PHA’s Court Street Workforce Housing Project

About the Developer

The PHA was established by the City of Portsmouth in 1953 to address its shortage of safe, sanitary, and affordable housing for low income people. The PHA built its first development in 1959 and is today a dynamic organization that has developed and manages over 600 permanently affordable rental apartments housing over 1,000 people in the City of Portsmouth, New Hampshire.

The PHA is an independent special-purpose local government entity governed by a six- member Board of Commissioners that are appointed by the Mayor of Portsmouth and serve five-year terms. The Commissioners appoint the Board of PHA Housing Development, Ltd. Both boards share an Executive Director.

The PHA is a developer, adept at utilizing Low Income Housing Tax Credits (LIHTC), public, and private financing to create affordable housing. It also serves as the property manager of its 600 rental units. It operates an area-wide Section 8 Housing Choice Voucher Program, which allocates over 400 vouchers that house another 750 people. The PHA also operates a Resident Services Coordination Program that connects residents to social services, transportation, health care, arts organizations, and recreational opportunities.

The PHA’s $83 million in real estate assets are a critically important piece of the city’s infrastructure and PHA residents are at the heart of the city’s civic and social fabric. The PHA is the largest Public Housing Authority per capita in New Hampshire, housing nearly 4.5% of the population of the city. As the city’s largest landlord, the PHA is a lead participant in the conversation about the need for additional affordable housing. The PHA is a key resource identified by elected and appointed officials, the business community, the thriving arts community, and the general public who have been calling on the city to address the pressing community need for affordable housing.

Court Street Workforce Housing Project Executive Summary

 The Court Street Workforce Housing Project is a historic opportunity to develop workforce housing right in the heart of downtown Portsmouth. This project will convert land already owned by the PHA and what is now primarily a surface parking lot and redevelop it into 64 one- and two-bedroom units. All of these units will be financially accessible to members of the workforce making at or below 80% of Area Median Income (AMI). Because it is located in a historic district, the building will be carefully designed to enhance the character of Portsmouth’s historic downtown.

The need for this project is well-documented. The city’s 2025 Master Plan, the Portsmouth Business Expansion and Retention Report, Portsmouth Listens, and the Mayor’s Housing Committee all identify the need for housing that is affordable to the city’s workforce. If the city fails to address its shortage of affordable housing it risks losing the social and economic vitality it treasures – vitality driven, in part, by those who are employed in its world-class creative economy and our valued public service employees.

 

The Court Street Workforce Housing Project will:

  • Develop 64 affordable housing units that will be home to 120 people;
  • Support Portsmouth businesses’ ability to attract and retain employees;
  • Create value by developing on an underutilized parking lot; and,
  • Improve the streetscape view by constructing a building that is both attractive and visually connected to the historic district in which it will be

This project is the culmination of years of planning, both on the part of the community and the PHA. Funding will come from Low Income Housing Tax Credits, New Hampshire Housing Finance Authority (NHHFA) grants and loans, and an equity investment on the part of the PHA.  The State of New Hampshire Community Development Finance Authority (CDFA) tax credits are also an important part of the project’s financing structure.

Property Description

The Court Street Workforce Housing project will be located at what is now 140 and 152 Court Street in the heart of downtown Portsmouth. The PHA owns the 100 unit Feaster Apartment building at 140 Court Street. This property also includes an underutilized surface parking lot which is where the new development is being proposed. The PHA has a Purchase and Sales agreement on an adjacent parcel at 152 Court Street, a portion of which will be demolished, while a historic antique colonial single family home will be preserved and integrated into the development plan. The 68 one- and two-bedroom units will include 2 stories of parking and have minimal underground parking as well as a courtyard and public areas.

The site’s current use is primarily used as a surface parking lot located within Portsmouth’s Historic District. PHA will incorporate landscape/streetscape amenities that will serve to reconnect the heart of the commercial business district with its residential and institutional neighbors to the south.

The site is at the nexus of the downtown business district and institutions such as the Fire Station, District Court, Middle School, Library, and dozens of local employers and arts venues whose employees are a primary focus of this new housing development.

The project will be owned and operated by a Limited Partnership with a non-profit PHA affiliate as the controlling General Partner and manager. This structure is necessary for the PHA to raise capital through the syndication of LIHTC. The PHA will enter into a Right of First Refusal to acquire the property from the Limited Partnership upon satisfaction of the 15-year LIHTC Compliance Period. Upon liquidation of the Limited Partnership, the PHA or its nonprofit affiliate, will purchase the property at the IRS Minimum Purchase Price and enter into a 99-year Land Use Restriction Agreement to ensure permanent affordability.

