Tag Archives: Escobedo at Verde Vista

ENERGY EFFICIENT, AFFORDABLE HOUSING DEVELOPMENT OPENS IN MESA

Escobedo at Verde Vista is Fully Accessible for the Disabled

Mesa, AZ (December 2, 2013) – Gorman & Company, in partnership with Affordable Rental Movement (A.R.M.) of Save the Family Foundation, the West Mesa CDC and the City of Mesa are proud to announce a grand opening for the completely redeveloped Escobedo at Verde Vista Public Housing.

Escobedo at Verde Vista is a state of the art, environmentally friendly, redeveloped housing location designed to a LEED-Gold Standard through its use of building technologies.  Located at 125 E. University Drive in Mesa, Escobedo at Verde Vista will house 70 units along with a leasing office, multi-purpose building for a before and after school program, a computer lab, training center, and a museum dedicated to preserving the rich history of the location.

The units rent for $386-$562 for a 1BR, $460-$630 for a 2BR, and $525-$801 for a 3BR.  Families eligible for this location earn between 40% and 60% of the county median income, which is between $18,600 and $46,260

The amenities include hard surface flooring, dual flush toilets, low flow plumbing fixtures, artificial turf, radiant barrier sheathing and high reflectivity roofing, and high performance Energy Star windows and lighting systems.  The development will also have access to free wireless internet, picnic tables, and a playground.

A ribbon-cutting for Escobedo at Verde Vista will take place on December 4th at 4:00pm followed by a reception at Save the Family at 5:00pm.  For more information or to attend, please contact Ron Meritt at (480) 225-0722.

About Gorman & Company, Inc.

Gorman & Company, Inc. specializes in revitalizing communities through innovative housing partnerships. As a trusted partner and respected industry leader since 1984, they specialize in downtown revitalization, the preservation of affordable housing, workforce housing and the adaptive reuse of significant historic buildings.  Learn more at www.gormanusa.com.

Escobedo at Verde Vista opens in Mesa

East Valley Tribune, Thursday, December 5, 2013

The City of Mesa held a grand opening event on Dec. 4 for a new mixed-use development that will provide housing for low- to moderate-income families.

The Escobedo at Verde Vista features 70 energy efficient rental units accessible to people with physical disabilities. A few amenities include a business center, clubhouse, state-of-the-art fitness center and a picnic area. Escobedo at Verde Vista will also house the new headquarters for Save the Family Foundation of Arizona; an organization that helps homeless families become self sufficient.

The development was built on the site of a facility that was vacated in 2007, and a few units from the original version were not demolished. The four “legacy” units include a leasing office, a multi-purpose building for a before-and-after school program, a computer lab and training center, a theatre and fitness center, and a museum.

Financing for Escobedo at Verde Vista came from private equity via the sale of federal tax credits. The development was constructed by the City of Mesa, Gorman & Company, Affordable Rental Movement and the West Mesa Community Development Corporation.

“We are happy to see quality private investments like Escobedo at Verde Vista coming to the City,” Mayor Scott Smith said in a statement. “It shows people have decided that Downtown Mesa is a great place to invest.”

Chris Glover

Mesa City Councilmember Chris Glover speaks at the opening of Escobedo at Verde Vista on Dec. 4, 2013. [Courtesy City of Mesa]

 

Low-cost housing center Escobedo to open in Mesa

The Arizona Republic , November 29, 2013

A new era in low-cost housing dawns in Mesa when Escobedo at Verde Vista, 125 E. University Drive, hosts its grand opening 4-5 p.m. Wednesday, Dec. 4.

The ceremony will mark completion of the first phase of the development, which is replacing the abandoned World War II-era Escobedo Apartments with modern, rent-subidized units.

It was among three tax-credit-financed housing projects approved last year by the City Council and the Arizona state housing department. The others are a senior complex on First Avenue and apartments at the La Mesita Family Shelter on West Main Street.

Escobedo is a project of Save the Family Foundation and several partner organizations.

Former real estate lawyer Gary Gorman overcomes early challenges to build successful business

By Tom Daykin, Journal Sentinel, September 30, 2013

Gary Gorman was a real estate attorney when he decided he’d rather be a developer, instead of the guy who gives developers legal advice.

