Bethel Gardens – 356 Henry Avenue, Hagerstown, MD
Construction and Permanent Financing Closed July 2017
Total Development Cost – $18,500,000
Audubon Enterprises was engaged by a partnership between Co-Developers Hudson Valley Property Group (HVPG) and the 501(c)3 nonprofit The Bethel Corporation (Bethel, an affiliate of the Ebenezer A.M.E. Church) to serve as the exclusive financial advisor to their substantial rehabilitation of a 94-unit townhouse style affordable housing community in downtown Hagerstown, Maryland that was in need of significant modernization and repair. The building had not undergone major renovations since its original construction in 1976 under the US Department of Housing and Urban Development’s (HUD) 236 program and was at risk of losing its rental assistance from the HUD. Audubon led the financial structuring which includes a $6.2 million FHA insured 221(d)(4) mortgage serviced by AGM Financial, $866,400 of Rental Housing Works gap funding, $8.5 million in tax exempt bonds issued by the Maryland Community Development Administration, and $5.3 million in Low Income Housing Tax Credits (LIHTC) syndicated by Raymond James Tax Credit Funds. Negative arbitrage costs were minimized as 100% of the short term tax exempt bonds were cash collateralized. Audubon also carefully negotiated the partial pay-off and assumption of existing debt on the property from multiple sources and ensured that adequate interim income and reserves were in place to close the transaction successfully.
Of Bethel Gardens’ 94 units, 37 units were subject to a Rental Assistance Payments (RAP) contract and 14 units were supported by Section 8 vouchers prior to the rehabilitation closing. Audubon assisted to streamline the subsidy structure post-renovation by soliciting a new Rental Assistance Demonstration (RAD; component II) contract from HUD to cover all eligible units. Audubon also led the negotiations with the City of Hagerstown which yielded a new 42-year Payment in Lieu of Taxes (PILOT) agreement.
The design team was led by Kramer + Marks Architects, and renovations will be performed by Bozzuto Construction Company. The original nonprofit owner will continue to manage the property’s operations going forward, as they have done successfully for 15+ years. Resident amenities on site include a multipurpose community building, central laundry facilities, and off-street parking.