Letter
May 27, 2014
Ms. Sarah LaValley
Conservation, Preservation and Land Use Planner
City of Northampton
210 Main Street - Room 11
City Hall
Northampton, MA 01060
Re: 129 Pleasant Street
Northampton, MA
Dear Ms. LaValley:
I am writing to request that the City of Northampton’s Community Preservation
Committee (“CPC”) consider an expedited review of an application by HAP, Inc., for $300,000
toward the acquisition of the Northampton Lodging property, located at 129 Pleasant Street in
downtown Northampton. HAP’s goal in acquiring the property is to ultimately redevelop it for
commercial and residential uses, with the rental apartments containing a mix of both affordable
and market rate units. As described below, HAP requests approval of CPC funds in September
2014 and availability of funds for acquisition of the property prior to December 31, 2014.
This letter and attached materials explain HAP’s plans for the acquisition and
redevelopment of the property, and the rationale for an expedited review of an application for
CPC financing.
Acquisition, Relocation & Re-development Plan
Acquisition
HAP has signed a six-month Option to Purchase Agreement to acquire the 58-room
Single Room Occupancy Northampton Lodging property for $1.6 million from current owner
October 8, 2014
Bowditch LLC. The Option to Purchase Agreement expires . Pending
satisfactory completion of due diligence investigations, HAP intends to exercise the option and
December
enter into a Purchase & Sale Agreement, with an expected title closing date prior to
31, 2014
.
HAP intends to purchase the property and manage it in its existing condition until
financing is secured to construct a new five-story mixed-use, mixed-income building on the site.
Given the demand for affordable housing resources, it may take as much as three years after
purchase before HAP is able to secure all necessary financial resources for the project and
commence construction. The new building, further described below, will contain 78 studio and
one-bedroom rental apartments and ground floor retail space. The completed development will
be managed by HAP. Apartment rents will be tiered to include market rates and rates affordable
to persons earning up to 80%, 60%, 50%, and 30% of Area Median Income.
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The sources and uses of funds for the purchase of the property and three years of
projected income and expenses for the interim management of the existing building are attached
to this letter as Acquisition & Interim Operating Budget.
In order to finance the purchase of the property, HAP is negotiating with Community
Economic Development Assistance Corporation (“CEDAC”) for an acquisition loan of
$1,600,000. The loan would carry an interest rate of 5.5% for a term of three years. HAP would
need to make quarterly interest payments only during the loan term. The principal amount of the
loan would be repaid to CEDAC at closing on the financing for the construction of the new
building. The attached acquisition budget shows HAP drawing as much as $1.5 million of the
CEDAC loan, including up to $264,000 with which to pay CEDAC annual interest payment of
$88,000. CEDAC is also expected to approve a separate $400,000 loan to HAP to pay for third-
party pre-development expenses for the re-development project. These funds will be used for
architecture and engineering, appraisal, market study, survey, environmental and other costs.
Additional sources of acquisition financing are $200,000 from HAP and $300,000
requested herein from CPC. The CPC funds are critical to reducing the amount borrowed from
CEDAC, and thus the interest expense.
Relocation
The Northampton Lodging building is an 11,700 s.f., 3-story, partially below-grade brick
building, constructed in 1967 as a dormitory for the now-defunct Northampton Commercial
College. It presently functions as 58 single-room rentals, plus a manager’s room, with a
common kitchen on the lower level. Men’s rooms are located on the upper two floors and a
woman’s room is on the lower level. Rooms are rented weekly or monthly. The current owner
has no leases with any tenants.
The tenant population of Northampton Lodging is notable for both its transience and
long-term residents. As of May 2014, 45% of tenants had moved into the property within the
preceding 24 months. However, 19% had been in residence for over ten years. During its
interim management of the building, and upon redevelopment, HAP will work with local social
service providers to offer case management, job development, and a range of counseling and
other services to residents. HAP will assign a full-time Property Manager to 129 Pleasant Street.
Because the length of the interim operating period is unknown and tenant relocation is
expensive, during the first year of the interim operating period, HAP will not rent any vacant
rooms, unless occupancy falls below +/- 40 rooms. If HAP rents rooms during the interim
operating period, new tenants will be required to waive their rights to relocation benefits. At the
time of HAP’s first financing application to MA Department of Housing and Community
Development, all tenants, except any that waived their right to relocation benefits, will receive
written notice from HAP that they may be subject to relocation and eligible for relocation
benefits in the event HAP is awarded funds and proceeds with the project.
Once redevelopment financing is secured, HAP will provide temporary relocation
benefits to all eligible tenants. Such tenants will be temporarily relocated to SRO, studio and
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1BR apartments in Northampton and nearby communities. HAP will engage the services of an
experienced Relocation Coordinator, and will pay for tenant moving expenses, rent differential,
etc. Relocated tenants will be offered apartments in the new building at approximately the same
rent they paid at the time of their relocation, plus any appropriate escalation. HAP estimates the
cost of tenant relocation is $250,000.
