The Poppleton Cooperative apartment complex in the Poppleton neighborhood of West Baltimore was developed in the early 1980s with funding from the U.S. Department of Housing and Urban Development’s (HUD) federal housing program. What was envisioned as an area of hope and opportunity for low income residents slowly deteriorated over the next 35 years, falling into a state of disrepair and becoming a haven for crime, drug use and violence.
The Hampstead Companies, a housing development firm with a history of innovation in the area of affordable housing in the Baltimore area, sought to rehabilitate the Poppleton neighborhood in 2005, with a closing of the second phase scheduled for September 2008. Led by Greg Gossard, Hampstead was just two weeks away from closing a multimillion-dollar rehabilitation deal when the financial crisis of 2008 hit. The news shook the markets and nervous lenders cancelled deals and tightened credit, threatening to keep Poppleton on a path toward despondency and positioning Gossard and his colleagues to lose $1 million in equity.
“It was a brutal time,” said Gossard, a principal at Hampstead. “We had a lot at risk.”
Aside from the financial challenges, the row homes, which were built in the 1930s, had leaky roofs, smashed windows and broken appliances, and the copper pipes had been ripped out. With the original owners of the project in default, Gossard was determined to put the deal back together.
A number of factors helped save the project, such as government funding opportunities and the prospect of new businesses moving into the area, bringing job opportunities along with them. A critical factor was Bank of America’s willingness to undertake a complex transaction with Hampstead, Gossard said.
“When we finally brought a tax credit investor in, they (Bank of America) were one, if not the only, construction lender left that was in this market and wanted to do the project,” he said.
“It meant a lot for them to step up to the plate when they could have walked from a complicated project like this and could have found simpler deals to do.”
Once financing was arranged, the renovation and rehabilitation of Poppleton became a reality. The Obama administration’s Green Retrofit Program for Multifamily Housing is providing $1.46 million for the installation of high-efficiency heat pumps; windows; low-flow toilets, shower heads and faucets; and other energy-saving appliances. The 86 row homes and 25 new units will be completed next to the University of Maryland’s burgeoning BioPark. An estimated 180 jobs will be created, and residents will live in state-of-the-art affordable housing. By the end of 2011, the Poppleton II Apartments construction will be complete with safe, quality affordable housing for 111 families.
Over the years, Bank of America has invested $100 million in Baltimore’s Westside where the Poppleton II Apartments are located. “It is important to continue those redevelopment efforts,” said Joyce Moskovitz, Senior Vice President at Bank of America, who was involved in the transaction. “Our goal here is to help develop affordable housing.”
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