Donna Kimura, Staff Writer
Affordable Housing Finance
CELEBRATING ITS 40TH ANNIVERSARY, THE FIRM POSITIONS ITSELF FOR THE FUTURE
When a multiplex movie theater shuttered its doors in Coram, N.Y., it left a big scar on the local landscape. The giant building stood vacant for a decade and became tagged as a “monument to blight.”
While other, nearby communities saw growth in their retail markets, Coram lagged. It wasn’t all the theater’s fault, but the abandoned building was hard to ignore. Early attempts to redevelop the property all failed, leaving residents to drive by the enormous eyesore day after day, year after year.
Finally, that view is about to change. In May, the troubled 18-acre site will open as a new, mixed-use development featuring 176 units of workforce housing and 13,000 square feet of retail commercial space. “It’s going to completely revitalize the hamlet of Coram,” says Marianne Garvin, the longtime president and CEO of the Community Development Corp. of Long Island (CDCLI). “It’s going to provide a downtown center.”
Wincoram Commons is the latest development by Conifer Realty, an affordable housing developer based in Rochester, N.Y.
“They’re one of the best,” says Garvin, who has partnered with Conifer on six projects, including Wincoram. “They share the values we do of wanting to have a very positive impact with our projects.”
All affordable housing deals travel a winding road, but Wincoram’s path had more curves than most. First, the developers had to manage developing in a wetlands area. Second, they also had to split the large project into two parts—one a 9% low-income housing tax credit (LIHTC) deal and the other a tax-exempt bond transaction. Both are being done simultaneously to save on construction costs and achieve economies of scale.
The $55.9 million development features one-, two-, and three-bedroom apartments. Fifteen percent of the units will serve residents earning between 60% and 90% of the area median income (AMI), with the balance reserved for those earning no more than 60% AMI. “It truly is a workforce housing project,” says Andrew I. Crossed, executive vice president and a principal of Conifer.
The development, which demonstrates the depth and breadth of the firm, is one of many projects Conifer has under way. Overall, the company started construction on 12 developments with 853 affordable units in 2014, making it No. 3 on the AHF 50 list of developers. Conifer also ranks No. 13 on the AHF 50 list of owners this year, with more than 13,000 affordable housing units.
Celebrating its 40th anniversary this year, Conifer has always focused on affordable housing.
“We’ve developed under virtually every affordable housing program that’s been available over these 40 years,” says Timothy Fournier, president and CEO. A CPA by trade, Fournier began working with Conifer as a client in 1982. He then joined the company as CFO in 1986, nine days before the LIHTC program was created.
Conifer grew to about 5,600 units, all in New York, through the end of 1995, when it merged with Rochester-based Home Properties, a public real estate investment trust and one of the nation’s largest apartment owners.
Conifer retained its name and operated as a separate division concentrating on affordable housing. By the end of 2000, its portfolio had grown to roughly 11,000 units. “The merger with the REIT allowed us to move outside of New York and start developing in New Jersey, Pennsylvania, and Maryland,” Fournier says. The firm also operates in Ohio.Wincoram Commons, a 176-unit, mixed-use development in Coram, N.Y., is a joint venture between Conifer Realty and the Community Development Corp. of Long Island. Financing partners include Red Stone Equity Partners, Capital One, and Community Development Trust. Kitchen & Associates is the architect.
That year, the partners, including Fournier and chairman Richard Crossed, took the affordable housing development division private. “As a result of a Securities and Exchange Commission change, the accounting method required for recognition of the affordable housing group’s development fees was no longer accretive to the REIT,” explains Fournier. “Home Properties decided at that point to begin the divestiture of its entire affordable housing portfolio.”
The spin-off firm began with 43 employees but had no apartments to own or manage. However, it bought the affordable housing pipeline that it had built to get started.
The team began developing projects and rebuilding the company’s portfolio. A pivotal move came in 2005, when Conifer formed a joint venture with LeChase Construction. Conifer-LeChase Construction is a full-service construction firm specializing in affordable housing.
