Our client’s need
Housing in Gulfport, Mississippi was severely impacted by Hurricane Katrina. A 120-unit, fifteen building, Section 8 property, was severely damaged by the hurricane and featured in the media as an example of the storm’s lasting devastation and the lack of progress in getting hurricane relief to the poor. Many residents continued to reside in the damaged buildings following the storm even though they no longer had roofs, windows or utility services because there was no other housing available.
Baker Tilly solution
Baker Tilly’s multifamily housing team recognized an existing client, a national affordable housing developer, had previously worked on transformative projects for other communities so we suggested they work with the City of Gulfport and the Mississippi Home Corporation to transform the project into a positive symbol of hurricane recovery.
Baker Tilly was engaged to assist in negotiating the acquisition and structure the complex transaction, which included insurance proceeds and the need to maximize eligible basis to complete the rehabilitation project. We also introduced the client to other development team members including bond counsel and an underwriter.
During reconstruction, the project was hit by a second storm—Hurricane Gustav. Several of the buildings now appeared unstable, so an engineer was brought in to evaluate the buildings and assess the structural integrity of the wood. The assessment revealed that many of the structures’ walls were now unsound. The developer was forced to expand its construction scope to remove and replace more materials than originally anticipated (i.e. rotted lumber), resulting in construction delays and large cost overruns on carpentry, lumber and site work.
The project later lost some of its financing, resulting in a $2 million shortfall; however, the developer received additional funds from the Mississippi Housing Corporation Tax Credit Assistance Program that allowed the project to continue.
Throughout the project, our team:
- Completed a package for the bond resolution
- Assisted in the underwriting and packaging of the four percent tax credit/tax-exempt bond application
- Assisted with an AHP application
- Assisted with a CDBG application
- Assisted with a TCAP application
- Assisted in attracting a low-income housing tax credit equity syndicator into the project and explaining the structure
The $14.8 million project was funded through tax exempt bonds, tax credit equity, insurance proceeds, an Affordable Housing Program grant and TCAP. Major physical improvements to the property and buildings included:
- Complete exterior and interior modernization
- Addition of gabled roofs
- Private entries to all units
- Playground and splash yard
- Hurricane-resistant windows and additional structural bracing
- Lighted walkways throughout the property with a picnic area
The project also included a new community center offering access to a wide variety of job training and life counseling services as well as secure laundry facilities, computer center, fitness center and a community meeting room.
Once completed, the project had transformed from a blighted apartment complex into a vibrant new community. The renovated housing units and critical services were catalytic in transforming a challenged area of Gulfport, Mississippi into a stabilized community.
The community continues to stand as a symbol of revitalization in the Gulf Coast region and returned much-needed affordable housing to those affected by Hurricane Katrina.
For more information on this topic, or to learn how Baker Tilly specialists can help, contact our team.