Redevelopment
After closing on all necessary development financing and tenant relocation, the building
will be demolished. HAP’s preliminary plan calls for construction of a new five-story,
approximately 73,000 s.f., 78-unit apartment building. Features of the completed development
will include:
28 studio apartments (23 affordable/income restricted & 5 market rate)
50 one-bedroom apartments (35 affordable/income restricted & 15 market rate)
4,500 square feet of retail space
On-site parking for 20 vehicles (none required Downtown Business zoning district)
4 apartments fully accessible for persons with physical handicaps
All apartments visitable by persons with physical handicaps
HAP property management office with space for service providers
Tenant laundry room and meeting space
Bicycle storage
Given its location and surrounding land uses, HAP believes that the property is best
developed as smaller rental units for one and two-person households. A preliminary plan of the
street-level and upper floors is attached. The proposed tiers of affordability are shown on the
following chart:
AFFORDABILITY RESTRICTIONS
Extremely
Extremely Low-Very Low-Low-Moderate
Project Total
Low-Income Income Income Income Income Market Rate
<30% AMI <30% AMI <50% AMI <60% AMI <80% AMI
Rental
Assisted Unrestricted
Studio 4 4 4 6 5 5 28
1 BR 4 4 4 18 5 15 50
TOTAL: 8 8 8 24 10 20 78
% of total: 10% 10% 10% 31% 13% 26% 100%
Under HAP’s plan, 48 apartments (61%) will meet affordability requirements of the Low
Income Housing Tax Credit (“LIHTC”) program. These apartments will be rented to households
earning up to 60% of Area Median Income (“AMI”). For a two-person household in Hampshire
County in 2014, 60% of AMI equates to a total annual household income of $41,280. Of these
48 apartments, 16 will be rented to households at or below 30% of AMI, which for a two-person
household is an annual household income of $20,600. In order to avoid economic displacement,
all relocated tenants who elect to return to the new building will pay rent comparable, with usual
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escalations, to rent paid at the time they left 129 Pleasant Street. An additional 10 apartments
will be rented to households earning at or below 80% of AMI, or $51,150 for a two-person
household. In total, 58 apartments (74% of total) will be income restricted.
HAP has selected Northampton Architect Peter Frothingham to design the new building.
A preliminary cost range for construction of the new building is $12-15 million. Financing is
expected to come from many sources, including: CEDAC, Low Income Housing Tax Credits,
MA Department of Housing and Community Development affordable housing funds, a bank
construction loan, permanent financing from either a bank or Massachusetts Housing
Partnership, and Northampton’s Community Preservation Committee. HAP is also preparing an
application to the City of Northampton requesting $150,000 from its Community Development
Block Grant allocation.
The new building will be designed to be highly energy efficient and use sustainable
materials where possible. It will conform to the existing Downtown Business zoning district
requirements. No zoning variance or waiver is anticipated. Review and approval by the City’s
Central Business Architectural Commission will be sought prior to acquisition of the property.
The site is centrally located in downtown Northampton and walking distance to many
nearby amenities, including convenient access to public transportation. The property is directly
adjacent to a bike path and 500 feet from a planned Amtrak station. Daily train service to
Northampton is scheduled to begin in late 2014. Pioneer Valley Transit Authority (“PVTA”) bus
service to the VA Hospital in Leeds and Williamsburg, as well as to Easthampton and Holyoke
Community College is available on Pleasant Street directly in front of the property. PVTA bus
service to Hadley, Amherst and the University of Massachusetts is available approximately .3
miles (1500 feet) from the site. Peter Pan inter-city bus service is available approximately .3
miles (1500 feet) from the site.
Request for Expedited CPC Review
HAP respectfully requests an expedited review of its application for $300,000 of CPC
funds for acquisition of 129 Pleasant Street. CPC approval in September 2014 will enable HAP
to exercise its option to purchase the property by October 8, 2014. Availability of CPC funds is
requested so that HAP could take title to the property prior to December 31, 2014.
The acquisition and redevelopment of 129 Pleasant Street is important to the City of
Northampton and the CPC for the following reasons:
The property is currently home to many individuals who might otherwise be
homeless. HAP is prepared to purchase the property subject to existing tenancies. As
a regional housing organization, HAP will work to improve the quality of life of
current residents, assist them in finding better quality housing, and/or relocating and
returning residents to the completed development.
The site is an under-developed prime parcel of land in downtown Northampton. Its
re-development is inevitable. HAP’s plan adds new units of affordable and market
rate rental housing to the City and in so doing achieves many of the goals set forth in
the City’s 2011 Housing Strategic Plan.
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The property currently has no affordability restrictions. HAP’s plan will retain many
of the current residents of Northampton Lodging and provide them with greatly
improved housing with deed restrictions insuring affordability.
A critical aspect of HAP’s request for CPC funds is the timing of CPC affordability
restrictions. HAP certainly recognizes the requirement that CPC funds be used for affordable
housing, and accepts that as a condition for receipt of funds. However, in the event that HAP is
unable to obtain all funds necessary to start construction on the new building, it may be
necessary to sell the property. In that event, HAP would want to re-pay the CPC funds and, by
pre-agreement, release the property from CPC affordability requirements.
Please contact me either by telephone at (413) 233-1728 or by email at
pserafino@haphousing.org if you have any questions about this letter, the attached materials, or
you require any additional information. I am available to attend a CPC meeting to make a
presentation of this request and answer any questions.
Sincerely,
Peter A. Serafino
Project Manager
cc: Peg Keller/Northampton Housing Partnership
Attachments: Acquisition & Interim Operating Budget
Street-level and upper level floor plans
CPC Eligibility Determination Form
CPC Application
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