House Springs Apartments

House Springs Apartments was conceived as a “special needs” project involving Rural Development subsidies in which Renaissance Property Group had a long-standing interest but no prior experience. After nearly two years of work, the project financing closed without any RD involvement or ”special needs” overlay.

House Springs Apartments, a 48 unit senior complex originally developed with a 515 RD loan (prepaid in 2008), was bundled with another property under common ownership which was still burdened with a 515 mortgage and concomitant RD control. RPG contracted to purchase both properties and obtained LIHTC and HOME awards from MHDC for their acquisition and rehabilitation, pursuant to MHDC’s priority for Special Needs housing. However, after the required Section 106 environmental review, HUD determined that the presence of House Springs in a 500-year flood hazard zone rendered it unsuitable for a Special Needs population, and MHDC released the project from its Special Needs commitment.

Meanwhile, RD had taken the position that the financial structure of the project was not viable—despite MHDC, RPG, the equity investors and bond underwriter having reached the opposite conclusion. Extensive explanations, negotiations and re-underwriting ensued, but RD remained intransigent, and the RD property was eventually dropped from the development plan. Within a few weeks, the acquisition/rehab financing closed, featuring equity investments from St. Louis Equity Fund and Sugar Creek Realty and tax-exempt bonds credit-enhanced by MHDC.

After a smooth rehab & resident relocation program, the project was completed in July 2014 and has been a resounding success.