A subsidiary of Irvine, Calif.-based property management company WNC Inc., Community Preservation Partners (CPP) is fulfilling its mission to became more actively involved in the Bay Area with the recent acquisition of downtown San Jose's Lenzen Square apartment complex. CPP bought the 88-unit community, located at 790 Lenzen Ave., from Lenzen Housing L.P., an entity associated with Pacific Affordable Housing Corporation and The Core Companies, in mid-February for $20.75 million, or around $235,800 per unit, locking down ownership on a significant property in one of the Bay Area's hottest submarkets. CPP, founded in 2004, is known for its efforts to rehabilitate and preserve existing affordable housing complexes. "Our mission is to stabilize and preserve affordable housing projects and prevent them from coming to market,” explained CPP’s President, Anand Kannan. “We want to keep those communities affordable and not only preserve them, but enhance them by putting in significant renovation on top of that."The deal closed just about two months after the signing of the purchase of sale agreement, said Kannan, a feat for an affordable buyer, especially during peak holiday season. The quick close, however, was paramount in warding off a slew of other offers that came in for the property, which was publicly listed.The property is in a highly desirable part of San Jose and is adjacent to the Shasta Hanchett Park neighborhood. The site is just a few minutes’ walk from The Alameda and SAP Center, as well as Diridon Station, where Google plans on building a major mixed-use development that will transform downtown San Jose. A shopping center, anchored by a Trader Joe’s and a Target, is also located nearby. "There were several offers from market-rate buyers and investors that were looking to acquire the property because it is in such a popular neighborhood and San Jose is such a great market," said Kannan. “We had to compete with those buyers, and we had to show that we could execute and close in the same time frame that an investor or market-rale buyer would." This included securing local government approvals, working with state agencies on existing regulatory agreements and coordinating with CPP’s financial partners — Deutsche Bank and Redstone — to get everything done on time. Kannan said that Deutsche Bank and Redstone provided $15 million of debt to finance the acquisition of the property. "The reason we were able to acquire the property was efficiency of execution,” said Kannan. “We have a process, a system, that we have put in place that enables us to perform like a market-rate buyer even though we’re an affordable buyer. We had the capital available to get the transaction done and can now focus on the renovation at hand." Kannan explained that CPP will spend around $4 million, or between $40,000 to $5D,0DD per unit, on renovating the property. Renovations are expected to begin in June and will include a complete revamp of the units' interiors, as well as accessibility and energy efficiency upgrades. Currently, the complex is a mixture of 38 studios, 38 one-bedroom and 12 two-bedroom apartments. The units range in size from around 482 square feet to 903 square feet. According to the Core Companies’ website, the property was completed in 2002, and the total development cost was $17,404,145. The units are reserved for those earning 50 to 60 percent of average median income. Currently, community amenities include a pool, laundry facilities, a gym, a tot lot, a computer lab and a community room.According to Kannan, CPP plans to extend the affordability of the complex for another 55 years, once the current term ends. "I think it’s second to none," he said when asked about the Bay Area’s housing market. “There is a crisis in the Bay Area. Rents continue to rise, people are continuing to be priced out, and one of the world's largest global economies is right there.” CPP’s interest in the San Jose submarket is apparent, in August of 2017, the firm closed on the El Rancho Verde apartment complex at 303 Checkers Dr. from Clark Realty Capital for $370 million, or around $528,571 per unit. CPP also owns the 81-unit Courtyard Plaza Apartments and the 144-unit Monte Vista Gardens; CPP finished renovating both properties in August of 2017. Kannan said that many of those who apply to live at the complexes are families, and that CPP has had to close several of its wait lists because demand is so high." It's difficult for people to raise a family and to have a solid place to live, a place that they can call home," Kannan added. “We are trying, one property at a time, to keep that ability to call the Bay Area home.”
Originally published on Forbes Business Councils by Seth Gellis, President of CPP.
