Good as Gold
In 1997, J. Wesley Daniels Jr., CCIM, founded a boutique firm in Atlanta that specialized in urban public/private partnerships and transit-oriented developments. With a knack for securing grants and rezoning approvals, Daniels' project list ranged from runway expansion to a mixed-use development. After the Great Recession dried up funding for these types of projects, Daniels redirected his expertise to the Charlotte Housing Authority in Charlotte, N.C.
As the senior development officer for CHA's Charlottetown Terrace, Daniels oversaw a $12.86 million renovation that earned the nation's first Leadership in Energy and Environmental Design Gold certification for a public-housing high-rise development. Commercial Investment Real Estate asked Daniels to comment on this unique venture.
CIRE: What factors led CHA to redevelop Charlottetown Terrace?
Daniels: The CHA Real Estate Group identified a portfolio of high-rise communities, which included Charlottetown, as ideal redevelopment projects. Originally built in 1977 as an apartment community for seniors and disabled persons, Charlottetown's units had inefficient heating, ventilation, and air conditioning systems that leaked condensation down the face of the building; the windows were single-pane sliders; and the mechanical, electrical, and plumbing systems were original and outdated. It was not a pleasant building.
CIRE: What role did you have with the Charlottetown rehab?
Daniels: I was responsible for project visioning and execution, which included complete project oversight, hiring and supervising the design and construction team, identifying, arranging, and securing financing, and supervising the construction management team.
CIRE: How did CHA finance the renovations?
Daniels: CHA lacked sufficient capital to undertake complete renovations of its portfolio of well-located and undervalued assets. I secured $55 million in grant, equity, and debt sources accompanied by financial structures to finance the redevelopment of all 540 units in the high-rise portfolio.
The Charlottetown redevelopment specifically was awarded $6.2 million in stimulus funds from the U.S. Department of Housing and Urban Development for the pursuit of creating a green community. This was an extremely competitive process. The project was also awarded a $1 million grant from the city of Charlotte's Housing Trust Fund. An additional investment of $5.66 million was infused by CHA for a total development cost of $12.86 million.
CIRE: Why did CHA pursue LEED Gold certification for the property?
Daniels: In 2008, CHA had adopted a sustainability policy that encouraged green building when feasible. Through the pursuit of LEED certification we were able to successfully leverage our capital with grant funding sources that incentivized green building. This was critical to offsetting additional costs and time involved.
Early in the design process, I pushed the envelope and decided to pursue LEED Silver with the architect and consultants. Soon after, the competitive application for HUD stimulus funds incentivized CHA to pursue higher green standards. In the application, CHA committed to the highest level, which required a savings in energy and water consumption of greater than 35 percent.
The construction manager ensured that a number of additional means and methods, such as more than 75 percent of waste diverted from landfill, sourcing local and regional materials, and maintaining 98 percent of existing wall, floor, and roof elements, were implemented during the construction phase. These additional strategies enhanced the project's sustainability and ultimately elevated Charlottetown into LEED Gold territory.
CIRE: How did your CCIM education and skill set assist you with the project?
Daniels: Through the assessment of the resident population, I was able to quantify the need for office and retail services in close proximity to the site. I was able to justify the conversion of 19 residential units to 12,000 square feet of retail and office space for service providers and retailers eager to serve a captive audience within the building. This served a sustainable element of the project. By incorporating the space within the building we reduced the need for the residents to make trips to office and retail locations off-site. This reduced the carbon footprint, reduced transportation-related expenses for the residents, and ultimately increased the value and marketability of the asset.
There were a number of challenges relating to the implementation of new direction, processes, and execution as well. I relied heavily on my ability to explain and substantiate positions based on detailed analyses for strategic decisions. My CCIM skill set proved extremely valuable throughout this process.
Jennifer Norbut is senior editor of Commercial Investment Real Estate. If you have a story worth sharing in CCIM Q&A, send it to firstname.lastname@example.org.