The list of developers expressing interest in a handful of affordable housing initiatives now in the works on Outer Cape Cod will likely be short. Taking on such a project requires complex skills and deep pockets.
Only three developers have built and managed sizable affordable rental projects in the last 20 years here: Community Housing Resource Inc., owned by Provincetown businessman Ted Malone; the Community Builders, a Boston-based nonprofit; and, most recently, Pennrose, a national affordable housing developer based in Philadelphia.
In the Works
Provincetown is preparing to invite proposals for the 1.3-acre VFW property on Jerome Smith Road in the next couple of weeks. The draft calls for a minimum of 44 rental units, said Town Manager Alex Morse.
“In Provincetown, land is not plentiful,” Morse said. “We need to make sure we fully utilize the site.” Morse said Monday he planned to urge the select board to maximize use of the land. A developer could potentially fit more than 70 units on the site, he said.
Half of the units would be priced for tenants earning less than 80 percent of the Area Median Income (AMI). With AMI currently at $77,750 for Barnstable County, the maximum income for a household of two would be $62,200. The other half of the units would be reserved for those earning above 80 percent of AMI, making them available to many people who work in Provincetown.
Wellfleet recently invited proposals for a 46-unit rental development on town-owned land at 95 Lawrence Road. Applicants must turn in proposals by early August.
In Eastham, officials are looking at various uses for the former T-Time driving range property. Whatever the decision, some of the site will be used for affordable housing, according to Eastham Town Planner Paul Lagg.
What It Takes
A big project with most of the units priced for low- to moderate-income tenants can take five years or more from start to finish. The developer must navigate a complicated funding process at the federal, state, and local levels, involving tax credits, a variety of public and private loans, and, frequently, contributions of land along with funds from the local community preservation and affordable housing trust funds.
“I think it’s mostly driven by the reality of financing,” Lagg said. “The primary financing tool is the state low-income housing tax credits. The number is limited. There is a lot of overhead, a lot of paperwork, and a lot has to happen for the state process. It lends itself to larger companies.”
Charlie Adams, regional vice president of Pennrose, said, “Readiness to proceed is the key driver with the state. You have to have the financial and personnel capacity for that.”
It usually takes two years to get through initial design and permitting before a developer can even get to the funding phase. Meanwhile, a great deal of money is being spent with no revenue, such as monthly rents, to offset expenses. The estimated cost is $350,000 to $400,000 per unit.
“It’s more than just construction costs,” said Ted Malone, president of Community Development Resource, which has built several affordable projects on the Outer Cape. “It’s architectural and engineering fees, financing fees, loan interest and pre-development costs. And there are also legal costs.”
Engineering for the Cloverleaf, a $14-million project Malone’s company is working on in Truro, cost over $200,000, Malone said. Now, it’s stalled by a lawsuit by neighbors.
The developer is also responsible for managing the property once it is built. Management costs run about $8,000 per unit, said Malone.
“We are losing more year-round housing than we are building,” said Alisa Magnotta, CEO of the Housing Assistance Corp. in an email. According to December 2020 figures published by the Dept. of Housing and Community Development, Eastham has 119 units of affordable housing, or 4.5 percent of its overall housing stock; Truro has 25 units, or 2.3 percent of its total stock; Wellfleet has 38 units, 2.5 percent of its stock; and Provincetown has 206 affordable units, 9.7 percent of its overall stock. The state’s standard is for communities to have at least 10 percent of their housing categorized as affordable.
Demand for these units far outstrips availability. More than 100 applications were submitted for 23 units at Stable Path, Provincetown. Nearly 300 recently applied for the 65 units in Eastham’s Nauset Green.
The Major Players
Ted Malone has been building and managing affordable projects on the Outer Cape since 1996. Community Housing Resource boasts the largest number of such projects in the region, with the most recent being Stable Path in Provincetown. The $8 million project, completed in 2016, consists of 23 units in 10 buildings, situated on two acres off Race Point Road. Sixteen serve households with incomes below 60 percent of AMI ($46,650 for a two-member household).
Malone’s company built and manages 18 rental units and 10 artist studios on Old Ann Page Way on the site of the former A&P in Provincetown. Malone also purchased and overhauled a former dormitory building at 83 Shank Painter Road, converting it to 13 efficiency units and 2 one-bedroom apartments.
In Truro, in addition to the proposed 39-unit Cloverleaf project, Community Housing Resource built the $4.2-million Sally’s Way complex, with 16 townhouse-style rental units on land leased from the town.
In Wellfleet, Malone’s Paine Hollow Road plan to build eight affordable rental apartments is stalled in court. His company also built and manages a six-unit complex on Gull Pond Road in Wellfleet.
Designing a project that blends in with its surroundings is important to Malone. He uses smaller buildings and careful landscaping, he said. “Making something that is aesthetically pleasing and fits into the Cape’s environment and community is a given, in my mind,” Malone said. “A little more density doesn’t have to mean lower quality. I’m proud of our communities.”
The Community Builders built and manages Province Landing, a 50-unit affordable housing complex that opened in 2012 on the former Cumberland Farms site in Provincetown. The town kept ownership of the property and has a 99-year lease with the nonprofit. All units in the $14.5-million project, housed in six two-story Cape-style buildings, are rented below the AMI and most are reserved for tenants making less than 60 percent of it. The nonprofit has no other projects on the Outer Cape, but has built and manages mixed-income complexes in Chatham, Sandwich, and Mashpee. The Community Builders also operates in the Mid-Atlantic states and Midwest.
Pennrose, a national company that has been building and managing affordable housing since 1971, finished its first project on Cape Cod in 2020, the $23-million Village at Nauset Green in Eastham. Fifty of the 65 units are for tenants who earn below 60 percent of AMI. The remaining 15 are categorized as workforce housing. Eastham has kept ownership of the land and awarded the project to Pennrose via an RFP process.
“When towns put out RFPs, they are articulating what their vision is,” said Adams, the company’s vice president. “It becomes a shared vision, working with towns to get what the community is looking for.”
The RFP called for five units for tenants making up to 120 percent of the AMI.
“The RFP made specific requests with broad parameters for design and amenities,” said Town Planner Lagg. One of those was to create the look of a cluster-style village with townhouse apartments. “The town owning the land is a major saving for the developer, and they can put that money into the design,” the planner said.
Pennrose recently purchased the Cape Cod 5 Bank property in Orleans and has permits for a similar project, with the majority of the 62 units for tenants making 60 percent of AMI. Adams said Pennrose will now begin the funding process.
Preservation of Affordable Housing, a large nonprofit known as POAH, has partnered with the Housing Assistance Corp. for several affordable rental projects in other areas of Cape Cod. While it currently doesn’t have projects on the Outer Cape, its latest project is Brewster Woods, a 30-unit affordable housing complex on Brewster Housing Authority land.
“When we look at projects, we’re looking to partner with a community-based organization to make sure we’re addressing local outreach,” said Aaron Gornstein, POAH’s president and CEO. “There’s a mission to maximize affordable housing, and our priority is to manage the property as effectively as we can and keep the affordability.”
POAH purchased two older properties on the Lower Cape, each with more than 100 units, where the affordable restrictions would be ending. The organization refurbished the buildings and continued affordable rents for the tenants. “We are a large organization,” Gornstein said. “We have the staffing and a strong balance sheet.”
The Stratford Capital Group has also been looking to establish itself on the Outer Cape. It purchased the T-Time driving range property in Eastham, where it planned to construct a 50-unit apartment complex in three-story buildings. The project faced local opposition, and Stratford ultimately sold the property to the town.
Stratford also submitted a proposal, which was not successful, for the Nauset Green site.