With the continued urgent need for more affordable housing across the country, industry experts and academics are looking for solutions, whether they involve preserving existing communities nationwide or creating additional units where they are needed most.
According to a recent study by the National Low Income Housing Coalition, there is a shortage of 7.3 million available affordable rental homes for the lowest-income renters in the U.S. While it’s a complex issue, one overlooked path to financing is the option to increase the use of private activity bonds (PABs), which pair with 4% low-income housing tax credits (LIHTCs).
Volume cap, a “use it or lose it” resource provided by the federal government to the states based on a per capita formula, allows tax-exempt financing to be issued for affordable housing at a lower interest rate. The lower interest rates offset the lower net operating income that debt is sized from as a tool to help keep project sources and uses in balance. This ensures a greater level of capitalization, reducing the need for other sources and increasing the funding available for construction activity.
This important resource is allocated and awarded by state finance agencies, some of which unfortunately do not use all the resources made available to them. This means that if a state agency has unused volume cap and a deal is unable to make it through the funding cycle for that state in a timely manner, the resource and accompanying economic and social benefits are lost for good.
So, what can affordable housing professionals and organizations do to ensure the volume cap does not go to waste or to use it in the most efficient manner possible?
One solution is to work with local bond issuers and agencies that support them.
Local bond issuers play a major role in identifying the projects most impactful for their community and often can reduce the overburdened load that housing agency staff must deal with.
At my company, we find that an average deal may take nine months to close, plus an additional year to complete the development or preservation of the property (with a few more months of time tagged on for an IRS Form 8609 to be issued). We consider that a quick turnaround. But when entities do not use a local issuer for the deal, the acquisition or renovation timeline can extend for an additional one and a half to two years—sometimes making the deal untenable.
Across the U.S., many affordable properties are in immediate need of preservation; and many of these deals use LIHTC as a part of their financing. Completing these deals as quickly as possible is integral to reducing the loss of affordable units and preserving options for communities.
According to a 2024 report from Harvard’s Joint Center for Housing Studies (JCHS), there was a loss of 2.1 million units with rents below the maximum amount affordable for the lowest income group since 2012. While creating new affordable housing units is a part of the solution, new construction alone won't be able to keep up with the need, especially if communities are losing more units than are being created.
I've found that when local leaders, community advocates, developers, lenders and agencies can work together, it creates efficiencies and the strongest outcomes in affordable housing development and preservation. Communities should have a say in their local housing choices. Local leaders and community advocates have the best understanding of residents’ needs and where and how to invest, and good developers will listen.
Working with local issuers increases the ability for local jurisdictions to control the terms and circumstances that preservation or new development must follow in addition to minimum state provided standards. When deals and terms are localized, it creates the largest impact for the community. Specific benefits may include:
• The community is empowered to decide the priorities they wish to address. Developers should foster dialogue with local housing advocates and community leaders to discuss and outline their wish list. Unsurprisingly, the goals are often the same.
• Related improvement projects (e.g., street, sewer, LEED), social service requirements, crime prevention programs, prevailing wage, are benefits that are, by and large, staying within their community (should they choose). This autonomy also relieves pressure on developers by having an equal partner in the myriad decisions.
• Locals control within the development what is done, where it’s done and who does it within the community. For example, they may have checklists or requirements (e.g., Section 3 that requires a local workforce) that directly benefit the local community and economy.
Affordable housing developers looking to finance their deals may have the opportunity to work with a local issuer to get the deal done. I recommend you keep these best practices in mind:
Just like when working with any financial partner, organization is paramount. As a developer, that means having the deal structure solidified, financial documents in place and a single point of contact for the local issuer identified. The more streamlined you can make the process, the better.
Developers likely understand that one of the key benefits of working with a local issuer is the ability to help impact the local community in specific ways. But, for that impact to be felt in the biggest way, developers must take the time to truly understand the local community and its needs.
Developers need to reach out early in the process to understand if the issuer has sufficient volume cap, and what their processes may be. Creating a relationship early makes the processing, organization and understanding of their needs much easier.
