by Mark O’Meara, Staff Writer, Novogradac & Company LLP

The Most Precious Blood Roman Catholic parish campus, an Italian Renaissance-style development constructed in 1908, was repurposed into affordable housing in 1993. Twenty years later, the complex’s former school building has received another facelift at the hands of a new owner, Mission First Housing Group.

Mission First acquired the building in 2008, and received both historic tax credits (HTCs) and low-income housing tax credits (LIHTCs) to help finance the building’s redevelopment, which began in September 2012. The developer also received project-based Section 8 subsidies from the Philadelphia Housing Authority for 16 of the property’s 28 units. “Between the tax credits and the project-based Section 8 financing, it allowed us to do substantial renovations and properly operate the small affordable housing development,” said Mark Deitcher, director of business development at Mission First Housing Group, the property’s developer.

MPB School Apartments, named after the former Catholic school, preserves 28 affordable apartments in a historically certified building in the Strawberry Mansion neighborhood of North Philadelphia. Although Mission First’s primary focus is building affordable housing, it didn’t shy away from the challenge of also preserving a local landmark. “We are affordable housing developers, but we take pride in doing historic rehabs,” said Deitcher. “We have done a number of historic rehabs over the years. This building had great bones. It just needed modern amenities and a little tender loving care.”

To receive HTCs, Mission First preserved or replaced a number of the building’s existing features, including finding historically accurate windows to replace the old ones, refurbishing the exterior doors, roofing and exterior masonry work and repainting the front of the school with the ornate detail it featured years ago.

Historic Building with Modern Amenities

While Mission First put a lot of effort into retaining the building’s historical appearance, the developer didn’t stop there. Mission First made it a priority to give this historic building 21st century amenities. The developer added sustainable features, including solar thermal panels that provide hot water to all common areas and laundry facilities; ENERGY STAR-rated windows, doors, appliances, lighting and bathroom exhaust fans; and a cool roof system that reflects sunlight and limits the amount of heat transferred into the building. Deitcher said that installing energy efficient equipment reduces utility costs, making the units more affordable and is good for the environment.

Breaking Down the Deal

The $11.3 million development received an equity investment from Capital One for $ 9 million – $1.5 million in HTC equity and $7.5 million in LIHTC equity. Capital One purchased the HTCs for 93 cents per credit and the LIHTCs for 98.5 cents per credit through a partnership with the syndicator, Enterprise Community Investment. Capital One also provided a $4.4 million construction loan. “There is a huge need for safe and affordable housing in Philadelphia, especially in the Strawberry Mansion neighborhood where this development is located,” said Thomas Houlihan, vice president at Capital One. He said that Capital One was attracted to the development because of its existing relationship with Mission First and the opportunity to expand into the Philadelphia market.

“The credits were critical to preserving viable affordable housing where a significant percentage of its tenants are living in poverty,” said Ali Solis, senior vice president of public policy and corporate affairs at Enterprise Community Partners, the nonprofit parent company of Enterprise Community Investment. “Housing credits are instrumental in getting developments like this up and running.”

MPB Apartments also received $672,000 of assumed soft debt from the Philadelphia Housing Finance Agency (PHFA) and more than $1 million of permanent financing from the City of Philadelphia Redevelopment Authority. “We look at it as preserving affordable housing. The development had a lot of vacancies and low-quality housing standards,” said Holly Glauser, PHFA’s director of development. “To revitalize housing and give these residents a [decent] place to live was important.”

Mission First Focuses in Philadelphia

This is not the first affordable housing development that Mission First has developed in Philadelphia in recent years. Prior to constructing MPB Apartments, Mission First developed Temple I and II Apartments, which combined preserved  98 affordable housing units near Philadelphia’s Temple University. It also developed Walnut Hill West, a 32-unit affordable housing development in West Philadelphia.

Deitcher added, “While Mission First’s footprint has now expanded to Washington DC, Maryland, New Jersey and Delaware, Philadelphia is our home and has a special place in the heart of our organization. We always look for opportunities to continuing our work to strengthen Philadelphia’s neighborhoods.”