RAD in Holyoke, MA Seizing an Opportunity

Building on history

Dam of Holyoke Water Power Company, from The City of Holyoke: Its Water Power and Its Industries Holyoke, Massachusetts, U.S.A., 1876. Courtesy of http://holyokemass.com/

Holyoke, Massachusetts, is a historic town known for its industrial beginnings in paper and silk manufacturing. Today, Holyoke is moving towards a bright future for the people who live there. Since 1996, the Holyoke Housing Authority (HHA) has been redeveloping and revitalizing their properties using a variety of HUD assistance opportunities, creating a community that can better serve the population. The HHA owns and operates 821 public housing units in twelve developments and other individual sites across Holyoke.

The heart of a carousel

HHA’s Lyman Terrace property requires extensive renovations. In order to fund this work, the HHA applied to participate in the Rental Assistance Demonstration (RAD), providing the HHA with an opportunity to address the significant rehabilitation needs of the property and to better support its residents. Using RAD also allowed the HHA to support the economic growth in and around downtown Holyoke.

Local growers share their produce

“My daughter had a problem of high lead… so [I was] one of the first ones [to move]. Every single one of the old apartments had lead, so I just waited, like, for 6 months and then I was in this one.” —Melissa Solis, Resident

Planning the PROJECT

Lyman Terrace is in downtown Holyoke, less than a block away from City Hall. Lyman Terrace was originally built in 1939 and is one of the oldest public housing projects in the country. It covers three city blocks and, when the project is complete, it will have 160 affordable apartments, ranging from one to four-bedrooms. Nearly 80 years old, pre-RAD Lyman Terrace was outdated and needed many changes to improve accessibility in the living space, improve the connections with the surrounding community, increase access to resident services and improve the overall appeal of the properties. The HHA attempted to obtain funding to address these needs but was unsuccessful until it applied to HUD to participate in the Rental Assistance Demonstration (RAD).

Careful planning and preparation
Residents add a touch of flair to their gardens

The HHA began planning changes to Lyman Terrace in 2012, working with several stakeholders to determine options for the transformation of the property. The Study for the Revitalization of Lyman Terrance and its Relationship to Center City Holyoke, MA identified the core principles of the redevelopment plan, including increasing the density and types of development; preserving Holyoke’s historic urban character; improving pedestrian streetscape; and promoting local utilities, green technology, and economic innovations. Using the study’s findings, the Lyman Terrace redevelopment was designed.

From the beginning, the HHA also ensured community members were involved in the planning process.

The HHA hosted ice cream socials to build relationships with the tenants of Lyman Terrace. At these events, the HHA worked to understand resident needs as well as explain to residents how the project would improve their homes and their community. To make the redevelopment plan a reality, HHA partnered with The Community Builders (TCB), a nonprofit real estate developer, and with the Boys and Girls Club of Holyoke. Through the support and partnerships of state agencies and local government and nongovernment organizations and the residents, the HHA was able to navigate the upcoming process of rehabilitating the Lyman Terrace property.

“[My] message to other small PHAs [Public Housing Authorities]: don’t give up. Work with your HUD RAD offices and transaction managers.”—Matthew Mainville, Executive Director, HHA

RAD and the Setup for SUCCESS

After five years of planning, Phase 1 of the renovations of Lyman Terrace began in 2017 and closed in 2019. As Phase 1 progressed, the HHA had to determine how to fund phase 2. The Executive Director of the HHA, Matthew Mainville, worked closely with all the Lyman Terrace project partners, including the HUD RAD office, to develop a plan. Together, they were able to seize a new opportunity to change the course for Lyman Terrace.

Improvement from the inside out
Modular additions, increasing the unit sizes

Filling in the Gap with OPPORTUNITY ZONES

The creation of Opportunity Zones, a federal incentive that was created in 2017 under the Tax Cuts and Jobs Act, was perfectly timed for the implementation of Phase 2 and “opportunity came knocking.” Opportunity Zones are census tracts where investors can gain favorable tax treatment on their capital gains by investing those funds (through a privately created Qualified Opportunity Fund) into the area. The governor of each state nominates qualified census tracts as Opportunity Zones and Governor Baker of Massachusetts, working closely with city leaders, selected the two northern areas of Downtown Holyoke for Opportunity Zone designation, a geography which includes Lyman Terrace.

