Washington, DC
In 1993, the
Greater Southeast Washington Community Hospital Foundation
asked the Community Preservation and Development Corporation
(CPDC) to acquire and redevelop Southern Ridge Apartments, a
troubled property located in southeast Washington and
adjacent to the Hospital. CPDC acquired Southern Ridge to
improve and stabilize the deteriorated community and to
provide affordable mixed-income housing.
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Property and Community
Profile
Southern Ridge Apartments is a garden apartment community
consisting of 156 rental housing units in six buildings
along with surface parking and a 4,808 sq. ft. daycare
center. There are a mix of efficiency, one- , two-, and
three-bedroom units.
CPDC purchased and renovated
Southern Ridge at a time when the market in Southeast was
weak. Most people thought it would be difficult to lease the
property since vacancies were high in the area. However, as
units were completed they were immediately leased,
demonstrating that the market for premium affordable housing
developments is strong.
Financing Structure
The owner of Southern Ridge Apartments is Southern Ridge
Limited Partnership, with CPDC, Inc. as the sole general
partner. CPDC, Inc. is the for profit-entity created by CPDC
to be the general partner in its limited partnerships.
Sources of funds for Southern Ridge included a first
mortgage loan from First Union Bank (formerly Columbia First
Bank) through the Federal Home Loan Bank Community
Investment Program (CIP); a second mortgage loan from the
District of Columbia Department of Housing and Community
Development (DC DHCD); and equity from Fannie Mae raised
through the sale of federal Low-Income Housing Tax Credits.
Although the project has several peculiar tax credit issues
relating to the property being located in a difficult
development area, CPDC was able to resolve all of the tax
issues and obtain an additional 30% tax credit basis for the
project. In addition, PEPCO rebates were received by the
property for energy efficiencies.
Construction Management
CPDC manages the
construction of its properties and therefore worked with the
project architect in the development of plans and
specifications. Once completed, CPDC worked closely with the
general contractor on the development of the costs. During
the construction, CPDC approved requisitions and change
orders prior to submission to the lenders.
As in any construction there are an array of issues that must be resolved, and the highly qualified staff was able to deal effectively to resolve all complex construction issues. One such issue related to soil problems. As with many properties in Southeast, the buildings were originally built on unstable soil. CPDC worked with the architect and engineer to determine which stabilization process would be most effective for the buildings and made sure the work was done satisfactory prior to the renovation of the building. Southern Ridge was partially occupied during the renovation.
Once the first building was
complete, residents were relocated (at no cost to them) from
non-rehabbed units into renovated units. The relocation of
residents and the management of this process has become a
specialty of CPDC. At least four developments have included
some form of resident construction
coordination/relocation.
Resident Association Participation
When CPDC started working
at Southern Ridge, there was a strong resident association
already organized. In the District, residents have the first
right to purchase property for sale. After meeting and
developing a good working relationship with the residents,
they approved CPDC's request to purchase. CPDC continues to
have a excellent working relationship with the residents. In
addition to the daycare program run by the DC YWCA, other
on-site community service programs include an after
school tutoring and computer learning center.
The Greater Southeast Community
Hospital also has a continuing relationship with this
community and CPDC is working with them on programs to
assist the residents.
Marketing and Asset
Management
The property was fully
leased and is operating as projected. As an asset manager,
CPDC approves budgets, reviews property management, reviews
and submits appropriate reports to lenders and the investor,
and conducts site reviews. The asset management
responsibilities are as important as the initial development
because the proper maintenance and the long-term financial
health will keep CPDC from wasting limited public and
private funds in redeveloping properties every five to ten
years. CPDC believes it must maintain the health of all
properties over the long term.
