meadows was $14.2 million.

Affordable Housing Challenges in Smaller Towns

According to the HDC MidAtlantic’s market study, development projects have focused on Reading’s urban areas, but many cost-burdened, low-income households live in the rural part of Berks County. River Run Meadows was fully leased within 5 months after it opened, and demand for affordable housing in the area remains high. In part because of an influx of residents from Philadelphia seeking less expensive housing, HDC MidAtlantic estimated a demand for an additional four units for every unit built in the area surrounding River Run Meadows. Funding for low-income residential development has always been highly competitive; the developer has received federal subsidies for only one project per year in this area. Although market conditions, agency allocation, reduced equity, and rising interest rates are additional challenges, HDC MidAtlantic plans to add approximately 1,500 units in the area over the next 5 years.