Gorman & Co. was launched in 1984. Within a few years the firm was focusing on apartment buildings, aimed at lower income renters, partly financed with federal affordable housing tax credits, along with projects that use historic preservation tax credits. Today, located in the Dane County community of Oregon, the firm has 230 employees, operates dozens of properties in Wisconsin, Illinois, Florida and Arizona, and annually develops apartment buildings and other projects costing around $75 million.

The firm’s Milwaukee-area developments include the new Brew House Inn & Suites, a hotel created at the former Pabst brew house, along with Blue Ribbon Lofts, apartments developed within the brewery’s former keg house. The company also plans for another apartment development at the Pabst complex, now known as The Brewery.

Gorman recently met at the Brew House Inn to talk about his early challenges as a developer — including a partner who was a cocaine addict — how the firm grew, and its new foray into the hotel sector. Here’s an edited transcript of that interview.

Q.How did you become a developer?

A. When I got out of law school (in 1980) I was hired by a firm and promoted by that law firm as somebody who knew something about real estate syndication, which is just a fancy term for putting together a group of investors to do deals. I represented developers and syndicators for four years.

Then they offered me a partnership. And I thought, if I become a partner, then I’m going to stay. And it really wasn’t what I wanted to do. I was more intrigued by the business side. So, June of ’84, I left the law firm. I teamed up with two other guys (including a marketing expert). One guy that was older, more experienced and allegedly had more money.

Q.Did it turn out he didn’t have any money?

A. Well, you’re guessing the rest of the story. Our basic strategy was that we were going to put existing properties under contract, we were going to raise the equity capital by selling limited partnership shares, buy the properties, have somebody else manage them, and then we sell them after five years and take a piece of the profits. That was the idea.

So, within about six months of leaving the law firm, the marketing guy and I started seeing these letters coming in from collection agencies, and dunning letters from banks and other creditors to this older guy. The bottom line is he had this white powder problem that I didn’t know about. Should have done better due diligence. His frequent trips to Jamaica were not just to lay in the sun.

Q.What happened?

A. The marketing guy and I left him and formed our own little shop. And we did one deal in 1985 called Seminary Park Apartments, in Evansville, Wis. It was a small deal, 24 units. It was a historic rehab of abandoned school buildings that had previously been a private school for boys. So it had been empty for a long time.

It was immensely complicated for a small deal, and we probably made about $1.50 an hour. But that created a track record. At the end of that deal, the marketing guy said, “I can’t live like this any more. I never know if we’re going to have the deal, not have the deal. I don’t know if I’m going to have a paycheck.” (So the partner left the firm.)

Q.How did it feel to be on your own?

A. It felt a little lonely. Then tax reform started heating up and it eventually passed in 1986. That changed the tax code completely, and it eliminated a lot of the benefits of investing in real estate. But it created a new tax credit, the affordable housing tax credit. So I thought maybe I could work with that.

Q.Did you just immediately think there’s just unlimited opportunity there?

A. No, God no. I thought: Would this ever work? And who would ever invest seeking this credit? And should I go back and beg my senior partner at the law firm to take me back? All those thoughts were going through my head. And there were times when I literally ran out of money.

I worked with a law firm and an accounting firm to put together four private placements in 1987 that were raising capital for (tax credit) deals that another builder built because I didn’t have the capacity to build anything. It was a lot of work.

I got a call one day (in 1987 from Boston Financial). They had a fund that had raised money to invest in these tax credits, and would I be interested in having that fund invest as the equity investor?

Q.And you said, “Would I?”

A. I kind of held the phone away like, is this really happening? Absolutely, I wanted to.

Q.With the advent of the fund, I assume your life got a lot easier in terms of financing.

A. It did. Trying to find investors that put in $5,000 apiece a year was tough. The first institutional deal was a big break-through.

Q.At what point were you starting to do multiple projects a year?

A. I think we did two a year in ’88 and ’89. (As the firm grew, it added in-house property management and construction divisions. In 1995, it hired Tom Capp, a former Fitchburg mayor who is now Gorman & Co.’s chief operating officer.)

