"As a nonprofit that is dedicated to finding creative and innovative ways to preserve and rehabilitate affordable housing, we are very grateful to CDT for their philanthropy and commitment to Detroit's exciting resurgence," Thorland said.
"CDT could have easily sold the property to another investor," Thorland said. "Their donation of the Daystar Estates neighborhood provides us with the opportunity to ensure the preservation of these units as quality, safe and affordable rental properties. We also plan to work with the families who move into these homes and establish a conversion-to-ownership plan that will be completed over the next four years."
The 48 single-family Daystar Estates homes were built during 2004-05 and are located in an area bordered roughly by Mack Avenue and Connor, Dickerson and Charlevoix streets, just east of the shuttered Chrysler Assembly plant, Thorland said. The property was developed using Low Income Housing Tax Credits, the federal housing program that makes rent affordable to lower-income tenants.
While parts of the northern Eastside neighborhood surrounding Daystar Estates are challenged by vacancy, flight and divestment, Thorland noted that some neighborhoods on the lower Eastside along the East Jefferson corridor are benefiting from an ongoing redevelopment effort. Jefferson East Inc., which promotes neighborhood redevelopment, reports that $1 billion has been invested in five neighborhoods from Alter Road to downtown along East Jefferson since 2009, including $540 million that went to improvements to the giant FCA US plant. Within the past year, seven new businesses have opened in the Jefferson-Chalmers neighborhood along the corridor.
The original borrower defaulted on the Daystar Estates mortgage loan in 2015. As the first mortgage holder, CDT evaluated its possible alternatives related to the investment and concluded that it did not want to put the 48 properties through an extensive and lengthy foreclosure process, according to Joan Berkowitz, the firm's senior vice president of asset management.
"Bearing in mind our affordable housing mission objectives, we determined that a better solution for the community, the property and the neighborhood's residents would be found if the mortgage loan was donated to a Detroit-area mission-oriented nonprofit," Berkowitz said.
"While investigating our options, we were delighted to find an established, well-regarded nonprofit with a proven track record of success working with real estate-owned affordable housing," she said. "We strongly believe that Southwest Housing Solutions is in a better position than CDT to implement a strategy for the loan that will result in a brighter future for the homes and the community's residents."
Eastside Detroit civic leaders lauded CDT's move and said the transaction will serve as a catalyst to the community's revival. In Chandler Park, for example, which is adjacent to Daystar Estates, officials recently unveiled a new high school-regulation, synthetic turf football/soccer/lacrosse field, United States Tennis Association-sponsored tennis courts with Michigan's only under-10 "tot" courts, a new comfort station, and refurbished baseball diamonds, picnic tables and new tree plantings.
Donna Givens Williams, president/CEO of Eastside Community Network (ECN), a place-based community development organization that has worked in the Daystar Estates' neighborhood for more than 30 years, said: "ECN is pleased to endorse CDT's donation that gives control of these properties to Southwest Housing Solutions, and further, to support the rehabilitation of nearly 50 affordable homeownership options in our community. Our community has experienced unprecedented disinvestment over the past three decades, and a project like this will highlight the great things that are happening on Detroit's far Eastside, and will spur further investment."
Jacqueline Bejma, executive director of LAND Inc., a local not-for-profit commercial real estate development organization, added: "Rehabilitation of these housing units is a much-needed step in the right direction for the future of the Eastside. Nearly 50 quality, newly rehabbed new homes, coupled with the ongoing $20 million investment in nearby Chandler Park's new recreational, landscape and stormwater mitigation efforts, make Detroit's Eastside neighborhoods a wonderful and affordable option for existing and new young families and professionals looking to live in the city and be a part of our promising new future."
Southwest Housing Solutions staff will prepare cost estimates this summer on the improvements necessary to make the Daystar Estates properties habitable, Thorland said. When the houses are sufficiently ready for occupancy, Southwest's staff will offer prospective tenants support services such as financial counseling and credit repair to ensure the residents can successfully transition from renting to homeownership.
The Community Development Trust (CDT) is a national investor in affordable housing. Working with local, regional and national partners, CDT makes long-term equity investments and originates and acquires long-term mortgages. In its 17 years, CDT has invested over $1.3 billion in debt and equity capital to properties in 44 states and regions – helping to preserve and create over 40,000 units of affordable housing. CDT is a private real estate investment trust (REIT), a certified Community Development Financial Institution (CDFI), an approved Fannie Mae affordable housing lender and a member of the Federal Home Loan Bank of New York (FHLBNY).
About Southwest Housing Solutions
Southwest Housing Solutions, a division of Southwest Solutions, was formed in 1979 and is a leader in the planning, development, and management of affordable housing and commercial property in Southwest Detroit. Their mission is to revitalize the community through collaborative, high quality and innovative projects, and by promoting homeownership and resident-centered development initiatives. Their mixed-use projects stimulate commercial and cultural development.
Contact: Mike Nowlin
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SOURCE Community Development Trust