Tag Archives: ironwood-village

Renovations bring multifamily affordable housing to W. Valley

By Kaila White, The Republic, September 14, 2014

One of the best things about Elizabeth Maciel’s new apartment is the brand-new playground just steps from her front door, where she can watch her four young children play through the blinds in her favorite part of the house — the spacious kitchen.
With three bedrooms and a renovated bathroom, her home is bigger and nicer than anything she has ever lived in, but the rent is about half as much as her other homes, she said.

Maciel, 26, lives in Ironwood Village, a formerly foreclosed apartment complex in downtown Glendale’s Centerline district that was recently renovated to create affordable housing for low- and moderate-income people.

Monthly rents range from about $570 for two-bedroom apartments to $775 for three bedrooms, utilities included. The complex is among a handful of similar new and planned revitalization projects designed to bring safety and stability to neighborhoods in the West Valley.

The city, state, a non-profit and a developer partnered on the complex’s $9.5 million renovation, with $2.1 million coming from the city via federal neighborhood-stabilization grants.

The developer, Gorman & Company Inc., also has plans for a multifamily affordable-housing project in Avondale. Madison Heights, a public-housing community near Van Buren Street and Dysart Road, will be demolished and rebuilt once the developer secures funding.

Madison Heightsand a complex in west Phoenix were the top two priorities on Housing Authority of Maricopa County’s list of redevelopment projects, according to Brian Swanton, Gorman & Company’s Arizona market president.

They also are the only projects in Arizona approved by Congress for transformation under the new Rental Assistance Demonstration program.

Though single-family homes are the most popular, some West Valley cities are partnering with non-profits and private companies to build multifamily affordable-housing complexes, some to help an area recover from foreclosure, others to improve dilapidated public housing.

Ironwood Village includes 95 units, a pool and many new amenities, including solar panels, a computer lab, a fitness room and a multipurpose room, which houses free before- and after-school programs.

Elizabeth Maciel reads one of her children’s Mother’s Day poems in the kitchen of her three-bedroom apartment at the recently renovated Ironwood Village in Glendale.

Since moving in, Maciel has been able to afford a few luxuries. She recently took her children to dinner and to see “Teenage Mutant Ninja Turtles.”

“I would love to get a house of my own someday, but I know me staying here, being here, I think I’ll be able to do that. You know, afford this place but save up on the side,” she said.

It’s common for people with low incomes to spend as much as 50 percent of their gross monthly income on rent, which makes it difficult to afford other necessities or save for a home of their own, said Michael Trailer, director of the Arizona Department of Housing.

“It goes beyond just housing,” he said.

“In our community, we like people to be productive and pay taxes; it’s pretty hard to do that when you don’t have decent housing. Simply put, housing creates stability in families and communities.”

Ironwood Village is an example of the new model of multifamily affordable housing, he said.

“We’ve come a long way from the old days of public housing. We’re not just trying to put a roof over people’s heads; we’re trying to build these projects in locations close to jobs and education and services which provide the best access to opportunity.”

In order to be able to receive federal funding, Gorman & Company had to find a foreclosed complex within certain areas that the U.S. Department of Housing and Urban Development deemed neediest and with the most potential for impact, a difficult task that had them looking at about 40 properties before picking Ironwood Village and another one in Phoenix, Swanton said.
Most of the affordable-housing revitalization is in or near Phoenix because of greater access to transportation for work and school.

The lack of light rail has created a challenge for West Valley revitalization, as there are more incentives for developers to buildaround the light-rail area, Swanton said.

But Ironwood Village fell within an approved area by a single block, he said. Gorman & Company, Catholic Charities Community Services, the Arizona Department of Housing and Glendale partnered to revitalize it.

“It was a property that was literally falling apart at the seams. … Physically, it was a nightmare,” Swanton said. “And quite frankly, the existing tenant base was a challenging one.”

About half of the residents moved out during the renovation process — most when they saw the new credit- and criminal-background standards, he said. In other cases, up to eight people were living in a two-bedroom apartment, which is considered overcrowding by federal standards.

Gorman was required to use the federal funding to find more-suitable homes for those families, in some cases giving up to $30,000 for their relocation, Swanton said.

Year over year in August, police received about half as many calls for service from the complex once Gorman took over and began renovation in 2012, according to police logs.

“If we go into a neighborhood like where Ironwood is and rebuild the complex, it starts to revitalize the neighborhood. It’s like dominoes,” Trailer said. “We’ve seen it over and over again where we’ll go into an area that has deteriorated and rehab an existing complex and, all of a sudden, everybody else starts fixing theirs up, too.”

Gorman completed another multifamily affordable-housing project in 2011, the Glendale Enterprise Lofts across the street from Glendale High School in the Centerline district, which runs along Glendale Avenue between 43rd and 67th avenues.

Since then, a gourmet taco shop opened and a shopping center was remodeled down the street, and the high school opened a new culinary building — investments that are related to the Lofts’ improvement, said Brian Friedman, Glendale’s director of economic development.

“There is a positive ripple effect. Once one business starts remodeling, we see others also investing in new projects, improving their properties and new private investment being planned,” Friedman said.

A shopping center, Circle K, McDonald’s and Burger King have been remodeled near Ironwood Village, he said, and Ascent, a data-center company, has planned a new campus nearby.

Both Ironwood Village and Glendale Enterprise Lofts were 100 percent occupied within weeks of reopening.

Most other West Valley cities that receive federal funding for housing aid, such as Peoria, use it mostly for single-family homes through work with Habitat for Humanity and Chicanos Por La Causa.

In addition, the non-profit Native American Connection has bought land in Glendale, near Laurie Lane and 59th Avenue just north of Centerline, and is awaiting financing to build multifamily affordable housing for seniors.

The AHF 50: Top 50 Affordable Housing Developers, #29 Gorman & Company, Inc.

By Christine Serlin, Affordable Housing Finance, April/May 2014

#29, Gorman & Company, Inc.

Gorman and Co., based in Oregon, Wis., isn’t just a housing developer.  The company considers itself a community developer, too, building in revitalizing areas in Arizona, Florida, Illinois, and its home state.  One of Gorman’s major accomplishments for 2013 was finding new sources of financing for that work.

“We have to be prepared if there are real jolts to traditional funding, like low-income housing tax credits (LIHTCs) or historic tax credits,” says COO Tom Capp.  “That’s a bit of the motivation why we’re looking at new sources.”

The firm has had recent success with the government’s EB-5 program, which offers foreign citizens a Green Card if they’ll invest $1 million in an American project that creates or preserves jobs primarily in community development areas.

Gorman is redeveloping the Pabst Brewery site in Milwaukee with three projects.  The first was Blue Ribbon Lofts, 100 affordable units financed with LIHTCs and historic tax credits.  The second was a historic hotel and restaurant, where the company utilized the EB-5 investments.  The third will be market-rate workforce housing with equity from a Chinese developer.

“These financial sources are fueling projects like workforce housing and elements communities want to see us executing in the revitalizing areas,” says Capp.  “These sources are touching housing, but not intermingling with the LIHTC.”

The firm has also received approval from HUD’s Rental Assistance Demonstration program for a 300-unit public housing development in Phoenix.

Gorman & Company, Inc. Named in the Top 50 Affordable Housing Developers of 2013

April 10, 2014

Affordable Housing Finance named Gorman & Company, Inc. in the top 50 affordable housing developers for 2013.

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.