The same market factors that lead to increased demand for low- and moderate-income housing can also make financing that housing an economic impossibility -- without government subsidies.
And getting government subsidies together is the speciality of National Housing Partnership, a profit-making company based in Washington that has completed 51,000 units. It is the nation's largest private developer of low-income homes.
NHP's biggest rehabilitation project in the Washington area is the 2,113-unit Foxchase of Alexandria, formerly the Shirley-Duke apartments. The first 140 units were recently rented for $295 to $495 a month.
Other projects here include Campbell Heights at 15th and U streets NW, a $6.1 million, 170-unit high-rise for the elderly completed last year; Portner Place at 15th and V streets NW, a $2.3 million group of 48 town houses finished this summer; the Olde Towne West complex in Alexandria, and the Latrobe, a 176-unit high-rise building at 15th and Rhode Island Avenue NW that is the first non-subsidized rental building built in Washington in recent years.
The development organization is also providing equity to restore the Fairmont Apartments -- one of the first large rehabilitation efforts on riot-torn 14th Street.
NHP and its general partner and administrative arm, the National Corporation for Housing Partnerships, competes with other developers for bids from the Department of Housing and Urban Development and generally pools its capital with that of local partners to finance a project. The partnership "enables builders to get better lending rates from private lenders . . . We provide the front-end money [equity] to get the project off the ground," a NHP spokesman said.
"Development low-income housing is an economic impossibility these days without federal subsidizing," said NHP President George Brady Jr. The challenges ahead for rental-housing developers will be "rent controls, condominium conversions and constraints imposed by federal and state agencies," he noted.
Since NHP was chartered by Congress in 1968, its projects have ranged from a Pennsylvania mansion converted into units for the elderly to a luxury high-rise in Cincinnati. None of NHP's projects in 40 states, the District and Puerto Rico has ever been foreclosed on.
Project suggestions come to the partnership's main office in Washington from local developers who may need its financial backing and security. Its development department thoroughly investigates the economic feasibility and actual need for a suggested project in a specific neighborhood.
If the department feels that a suggestion is sound, it presents the proposal to the project approval committee, which consists of the senior department heads in NHP.
When the committee gives a green light, the departments get to work: NHP architects work on design and energy efficiency with an architectural firm from the project's locale, and the construction department monitors the buildings at the site, making sure the correct materials are used and bills are paid.
In the past, the agency focused most of its efforts on California, Florida and Maryland. Extensive redevelopment in St. Louis and in New York's Harlem, the Bronx and Manhattan as well as the facelift given to Baltimore's inner harbor, also are some of its accomplishments.
The latest area of concentrated effort is New England. Mark Sharp, vice president of NHP's New England property management office, estimates that one-third of the New England projects are in the Boston and Providence, R.I., areas.
Sharp's office takes full responsibility for the financial burden, maintenance, tenant selection and anything else connected with the project.
"Tenant selection can make or break any subsidized rental project," Sharp said. Formerly, NHP was not involved with tenant selection, but when "alcoholics, drug addicts and criminals were easily getting accepted, we felt we had to take over," said Sharp.
"We have the expertise to get a project off the ground. Once it is off and running we buy out the equity. When the project is near completion we sell off to investors who use it as a tax shelter. But we keep 5 percent general partnership interest, which enables us to remain manager, owner and operator. This is a very important aspect of low-moderate income housing," another NHP spokesman said.
Site managers usually are NHP affiliates. The firm does, however, hire managers from other developers, usually from original partners in a project.
Minnie Clark, for example, works for Boston's Abrams Management Co., which oversees an NHP-subsidized urban-renewal development in Roxbury, a part of Boston.
Behind the main doors of the buildings in Roxbury, dubbed TAB (Tenants Association of Boston), is an entryway sealed off by iron bars as a security precaution. The mailboxes, which have no nameplates, soon will be covered by an iron gate.
"We found that lounges quickly turn into centers for drug users and dealers," Clark said.
The buildings are clean, lights all work, the leaks get fixed: "The good appearance of the building has done a lot to uplift the neighborhood," she said.
Unfortunately for the National Housing Partnership, managers such as Winnie Clark are one in a million. Sharp termed NHP's project in South Providence a "management nightmare. . . . It's hard to keep a cohesive, smooth operation" with 23 buildings scattered over the area, he said.