NEW YORK, NY - A joint venture announced between the Community Development Trust (CDT), a real estate investment trust that provides capital for the preservation and creation of affordable housing, and Volunteers of America (VOA), a national nonprofit affordable housing owner and developer, will ensure that a Colorado Springs, Colorado, apartment complex continues to provide affordable housing to 256 low-income families and individuals.
The CDT-VOA joint venture to recapitalize Summit Apartments, a 30-year-old complex at 2795 Reeve Circle, will also fund $1.5 million in improvements to the property, including kitchen updates, new windows, other energy upgrades and new retaining walls. The Colorado Springs Housing Authority (CSHA) also is a partner in the joint venture.
"CDT's investment—our first in Colorado—is part of our larger commitment to ensuring long-term access to quality, safe and affordable housing throughout the country," said Brian Dowling, Senior Vice President of Community Investments at CDT. "Our joint venture with Volunteers of America also serves as a model of how a national institutional investor can partner with a large nonprofit organization to help address the nation's critical shortage of affordable housing."
All of the units in Summit Apartments will remain preserved for families and individuals earning between 50 and 80 percent of the area median income (AMI).
Constructed in 1986, the property was purchased by Volunteers of America in 1993 from the Resolution Trust Corporation using financing provided by Colorado Housing and Finance Authority.
The Colorado Springs Housing Authority was integral to the success of the latest Summit Apartments transaction, having facilitated a tax exemption to the CDT-VOA partnership that expanded and extended the level of affordability at the property. Through partnering with the CSHA, CDT and Volunteers of America were able to increase the level of affordability so that 85 percent of the units serve families at or below 50 percent AMI and 15 percent of the units serve those at or below 80 percent AMI.
"As there is a shortage of affordable housing in our community, the preservation of existing affordable units is critical to our goal of providing quality housing for low-moderate income families," said Chad Wright, Executive Director of the CSHA. "The ability to create strategic partnerships in the pursuit of this goal is essential. This collaboration exemplifies that approach and will benefit families in Colorado Springs for many years."
Civic leaders have identified the lack of affordable housing that accommodates low- to moderate-income residents as a high priority in Colorado Springs and across El Paso County. An October 2014 Affordable Housing Needs Assessment commissioned by the city and county governments shows that:
About half of renters and a third of homeowners with mortgages in El Paso County are cost burdened, meaning they spend over 30 percent of their income on housing.
When comparing the distribution of household incomes to the distribution of housing units priced at levels these households can afford, El Paso County has an estimated gap of 24,513 affordably priced units.
Given the high cost of land in Colorado Springs, increasing construction costs, including extension of new public infrastructure and public opposition to new affordable multifamily housing properties, the report recommended that city and county officials "seriously" consider the acquisition, rehabilitation and preservation of its existing affordable housing stock by teaming with a nonprofit developer or entering a limited partnership.
The Summit Apartments transaction with the triumvirate of CDT, Volunteers of America and the Colorado Springs Housing Authority is a strong example of a for-profit, a nonprofit and a public entity working together for the common goal of preserving affordable housing in the community.
CDT invested approximately $2 million into the partnership. CDT and Volunteers of America closed on an acquisition bridge loan funded by CDT in June and then closed on permanent financing in July. The permanent financing provides attractive long-term financing from Freddie Mac through Wells Fargo, National Association.
"We are proud to partner with CDT and the Colorado Springs Housing Authority to preserve and improve the affordable housing opportunities provided at Summit Apartments," said Robert Gibson, Executive Vice President and Chief of Staff for Volunteers of America. "By providing families with the space they need and services that help parents and their children thrive, we help families build communities."