Ultimately, the ability to work with local agencies carries many benefits and can make developers and investors nimbler in their work solving the nation’s affordable housing crisis.
CPP, a mission-driven affordable housing preservation developer, has announced the acquisition and planned renovation of Lexington Green Apartments, an affordable housing complex in El Cajon, Calif. CPP partnered with co-developer The Hampstead Companies on the deal. This is the second community in El Cajon for CPP, joining Park Villa Apartments.
Lexington Green Apartments is located in a primarily residential neighborhood two miles east of downtown El Cajon, which sits 17 miles east of downtown San Diego. Originally built in 1970, the property last underwent a tax credit renovation in 2007, which replaced some, but not all, original building systems. The property consists of 144 units, spread across 12 two-story residential buildings. CPP’s total development investment is approximately $80,000,000, which includes the purchase price of $52,880,000 and estimated renovation costs exceeding $80,000 per unit.
“Lexington Green Apartments aligns with one of CPP's core philosophies of strengthening cornerstone communities in the neighborhood while extending the affordability of the community,” said Evan Cramer, Assistant Development Manager at CPP. “We hope to accentuate the feeling of pride that Lexington Green's residents have for their community while providing the physical upgrades necessary to ensure the property remains a prominent piece of the community for many years to come.”
The renovation will exceed the 10% energy savings requirement from the California Tax Credit Allocation Committee (CTCAC) through the replacement of all windows with energy efficient vinyl retrofit windows, water heaters, Energy Star appliances, and energy efficient LED light fixtures.
“At Lexington Green, incorporating green, energy-saving appliances and fixtures allows us to weave sustainability into the residents’ daily lives and helps further our goal to create a more sustainable future,” John Fraser, Vice President CPP – East.
Additional upgrades will include dryrot repairs, flooring replacement, new cabinets and countertops. ADA-complaint upgrades will be made for units and path of travel throughout the property.
CPP and The Hampstead Companies are partnering with LifeSTEPS to provide instructor-led adult educational classes including financial literacy, computer training, resume building, nutrition, exercise, parenting, and more. LifeSTEPS will also provide individualized health and wellness services and programs such as crisis intervention, practical counseling and emotional support, physical and mental health assessments.
Renovations are expected to be complete by August 2025. With CPP's involvement, the property’s previously expired affordability status will be extended until 2044 under a renewed Section-8 Housing Assistance Payment (HAP) contract.
Additional partners on the project include the California Tax Credit Allocation Committee (CTCAC) and California Debt Limit Allocation Committee, who issued and allocated 4% LIHTC and Tax-Exempt Bonds, WNC & Associates, and Ready Capital.
CPP (Community Preservation Partners), a mission-driven affordable housing preservation developer, has announced the acquisition and planned renovation of Green Hotel Apartments, an affordable senior (62+) apartment complex in downtown Pasadena, Calif. This is the 15th community in the greater Los Angeles area for CPP and the 41st in the state.
Built in the 1890s, Green Hotel Apartments is listed on the National Register of Historic Places and is a Pasadena Historic Monument. Located at 50 E. Green Street, the 139-unit property is a seven-story mix of studio and one-bedroom units serving seniors earning between 30 and 60 percent of the area median income (AMI). CPP’s total development investment is approximately $100,000,000, which includes the purchase price of $54,000,000 and an estimated per unit renovation cost of $115,000.
“Green Hotel Apartments is a unique opportunity for CPP to renovate a historic property with modern systems while carefully restoring the exterior to its original historic charm and architectural integrity,” said Seth Gellis, President at CPP. “Our experience in historic affordable housing preservation provides us with an asset which we look forward to utilizing on Green Hotel.”
CPP’s renovations will include building envelope restoration, new flooring, countertops, appliances, and lighting, and upgrades to ADA units and ADA paths of travel. Wi-Fi will be installed throughout the units. CPP plans to develop a community space to include a theater, conference rooms, business center, multipurpose room, and library. Windows and air conditioning systems will be replaced in such a way as to look like the original building.
