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Residential Real Estate


WHAT IT TOOK TO FINANCE ONE "AFFORDABLE" HOUSING DEVELOPMENT IN TROY

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Enlarge

The Hillside View project was spread across eight sites in Troy's North Central
neighborhood, including 534 8th St.

Donna Abbott-Vlahos | Albany Business Review


IN THIS ARTICLE

 * 


 * Christine Nealon Person
 * Alfred Testa Person
   
   
   


 * 




By Chelsea Diana
 –  Reporter, Albany Business Review
May 30, 2022

The Hillside Views neighborhood revitalization project was one of the first
large-scale new development projects led by the TRIP and Unity House.



It took six years, $18 million, support from federal and state governments and
coordination among five funding sources and dozens of partners to build 51
affordable apartments in Troy's North Central neighborhood.

"There's lots of developers who will go in and do a big investment in an old
factory building," said Christine Nealon, CEO of the Troy Rehabilitation and
Improvement Program. "And I understand why more now than ever, because it is
less expensive. You have a single set of neighbors, there are less grounds to
break. I totally get that. But that's not what our neighbors wanted."

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The Hillside Views neighborhood revitalization project was one of the first
large-scale new development projects led by the TRIP and Unity House. But
breaking ground on the 51 apartments scattered across eight lots wasn't easy. It
required getting tax credits, an equity partner and a $13 million construction
loan with NBT Bank, and listening to neighbors' concerns.

The first tenants started moving in this year. They are bus drivers, preschool
teachers, certified nursing assistants and others who earn at or below 60% of
the area median income, or about $40,200 for one person. Rent costs 30% of the
households' monthly income, or $1,000 a month for one person on a $40,000
salary.

As housing becomes more expensive, projects like this are vital for revitalizing
neighborhoods, and allowing more people to save so that they eventually can buy
their own homes. But the complexities of the project — from working with
neighbors to getting tax credits to lining up banking partners — make it
incredibly complicated.

"Every time we do a project like this, we get to the finish line and we see how
quickly this fills up. And then I hear after the fact, but we just need more
units," said Alfred Testa, NBT's commercial executive for the Capital District.
"It's such a heavy lift and it's so much time and so many resources to get these
projects up and running. But our communities just need more housing like this
because there's so many people who need it."

Enlarge

Christine Nealon is the executive director of Troy Rehabilitation and
Improvement Program Inc. (TRIP).

Courtesy of Troy Rehabilitation and Improvement Program

TRIP started in 1968 with the goal of building strong, balanced communities.
Today, Nealon said that involves talking with community members and working
together to identify the assets in the community that need greater investment.

Conversations around the Hillside Views project started in 2016 when Nealon left
Unity House to become executive director at TRIP.

"The first steps were looking at properties that were already in our portfolio,"
Nealon said, "either vacant, abandoned or empty lots or things that we could put
together."


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They identified eight properties scattered around the neighborhood, including
534 8th Street and 313 9th Street; among others.

The next step was navigating the red tape of getting Low-Income Housing Tax
Creditsneeded to make projects that offer housing below what is considered
market-rate financially feasible. Nealon worked with Monica McCullough, a
development consultant out of Rochester, to be able to do something at this
scale and successfully get the 9% tax credit needed for the project to work.

Once the project was approved for its tax credits, Nealon said they had to
campaign for an equity partner and find a construction loan lender.

"The equity partnership is something that you basically go out and shop
yourself. So it's like you're pitching, you're making a campaign for someone to
pick you up," Nealon said. "And because it was a scattered site with eight
different parcels, it was seen as a risk in a neighborhood that has old
infrastructure and lots of neighbors and lots of potential risks."

They brought on Red Stone Equity Partners to essentially buy the tax credits,
which for this project was around $9 million. In turn Red Stone gets about a 1%
equity interest.


Enlarge

Alfred Testa is NBT's commercial executive for the Capital District.

Donna Abbott-Vlahos | Albany Business Review



Nealon then connected with NBT Bank and Testa. By then it was early in the
pandemic, and most of the communication was over the phone and Zoom.

"We have a deep history in doing affordable housing projects across upstate New
York and a very thorough understanding of what these need to look like and
making sure there's the appropriate partners in this project," Testa said.

"The big thing for us is who is leading the project and do we know them or are
we comfortable with them," he added. "We know who's doing the work in the
community day in and day out. So once we realize that these two organizations
were putting forth this critically important project, we want to be part of it.
Yes, we fully recognize there's risk associated with it. But after meeting with
Christine and learning more, we knew we wanted to be there."

What's different, Testa said, about these affordable housing projects compared
to traditional commercial projects is the number of players and complexity
involved.

"When we work with a traditional for-profit developer, it's the bank working
with the developer and their in-house development team," Testa said. "When we're
looking at a transaction like this, there is a number of stakeholders involved
in the process, obviously TRIP and Unity House, but then Christine brought on a
development consultant and then you have a number of permanent funding sources.
We're the construction lender and get them to the finish line."


Enlarge

The Hillside Views redevelopment project included 313 9th St. in Troy.

Donna Abbott-Vlahos | Albany Business Review



Construction started last year on one four-story building with 28 apartments and
seven townhouse-style buildings at scattered locations. The buildings were
constructed in phases, with the smaller townhouse-style apartments going online
first. Several of the apartments were set aside for people with disabilities.

The project was recently able to get an $800,000 Federal Home Loan Banks grant
to upgrade some of the finishes to be longer lasting.

"We want to build communities that have homeowners, that have rental
opportunities across many socioeconomic realities. We want to ensure that there
are stores and commercial spaces and parks and sidewalks and lights and parking
spots. We want all of those things,' Nealon said. "So this project fits right
into that part of the larger continuum."

Nealon said the goal isn't to just build affordable apartments like this across
neighborhoods, but to eventually turn those tenants into homeowners.

"I always appreciate when people elevate that more sophisticated way of thinking
about affordability, because it it bridges the gap between people thinking 'I'll
always be a renter' and 'I can save to own my own home,'" Nealon said. "If you
are ensuring that you're only paying 30% of your household income on rent, that
gives you the space to start repairing credit, building savings."






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