New owner to turn market-rate RI apartments into affordable units
The new owner of a West Warwick apartment complex plans to turn market-rate units into affordable housing for people making up to 80% of the area median income.
Standard Communities in March purchased Tanglewood Village for $29.6 million from the Massachusetts- based Sawyer Realty Holdings LLC. At the time, the national affordable housing developer didn’t comment on its plans for the 176-unit property on 11.6 acres.
On Monday, Standard Communities principal and co-founder Scott Alter confirmed to Business First that the housing units will be deed-restricted as affordable. Standard will spend $3 million on capital improvements to include interior renovations and energy system upgrades.
In an interview, Alter said no tenants will be displaced at Tanglewood, but that future tenants will have to meet income guidelines. According to the most recent HUD figures, a family of four in West Warwick could make up to $86,500 and still qualify for one of the units. Rents would not rise above 30% of the 80% benchmark, Alter said.
“We’re planning to keep it looking and running just like a market rate housing property, just without the rent increases,” said Alter.
Tanglewood Village marks Standard’s fifth acquisition in Rhode Island. The company already owns Charles Place, Colony House, and Curtis Arms apartments in Providence as well as Riverstone Apartments in Pawtucket.
“Standard really believes that housing is a pathway to human prosperity,” Alter remarked. “Housing is human infrastructure. It leads to community prosperity.”
He said rents in the Providence metro area have spiked, and that stabilization is needed. “There’s not enough housing in Rhode Island,” he noted.
Alter said that Standard knows how to package complex affordable housing deals, and that the model provides institutional investors with stable returns at low risk. He added that banks with federal Community Reinvestment Act requirements are drawn to investing in well-crafted affordable housing opportunities.
Such deals depend upon cooperation between the private and public sectors. Alter remarked that the Rhode Island Housing and Mortgage Finance Corporation — better known as RIHousing — was “great to work with.”
RIHousing trustees in February approved $1.5 million in financing for Tanglewood under the state’s Preservation Loan Program Fund. Minutes from that meeting show that the project’s capital stack includes a first mortgage funded through Fannie Mae, borrower equity, and the RIHousing loan. The overall renovation budget will be around $18,000 per unit.
The development will qualify for so-called “8% tax treatment.” Under a Rhode Island law, certain affordable housing properties can be taxed at 8% of the project’s gross rental income from the previous year, a stabilization mechanism that paves the way for long-term affordability.
“Converting these rental homes from market rate to affordable opens up housing opportunities to families who are increasingly struggling to afford market-rate rents. We’re excited to see the work commence at Tanglewood,” said RIHousing executive director Carol Ventura in a statement.
Originally published by Providence Business First