As part of CPP’s community work, Green Hotel Apartments residents will be able to participate in on-site health, education, and employment services through a partnership with Project Access.
The property’s affordability was set to expire in July 2035. Affordability will be deepened and renewed for at least 20 more years under a renewed Section-8 Housing Assistance Payment (HAP) contract and 55 years under the new CA Tax Credit Regulatory Agreement that will be implemented post-renovation.
“Green Hotel Apartments is currently at 100% occupation with a full waitlist, reflecting the high demand for affordable senior housing options in the area,” said Belinda Lee, Director – Development at CPP. “We’re pleased to preserve this historic landmark and provide much-needed housing for the Old Pasadena neighborhood.”
Partners on the project include the California Tax Credit Allocation Committee (CTCAC) and California Debt Limit Allocation Committee, who issued 4% tax credits and bonds, California Municipal Finance Authority, U.S. Department of Housing and Urban Development (HUD), WNC and Associates, Citibank N.A., California Bank and Trust, Belveron, and Goldrich Kest.
Originally published on Forbes Business Councils by Seth Gellis, President of CPP.
With the continued urgent need for more affordable housing across the country, industry experts and academics are looking for solutions, whether they involve preserving existing communities nationwide or creating additional units where they are needed most.
According to a recent study by the National Low Income Housing Coalition, there is a shortage of 7.3 million available affordable rental homes for the lowest-income renters in the U.S. While it’s a complex issue, one overlooked path to financing is the option to increase the use of private activity bonds (PABs), which pair with 4% low-income housing tax credits (LIHTCs).
Volume cap, a “use it or lose it” resource provided by the federal government to the states based on a per capita formula, allows tax-exempt financing to be issued for affordable housing at a lower interest rate. The lower interest rates offset the lower net operating income that debt is sized from as a tool to help keep project sources and uses in balance. This ensures a greater level of capitalization, reducing the need for other sources and increasing the funding available for construction activity.
This important resource is allocated and awarded by state finance agencies, some of which unfortunately do not use all the resources made available to them. This means that if a state agency has unused volume cap and a deal is unable to make it through the funding cycle for that state in a timely manner, the resource and accompanying economic and social benefits are lost for good.
So, what can affordable housing professionals and organizations do to ensure the volume cap does not go to waste or to use it in the most efficient manner possible?
One solution is to work with local bond issuers and agencies that support them.
Local bond issuers play a major role in identifying the projects most impactful for their community and often can reduce the overburdened load that housing agency staff must deal with.
At my company, we find that an average deal may take nine months to close, plus an additional year to complete the development or preservation of the property (with a few more months of time tagged on for an IRS Form 8609 to be issued). We consider that a quick turnaround. But when entities do not use a local issuer for the deal, the acquisition or renovation timeline can extend for an additional one and a half to two years—sometimes making the deal untenable.
Across the U.S., many affordable properties are in immediate need of preservation; and many of these deals use LIHTC as a part of their financing. Completing these deals as quickly as possible is integral to reducing the loss of affordable units and preserving options for communities.
According to a 2024 report from Harvard’s Joint Center for Housing Studies (JCHS), there was a loss of 2.1 million units with rents below the maximum amount affordable for the lowest income group since 2012. While creating new affordable housing units is a part of the solution, new construction alone won't be able to keep up with the need, especially if communities are losing more units than are being created.
I've found that when local leaders, community advocates, developers, lenders and agencies can work together, it creates efficiencies and the strongest outcomes in affordable housing development and preservation. Communities should have a say in their local housing choices. Local leaders and community advocates have the best understanding of residents’ needs and where and how to invest, and good developers will listen.