All 64 units will be affordable to those who have an income below 80% of AMI. The target rents will be affordable for individual renters making $41,700 per year.

Community Development

Housing costs are rising faster than incomes in Portsmouth. This has been true for years. The PHA currently has a waiting list of more than 530 individuals and families but the majority of new housing developments in the city have been targeted to the wealthy. City, civic, and business leaders are very concerned that this high cost of housing will irreparably damage the city’s valued social and economic vitality.

The City in 2014 completed a report on current housing conditions that identified the following:

  • More than half of Portsmouth’s population obtains housing by renting;
  • Of these renting households, more than 43% are classified as overburdened due to paying over 30% of their income on housing costs, with one-third being classified as severely burdened; and,
  • Rents on average have been consistently higher in Portsmouth than in other parts of the state and Seacoast

The City completed its Portsmouth 2025 Master Plan in 2017.  The plan’s five major themes are: Vibrant, Authentic, Diverse, Connected, and Resilient. The Court Street Workforce Housing Project brings together elements of each one of these themes.

Among the Master Plan’s specific findings were:

  • The costs of both rental and ownership housing are out of balance with wages and household incomes: 44% of renters, 34% of all homeowners, and 28% of homeowners without mortgages pay more than 30 % of their household incomes for housing expenses;
  • Based on current income distributions and housing costs, approximately 55% of residents would be unable to affordably purchase a home in Portsmouth; and,
  • 39% of Portsmouth residents live alone but small housing units (studio and one bedrooms) currently comprise only about 20% of the units in

Recognizing that housing affordable to its workforce achieves all of the values of the 2025 Master Plan, the plan specifically names PHA as an obvious partner, stating: “The financial and land ownership resources of the Housing Authority should be leveraged for future redevelopment of mixed-income and mixed-use districts adjacent to PHA sites.”

The 2025 Master Plan also includes goals that make it more likely that affordable housing will be developed. For example, Goal 3.2 is to “Accommodate the housing needs of low and moderate income residents,” and Goal 3.2.2 is to “Promote the development of mixed-income multifamily housing in appropriate locations with incentive zoning provisions, such as reductions in parking requirements and increased maximum heights.”

The lack of affordable workforce housing clearly impacts the city’s business community. In October 2017 the UNH Cooperative Extension issued its Portsmouth Business Expansion and Retention Program report (attached). It found that business owners value the quality of life offered by Portsmouth – citing the arts, education, culture and historic character. But a primary concern with expansion and retention of employees is the lack of affordable housing in the city.

A letter of support for this project dated March 8, 2018 from Valerie Rochon, President of the Chamber Collaborative of Greater Portsmouth, expresses great urgency about the issue. She wrote: “As of this afternoon, there are 1,069 open positions posted on Indeed.com in Portsmouth, with salaries ranging from $20,000 to more than $50,000. In our Tourism Committee meeting this week, many of our businesses expressed concern about filling their open positions before the high season begins. The low unemployment rate, the out migration of our youth, the lack of regional transportation, and the lack of affordable housing in and around Portsmouth are all adversely impacting our businesses and our economy. New affordable workforce housing developments, such as that which has been proposed by the PHA on Court Street, represent a critical investment in the social and economic health of our community.”

Public Benefit

Walkable to thousands of jobs in Portsmouth’s downtown, the location of the Court Street Workforce Housing Project is in a perfect spot to realize all of the principles of high quality urban design. The neighborhood context, at the heart of what some call a municipal campus between the Middle School, District Court, the Central Fire Station and the Feaster Apartments, make this a historic opportunity to achieve unit density, which is a function of affordability.

The Court Street Workforce Housing Project will be a vital source of housing that is financially accessible to those in the creative economy, the public sector, the many nonprofits based in the city, and the small businesses that make up the majority of employers in Portsmouth (88% of businesses in the city employ ten or fewer people). [2025 Master Plan, p. 59] This location is also host to a COAST bus stop, providing public transportation to other shopping, schools, businesses, educational opportunities, and services throughout the Seacoast region.

The Court Street Workforce Housing Project will be affordable to those at or below 80% of AMI and 60% of AMI. In New Hampshire, affordable workforce housing is typically defined as targeted to households earning less than 60% of the median area income ($47,640 for 2-person household). This demographic will be the primary target for the project.