Q.Was adding Tom a turning point?

A. It really was. It added a level of political sophistication that, frankly, I didn’t have. He really knows how to work with city planners, mayors, elected officials, plan commissions. He knew that mentality. He had a greater level of patience with the political process.

Then we started to grow, did more projects. All of the equity was from institutional investors. Then we thought we would internalize the architectural function. We did that in ’99. At that point we sort of had the bones of an integrated development firm. That’s where we are today.

Q.What percentage of your business comes from affordable housing developments?

A. Probably 85%.

Q.How did you first get involved in doing the Brew House Inn & Suites?

A. (During a presentation to some Chinese government officials who were visiting Madison, Gorman was impressed with the interpreter, University of Wisconsin-Madison law student Ying Chan. Gorman hired him as an intern.) I was paying him, but I really didn’t know what he was doing. He was going to seminars here and there, and then he left when he graduated from law school.

He called me about six months later and said that he had been successful raising money through this EB-5 program (in which foreign citizens receive green cards in return for job-creating investments in the United States) for an immigration attorney out of the state of Washington who had never done a development deal before. I said, Ying, if you can raise money for someone who has never done anything before in the development area, it ought to be easy for you to raise money for us.

We had done Blue Ribbon Lofts, and we thought, where can we find another historic (preservation) deal that was of some size? Talking to the Zilber folks (owners of the Pabst complex), they pointed us to this building. The reason it’s a hotel rather than an apartment building is that to attract EB-5 capital you have to create jobs. A hotel and (restaurant) produce a lot more jobs than an apartment building.

Q.You’ve never done a hotel before, right?

A. No, but we have a regional manager, Laura Narduzzi, who’s got 25 years experience (in the hotel industry). I completely defer to her judgment on designing the hotel, running the hotel. I’ve stayed in a thousand of them but I don’t know anything about running them. I’m learning a little bit now, though.

Q.What have you learned?

A. The staffing level is much higher than an apartment building. The service level is huge. You have to have skilled, well-paid people on site, all the time.

Q.Are you making money?

A. We’re doing OK. Is it belching cash? No, not in the early phases. But we’re doing a lot better than our projections showed.

Q.Are you going to do other hotel investments?

A. We have a deal in Kenosha, called Heritage House. It’s a historic building. We’re about to convert that into a boutique historic hotel. I just made a presentation to the mayor of Rockford, Ill., and his staff on a project there that would be a historic hotel combined with a conference center. I made a presentation in Butte, Mont., with a concept of a similar combination of a historic hotel and a conference center. It’s opened up another area for us.

Q.But you’re going to continue to primarily be an apartment developer, right?

A. Yeah, that’s our core competency.

Mesa gets bit of boost in low-income housing

Ariz. to get 7 subsidized projects this year vs. 18 in 2012

PNI0806­-met housing 0802131216gn

Ramiro Ibarra (left) and Jose Ibarra level gravel on a road at the site of a low-income housing project in Mesa.

Photos by Stacie Scott/The Republic

The northern side of University Drive near downtown Mesa used to be, figuratively speaking, the other side of the tracks.

Seventy years ago, Mesa chose the neighborhood as the site of its first low-income housing project financed with federal money.

During World War II, the low-slung bungalows housed airmen training at Falcon Field.

But after the war, the Escobedo Apartments reverted to their original purpose: providing roofs for many who otherwise wouldn’t have one.

Faced with a monumental bill to rehabilitate the decaying units, Mesa closed them in 2008. The tenants got vouchers for reduced rents in other quarters.

Now, Escobedo is being reborn.

You can still see many of the original units, fenced off and slowly crumbling. But others are gone, and in their place is the frame of a low-income complex called Escobedo at Verde Vista.

It’s happening because last year the Arizona Department of Housing included the complex among projects approved for federal tax-credit financing. This year, Escobedo’s second phase, which will add 62 units to the 70 under construction, also received funding.

Overall, the list of approved housing projects statewide — only seven — is far shorter than the 18 issued by the department last year.

