If you do something innovative, you should win an award, no? 

I’d like to thank the Academy for creating awards so I can win one!

Henry Hudson Townhouses, the property so badly built it had to go somewhere to die, has been reborn as Village Green Apartments, and is up for Best Preservation of the Year as judged by the readers of Affordable Housing Finance (the industry’s monthly magazine, to which I’ve contributed on many occasions).  If you’re an Affordable Housing Finance subscriber, Vote here.

Vote for Charlie and all your wildest dreams will come true

[Full disclosure: I had a hand in this transaction, because as Recap we represented the seller for a period of several years, during which we persuaded the town and HUD that there was a responsible counterparty involved (us), that the owners would sell for a truly nominal price (enough to pay their exit taxes), and that they were not going to be able to wish the problem away.  We also found Charlie Allen and Evergreen – easy enough to do, as Charlie was a partner at Recap for a dozen years – and suckered Charlie into persuaded Charlie what a great opportunity it was.

… Here’s what it looked like before

Key to the transformation is the concept – which we conceived and Charlie put into practice – of subsidy portage.

And what it looks like today …

To see why it was necessary, let’s go to the Affordable Housing Finance article nominating it:

GLENS FALLS, N.Y. – Sometimes to save affordable housing, developers have to tear it down. That’s what happened to the dilapidated, crime-ridden Henry Hudson Apartments, which were torn to splinters by bulldozers to make way for Village Green Apartments, a new affordable housing complex on the same site.

Evergreen Partners, LLC, and Marathon Development Group, Ltd., kept federal subsidies flowing to the old affordable housing project even as they demolished the buildings.

We had to keep the subsidy flow continuous, because under various of the contract documents, once they stopped, they could not be revived.  The buildings themselves were a catastrophe, and had to go:

The 136 new townhouse apartments, all reserved for low-income households and subsidized with project-based Sec. 8 vouchers, are replacing 136 crumbling apartments originally built in 1973 under the Sec. 236 program administered by the Department of Housing and Urban Development (HUD).

Henry Hudson residents watching their homes being demolished

Once you free yourself from the shackles of the current exoskeletal structures, you realize that the awful buildings are the problem.  So you demolish them, while preserving the money.  As veteran reporter Maury Thompson of the Glens Falls Post Star described it:

A year ago, officials hoisted sledgehammers to mark the start of demolition of the Henry Hudson Townhouses.

On Thursday, they used a giant pair of scissors to snip the ribbon on a new three-story “mid-rise” apartment building, the latest of the new apartment units at Village Green.

To make subsidy portage work, you have to have local political buy-in.  Getting that took several years, and required the sellers to refuse to give up and allow HUD to foreclose – otherwise they’d have hoped that on a foreclosure, the housing could be bulldozd and shiny new medical offices could rise to take their place – and ethe buyer to convince everybody that their plan could succeed. 

“We’ve been on an exhaustive construction schedule for exactly a year now. … We’re almost there,” said Charles Allen, a principal in Evergreen Partners.

Hudson Avenue Housing Associates, a joint venture between Evergreen Partners and Marathon Development Group, is in the process of replacing the old 136-unit townhouse complex with an equal number of apartment units for low-income individuals and families.

Charlie Allen, putting up with me photographing him in Recap’s offices

Again, we needed 1-for-1 replacement, so the subsidies would match up.  Like the knife that stays the same through two new blades and three new handles, the transaction required sustaining a continuity even as Charlie did the most complete gut rehab imaginable – not a single stick of the old buildings survives.  That means doing the work in phases, a rolling rehab that moved around the site:

The developers have been demolishing older townhouse units and building new apartment buildings in phases.

The last of the older buildings will be demolished this month and next, with construction of new buildings expected to be completed around the end of the year, Allen said.

Fortunately, the site was big enough, and low enough density, there was space to make it work (particularly if the complex had a natural 15% or so vacancy when demolition began).

The three-story building that opened Thursday includes single-floor apartment units designed for the elderly.

Other new buildings have multilevel apartments designed for families.

The old structures could not possibly have been modernized:

The former townhouse complex, often called “the chicken coops,” was long considered an eyesore and had a reputation as a hotbed of crime.

Affordable housing, or chicken coop?  You decide!

You are what you live in; bad properties invite bad residents, and encourage the observant herd to veer from good into bad tenancies.  As the new properties come online, there are new enforcement of lease policies:

Allen said his company is not just improving the appearance of the neighborhood, they’re changing its reputation by enforcing tenant rules.

Since the company took over in January 2007, 45 households have been evicted or have left voluntarily because they were facing eviction, he said.

Forty-five exist out of 136 means that fully one-third of the old residents didn’t deserve to live in quality accommodations.  Truly, there’s a new sheriff in a new town.

You don’t follow the rules, I’m gonna drool on you

Officials say the new apartments are a model for other communities.