In addition to providing critically-needed workforce housing, the development will add value to the neighborhood. Located between the downtown business district and the more institutional anchors between Court Street and South Mill Pond, the design will extend the historic and visually pleasing streetscape southerly, reconnecting the heart of the business district to its neighbors; neighbors that include the historic Portsmouth Fire Station, Portsmouth District Court, the Portsmouth Middle School, the Portsmouth Library, and the nationally recognized African Burying Ground Memorial. The site is located within steps of dozens of local employers, including hospitality and public services institutions, and arts venues such as the Seacoast Repertory Theater, the Music Hall, 3S Art Space, the Prescott Park Arts Festival, Strawberry Banke Museum and others whose employees are a primary focus of this new housing development.

Community Input

In 2016, the Mayor created a new Housing Committee and appointed current and past PHA Board members to the Committee. The goal of this Committee was to study ways the City could incentivize the development of more affordable housing. As part of the development of its 2025 Master Plan, Portsmouth published a housing report in 2014, and the PHA was a part of that process. When the city’s 2025 Master Plan was released in 2017, PHA was cited as a critical partner that can provide both the land and know-how to increase the amount of workforce housing in the city.

PHA was a part of the eight-months of deliberative discussion about housing in Portsmouth facilitated by Portsmouth Listens. Their Housing Report, released in December 2017, found a need for housing affordable to workers in the community, a commitment to economic diversity, and a recognition that zoning that regulates density and building height will have to change in order for more housing to be constructed.

PHA also hosted in a design charrette convened by the Workforce Housing Coalition directed at its Gosling Meadows development. The focus was how to increase affordable and market rate housing and create additional commercial or community uses on the property. This opportunity remains under study by the PHA as a means to advance its 2017-2020 Strategic Plan major goal to grow Portsmouth’s supply of affordable housing.

The PHA’s Executive Director Craig Welch presented about the project to the Economic Development Commission and Chamber of Commerce, the Portsmouth Herald Editorial Board, Portsmouth Listens Study Circles and the residents of the adjacent Feaster Apartments. Welch is serving as the keynote speaker at the Workforce Housing Coalition of the Greater Seacoast’s Annual Meeting in March and will host additional educational and input sessions with the general public.

Economic Development

Portsmouth Listens’ 2017 Report on Housing includes this from the business member participants: “Housing is a very serious problem for small business owners and their employees. The problem is availability and affordability. Small businesses do not have enough revenue to pay substantially higher wages necessary for them or their employees to afford to live here (rent or own). If one cannot live in Portsmouth, then they must spend time and money getting here every day. As a result, there is a high turnover of employees who will take slightly lesser paying jobs if they can live where they work.”

The Court Street Workforce Housing Project is located within steps of thousands of downtown jobs and would meet the need of these area businesses concerned about housing for their workforce.

The City’s 2014 Report on Housing noted that while Portsmouth’s population growth overall is just 2%, the two age groups growing in population are young adults ages 20-34 and seniors aged 65+. Smaller apartments close to downtown will benefit both.

Portsmouth businesses cite the lack of affordable housing as a key deterrent to business expansion and retention of employees. They note that younger employees, many that are young adults just entering the job market, seek downtown living with walkable commutes. This population is an ideal match for the retail and dining establishments that fill downtown.

The location is home to a COAST bus stop, making accessible by public transportation Great Bay Community College, located 3 miles from downtown, and UNH, located 10 miles from downtown.

The current use of the site is primarily as a surface area parking – not a good use of this one-acre space one block from historic Market Square. A thoughtfully designed development that references the historic nature of the neighborhood and that achieves density in downtown, is a much more effective use of this site.

Project Team

PHA and PHA Housing Development Ltd. will serve as project developers. Craig Welch is Executive Director of both organizations, bringing 20 years of private and nonprofit development and financial management to the task. Valerie Labrie is the PHA Director of Finance, responsible for the fiscal operations of this $7.6 million agency with $83 million in assets. Valerie manages the complex budgeting and reporting for the PHA’s multiple programs.

To support development of the project, PHA has contracted with the following:

CJ Architects, as lead design professional. Led by Carla Goodknight, CJ Architects is a Portsmouth based design firm specializing in high quality urban infill developments, including Parkside Place and 233 Vaughn Street in downtown Portsmouth.