And while last year’s projects included nine in the Phoenix metro area, this year there are only two, both in Mesa.

In addition to Escobedo, the department approved a 78-unit complex proposed by Scottsdale-based Algarve Partners on the site of an old motel at 950 W. Main St.

The Algarve Apartments complex will be adjacent to a light-rail extension under construction, complying with the housing department’s goal of building as many units as possible next to public transit.

These complexes, and others like them throughout the Valley, are built by private companies or non-profit agencies, rather than with public money.

But public money is involved because the companies receive tax breaks under a Reagan-era program designed to spur investment in affordable housing. The federal government issues a certain amount in tax credits each year, and the states decide which projects are worthy. This year, Arizona sifted 32 applications.

Rent at Escobedo will range from $256 for one-bedroom units to $824 for the most expensive four-bedroom models. The first residents are expected to arrive in late September.

“Without the tax credits, none of this would be remotely economically feasible,” said Brian Swanton, Arizona market president for Gorman & Co., which is building the Escobedo project.

Swanton said Escobedo and other tax-credit projects around the state won’t fill the demand for affordable housing.

Already, he said, 100 people are on the waiting list for Phase I without the company doing any marketing other than putting signs on the construction-site fence.

“I was surprised by all the demand,” Swanton said. “We will literally fill up overnight.”

Nationwide, he said, industry experts have estimated there is $25 billion in past-due capital needs for affordable housing.

“It’s a crisis,” Swanton said.

The disparity between last year’s long list of approved projects and this year’s short one was deliberate, Housing Department spokesman Daniel Romm said.

In 2012, the department beefed up the project list using 25 percent of the tax credits it knew would be available this year, he said.

“Our goal was to leverage our program to create immediate job growth,” Romm said. “As a result, we invested over $200 million in financing to fund 18 low-income rental projects, creating over 1,200 low-income rental units in seven counties.”

That, he said, “was the most ever funded in one year by ADOH.”

Those who received last year’s tax credits, which totaled more than $20 million, were required to speed up the construction timetable, and ground was broken for Escobedo and two other projects in Mesa late last fall.

Total investment in Escobedo at Verde Vista is estimated at $23 million.

It is being built under the auspices of the Save the Family Foundation, a Mesa charity created in 1988 to serve homeless families.

It partnered with other non-profits and Wisconsin-based Gorman, which specializes in affordable housing and urban redevelopment.

The project includes a new headquarters for Save the Family and a social-services campus on the southern side of University Drive.

In addition, four of the original bungalows are being preserved for historical purposes. They will house a fitness center, computer classes and other services for Escobedo’s new generation of residents.

http://www.azcentral.com/community/mesa/articles/20130802mesa-arizona-low-income-housing.html?nclick_check=1

 

RELATED INFO

Newly approved projects

These are the seven projects approved by the Arizona Department of Housing this year for tax-credit financing:

Amity Residences for Veterans, Tucson, 65 units.

Escobedo at Verde Vista Phase II, 125 E. University Drive, Mesa, 62 units.

Crossing Point Villas, Sierra Vista, 60 units.

WMAHA Homes VI, Fort Apache and Whiteriver, 46 units.

Algarve Apartments, 950 W. Main St., Mesa, 78 units.

Bowman Senior Residences, Nogales, 48 units.

Sun Ray Family Apartments, Douglas, 57 units.

Tax-credit program

The Tax Reform Act of 1986 changed how the federal government promotes low-income housing.

Rather than pay directly to build such projects, the government now gives tax breaks to entities willing to finance them privately.

The IRS divvies up a set amount of tax credits per year among the states, based on population. In Arizona, companies that want to build projects apply to the Arizona Department of Housing.

Winners don’t always have their own money for construction and may obtain funding from outside equity firms. The sponsoring organization then sells the tax credits to the equity companies, making the equity companies eligible for tax credits each year for 10 years.

The tax credits lower the overall cost of building a project, making the apartments more affordable.

The tax-credit program does have some critics. The Cato Institute, a libertarian think tank, opposes it and says on its website, “The low-income housing tax-credit program provides large subsidies to developers and few, if any, benefits to low-income families.”