From: Affordable Housing News (pages 102-103)
Shelter Resources, Inc. finds new ways to develop affordable housing in disparate markets
Celebrating its 35th anniversary this year, Shelter Resources, Inc. and its President, Len Brannen continue to work on tackling the difficult issue of how developers can provide senior housing with elective supportive services for residents and seek necessary Section 42 IRC changes that would support meaningful production of the same.
The company, based in Bellevue, Washington, has built or renovated 4,833 apartment units, at a total cost of about $445 million. About 2,200 of those units are for senior citizens. The Shelter Resources team serves urban, suburban and rural areas throughout Washington, Oregon, Alaska, Arizona and Idaho.
“We are proud of the quality of product our efforts create and have extensive experience in the field of affordable housing, particularly in the Pacific Northwest,” Brannen says about the firm’s success since its launch in 1980.
Shelter Resources is particularly skilled at leveraging tax exempt bonds, low-income housing tax credits and other local, state, and federal financing tools to move affordable development efforts forward.
“Depending on where you choose to locate affordable housing, the ability to solicit necessary funding tools varies,” Brannen says. “Certain housing agencies encourage the promotion of housing services, while others are primarily focused on production and leave social services to inplace agencies with other funding support. The mingling of housing with supportive services can be challenging, as the dedicated funding from government support systems may have a restricted shelf life. And some federal housing financing, like USDA in rural markets, has program restrictions not conducive to the inclusion of services.”
At this time, the company has about 500 units in various stages of development. This includes new construction and acquisition-rehab portfolios.
A VALUED CONSULTANT TO NONPROFITS
The firm also works regularly with nonprofit organizations, helping them assess population needs, locate suitable development sites and arrange publically supported financing as well as privately sourced funding. The firm asks its property management to work with development staff to create housing products that consider some of the supportive needs that residents may have.
“We have a full-time Resident Services Asset Manager in Oregon, for example, who works with local service providers,” Brannen says. “These providers link up with the management companies and provide services as needed by that particular resident population, and later in the process we report on the progress and outcomes for those resident populations.”
Shelter Resources also provides nonprofits with negotiation and financial capabilities, two areas in which these organizations tend to be less experienced. It also covers the primary risks associated with affordable housing ownership for its nonprofit developer-sponsor relationships. This involves guaranteeing completion of the projects, securing construction financing, covering operating deficits and the delivery of tax benefits to investors.
“We are really unique in that we can offer nonprofit financial resources and 30 years’ worth of experience in all assets of the development process,” Brannen says. “A lot of those organizations have their own missions to focus on, so becoming a developer is not an easy or necessary transition.”
The firm complements nonprofit missions by assisting with nearly all aspects of bringing affordable housing developments to fruition, while keeping their long-time partners fully informed along the way.
“We can complement their missions by coming in with a staff ready made to get financing put together, locate sites, build out the building, market the product and work hand-in-hand with them,” Brannen says. “We provide risk mitigation and financial resources, which is different because many consultants that work with nonprofit developers are newer to the process and don’t necessarily come in as ‘at risk’ partners. They just provide the services of development, but take no risk. We are full-fledged partners from the beginning.”
CHALLENGES AND OPPORTUNITIES IN URBAN DEVELOPMENTS
Because Shelter Resources works in so many different types of communities, its team has developed the skills and knowledge necessary to meet the demands of urban, suburban and rural affordable housing and mixed-use developments. This is particularly important when it comes to financing and maintaining a pipeline of projects to work on.
“The financing that tends to cater to urban versus rural has different requirements attached to it.” Brannen says. “In the urban markets, it is usually lower-income targeting because the incomes in urban markets are usually higher, plus you have more access to soft publically supported financing provided at below-market interest rates. That allows you to dive deeper into the lower-income segment of the tenant base.”
On the rural side, however, the funding mechanisms change, as there are fewer sources available and a less sophisticated development community and community planning process. This leads to smaller projects and often a more difficult challenge to financing rural transactions.
“In many ways, urban affordable development is dictated by the social priorities of the funders in the subject urban markets, and rural affordable development is driven more by the creativity of the develop-sponsors and their willingness to search out a development track that works,” Brannen says. “Certainly, the need for modestly priced rental is just as significant in many rural markets.”