(St. Thomas, Virgin Islands) – Developing affordable housing in paradise isn’t all fun in the sun, especially when you take over midstream.

The start date of April Fool’s Day 2004 was not the strangest part of the development of the Virgin Islands Community Housing Campus. First, the pre-existing development plan was unworkable. Second, the previous developer hadn’t lined up financial support for the project. And if it couldn’t meet a rapidly approaching deadline, the project would lose its tax credit allocation.

Not to mention that the location was on a hillside where a hurricane had destroyed the previous building. It was also in a seismic zone, but that’s almost anti-climactic when the rest of the risks and challenges were factored in.

For developer Winder Balter Partners, Inc., the challenges were just beginning. Asked when he began to wonder just what he had gotten himself into, Robert Wilder quipped, “April second.”

The reason to overcome all these hurdles becomes clear when the end result is considered: the $26.6 million development of 151 affordable housing units and a 28,000-squre-foot community center. Military veterans and their families will have preference for the apartments: 60 one-bedroom, one-bath units; 49 two-bedroom, one-bath units; and 42 three-bedroom, two-bath units. All units have ceramic tile floors and central air conditioning, but no heating system. (This is the Virgin Islands, after all.) The community center will be reserved for agencies that provide social services to the island’s veterans and low-income residents.

“There was a study done to determine that this was the right project [for the site], and they determined that their veterans—folks who live in the Virgin Islands and went off to fight in the services—have come back and uniformly are in dire poverty,” said Chris Tawa, managing director at MMA Financial, which worked with the developer on this and many other projects.

The Community Housing Campus received a $10 million floating-rate construction load from JPMorgan Chase Community Development Group, based on the prime lending rate. It was awarded $25 million in 9% low-income housing tax credits, which were syndicated by Alliant Capital for about $20.7 million. Additional funding came from MMA Financial acting as a correspondent for the Community Development Trust (a $3.9 million permanent loan) and the Federal Home Loan Bank of New York (a $1.7 million subordinate loan).

All of the units in the property are affordable to households earning no more than 60% of the area median income, and the project received a 15-year Sec. 8 housing assistance payment agreement for the 42 three-bedroom units. Rents (including utilities) range from $612 for a one-bedroom unit to $849 for a three-bedroom unit. Land for the development was leased for $1 a year for 99 years by the Virgin Islands government—a move that required a vote by the territory’s legislature.

An uphill climb

When Wilder Balter, based in Elmsford, N.Y., first heard about the project in December 2003, tax credit syndicator Alliant Capital was looking for a new developer to take over the project, which was dying on the vine after three years of struggle. Because a previous developer had been unable to pull it all together, the project needed someone who could bring construction, development, and affordable housing experience to the project, as well as credibility with lenders.

“Because we have development and management skills, we get to see a certain number of these troubled projects that can’t seem to get closed,” said Robert Wilder, a principal at the development firm.

Wilder Balter was reluctant to get involved because it had its hands full with other projects. “We kept saying no until 2004,” said Wilder. By then, it had learned enough about the project to understand its complications and potential, and the company’s schedule had lightened up.

The challenges had to be dealt with as soon as Wilder Balter came on board. Wilder said the existing plan wasn’t viable. The mix of studio apartments for homeless veterans and one- to three-bedroom units was supposed to be built on a portion of the side that was unsuitable for development. “We tool the plans and basically just shredded them,” remembered Wilder.

The new plan recognized that the biggest need was for families, so more two-bedroom units were added to the plan and the studios were eliminated.

The design itself had to be carefully tailored to the site, a hurricane-prone scenic hill overlooking the town and port of Charlotte Amalie on St. Thomas island.
“You encounter the question of how do you do affordable housing on a site that already had a hotel blown away,” said Tawa.
The new construction, therefore, would have to be hurricane-resistant, so its one six-story building and seven three-story building were designed to be solid, using concrete and metal roofing. It uses “missile-impact-resistant” glass, meaning not that it can withstand a military assault but that it will survive the impact of flyer debris during storms.

Overcoming obstacles

Though Wilder Balter has its own construction company, it was not the general contractor on this deal. It could draw on that in-house expertise, however, to manage the process, with a little help from technology. Web cameras were mounted throughout the construction site “so we can actually view what’s going on from up here in the [New York] office,” said Kathleen Rubin, vice president of Wilder Balter.

There were other challenges that were overcome only by time. After the company came on board in April 2004, it had only about 90 days to complete its plans and get them approved by the territorial government, including remediation plans for the remains of the destroyed hotel on the site.

The territorial government had voted to provide tax abatement for the site, but when the developer checked into the legislation, it found that the law had been drafted incorrectly. So it was back to the legislature to have the tax abatement redrafted and voted on again.

After hurrying to get the deal to close, the next step was for the governor to sign off on the project at its closing—but he refused, to the confusion of the other parties involved. The still-unexplained impasse wasn’t solved until three months later, when the governor left the island and the lieutenant governor, as acting governor, signed off.

All this is now behind then, and the official groundbreaking finally took place in January 2005. Construction is expected to be completed in early 2006.