Located in La Porte, Tex., Happy Harbor Apartments is a 51-unit affordable seniors housing community with a Sec. 8 Housing Assistance Payment (HAP) contract on all 51 units. Originally constructed in 1983, the site is owned and managed by Methodist Retirement Community (MRC) and is part of its Healthy Living Communities.
Working with Lancaster Pollard, MRC completed a refinance in 2006 using the FHA Sec. 223(f) program that prepaid the original FHA Sec. 202 loan. Since that time, the foundation of the site shifted substantially which in turn caused cracking and plumbing fixture displacement. With interest rates currently lower than they were in 2006, ownership sought to complete another refinance with Lancaster Pollard that would not only lower its debt service but also provide funds for repairs.
MRC obtained a $500,000 affordable housing preservation grant from the Federal Home Loan Bank in Dallas to be used as part of the funding structure. Additionally, Lancaster Pollard sought to underwrite a structure that borrowed funds from two related MRC properties to help finance the extensive repairs needed at Happy Harbor. To mitigate any adverse effects on the two related properties, Lancaster Pollard processed interest rate reduction requests for both properties that would increase cash flow and replacement reserve deposits, ensuring they will be able to address any unanticipated repairs. The final piece of the funding structure was a $2.2 million loan insured by the FHA Sec. 223(f) program.
Lancaster Pollard successfully orchestrated the FHA loan closing as well as the borrowing of funds from the related MRC properties. The transaction provided for nearly $930,000 in repairs for the foundation, plumbing fixtures, drywall repair, painting and other related damage. The repairs will greatly improve the facility and ensure that the residents live in a safe and comfortable environment for years to come.
