$40 million total transaction includes an estimated $4 million in planned renovations; State Housing Commissioner Tingerthal praises acquisition for preserving affordable housing in Twin Cities
Santos Mejia can sleep easier now.
The 54-year-old maintenance worker has experienced nightmares this summer in fear that he and his neighbors would be displaced from their homes at Seasons Park Apartments, a 422-unit
affordable housing complex in Richfield (Minn.) that includes 400-plus low-income families who worried the property would be sold to a developer intent on raising rents.
“We in government need to be more nimble and creative in how we make resources available for affordable housing in order to replicate the success story” accomplished by CDT and Aeon, said Richfield City Councilmember Maria Regan Gonzalez, accompanied at the Sept. 21 press conference by Seasons Park Apartments resident Santos Mejia.
“I prayed, I went to public hearings asking officials to keep Seasons Park affordable,” Mejia said. Homebuyers and renters wanting access to the Twin Cities increasingly purchase or lease property in Richfield due to its affordability and proximity, raising the cost of housing within the community and pushing out low-income families, he explained.
“Fortunately, they listened and our prayers were answered.”
On Sept. 21, State Housing Commissioner Mary Tingerthal announced that Seasons Park residents, including approximately 200 preschool children and 250 school-age students, will no longer face potential displacement from their homes following the $36 million purchase of the property by Minneapolis-based nonprofit Aeon and The Community Development Trust (CDT).
“Today is a great day for Minnesota and for the city of Richfield as we are all well-aware of the critical need for affordable housing in the Twin Cities,” Tingerthal said during a news conference at the Seasons Park community room to celebrate the acquisition. The importance of the issue was reflected by attendance at the press conference of reporters with three local TV news stations and the city’s major newspapers and business publications. (For examples, see Partnership with non-profit keeps Richfield apartments affordable by KMSP-TV and Richfield low-income housing stays after sale to non-profit by KARE-TV, Sept. 21, 2017.)
Sale offers peace of mind
“I am confident the Aeon-CDT partnership is going to be a great collaboration between two outstanding companies because they understand the importance of how affordable housing and quality schools fit within the social fabric of a community,” she said. “Most important, the people who live here can now enjoy the peace of mind that comes with knowing they can afford to continue calling Seasons Park their home.”
Tingerthal also read a prepared statement issued by Minnesota Lt. Gov. Tina Smith: “Nearly 30 percent of all Minnesotans lack quality affordable housing. I thank Aeon, The Community Development Trust and the City of Richfield for ensuring that Seasons Park Apartments remain an affordable choice for more than 400 families. Gov. Dayton and I will continue to prioritize investments in housing. As a state, we must do more to ensure all Minnesotans have a safe, affordable place to call home.”
Among the dignitaries attending the press conference were Richfield Mayor Pat Elliott, City Councilmember Michael Howard, City Councilmember Maria Regan Gonzalez, Richfield Public Schools Superintendent Steven Unowsky, Aeon President and CEO Alan Arthur, CDT President and CEO Joseph Reilly, and Hennepin County Commissioner Debbie Goettel, as well as Seasons Park Apartments residents and their children whose homes are now secure.
‘A tremendous achievement’
“The sale of the Seasons Park Apartments to Aeon and CDT is a tremendous achievement,” Unowsky said. “Along with Gov. Dayton, Lt. Gov. Smith and Richfield city leaders, we feared the sale of this property to another potential buyer would have forced the displacement of virtually all the current residents, including approximately 250 students who attend our schools. Their departure would have been devastating to the Richfield Public Schools system.”
The approximately $40 million total transaction, which includes an estimated $4 million in planned renovations, marks the largest acquisition in the 31-year history of Aeon, a nonprofit developer, owner and manager of affordable housing in the Twin Cities. The purchase also represents the second-largest investment in the 18-year history of CDT, a national investor in affordable housing.
“Since 2000, the number of Minnesotans considered cost-burdened by housing has increased 69 percent, forcing people to choose between paying rent or paying grocery, medical and child care bills,” noted Arthur.