Development Synergies LLC as development consultant. Peter Roche (President) has served as founding director of two of NH’s largest and most successful non-profit affordable housing firms and has facilitated the development/preservation of more than 5,000 units of multifamily housing across the northeastern and Midwestern US.

Sheehan Phinney, lead transactional counsel. Kenneth Viscarello is one of NH’s most experienced and creative attorneys with a high degree of technical specialization in the field of affordable housing, construction law, and tax credit syndication.

Bosen & Associates, local permitting and PHA counsel. Highly regarded Portsmouth attorney John A. Bosen is both a highly skilled real estate lawyer and a civic leader with deep ties to the Portsmouth community.

Ambit Engineering, civil engineer. Led by John Chagnon P.E., Portsmouth based Ambit Engineering will provide state of the art civil engineering and permitting services.

A construction manager will be selected by May 2018. Once complete, the PHA will manage the development, bringing its 59 years of property management to the task.

Funding Timeline

Leveraging financial support for affordable housing developments, especially in the high cost Seacoast housing market, requires a highly disciplined and well-orchestrated strategy of resource development. The first step is funding for predevelopment due diligence which is essential to demonstrating political and financial feasibility. The approximately $700,000 predevelopment budget was recently approved, funded almost entirely by PHA and its affiliated nonprofit entity. This equity commitment serves as the foundation for the financial plan which is illustrated on the attached CDFI Sources and Uses Statement.

Although we are in constructive conversations with all prospective sources of debt and equity capital for the proposed development, the application timetable does not allow for the demonstration of formal commitments prior to submission of final applications, all of which are scheduled in the fall of 2018.

Contact

For questions about the Court Street Workforce Housing Project or the PHA, contact Executive Director Craig Welch at craigwelch@nh-pha.com or 603-436-4310 x118. More information can also be found on our website at www.porthousing.org.

For more than 60 years, the Portsmouth Housing Authority has been developing and managing quality affordable housing to thousands of Portsmouth families, seniors and people with disabilities. As the largest landlord in the City of Portsmouth we own and manage over 600 units of affordable housing that nearly 1,000 Portsmouth residents call home.

Our housing is a critical part of the public infrastructure in the city.  Demand for our housing is stronger than ever, both from residents who want to live with us and from all those who recognize that housing diversity is important to the economic vitality and character of our great city.

In recent years, the City has been struggling with ways to incentivize the development of workforce housing while for-profit developers have almost exclusively been building to meet market demands for rental housing and condominiums that serve the most affluent members of our community. The result is that the far too many members of our vital workforce have been priced out of the market.

If we fail to address the shortage of affordable housing in this community, Portsmouth runs the real risk of losing the social and economic vitality that we treasure – vitality that is driven, in part, by those who are employed in our world-class creative economy where artists, craftspeople, musicians, performers, historic preservationists and others can no longer call Portsmouth home. The same holds true for our valued public service employees including first responders, teachers, coaches, health care professionals and employees of the variety of nonprofit organizations located here.

While housing diversity and affordability has long been a part of our civic dialogue, the public demand for more workforce housing has never been as pronounced in Portsmouth as it is right now. This demand is one reason why the Portsmouth Housing Authority included in its 2017-2020 Strategic Plan a primary goal to both grow and preserve the number of affordable rental units in the city. In order to overcome some of the biggest impediments to our goal, the PHA started by studying opportunities for additional development on land that we already own, including an underutilized parking lot on Court Street.

As a location, walkable to thousands of jobs in Portsmouth’s downtown is a perfect spot to realize all of the principles of high quality urban design. The neighborhood context, at the heart of what some call a municipal campus, between the Middle School, District Court, the Central Fire Station and the Feaster Apartments was a perfect opportunity to achieve unit density as a function of affordability.

The PHA is also everything city residents have been asking for in a housing developer: local, not for profit, experienced in bringing tax credits and other public financing tools to the table, and an owner of land that we already own free and clear.

The time is right, the location is choice, and the developer is your neighbor.  Please join us in a civic discussion we hope will result in a clear and direct response to the goals we all share for an inclusive, socially and economically diverse community.

As we begin the public process to create this development, we encourage your participation, and for your show of support both in person during City public hearings and in writing for those that can’t attend.  Join us in creating something special that is worthy of the City of the Open Door.

Craig W. Welch
Executive Director
Portsmouth Housing Authority & PHA Housing Development LTD.
245 Middle Street
Portsmouth, NH 03801
603-436-4310 Ext 118
www.porthousing.org