May 11, 2016
Silver Street Development Corporation is proud to announce its recent acquisition of the 171-unit Sebastian Villa of NJ to its subsidized housing portfolio. Through careful deal structuring, accomplished in partnership with the NJHMFA, Silver Street has been able to both add 84 units of subsidized housing to the property and to embark on a series of green renovations, including the installation of large rooftop solar array.
Sebastian Villa, originally built in 1982 and located in Neptune, NJ, is a charming high-rise building whose subsidized units cater to seniors of low income in the Jersey Shore area. When the property was originally built it contained 81 rent-subsidized units via a project-based Rental Assistance Program (RAP) contract operated under HUD’s section 236 program. In an endeavor to expand Sebastian Villa’s affordability to the benefit of the surrounding community, Silver Street, with council from Nixon Peabody LLC, shepherded the acquisition through the HUD Rental Assistance Demonstration (RAD) program, ultimately adding an additional 63 subsidized units via a 20-year project-based Section 8 Housing Assistance Payments (HAP) contract. The New Jersey Department of Community Affairs (NJDCA) further expanded the total subsidized unit count by providing a 15-year extension of Sebastian Villa’s pre-existing Section 8 HAP contract which covered an additional 21 units, bringing the final total to 165 subsidized units, an impressive 96% of the property’s offerings.
Financing for a deal of this complexity can pose challenges, however in the end Silver Street was able to secure $15M in short-term tax-exempt multifamily housing revenue bonds from the New Jersey Housing and Mortgage Finance Agency (NJHMFA, the original 1982 financiers of Sebastian Villa) as well as $22.5M in permanent financing from Prudential Affordable Mortgage Company and Freddie Mac. Additionally, Silver Street raised $8.5M in low-income housing tax credit equity by selling the tax credits (procured as part of the aforementioned NJHMFA bond allocation) to Boston Financial Investment Management.
With an eye to the future Silver Street has, within the structure of the deal, committed $8.8M to carrying out the following property renovations:
Additionally, as part of Silver Street’s green initiative, it will be modernizing the property’s aging energy infrastructure by installing new energy efficient appliances, water saving plumbing fixtures, and a significant rooftop solar array which is anticipated to both reduce the complex’s monthly power bill and generate roughly $75,000 in federal energy credits.
With its 62% increase in guaranteed subsidized units, green energy makeover and planned $8.8M in property improvements, Sebastian Villa’s acquisition illustrates Silver Street’s different priorities when it comes to closing a deal and likewise displays Silver Street’s ability to maneuver gracefully within complex, demanding bureaucratic systems.