Miami developer will address the country’s affordable housing crisis
Related Group’s Executive Vice President Jon Paul Pérez is taking on the country’s affordable housing crisis.
Pérez is partnering with housing social-investment firm Federal Housing Solutions to create a new venture, Pérez Housing Associates, that will upgrade existing affordable housing stock nationwide using Section 42 tax credits.
“This is the first time that we have launched a dedicated effort specifically targeting Section 42 properties,” Pérez said in a statement. “PHA was formed to respond to this critical sector and, ultimately, make a significant positive impact across the country.”
PHA will be separate from Related Urban, Related Group’s development division that master-plans and builds affordable housing communities from the ground up. Its president will be Patrick Plunkett, founder of Federal Housing Solutions, a development firm that acquires and rehabilitates low income and affordable multifamily properties.
Plunkett previously led acquisitions for Related Affordable in New York. He left in 2009 after seven years, and created Federal Housing Solutions in 2012. Plunkett will now focus all of his efforts on PHA.
“This new venture is very exciting to me because I’ve known the Perez family for a long time,” Plunkett said. “They are best in class owners and operators and this completes their service within the housing market for the acquisition rehab space which I specialize in.”
PHA’s mission will be to acquire, renovate and reposition 1,000 residential units per year. Plunkett said he expects the amount to renovate each unit to vary. He’s worked on deals as low as $5,000 to as high as $80,000 a unit. The average cost per unit is about $25,000 to $30,000.
“On a 100-unit building,” said Plunkett, “you would be doing $2.5 million worth of work. That’s on average.”
The turnaround period is expected to be 12 to 36 months. PHA will continue to manage and operate units that it renovates.
Section 42 provides tax credits for developing affordable housing and maintaining units at a high standard. Buildings must allot a specified percentage of units for residents earning less than 60% of the area’s median income. Rents are capped at 30% of the household’s adjusted gross income.
.jpg)
“Section 42 serves the country’s most vulnerable families and individuals, and while there is existing stock available, much of it is aged, in need of rehabilitation and is at risk to go to market if we do not create long term affordability for these residents,” Plunkett said.
PHA will start acquisitions and closings soon. Plunkett expects to go under contract on several acquisitions in the next two weeks in Alabama, two in Jacksonville, and another two in Houston. A Miami deal is not yet in the works.
“We are looking at deals all over the country,” Plunkett said. “If we can find the right opportunity for an acquisition rehab for a tax credit deal, Miami is a prime market.”
Earlier this month, Urban Related broke ground on the 150-unit Gallery at River Parc. The apartment rental building in Little Havana will provide 30 affordable housing units and 120 workforce units. It is one part of River Parc, the development firm’s $600 million, 22-acre mixed-income housing plan that eventually will encompass 2,600 units.