The partnership was critical to Conifer’s 360-degree business model: What we develop, we build. What we own, we manage. The JV allows the team to control the quality, timing, and construction costs at each of its developments.
In the past 10 years, the firm has built more than a half-billion dollars’ worth of affordable housing. It currently has 22 sites in three states under construction.
“They’ve done a great job of growing their business without losing any of the quality or integrity of the company,” says Eric McClelland, president and CEO of Red Stone Equity Partners. The LIHTC syndicator has frequently teamed with Conifer to help finance the developer’s deals, including Wincoram Commons.
McClelland cites the company’s culture as one of its strengths. In real estate, there are always challenges, and Conifer executives have been very forthright in discussing any issues that may come up in a deal. “Working with them, that helps solve things,” McClelland says. “That’s what makes a great partner.”
For the past several years, Conifer has tried to maintain a pipeline of about 30 or more properties. It’s a significant financial commitment, but it has allowed the company to move quickly when new funding opportunities become available.
For example, Conifer has two properties in New York and six in New Jersey that are involved in the Hurricane Sandy recovery efforts.
The firm has also ramped up its tax-exempt bond transactions. Conifer has typically done two to four bond deals a year, but it has seven in the works this year, both new construction and preservation, in three states. The increase comes as states establish new soft-financing programs that work with tax-exempt bonds, says Andrew Crossed.
Company executives have recently taken several steps to position Conifer for the future. These include tapping a 32-year Conifer property management pro to become director of administration. His team will oversee all property management administrative functions, such as multistate and agency rental leases, LIHTC compliance, and rental assistance contracts.
“We created the position to provide consistency,” Fournier says. “It’s part of capacity building for us to handle not only the [more than 13,000 units] in 200-plus properties we have today but prepare us [as well] for growth opportunities through possible acquisitions of affordable housing portfolios.”
Conifer also brought in a director of learning to lead education and training efforts. The initial focus has been the training of the maintenance staff to boost safety and consistency and the implementation of a learning management system.
In another move, Conifer has unveiled a refreshed brand and marketing tools. It had been about seven years since the company’s logo and materials had been updated and its website redesigned, and the firm needed to make improvements to meet current digital media standards. The tools needed to better market the company, and its properties needed to be more high-tech.
“Our goal was to update our current brand identity with a modern and fresh design that would coincide with who we are today and the direction we are going in the future,” says Sandy Gorie, vice president of marketing and communications, who joined the firm in 2007 from Equity Residential, one of the largest REITs in the country.
As a result, Conifer’s colors have been updated to blue and gold, and the firm’s long-standing tree logo has been reimagined as an arrow pointing to the future, to symbolize that Conifer is in motion, according to Gorie.
The new branding comes as the firm looks to expand beyond its five-state territory. Conifer is exploring moving south into Virginia, North Carolina, and South Carolina. It’s also considering opportunities in Connecticut, Massachusetts, and other neighbor states to where it currently is doing business.
Conifer continues to be a big player on its home turf, too: The company has proposed a 28-unit development in Chappaqua, N.Y., an affluent community that’s home to Bill and Hillary Clinton. The small but high-profile project has been met with dogged opposition from some local residents and officials. In response, Conifer has filed a housing discrimination complaint that is being investigated by the Department of Housing and Urban Development.
The firm still hopes to build Chappaqua Station and recently received minor building code variances for the project from the Hudson Valley Review Board and will be submitting updated construction drawings to the town.
Meanwhile, Conifer has its opening of Wincoram Commons to look forward to.
“It’s more than just an affordable housing development,” says CDCLI’s Garvin. For Coram, it’s a new heart to the hamlet. For Conifer, it’s a showcase property, the latest development in a long history of building affordable housing.
Overall, the company expects to start construction on 11 new-construction developments with nearly 800 affordable units this year.”