The Needham Housing Authority has selected AHSC/Peabody Developer LLC as its development partner for the Linden Street Redevelopment initiative, clearing the way for the NHA to apply for state funding for the estimated $84 million project.
Headquartered in Braintree, AHSC/Peabody is a strategic partnership among Affordable Housing and Services Collaborative, Inc., Peabody Properties and Peabody Resident Services. It works to preserve and create affordable rental communities.
Peabody has 15,000 affordable units under management, mostly in Massachusetts and Rhode Island. It will work with the NHA to obtain financing and manage construction and will remain engaged in the town — potentially for decades — to provide a variety of services, including all aspects of property management and facility maintenance.
NHA Chair Reg Foster views the selection of a development partner as a key milestone that positions the NHA to speed up the pace at which the project has moved to date.
“Over the last three or four years, we’ve actually gone through the most challenging and risky period, which is the pre-development period,” he said. “We’re not all the way through, obviously. We still need to get through the site plan review (before the Planning Board) and the Conservation Commission. But more often than not, (pre-development) is where projects blow up because it’s very hard to get to this point.”
The NHA and AHSC/Peabody, which is a nonprofit, have preliminarily agreed on a 7-8% development fee based on the total development cost of the project, subject to final regulatory approval. As co-developers, they will share equally in the proceeds of that fee.
They will be equal partners in the two-phased effort to replace the 72 aging studio units on Linden Street with 136 new deeply affordable housing units. The first phase will involve replacing 18 single-story bungalows that have four studio units each. The bungalows will be demolished in phases to make way for a four-story, 72-unit building on Linden Street. An additional 64 units would be added in a second phase, with the final mix being 128 one-bedroom and eight two-bedroom units.
The NHA chose AHSC/Peabody through a competitive bid process that drew two other applicants, Pennrose LLC and 2Life Development Inc. The NHA created a seven-person review committee of Needham residents with public housing experience chaired by NHA Vice Chair Jim Flanagan. Beginning in July it held five lengthy sessions before announcing its selection this month.
“They understand our vision,” Flanagan said of AHSC/Peabody. “They have our residents’ best interests at heart, and we are excited about our future going forward with them.”
The NHA has made multiple attempts over the past decade to launch a comprehensive redevelopment of nearly all of the 336 units it manages, the vast majority of which are considered beyond their useful life, having been built in the 1950s and ’60s.
In 2021, the NHA announced its Preservation and Redevelopment Initiative, an ambitious plan to address all of its deeply affordable units, while possibly adding more than 200 new units across its five developments, beginning with Linden.
Foster has made upwards of 60 presentations before multiple town boards, at community meetings and before Town Meeting to advance the plan. In May, Town Meeting approved four warrant articles to provide both funding and multiple zoning changes necessary for the project to proceed.
With the zoning and $5.5 million in Community Preservation Act funding in hand, the NHA turned its attention to choosing a development partner to provide the expertise and scale to advance the highly complex project.
The NHA has long relied on consulting help provided by an arm of the Cambridge Housing Authority, which leverages that authority’s considerable expertise to assist smaller housing authorities in navigating the often Byzantine world of affordable housing finance and construction. The NHA considered engaging the CHA directly as its development partner, but opted instead to go through the state’s competitive bid process.
Now, with AHSC/Peabody on board, the immediate challenge is to meet the early November deadline to apply for funding through the state’s “One Stop” funding program. Administered by the Executive Office of Housing and Livable Communities (EOHLC), the program resembles the “common app” process used for college admissions, allowing the NHA to submit one application that makes it eligible for multiple state funding sources.
The process runs on an annual cycle, and missing this year’s deadline would force the NHA to wait a full year to get in line in a highly competitive grant process. “And if you wait a whole year, then you’ve got a year’s worth of construction inflation that you’ve got to fund,” Foster said.
The funding sources in the One Stop program are part of what Foster is fond of calling the project’s financial “layer cake” — more than a dozen potential sources of funds from federal, state, nonprofit and private-sector sources.
Foster acknowledges the NHA has only an outside chance of getting funding from this year’s program, but he emphasized the importance of applying this year to get in line and improve its chances for eventual funding.
Approximately 40% of the project is expected to be funded through low-income housing tax credits, allocated by the IRS on a state-by-state basis. Another 40% is expected to come from the competitive state grants and “soft loans” that flow from the EOHLC One Stop process.
The remaining sources include hard debt, such as mortgages, and from competitive grants and income from the properties once they are built and occupied. The town’s contribution is expected to be less than 10% of the budget, with $6.8 million already secured from Community Preservation Act funds.
The town has been assured its funds will be used for construction and will not be conveyed until the project is completed.
Betsy Collins, AHSC’s vice president of development, will be the primary contact with the town. She and her colleague Mike Mattos joined Foster at the Sept. 9 meeting of the Town-Financed Community Housing Committee and expect to be present when the project goes before both the Planning Board Sept. 24 and the Conservation Commission Sept. 26 for their required approvals.
“This project is very advanced with the work that’s been done. It’s not lost on us,” said Collins. “We rely a lot on the local partner to help us navigate.”
“Reg has really advanced the ball so far down the field to a point where, now, they really need a development partner that has a track record to take it to the next level, and that’s where we come in,” said Mattos, president and executive director of AHSC.
“It’s not a question of ‘if’ anymore,” said Foster. “It’s just a question of ‘when’ and just a matter of time before it becomes our turn for the scarce funding resources that are out there. And if new funding sources pop up, we have a shovel-ready project ready to go.”
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