Through well-timed collaboration, the HHA was able to work with all these partners to “seize the opportunity” and secure enough funding to fill in the financing gaps. Key Bank had capital gains that it was seeking to invest in a qualified Opportunity Zone so Key Bank became the construction lender and equity investor in the second phase of Lyman Terrace. The additional tax benefits from investing in an Opportunity Zone allowed Key Bank to increase its pricing by 5 cents per dollar of Low Income Housing Tax Credits, which translated to an additional million dollars in equity for the project.

A view of the riverfront


Phase by Phase

With the funding fully secured for the Lyman Terrace rehabilitation, HHA launched Phase 2 in 2019. HHA is revitalizing the community in more ways than one. The Housing Authority was able to utilize the synergy of RAD and Opportunity Zones to fund a community center that had not been included in Phase 1 of the project. The HHA worked with HUD to get approval under Section 18 Demolition and Disposition Authority to demolish one of the site’s buildings to make room for the community center. Under this Section 18 application, the HHA also converted the existing units to Project-based Section 8 Vouchers, helping to better reposition the finances of the entire complex. Additionally, the HHA and TCB worked closely with Eastern General Contractors (EGC), the construction company completing the demolition and renovation of both phases, to employ Lyman Terrace residents as a percentage of the construction team. EGC provides job training to these new employees to maximize their economic opportunities long-term.

Creating a BETTER FIT for Residents

The renovation of Lyman Terrace focuses on rebuilding the community from within, expanding the interior of the homes, increasing the communal areas and maximizing the connectivity of the site with the surrounding community. The effort involved innovation not only in how funding was secured, but in how the buildings were reimagined and redesigned. Given the historic designation of the property, the HHA was unable to change the exterior of the buildings. TCB and the construction company worked with Simplex Homes to design modular additions to fit onto the brick exteriors, extending the kitchen space and creating more interior space through this innovative construction method. Through these additions, the living space of some apartments has increased by over 200 square feet and the homes now range in size from 600 to 1100 square feet. The buildings that were simple, rectangular brick structures now resemble contemporary, updated townhomes.

A cleaner, more modern neighborhood

Inside the expanded homes, residents have brand new kitchens and in-home laundry, larger living spaces, and updated wiring and plumbing systems. They also vary from single- to four-bedroom apartments, including some accessible apartments for those with physical impairments, so residents can relocate into “right-sized” homes. Outside of the homes, special consideration was given to creating a “front” and “back” to the buildings, increasing curb appeal in the front and creating more private yard space in the back. A new private street was also paved through the property to better connect the buildings to each other and to downtown locations, such as City Hall. One four-unit irreparable building was demolished to be replaced with a new community center. Once completed, the community center will provide space for community gatherings, a full-time Resident Services Coordinator, and activities with the Holyoke Boys and Girls Club.

“[The renovation] was nice because my mother needed a handicap apartment and the old apartments didn’t have handicap apartments. Having this was truly a blessing because she needed this type of apartment.”—Miguel Hernandez, Lyman Terrace Resident

What is RAD?

The Rental Assistance Demonstration (RAD) is a program led by the Office of Recapitalization in the Office of Multifamily Housing Programs at the U.S. Department of Housing and Urban Development (HUD). Authorized by Congress under the Fiscal Year 2012 HUD Appropriations Act, RAD allows public housing agencies and owners of other HUD-assisted properties to convert units from their original sources of HUD financing to project-based Section 8 contracts. These new contracts provide a more reliable source of operating subsidy that enables property owners to leverage private capital, such as debt and equity, to finance new construction and rehabilitation of rental housing.

What are Opportunity Zones?

Opportunity Zones are a federal tax incentive that was created under the 2017 Tax Cuts and Jobs Act that is meant to revitalize economically distressed communities using private investments rather than taxpayer dollars. Individuals with capital gains subject to tax can defer or reduce their tax liability by investing the capital gains in Qualified Opportunity Funds. Qualified Opportunity Funds can finance a variety of activities and projects such as commercial and industrial real estate, housing, infrastructure, and existing start-up businesses. Twelve percent (or 8,764) of U.S. census tracts are Opportunity Zones. These designated zones have lower incomes, higher poverty rates, and higher unemployment rates.