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Health Secure Construction

Oct 19 2020

By Mark Fogarty, previously published in Tax Credit Advisor magazine, September 2020

Everything Under One Roof

Mixed-use housing is poised for a huge expansion in the post-COVID era, as at-risk populations, especially seniors, are going to want more goods and services available to them under one, health-secure roof.

Housing policy planners and affordable housing specialists are in the process of conceptualizing an arena where housing, workspace, grocery stores, retail and health services all could be accessible to residents after they are screened at the door and can then proceed to a wide array of goods and services without fearing for their health. And they are matching up that concept with societal change in building infrastructure, as office buildings become more and more superfluous and big-box shopping malls wither on the vine.

Already there are prototypes for this kind of all-in-one housing, though no facility built to date is a true city within a city. The pieces of such an approach already can be seen, though. As in the giant Las Vegas hotel with a wide variety of goods and services available to its temporary residents, with a monorail available to whisk them to other such enclosed hotels with different amenities without ever being exposed to the elements. Shopping malls with hotels either attached or accessible without leaving the health-secure facility. Dormitories built over classrooms in university towers. Mixed-use housing so robust as to be known as “everything buildings.”

And it’s not hard to think of current building uses easily adaptable to health security. Places that are hot, like Honolulu, have hotels that have no first-floor exteriors, enabling healthy ventilation year-round. Places not as high-temperature year-round could still use this technique part of the year through retractable ground-floor exteriors. Places that are cold, like Minneapolis, already have sky walks between potentially health-secure buildings where escalators can easily be marked off for social distancing.

The most immediate prototype is the big Vegas casino/convention hotel. “You can do pretty much anything inside it and they don’t want you to go outside,” says David A. Smith, director of the Affordable Housing Institute in Boston. (Smith is also a columnist for Tax Credit Advisor).

Vegas casinos, restaurants, hotels, office space and shopping malls all reside inside one space with limited ingress, which could be made health-secure. And they are not the only prototype.

Airports Give a Clue
“We have redesigned airports so there’s a lot to do in the post-security environment,” Smith notes.

The venerable big-box shopping malls also are ripe for redesign, Smith feels. In the future, “I think you’ll buy malls at ten cents on the dollar and turn them into “everything” living environments,” he says.

Offices too will be reimagined. “Old offices will be replaced with residential flats,” Smith says – but perhaps not totally replaced. Some office space may remain office or commercial space. “You’ll have a cafeteria and grocery store on the ground floor.”

He also thinks “Repurposing hotels into affordable housing is a natural,” pointing to old hotels with mezzanine floors that can be redesigned into low-social healthcare space. Old buildings also open the possibility of using Historic Tax Credits in developing Health Secure Housing, he points out.

Some in the industry may think of self-contained housing towers as creating an elite distance between those living inside and those in surrounding neighborhoods. But others point to their ability to rejuvenate neighborhoods and bring in much-needed investment.

Meade Curtis, vice president, development at Winn Development, Boston, is one of these people. He has been working on a mega mixed-use building with “everything housing” characteristics, the Sibley Building in Rochester, NY (see accompanying article), an extensive redevelopment that has been underway for a decade and may take another decade to finish.

Housing As Catalyst
“It all starts with housing,” Curtis says. “Housing becomes the catalyst for other resources out there,” like urban markets and charter schools.

He points out that there’s a way to avoid the elitist model of people walled off from their urban neighborhoods and poorer neighbors: cast a wide net for potential residents. At the Sibley, for instance, the housing there is open to low-income renters, workforce units, market-rate housing and senior living spaces. In some cases, units for different kinds of residents are on the same floor and have the same floor plans.

“Have a building where anyone can live,” he says. And one where the amenities inside the building are affordable to all income levels. “I think that’s a great social objective.”

Curtis says he hopes the Sibley can become “something that can be replicated in the rest of the country.” Winn is now looking at Detroit and other cities for another one, he adds, and has done many large, complicated housing developments.

How can such giant projects be financed? Curtis tallies the usual sources: Low Income Housing Tax Credits, Historic Tax Credits for older buildings like the Sibley, New Markets tax credits for the commercial aspects of the project, getting Opportunity Zone designations and CDFI financing. But that is not going to be enough.

“All of these are helpful. None is a silver bullet,” he says. Public-private partnerships will be necessary to fund everything buildings, along with “an intense kind of focus” on the part of all participants.

Without the public/private partnerships, “it just wouldn’t be viable in most areas of the country,” he feels.

Buy-in from state housing finance agencies is a key on big and complicated deals. The Sibley Building got tax credits, tax-exempt bonds and subordinated finance from the New York Housing Finance Agency and a loan from the State of New York Mortgage Agency.

Challenges Bring Opportunity
Curtis sees certain types of asset classes as being “challenged” currently: main street retail, hotels, office buildings. “With that comes an opportunity. When those assets are challenged, the starting value becomes more reasonable.”

There are more “everything building” amenities planned in the near future for the Sibley, Curtis says. This fall they hope to see an affordable grocery/food store/convenience store, DGX, moving in, as well as a commissary kitchen that can be rented out to chefs by the hour. A bio-tech incubator is also in the works, and he hopes to see medical services there as well, perhaps for Alzheimer’s care.

In keeping with the affordable-to-all amenities philosophy, DGX is a unit of Dollar General, a $1 store.

Curtis gives the everything building concept an “A plus” rating. “We’re voting with our checkbook and trying to create it. We’ll see if the concept works.”

Other developers approach this from the services side.

The nonprofit Volunteers of America (VOA), a huge affordable housing developer, has done some mixed-use commercial in its projects and even has a Minneapolis development, Nicollet Towers, attached to a huge shopping mall. But its focus is on the added-services side.

Seniors make up about 75 percent of VOA’s residents, according to Patrick Sheridan, executive vice president of housing at the big nonprofit. So it sees expanding healthcare services as the way it wants to go.

“Seniors are among the most vulnerable to the pandemic,” says Sheridan, whose VOA has 20,000 units nationwide and also has an active healthcare unit.

“We’re very concerned for their health. The advantage we have is that we do have a healthcare unit too. Even before the pandemic we had already established a strategic plan based on trying to marry up healthcare and housing even more than it is.”

One concept that has worked for them is having “campus” arrangements where housing and healthcare facilities are adjacent to each other.

Having wellness nurses in facilities is also helpful, he says, as that keeps residents in the building for care rather than going to the emergency room.

But the campus arrangement isn’t always possible, so VOA looks for partners.

One plan VOA has is to work with the Dallas Housing Authority on a 260-unit senior facility to include a 6,000 square feet healthcare clinic within.

The housing/healthcare combo “tracks closely with what we’re doing already, to provide health secure housing,” he concludes.