The New Canaan Housing Authority last week closed on the approximately $75 million acquisition of a 104-unit apartment complex on Lakeview Avenue.
What locals have long known as the “Avalon” property, a 9.1-acre parcel whose closest neighbors include Lakeview Cemetery and Canaan Parish, will be known in the future as “Riverwood at New Canaan,” according to Housing Authority Chair Scott Hobbs.
Avalon Drive East runs off of Lakeview Avenue up toward Route 123.
The acquisition of 106 Lakeview Ave. is expected to help the town achieve relief in the future from a widely discussed state law that allows developers to skirt local planning decisions in municipalities such as New Canaan, where less than 10% of all housing stock is deemed “affordable” under the state’s definition.
According to Hobbs, the “vast majority of the units will remain market based and will be managed by Greystar who is a premier property manager.”
“As units turn over, we will be converting 21 of the units to 80% Area Median Income units which will essentially become ‘workforce housing,’ ” Hobbs told NewCanaanite.com in an email. “In future years, these or other units could be converted to 80% State Median Income units in order to ensure that the Town achieves additional 8-30g moratoriums.”
The Town Council last May passed an ordinance that allowed for the formation of an Affordable Housing Committee, calling for the appointed body to identify properties that could support affordable housing developments in order to help New Canaan chain together four-year blocks of relief—each block known as a “moratorium”—from the state law known by its statute number, 8-30g.
Under it, in towns where less than 10% of all housing stock qualifies as affordable (New Canaan is at less than 4%), developers who propose projects where a certain percentage of units are set aside to rent at affordable rates may appeal to the state after a local P&Z Commission denies their applications. New Canaan’s last moratorium lapsed in July 2021, under a prior administration. After it did, the town received three 8-30g applications, at Weed and Elm Streets (120 units), Main Street (20 units) and Hill Street (93 units). P&Z denied all of them. The applicant’s appeals currently are before a state Superior Court judge in Hartford. (The town earned a new moratorium this summer, though neither that, nor the acquisition of Avalon, is expected to affect the pending 8-30g appeals.)
Hobbs said the acquisition of 106 Lakeview—recorded in the Town Clerk’s office Oct. 30 as a $74,645,615 purchase by “HANC Lakeview LLC” from the Town Close Associates Limited Partnership—was a “fast paced, complicated transaction that required help from numerous people and organizations.”
“I am pleased to say that they all stepped up and helped facilitate this move which will both provide more affordable housing options for New Canaan and help to protect our local zoning control,” Hobbs said. “We will be issuing a more detailed press announcement in the not too distant future where I hope to thank at least most of the people and groups without whose support this acquisition would not have happened.”
The Housing Authority’s plan to acquire Avalon became publicly known in August, following publication of a legal notice.
Though Hobbs has said the Housing Authority likely won’t need the funds, the town recently approved a loan of up to $4 million to cover expenses related to the purchase.
Hobbs said during a regular meeting of the Housing Authority held Wednesday evening that the agency did use the $4 million loaned by the town.
It “did go into the deal essentially as equity for us,” Hobbs said during the meeting, held via videoconference.
He continued: “We do owe a vig [interest] on that, which will be paid for out of the project. And we may go ahead and need to borrow more money from the town in order just to bring us back up to a safe operating level. But we also may already be there.”
Referring to the purchase, Hobbs said it’s “still surprising we were able to pull it off.”
“This was a good thing,” he said. “And for the town, again, it’s ideally a really great thing: immediately, we get some workforce housing and then we end up having a stock of units that, over time, as we need them for moratoriums, we’ll be able to draw them down.”
Asked how the Housing Authority is pulling together the funds for the acquisition, Hobbs said, “We secured backing from Fannie Mae to issue around $50 million worth of credit enhanced essential housing bonds. We then issued around $24 million in subordinate bonds through Royal Bank of Canada. The Housing Authority used the vast majority of our accumulated capital (which included funds from the Town’s Affordable Housing Fund) and a $4 million loan from the town. The proforma projects that the project will be cashflow positive in year one and get better over time.”
Hobbs said during Wednesday’s meeting that the purchase “was far more dramatic than it should have been.”
“We learned a whole lot in trying to close on a $75 million property with $2.5 million—it’s very difficult, but we did it,” he said. “A lot of huge support from the community. Everybody along the way, when asked, they all stood up and helped out and assisted. Some more than others, some a little bit difficult, but everyone eventually ended up stepping up, which was good. So we end up being the owners.”
Hobbs said that “there were issues with the subordinate bonds at the very end, and Royal Bank of Canada took them down and held them.”
“And we were going to go ahead and do a moral authority letter from the town, which might have allowed us to rewrite the $24 million worth of subordinate debt at far more advantageous interest rates,” he said. “They are going from like a six down to a sub four or five. There were risks and costs associated with that. And in the meantime, Vanguard stepped up and looks like they’re buying the entire issue. So that takes away both a windfall and a potential downside and puts us basically at a zero stance, which is good. And again, it allows the deal to close and everything to happen. Probably for the Housing Authority, one of the tricky parts is that we basically use all of our funds and all of the available deferred developer fees from the Millport projects to fund this, to fund our portion of it. And it will put us down at a low number. So we’ve gone from $2 million down to a few hundred thousand dollars. And of course, this was before we got that summary sheet of what we need to do to really maintain Millport. Not much we can do about that. I will be briefing the town and telling them what happened.”