EHLERS TEAM LEAD: Bruce Kimmel
TIME FRAME: August 2015
CLIENT CONTACT: Washington County Community Development Agency (CDA), Minnesota

Piccadilly Square: Affordable Senior Housing

CASE STUDY: Washington County Community Development Agency (CDA), Minnesota

The Goal

Washington County CDA established a goal to redevelop a parcel of land in Mahtomedi, Minnesota to provide affordable housing to seniors whose income range between 50% and 60% of the area’s median level.

The Solution

The CDA selected Ehlers to provide financial planning, economic development and debt issuance services. Our municipal advisors worked with CDA staff to devise and analyze several funding scenarios and financial management options. Collaboratively, we determined that combining General Obligation bonds (G.O.) with tax credits would provide the most effective and cost-efficient option for the CDA to achieve its goal. To support this determination, Ehlers worked closely with the CDA to develop and refine project budgets, operating pro formas and final debt structure.

The Results

In August 2015, the CDA issued approximately $11 million in Multifamily Housing Revenue Bonds via competitive public sale, with the offering to be repaid via both short-term tax credit investor payments and long-term rental income. In Fall 2016, Piccadilly Square Apartments, a 79-unit affordable senior housing complex opened at nearly full capacity.

Of note: This transaction marked the first time that a Minnesota issuer combined G.O. – supported housing revenue bonds with 4% tax credit available to issuers of private activity bonds for qualifying purposes. This allowed the CDA to combine the low interest cost of G.O. Bonds with the equity generated through the sale of tax credits to provide seniors with the lowest possible rents.