In West Virginia, Innovative Financing Gives New Life to Two Distressed Senior Housing Developments

In West Virginia, Innovative Financing Gives New Life to Two Distressed Senior Housing Developments

The renovated Parkland Place provides 133 units of affordable housing for seniors and people with disabilities in the city of Parkersburg, West Virginia. Photo credit: Heritage Housing

Despite being 150 miles apart, two affordable senior housing developments in West Virginia were renovated through a single, innovative rehabilitation process. Parkland Place was built in 1977 in Parkersburg, a city of 29,738 on the Ohio border, and Chapmanville Towers was constructed in 1981 in the rural town of Chapmanville, population 1,020. Both areas have a shortage of affordable housing, and Chapmanville also has a pronounced need for senior housing; 28.5 percent of the town's population is aged 65 and older compared with 21.2 percent for the state as a whole.

By 2020, Parkland Place and Chapmanville Towers were in dire need of renovation. Despite being more than 40 years old, both properties still had original interiors and building systems, many of which were near failure. Connecticut-based developer Heritage Housing, Inc., was able to acquire, refinance, and rehabilitate the buildings in one innovative deal, preserving 221 units of affordable housing.

The Path to Joint Rehabilitation

Heritage Housing acquired both Parkland Place and Chapmanville Towers from the same seller — the former in July 2020 and the latter in January 2021. All units in the two properties were supported by project-based Section 8 subsidies. Heritage sought to trim rehabilitation costs by packaging the properties into a single deal for the purposes of bond and tax credit financing. Heritage worked with the West Virginia Housing Development Fund (WVHDF) to obtain a single tax-exempt bond and low-income housing tax credit (LIHTC) syndication for the properties. David McCarthy, president of Heritage Housing, noted that Chapmanville Towers was "on the small side" for a tax credit deal on its own; pairing it with the larger Parkland Place helped Heritage finance the necessary renovations.

Chapmanville Towers is the only affordable housing development in Chapmanville, West Virginia. Photo credit: Heritage Housing

Unlike Parkland Place, Chapmanville Towers had undergone a HUD Mark-to-Market transition in the 2000s and still had mortgage restructuring debt from that loan. To resolve the issue, WVHDF approved two separate loans, which allowed WVHDF to take advantage of rural development credits for Chapmanville Towers. HUD renewed the Section 8 subsidies for both properties and extended the Mark-to-Market loan at Chapmanville Towers.

With financing in place, Heritage extensively renovated both properties, upgrading the kitchens, bathrooms, and finishing details in each unit. The company also replaced the elevators, windows, and doors, which were nearly inoperable, and updated the heating and air conditioning systems with energy-efficient units. The renovation lasted 18 months, and residents remained in their units for most of that time. At each property, residents moved into vacant units in the same building for 3 to 4 weeks while their apartments were being renovated. The renovation contractor also helped the residents move in and out of these temporary units. "The main strategy to make this process go [smoothly] is just to have good communication," said McCarthy, who noted that having longtime managers also fostered residents' trust in the developers and the renovation process.

Parkland Place and Chapmanville Towers were completely renovated with new elevators; heating, ventilation, and air conditioning systems; and plumbing, as well as modernized living spaces. Photo credit: Heritage Housing

Financing

The renovated projects consist of 221 affordable apartments, including 88 units in Chapmanville Towers and 133 units in Parkland Place. Nearly all these units are set aside for seniors, with 7 units reserved for people with disabilities. Across both buildings are 219 one-bedroom units and 2 two-bedroom units; 56 units are restricted to households earning 40 percent or less of the area median income (AMI), and the remaining 165 units are restricted to households earning 60 percent or less of AMI. Both properties have a community room, and Chapmanville Towers offers a library and outdoor terrace. Parkland Place has an activity room where residents engage in arts and crafts and play games.

The total cost to rehabilitate both properties was $21.8 million, financed with 4 percent LIHTCs from PNC Bank. The Parkland Place renovation cost $12.5 million, which includes a $7.7 million mortgage from WVHDF, $3.5 million in LIHTC equity, and other sources, including a deferred developer fee and operations income. The Chapmanville Towers renovation cost $9.3 million; funding sources included a $3.9 million U.S. Department of Agriculture Rural Development Section 538 credit enhancement that WVHDF facilitated, $2.7 million in LIHTC equity; and $1.8 million from HUD mortgage restructuring as well as a deferred developer fee and operations income.

Renewed for Another Generation

Heritage Housing completed renovations to Parkland Place and Chapmanville Towers in March 2023. "The properties are operating much [more smoothly] now, and I think they're really high-quality housing," said McCarthy. He believes that the buildings' upgraded units are a meaningful addition to the affordable housing supplies in both Chapmanville and Parkersburg.