Working with local issuers increases the ability for local jurisdictions to control the terms and circumstances that preservation or new development must follow in addition to minimum state provided standards. When deals and terms are localized, it creates the largest impact for the community. Specific benefits may include:
• The community is empowered to decide the priorities they wish to address. Developers should foster dialogue with local housing advocates and community leaders to discuss and outline their wish list. Unsurprisingly, the goals are often the same.
• Related improvement projects (e.g., street, sewer, LEED), social service requirements, crime prevention programs, prevailing wage, are benefits that are, by and large, staying within their community (should they choose). This autonomy also relieves pressure on developers by having an equal partner in the myriad decisions.
• Locals control within the development what is done, where it’s done and who does it within the community. For example, they may have checklists or requirements (e.g., Section 3 that requires a local workforce) that directly benefit the local community and economy.
Affordable housing developers looking to finance their deals may have the opportunity to work with a local issuer to get the deal done. I recommend you keep these best practices in mind:
Just like when working with any financial partner, organization is paramount. As a developer, that means having the deal structure solidified, financial documents in place and a single point of contact for the local issuer identified. The more streamlined you can make the process, the better.
Developers likely understand that one of the key benefits of working with a local issuer is the ability to help impact the local community in specific ways. But, for that impact to be felt in the biggest way, developers must take the time to truly understand the local community and its needs.
Developers need to reach out early in the process to understand if the issuer has sufficient volume cap, and what their processes may be. Creating a relationship early makes the processing, organization and understanding of their needs much easier.
Ultimately, the ability to work with local agencies carries many benefits and can make developers and investors nimbler in their work solving the nation’s affordable housing crisis.
CPP, a mission-driven affordable housing preservation developer, has announced the acquisition and planned renovation of Lexington Green Apartments, an affordable housing complex in El Cajon, Calif. CPP partnered with co-developer The Hampstead Companies on the deal. This is the second community in El Cajon for CPP, joining Park Villa Apartments.
Lexington Green Apartments is located in a primarily residential neighborhood two miles east of downtown El Cajon, which sits 17 miles east of downtown San Diego. Originally built in 1970, the property last underwent a tax credit renovation in 2007, which replaced some, but not all, original building systems. The property consists of 144 units, spread across 12 two-story residential buildings. CPP’s total development investment is approximately $80,000,000, which includes the purchase price of $52,880,000 and estimated renovation costs exceeding $80,000 per unit.
“Lexington Green Apartments aligns with one of CPP's core philosophies of strengthening cornerstone communities in the neighborhood while extending the affordability of the community,” said Evan Cramer, Assistant Development Manager at CPP. “We hope to accentuate the feeling of pride that Lexington Green's residents have for their community while providing the physical upgrades necessary to ensure the property remains a prominent piece of the community for many years to come.”
The renovation will exceed the 10% energy savings requirement from the California Tax Credit Allocation Committee (CTCAC) through the replacement of all windows with energy efficient vinyl retrofit windows, water heaters, Energy Star appliances, and energy efficient LED light fixtures.
“At Lexington Green, incorporating green, energy-saving appliances and fixtures allows us to weave sustainability into the residents’ daily lives and helps further our goal to create a more sustainable future,” John Fraser, Vice President CPP – East.
Additional upgrades will include dryrot repairs, flooring replacement, new cabinets and countertops. ADA-complaint upgrades will be made for units and path of travel throughout the property.
CPP and The Hampstead Companies are partnering with LifeSTEPS to provide instructor-led adult educational classes including financial literacy, computer training, resume building, nutrition, exercise, parenting, and more. LifeSTEPS will also provide individualized health and wellness services and programs such as crisis intervention, practical counseling and emotional support, physical and mental health assessments.
Renovations are expected to be complete by August 2025. With CPP's involvement, the property’s previously expired affordability status will be extended until 2044 under a renewed Section-8 Housing Assistance Payment (HAP) contract.
Additional partners on the project include the California Tax Credit Allocation Committee (CTCAC) and California Debt Limit Allocation Committee, who issued and allocated 4% LIHTC and Tax-Exempt Bonds, WNC & Associates, and Ready Capital.