Serenity; Boston, MA;
One of the ground rules for multifamily development in Boston is that market-rate projects are required to subsidize affordable units, which otherwise might never get built because of insufficient financing.
Housing advocates are questioning what happens after things don’t go according to the script, as a Brookline developer who has yet to submit an $8.4 million payment toward 42 affordable units prepares to sell a year-old apartment tower in ever-gentrifying Jamaica Plain.
“This is a luxury development entering into a neighborhood that we’re trying to stabilize,” said Patricia Flaherty, executive director of Mission Hill Neighborhood Services. “Having the affordable units offset the private market housing is important to us, and we want to make sure they’re paying into the pool.”
The property at the center of the dispute is known as Serenity, a 195-unit apartment complex at 105 South Huntington Ave. which opened in June 2017. Developer Cedar Valley Holdings, a subsidiary of developer Tony Nader’s Brookline-based Longwood Group, bought the 1.1-acre vacant parcel overlooking Olmsted Park from the state in September 2005 for $1.1 million.
Nader gained approval from the former Boston Redevelopment Authority in 2013 for the project, then estimated at $60 million, including plans for 32 on-site affordable units reserved for households earning up to 70 percent of the area median income.
At the time Boston’s inclusionary development policy required Nader to include 13 percent affordable units on-site, or pay a $200,000 per-unit “cash-out” fee toward their creation elsewhere in the neighborhood.
Longwood Group notified the BRA that it was unable to break ground because of rising construction costs in September 2015. Under the revised approval, Nader would pay $8.4 million to support 42 new affordable units elsewhere in Jamaica Plain or Mission Hill.
Such payments are crucial to nonprofits seeking to piece together financing for affordable projects, housing experts say, to bridge financing gaps between high development costs and lower anticipated rents.
“Everybody knows what a desperate need we have for affordable housing,” said Richard Thal, executive director of the Jamaica Plain Neighborhood Development Corporation, noting that the group had 3,000 applicants for 39 affordable apartments it completed last year at 75 Amory Ave.
The significant payouts generated by large projects such as Serenity, Thal said, could help complete financing packages for future affordable projects that have all their permits in hand. His group is partnering with The Community Builders on a 112-unit rental complex at 250 Centre St., which could include up to 71 income-restricted units.
From its outset in 2000 through 2016, Boston’s inclusionary development program generated $97 million toward over 1,700 affordable units, with 89 percent of the projects including at least some affordable housing on-site.
BPDA Compliance Director Peter Sasso notified the firm on May 18 that its payment had been due on March 16, when the building’s final certificate of occupancy was issued. The letter gave Longwood Group a payment deadline of March 16, 2019.
Brokerage Newmark Knight Frank in July announced it had been hired to market Serenity for sale. The news prompted state Rep. Jeffrey Sanchez, whose district includes Mission Hill and Jamaica Plain, to criticize the lack of progress on the affordable housing payment. In a letter to Mayor Marty Walsh, Sanchez asked the BPDA to hold a community meeting on the status of the affordable contribution.
“The lack of follow through on that agreement, and absence of community outreach in the process of this transaction, is deeply upsetting,” wrote Sanchez, who did not respond to requests for additional comment.
Housing advocates say they expect the $8.4 million obligation will transfer to the new owner, but questioned whether the sale could delay the payment even further.
“We didn’t know the developer was going to attempt to sell the property so early on in his ownership. To me, it seems like a lien against the property that needs to be fulfilled prior to sale,” said Flaherty, of Mission Hill Neighborhood Services. “If there’s a sale, we don’t want to be dealing with a new owner.”
Steve Adams
Corporate Housing Fills Up 24 Units
Longwood Group broke ground in 2016 on the 246,186-square-foot steel-framed complex, containing high-end amenities including a roof deck with swimming pool, and obtained $84.3 million in debt and equity financing. The grand opening was held in May 2017, with Miss Massachusetts Alissa Musto delivering a piano recital.
Amid community fears that many of the apartments would be filled with college students, Nader had agreed to a series of occupancy restrictions prior to the original BRA vote in 2013: no units would be rented to undergraduates, and apartments could not be subleased.
So housing activists were taken aback in June 2017, when Longwood Group announced it had leased 24 units to Churchill Corporate Housing, bringing occupancy up to 38 percent.
“It goes against the whole idea of these new apartments being part of the permanent housing stock. It’s not going to help address affordability issues if they’re converted to corporate short-stay,” JPNDC’s Thal said.
BPDA spokeswoman Bonnie McGilpin said short-term rentals do not violate the agreement prohibiting subleases. If the property is sold, the new owner will be responsible for making the payment, McGilpin said. Newmark confirmed that the property remains on the market.
The complex lists three units available for lease at monthly rents from $2,744 to $3,135.
Longwood Group declined to speak with Banker & Tradesman. In a prepared statement, the company said, “We are gratified by the response of the market in this neighborhood that serves the Longwood medical area and nearby educational institutions. This neighborhood is strong, and we recently decided to put our Serenity property on the market. We are cognizant of our obligations to the city and the community.”
