New residential development in Puerto Rico aims for community inclusion
Editor’s note: The following article first appeared in the May 31-June 6, 2018, issue of Caribbean Business.
Real-estate development firm McCormack Baron Salazar Inc. (MBS) and the Puerto Rico Housing Department presented a new apartment community, Bayshore Villas, in the former Puerto de Tierra public housing community, for people with a mixed income to stimulate additional investments in that sector.
The development, established through a public-private partnership (P3) at a cost of $41.3 million, was financed with $27.8 million in private capital provided by Alden Capital Partners and Citibank NA through the Low-Income Housing Tax Credit program administered by the Housing Finance Authority of Puerto Rico (AFV by its Spanish initials). In addition, the Housing Department provided $13.5 million through funding from the U.S. Department of Housing & Urban Development (HUD). Meanwhile, Citi Community Capital provided a construction loan.
“Bayshore Villas takes into consideration the Bahía Urbana master plan, which will greatly benefit residents because the new and modern coastal urban project will offer jobs and provide walking access to restaurants, shops and other community services,” said Daniel Acosta, senior vice president & project manager at McCormack Baron Salazar.
Located a few steps from Bahía Urbana, San Juan Bay’s waterfront-area revitalization initiative, the development consists of a mix of one-, two- and three-bedroom apartments in a four-story mixed-use building, three-story walk-ups and three-story townhouse buildings. Along the waterfront, the nine-acre community has access to the Rapid Transit Bus line on Calle del Tren.
Of the 174 new units, 78 percent is reserved for families earning 60 percent or less of the area’s median income, including some accessible as public housing, and the remaining 22 percent of the units available at market prices.
“There is a relocation plan prepared by the Housing Department that gives priority to residents who previously lived in the public housing project to reapply and qualify for a unit in this new project,” Acosta said.
The development also includes about 6,000 square feet of commercial space, a 3,300-square-foot administration office with management space, community room with business center area and fitness room.
The community offers outdoor exercise stations, walking trails, playgrounds, community gardens, and controlled access to parking and buildings.
In addition to the amenities, the development team designed the community with hurricane-resistant features that include hurricane-rated windows, doors and roofs, as well as reinforced structural components. The site also manages stormwater runoff to reduce the impact of heavy rains.
When asked by Caribbean Business how this P3 project was managed in the context of the Puerto Rico Oversight, Management & Economic Stability Act (Promesa) and the island’s fiscal situation, Acosta explained that it began with a bidding process through a request for proposals with qualifications requested by the Housing Department in 2014, when Promesa was not yet in effect.
The sales closure of Bayshore Villas, he further said, was achieved in November 2016, and although Promesa had come into force several months earlier, all transaction-related documents and budgets were approved because they used HUD funds as well as credits.
Bayshore is the second development that MBS and the Housing Department have worked on as a P3. The first was Renaissance Square, after the former Las Gladiolas housing project near the Golden Mile financial district in Hato Rey was imploded in July 2011.
With a total of 140 available apartments for rent, the Renaissance Square, Housing Department, MBS and private investor partnership reached $35.5 million. An open house was held in December.
Sixty percent of the new mixed-use community is reserved for very low-income families, 20 percent for the working class, and 20 percent are rented at current market prices.
The MBS and Housing Department are working on two additional developments at the José Gautier Benítez public-housing site in Caguas. Among these new projects is a 238-unit mixed-income complex similar to Renaissance Square and Bayshore Villas, where 25 percent is geared to the open market.
The second is a 200-unit project for people older than 60, which is subsidized by HUD, the Housing Department and tax credits. “For this project, there are no units for the free market because the need in Caguas for elderly people has increased,” Acosta explained.
The project received tax credits, as well as federal housing funds, and is in the process of completing private investment. Acosta said the financial phase of the project should close by the beginning of fall and the construction process should begin at the end of the year.
Intending to continue developing more projects, Acosta said the MBS is talking to mayors from various municipalities that have the need to develop these projects, so partnerships can be established to send the Housing Department requests to develop more residential units.