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Business Observer Thursday, May 28, 2020 2 years ago

New affordable housing community for seniors takes shape in area

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Using an underutilized tax credit and a penchant for long-term ownership, a Minnesota company targets Florida for growth — even during the pandemic.
by: Grier Ferguson Sarasota-Manatee Editor

The pandemic hasn't stopped Minnesota-based Dominium, an owner, developer and manager of apartment communities nationwide, from marking a big milestone: its first new, ground-up construction apartment project in Florida.

An affordable housing apartment community in Palmetto, in north Manatee County, the project will have 224 units and cater to people who earn an average of 60% of area median income. The community, Reef at Riviera, will be age restricted, with the head of the household required to be 62 or over.

Courtesy. Devon Quist, a development associate with Dominium and project manager for Reef at Riviera, says a critical element of the project has been designing a single building with over 200 units tailored to the site.

Dominium, which closed on the roughly six-acre site in late April for $2.1 million, is using a 4% low-income federal housing tax credit as a financing tool for the project. (While the tax credit isn’t dependent on the age requirement, a company official says the demographics for senior affordable housing in Florida are “very compelling.")  The project has faced some challenges, including the presence of wetlands and arsenic. But the company is moving forward with construction, where officials say they will focus on using quality materials that will pay off during the company’s long-term investment.

The empty lot, at 705 Haben Blvd., near the Bradenton Area Convention Center, went under contract in November 2018. Since then, a critical element has been designing a single building with over 200 units tailored to the site. Unit interiors will have nine-foot ceilings, movable islands, a balcony or patio, solid-surface countertops and stainless steel appliances.

“Dominium is very interested in producing high-quality housing that mimics market-rate housing,” says Devon Quist, a development associate with Dominium and project manager for Reef at Riviera. “Tailoring those standards to fit different sites takes time, and designing the building overall takes a lot of time.”

Dominium is committing to owning and maintain the property near U.S. 301 and U.S. 41 for the next 15 to 30 years, so it’s built with that in mind. “It’s really important we’re installing fixtures and materials that will go the test of time,” says Quist. “We want to install things we’re not going to have to replace over the next 15 years. You’ll see that throughout the apartment community.”

Another Dominium philosophy is to keep its apartment communities clean and well maintained, which boosts its bottom line. “If you run these things nice, there are a lot of efficiencies to operating them over long periods of time,” he says.

Dominium has years of experience with affordable housing. Quist says the company, in existence for over 45 years, owns 34,806 units and 227 communities, the vast majority of which are affordable housing. About 4,000 or 5,000 units are in Florida, in communities already built. “Affordable housing is our bread and butter and I think what really drives our business,” he says, adding that a key to the Palmetto project is the often underutilized 4% low-income housing tax credit. 

Susan Goldstein, senior commercial real estate advisor at MSC Commercial, worked with the seller of the property, part of Riviera West LLC, for at least three years. She says the location offers good access to what Palmetto has to offer, including nearby shopping areas.

‘Dominium is very interested in producing high-quality housing that mimics market-rate housing. Tailoring those standards to fit different sites takes time, and designing the building overall takes a lot of time.’ — Devon Quist, Dominium

The largest challenge with the deal, Goldstein says, was helping Dominium get needed approvals. “It’s a long time frame, but it’s what required to get a deal of this magnitude taken care of,” she says. “Land generally takes a while, but certainly when dealing with this finance mechanism it takes a little while. It’s wonderful to watch affordable housing to come together with this type of financing.”

Nearby, Dominium also owns the River Trace apartments in Bradenton. It has three more sites under contract in Florida, with plans for more expansion in the state. The company often buys existing complexes Quist describes as troubled assets that weren’t managed properly. Dominium, he says, comes in and “rights the ship.”

At the new-build Reef at Riviera site, work is starting now with brush clearing. Construction should take about 18 months. The architect is Bessolo Design Group of St. Petersburg, and the contractor is a joint venture of Dominium Construction & Architectural Services and Current Builders of Pompano Beach.

The construction obstacles, meanwhile, including the presence of arsenic and non-jurisdictional wetlands and being in a flood zone, haven't derailed the project. “There were solutions out there,” says Quist. “We were able to rely on the team and come to a way to get around those.”

While the pandemic has affected Dominium on several fronts, including property management, asset management and development of new apartment communities, the Reef at Riviera project isn't likely to face as many impacts, company officials say. It was opportune timing that the company recently closed on the site, Quist says, and there are fewer virus-related challenges with new construction versus occupied rehab projects. He says, “We’re working very closely with contractors and architects to keep people safe and healthy.”  

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