Rau Fastener

Mill Complex

Providence, Rhode Island

Introduction

Summer 2003 The Developer The Architect Reviving a Brownfield Tour the Site

Fall 2004 The Developer The Architect Tour the Site

Summer 2006 The Developer Tour the Site

The Numbers

The Developer: November 2004

Elevator door at the Rau site, November 2004.

Sharon Conard-Wells is executive director of the West Elmwood Housing Development Corporation in Providence.

This was a large project with many unknowns. It was a brownfield as well as an historic project. Residential projects require the highest level of environmental remediation.

There were a lot of people to please. Matching funds and making sure that one set of funds didn't taint another were also issues. We started looking at this project in about 1998, so we've come a long way since then.

Further complicating matters is the fact that Phase One (now called Westfield Lofts) is a mixed-income initiative. Our traditional partners weren't excited about a project in which the majority of the units weren't low-income. Our board and development team talked a lot about this issue. It would have been easier for us to fund the project if it were mostly affordable because we had Low Income Housing Tax Credits and our first mortgage would have been manageable. We would have had an easier time with our equity partners because their model assumes there will be a higher percentage of low-income tenants.

But our goal is to make West Elmwood a mixed-income neighborhood. We have people coming in every day who cannot afford a $1,500- or $1,600-a-month rent but wouldn't be eligible for tax-credit units because their income is too high. We wanted to provide units that did not have the low-income restriction. This would allow people living in the neighborhood to afford the apartments and still be able to generate enough wealth to eventually move toward homeownership. If every dime you have is going into a rental unit, how will you ever be able to buy your own home? Our goal here is to help people create and retain wealth.

View of buildings B and D, November 2004.

We've completed about 99 percent of the remediation. Some has to be done during the construction phase. The plating building where most of the contamination took place has been demolished. It was cheaper to knock the building down than to go through the floors to remove the contaminants. Most of the lead and asbestos has been abated. There are some background air quality concerns that we still need to deal with.

We had to coordinate between the remediation contractor and the general contractor to make sure that the environmental work was done in a timely manner. The plan was to have the general contractor follow the remediation contractor and continue to work through the winter.

Right now we're trying to close on our mortgage. We had to start construction prior to closing because we have a placed-in-service date that needed to be met. Otherwise, the contractor wouldn't have been able to meet the deadline and the project would have been in jeopardy.

Getting the Financing in Place
The logistics of closing on a deal of this size, with so many partners and so many considerations, is not for the faint of heart. There are days when I say, "Never again." But there are also days when I go through the building and see it's clean and see the beautiful wood; I see the clean brick and the blueprints and the number of units; I see the people that stop by while I'm at the site and ask, "When will it be ready? I'm homeless," or "I was staying with my cousin and she's putting me out." Seeing this makes you think, "Yes, I'll make this one happen and I'll probably be here for the next one too." But there are days when it's hard to think like that.

Site of demolished building, November 2004.

Doing a project of this size involves a lot of bureaucracy. Often, each funding source only understands its own process. Sometimes we have to explain to funders how everything ties together.

Just because a funder releases its funding to me doesn't mean I can start the project; it just means I can go and talk to 15 other people to move the process along. You have to plan your coordination and anticipate the lack of comprehension. Nobody could have pictured how challenging the coordination of this has been. There were things that our team didn't anticipate; it was very difficult to prepare our funders for things we didn't anticipate.

At this point we have actually maximized most of our funding sources. If the maximum was $500,000, I can't go back to them for more money. It's hard if in the middle of finishing up the project, I suddenly have to go out and find new money because costs went up and unexpected things happened.

It's important to make sure your legal budget is adequate and to have funders who can be as flexible as possible in their timelines. Do not write up the project so that all of your funding is going to match; it just doesn't happen that way in this type of project.

Funders and partners have been extremely flexible in allowing us extensions. Finding new money when we're at the maximum has been a real challenge. Getting funding to match has a lot to do with accountants, underwriters, and lawyers thinking about the project as a whole rather than about just their piece.

Sharon Conard-Wells visits the Rau site, November 2004.

Right now I'm waiting for everything to close at the same time. I have a construction loan, a bridge loan, and permanent financing. Bank of America is providing the construction loan. The Federal Home Loan Bank of Boston is providing a subsidized advance through Bank of America. The Federal Home Loan Bank of Boston has been right there. They've been very supportive and made sure the money needed to continue the project was in place for us.

We were supposed to close yesterday. I've talked to two of the three parties that need to coordinate in order for us to close. They say that maybe we will close next week. In the meantime, my contractor is out there working. The plumbing and installation of the interior partitions has begun.

But we need to close right now in order to continue the project. We've exhausted the funding that could be released prior to the closing. It's extremely stressful. You've got to keep foremost in your mind the vision of what this is going to be for the neighborhood and for the people you serve.

What keeps hope alive is that when everything is said and done I believe we will have a project that will transform and stabilize the neighborhood and attract people with various income levels, interests, and education to the community. This in turn will provide the impetus for financing future phases. Remember this is just Phase One. We've got the commercial phase and the two homeownership phases still to go.