“I think this project really shows the kind of work we want to do in housing around the state,” said Deborah VanAmerongen, state commissioner of housing and community renewal.

VanAmerongen: supporting Village Green with words and lots and lots of dollars

The developers’ unique plan saved the project from foreclosure. Preserving affordable housing usually means fixing up old apartments to keep a stream of HUD subsidies flowing. But shoddy insulation, inefficient electric heating, and decades of less-than-attentive management made Henry Hudson much too expensive to rehabilitate.

Not just expensive, impractical.  Remarkably, when property gets older than a certain age (which varies from twenty to eighty years, depending on its construction and layout), it can never be brought to market standard – it must be demolished and rebuilt from scratch.

Demolition and redevelopment were also costly options. “Our initial thought was we would never assemble enough money,” said Charles Allen, principal for Evergreen. In 2006, the developers won an enormous $20 million reservation of low-income housing tax credits—four times larger than the median tax credit award in New York in 2006.

There is no financial problem in affordable housing that cannot be solved by the application of very large sums of money.  The key is creating the political capital to secure the money.

With this large tax credit reservation, the developers thought they’d cleared their biggest hurdle. But their troubles had only just begun.

Who could possibly oppose such an innovative and vital plan?  You’ll never guess:

You going to blame the locals?

Local opposition delayed the project for more than a year.

This didn’t surprise me – but it was irritating nonetheless.  Here was the property, located smack-dab in downtown Glens Falls.  What did the city want?  To move it out of sight:

A new mayor demanded that the redevelopment locate its new apartments on an underutilized park on the outskirts of town in early 2006. Other planning officials opposed even that much preservation and seemed to be waiting for HUD to shut down the apartments, which had failed several HUD inspections and owed the agency $110,000 in overdue mortgage payments, said Allen.

Yes, many locals did want the place to disappear.  The sellers refused, and gave Charlie a long-term patient exclusive, which gave Charlie the leverage.  Meanwhile, both the sellers and the buyer were telling HUD that it could have the property any time it wanted – remind me to post sometime on why foreclosure of crappy real estate is a lender’s worst nightmare – and HUD backed us up, by doing what HUD is so magnificently capable of: nothing.

None shall shut down Henry Hudson

HUD officials saved the project with their support, Allen said. The agency made it clear to local officials that even if HUD foreclosed, the apartments would remain affordable housing.

Now that it’s actually happening, the locals have come around:

Local officials have become enthusiastic as construction proceeds. A new property management team has made the property, which has been more than two-thirds occupied throughout the process, a safer place to live. The team has worked closely with police and earned the trust of residents, who are willing to identify and remove tenants breaking the law.

The herd is observant.  Give them a fair deal, treat them as customers, say what you’ll do, then do what you say, and they become your allies.

By April, the number of calls to the police from the property was less than a third of what it was the year before, said Allen.

I’ve previously argued that housing is the catalyst of cities, and that Mission Entrepreneurial Entities are the change-makers.  One reason is that elected officials, administrators, and policy makers have difficulty believing anything will work.  Demonstrating by example actually proves concept.  That’s what happened here.  Without Charlie, this property would not have turned around.  It’s the best story of the year – of many a year.

Henry Hudson is gone, but the property lives on

Vote for Charlie as Best Preservation and all your wildest dreams will come true.

A dance in celebration of Village Green in Glens Falls, New York

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Sometimes it works.

Sometimes the things we hope to do, and plan to do, actually get done.

If you wanted to rehab this –

– into this –

– how would you go about doing it?

Well, yes, you’d need that too

Aside from a big pile of money, your biggest obstacle to the redevelopment is that there is already a property on the site, which no matter how rickety or leaky, is still home to families and children.  Never mind that it’s badly built, and leaks like a sieve.  You can’t just wish it out of existence.  What then do you do?

It would look worse without the snow covering up the soggy grounds

As I posted six months ago, some properties need to go somewhere to die:

Henry Hudson’s redevelopment is an example of what I’ve dubbed ’subsidy portage’, where the current physical property is demolished and rebuilt, and the residents, subsidies, mortgage, and regulatory agreements all migrate from the old physical buildings to the new ones.

The complex is owned by Hudson Ave. Housing Associates LLC, a partnership made up of Preservation Management Inc., Evergreen Partners and Marathon Development.

The existing buildings, which were built in the early 1970s, are in poor shape and are not energy-efficient, said [property manager Kelsey] Smith.

Remarkably, some properties are worth negative value — the land would be more valuable if they were torn down.  This particular property was a maze of Texture-111 siding, flimsy stick-built construction, and sloping roofs that invited water in to every crevice.

“They’re just old, and they really have to come down,” she said.

That became the plan: demolish and rebuild, and demolition started last September.

Today, after a very snowy winter, the first phase of rebuilt homes is coming on line, as reported in the

Glens Falls Post-Star:

New housing excites incoming tenants

Zachary Lane wheels some family possessions up to the family’s new home as his mother Shanda moves out of the way on their moving day at the Village Green Apartments on Monday.

