VHFA, the New Northgate Housing, LLC, and the U.S. Department of Housing & Urban Development (HUD) came together yesterday to sign the legal documents firming up a new and improved financing structure for the Burlington apartment complex.
The new loan provided by VHFA for $13.265 million is the largest in the Agency’s history. The new loan is being used to pay off existing debt and to finance $5.2 million in improvements, including new roofs and boilers, weatherization, and some kitchen and bathroom upgrades. The weatherization and new boilers are expected to reduce the cost of heating for residents.
These apartments overlooking Lake Champlain in Burlington’s New North End are unique in several ways. Northgate is owned by New Northgate Housing LLC, which is comprised of the Northgate Residents Ownership Corporation, a resident-controlled organization. Northgate is also the largest single subsidized apartment development in the state, with 336 units of housing, and is perpetually affordable, by virtue of a Vermont Housing & Conservation Board Housing Subsidy Covenant.
Northgate is truly a mixed-income, diverse, multi-generational community. With incomes of 30% through 95% of area median income, Northgate’s 1,000 residents are from Vermont and 14 countries, Its longest standing resident moved in 40 years ago, and residents range in age from 1 to 95. A full time on-site youth services coordinator offers popular, successful programs.
Northgate’s financial restructuring involved many legal and financial complexities. A nearly $6 million HUD loan came due and a restructuring proposal needed to be reviewed and approved by HUD. In addition, a capital needs assessment outlined a scope of work that required more resources than the project’s existing reserves. Further complexities involved transferring the ownership of the ground lease, combining two HUD projects into one from an operating and financing basis, and completing a market study required for HUD’s approval of a new rent structure to service the new debt (while maintaining affordability). Finally, the financing needed to be structured in a way that complied with requirements of the U.S. Treasury’s New Issue Bond Program in order to obtain low 4.5% fixed rate financing.
The vision of several key players 18 months ago, including Phil Holmes in HUD’s Manchester office who died in a tragic accident in July, and the tenacity since then of VHFA, Maloney Properties Inc. (Northgate’s management agent), and Northgate Residents Ownership Corporation, and their development and legal consultants led to yesterday’s monumental accomplishments.
Thanks to these individuals and organizations, Northgate will be preserved as a mixed income community, with needed improvements and sufficient reserves to cover future capital needs.