St. Croix, USVI; 56 Units, Senior Affordable Housing
Flambouyant Gardens is an affordable, 56-unit senior housing project located in the U.S. Virgin Islands. The project was developed in the mid 1980’s under HUD’s Section 202 direct loan program. The Owner was stuck with high interest debt (9.25%) and minimal cash-flow to address deferred maintenance and other capital repairs and improvements. Also, the project lacked funds to replace a broken-down bus used for transporting residents and to pay for an employee to provide supportive services for the elderly and frail residents unable to clean and maintain their units.
Terms of the Section 202 Mortgage Note prohibited prepayment prior to loan maturity without the prior written approval of HUD. The property was severely non-compliant with current fair housing accessibility standards as constructed. The property is located in a hurricane zone and within a 100-year floodplain. The Owner’s wishlist of repairs was substantial and included doubling the size of the community room, leasing offices, and maintenance shop.
Rockhall leaned on its expertise in the Section 202 and Section 8 Housing programs to navigate the 202 prepayment process, obtain approval for a release of residual receipts to cover the cost of a new bus, and to obtain approval for a Section 8 budget-based rent increase to cover the cost of an additional supporting service employee. Rockhall utilized FHA insured financing to pay off all existing debt, provide a substantial developer fee, fund $850,000 for repairs, improvements and accessibility modifications, and fund an enhanced $700,000 initial deposit to capital replacement reserves at the Owner’s suggestion. The enhanced replacement reserve deposit can serve as a contingency fund to supplement hazard insurance in case of a hurricane or other natural disaster. The 202 prepayment/refinance cut the fixed interest rate by more than half for a 35-year term, renewed the Section 8 HAP contract for a 20-year term, and ensured the long-term economic viability of the project.