“That’s why Aeon aggressively pursued Seasons Park Apartments,” Arthur said. “Our goal was to stem the tide of affordable housing properties being gobbled up and converted into high-rent apartments out of reach for the average family. This purchase with The Community Development Trust serves as a model for how other communities in Minnesota and across the country can work together to make housing more affordable.”
Aeon President and CEO Alan Arthur, left, congratulates CDT President and CEO Joseph Reilly on a partnership that State Housing Commissioner Mary Tingerthal hails “as one of the greatest success stories in the history of Minnesota affordable housing.”
In addition to Aeon and CDT’s participation, the City of Richfield Housing and Redevelopment Authority allocated $150,000 to help finalize the purchase. Officials with Hennepin County, Minnesota Housing Finance Agency and the Federal Home Loan Bank of Des Moines are also considering requests to provide further funding related to the acquisition.
Strong partnerships fuel success
“CDT is proud to be partnering with Aeon in this acquisition, which will ensure that Seasons Park remains affordable and will be maintained as high-quality housing for its residents for the foreseeable future,” Reilly said. “CDT’s decision to make such a significant investment was primarily based upon Aeon’s longstanding commitment to the Twin Cities region and its strong relationship with state and local funding partners, all of whom share our desire to preserve Seasons Park as affordable.
“Aeon and CDT could not have completed the successful purchase of the Seasons Park property without a broad-based consensus from all the parties involved that this is the right decision for preserving affordable housing in Minnesota. This strong level of commitment, through a public/private partnership, demonstrates the determination of Twin Cities-area government and education leaders to improving their communities,” Reilly added.
The Twin Cities is in an apartment construction boom, but just 10 percent of new units will be available for low-income renters, according to the 2017 report “State of the State’s Housing Report, Twin Cities Region,” released by the Minnesota Housing Partnership (MHP). Existing affordable housing stock is also being purchased and renovated into higher-rent housing. In 2016, only 1,050 new affordable housing units were created in the entirety of Minnesota, MHP’s data show. Fifty percent of renters in Richfield are considered “overburdened,” meaning they pay at least 30 percent of their income on rent, with an average rate of $854. The median income for a family of four in Hennepin County is $90,400. Going forward, rent at Seasons Park will remain affordable to a family of four earning $54,240 or less.
“All people deserve housing that is safe, stable and affordable – it’s the foundation we depend on for our quality of life and opportunities to succeed,” said Councilmember Howard. “Aeon and CDT’s purchase of Seasons Park shows us that when we work proactively to prioritize families whose housing is at risk, we have the power to change lives for the better.”
“I thank Aeon and The Community Development Trust for this landmark accomplishment for our city,” Councilmember Gonzalez said. “Housing costs keep rising faster than incomes, especially for lower-income people, so I know we in government need to be more nimble and creative in how we make resources available for affordable housing in order to replicate the Seasons Park success story.”
The Community Development Trust (CDT) is a real estate investment trust that provides capital for the preservation and creation of affordable housing and charter school facilities. Working with local, regional and national partners, CDT makes long-term equity investments and originates and acquires long-term mortgages. In its 18 years, CDT has invested over $1.4 billion in debt and equity capital to properties in 44 states and regions – helping to preserve and create over 40,000 units of affordable housing. CDT is a private real estate investment trust (REIT), a certified Community Development Financial Institution (CDFI), an approved Fannie Mae affordable housing lender and a member of the Federal Home Loan Bank of New York (FHLBNY). As a CDFI and private REIT with a social impact mission, CDT operates as a double-bottom-line organization by utilizing creative financial solutions to provide debt and equity capital to underserved real estate markets, all while seeking attractive returns for shareholders.
Aeon is a responsive nonprofit developer, owner and manager of high-quality affordable apartments and townhomes that serve 6,000 people in the Twin Cities area each year. For more than 30 years, Aeon has been committed to helping people create a home where they feel safe and connected to the community around them. Aeon believes that Home changes everything. For more information, visit aeonmn.org or follow Aeon on Twitter and Facebook.