Shanda Lane was animated as she spoke about how nice it was going to be to have shower faucets that turned on and off easily and a toilet that didn’t leak.

Sometimes we forget how much people will silently endure, and how much joy simple things can bring.

She was even more excited about another feature of the family’s new Village Green apartment.

“And check this out — we actually have a doorbell!” she said, as she reached outside the front door and rang the bell.

To accommodate demolition and rebuilding without displacing residents for long intervals, the developer (my former colleague, Charlie Allen) used a rolling rehab:

So the challenge became how to do a ‘rolling rehab,’ demolishing and rebuilding some of the buildings in phases, and moving residents around from old to new.

Building 44 is scheduled to come down next week [September, 2007 – Ed.], followed by buildings 21 and 25.  Residents of buildings being demolished have been moved into vacant apartments at the complex, Smith said.  Construction of the building that will replace Building 40 is tentatively scheduled to begin on Aug. 27, Smith said.

I’m also particularly happy because my for-profit company and I took on this problem four years ago.   When we were contacted by the investor limited partners, who were seeking some resolution of their risk, we realized that for the property to be viable, it needed to be comprehensively recapitalized, with very substantial new resources.  That, in turn, meant it would have to be sold, and to the right buyer — which, in turn, meant we had to preserve the status quo for several years.  But it got done, and the demolition is the first step.

The results are worth it:

No way that could have been recreated through rehab

Lane, her fiance Bill Kearney and their five children were among the first families to move into the new apartments, which are being built to replace the Henry Hudson Town Houses complex between Hudson Avenue and Broad Street.

Three families moved in on Monday, and another three will move in each day for about the next week, said Devon Briggs, the local property manager.

One of the most noticeable differences in the new apartment was its consistent heat, Lane said.

The townhouse where they lived for 11 years was drafty, she said.

What, you think that was drafty?

Old construction – pre-1974 Arab Oil Embargo – treated energy as virtually a free resource, and closed the cost-value gap through skimping on the physical construction.  The builders used single-pane windows (take a look), loose aluminum frames (unbelievable heat sink), low R-factor insulation, and that wafer-thin Texture-111 (T-111 as it was known) siding.

It was cheap up front, and horribly expensive over time:

Tenants not only will have more consistent heat, but they also can expect to pay less for utilities, because of the design of the new apartments and their new heating systems, said Kelsey Smith, a member of the management staff who is working on tenant relocation.

“It’s a long time coming. I think the new company is doing some really good things here,” [Ms. Lane's fiancé Bill] Kearney said later Monday.

Hudson Avenue Housing Associates, a joint venture between Evergreen Partners and Marathon Development Group, bought the Henry Hudson Town House complex last spring.

From the sellers I represented.  Our clients had agreed to take a minimal price – basically, just enough to cover their exit taxes – and to allow any additional resources to be put into the property. 

More money spent on buying the property usually means less money available for construction

I’m proud of that group of clients.  Had they chosen their economic self-interests, they could have let the property limp along, as dilapidated and substandard housing, daring HUD to foreclose.  Fortunately, they didn’t – and our role in the transaction was to tell anybody and everybody that our clients would sell it if a certain minimal price was cleared … and then to wheedle my former colleague Charlie into taking it on.

Construction has progressed smoothly, other than occasional delays because of weather, according to Charles Allen, a principal in Evergreen Partners.

“The winter’s not doing us any favors. It’s made for extra work — no surprise,” he said on Monday.

Not to mention the dead bodies on the site, as Charlie emailed me during demolition and site prep:

Did I tell you about the dead bodies that we have on the site?  There are 12 of them and we are leaving them alone.  There had been an entire graveyard on one edge of the site.  It got moved in 1851.  That means a notice was put in the paper – “We are moving the graveyard.  Come get your friends and loved ones.”   

You scarecrows are gonna have to go …

That’s all in the past now:

Once the first round of moves into new apartments is completed, the next round will begin in June or July, when a three-story midrise building on the Hudson Avenue side of the complex is expected to be ready for occupancy, Allen said.

Buildings like these come down …

And buildings like these go up …

Some two-story apartment units along Hudson Avenue are expected to be ready around the same time.

The last of the townhouse units is expected to be demolished in July or August, with construction of the last of the new apartment units completed in the spring of 2009, Allen said.

You know it’s spring when the flowers bloom in your front yard.  You know a property’s a success when the elected officials bloom in your front yard.

Glens Falls Mayor Roy Akins said he is pleased the construction is proceeding smoothly.

He said one of his pledges when he ran for office was to make the town house complex a better place to live.

Gee, thanks, Mister Mayor.

It is amazing what you can accomplish if you do not care who gets the credit.  ~Harry S. Truman

A man who knew where the buck stopped

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