Watching Birchez grow
Saugerties development key to expanding affordable empire
by Katie Cahill Kingston Times Thursday, February 24, 2005

Steve Aaron is branching out. His Birchez Associates LLC, fresh from its success building and populating Chambers Court in the town of Ulster with a few dozen grateful seniors, is involved in not one but three new projects around Ulster County. Birchwood Village, an 80-unit family complex on Flatbush Avenue in Kingston, is under construction to be occupied sometime this fall. He's close to nailing down approvals for the Birches at Saugerties, a proposed 60-unit Chambers Court-style senior housing complex to be located on Route 9W in the town of Saugerties. And he recently went before the planning board in the town of Esopus, paving the way for a third Chambers Court-style project for seniors.

Aaron is particularly excited about the Saugerties project, which will cement his company's reputation as the premier builder of affordable housing in the county. He said the project aims to serve seniors with "low to median" incomes. It will feature 52 one-bedroom and eight two-bedroom units, with a number to be set aside for frail elderly, who are those who can still live on their own but need to incorporate the assistance of a walker or cane in their daily activities. At press time, rents were estimated to be approximately $385, $490 and $595 for one-bedroom units and $585 and $710 for two-bedroom units. Rent will include hot water, heat, air conditioning, security and on-site laundry facilities. The units will remain subsidized senior housing for at least 50 years, and Aaron said rent will remain stable for the time being. He does allow for the distinct possibility of rising utility and maintenance costs engendering the need for subsequent rent increases, although he claims the project will have to prove to the state that it is absolutely necessary to increase rent. Aaron maintains that Birchez Associates will make an effort to remain affordable based on median income.

BOOMERANG FUNDING

While affordable housing, especially for the growing senior population, is becoming more of a priority in area communities, projects like these don't come cheap. To fund them, Aaron relies heavily on syndicated tax credits from the Division of Housing and Community Renewal and the Housing Trust Fund Corporation's Unified Funding, which are sold to banks for actual cash. Thus far the Birches at Saugerties project has received approximately $500,060 in tax credits, as well as $1.4 million from a 1-percent-interest loan from the state Housing Authority, and $915,000 from a conventional mortgage. Birchez has already kicked in $300,031 of its own money, and anything that goes beyond those figures will come out of the company's pocket. Though some of the other figures are higher, tax credits are the one thing Birchez can get free and clear. "This isn't from the local taxpayer's pocket," Aaron assured, adding that the money represented state and federal taxes coming back into the community. And that isn't the only money Aaron said the project is bringing back.

"Statistically for every dollar spent on a project like this, it's $7 back into the local economy in terms of services," Aaron said, before mentioning that he plans to use local agencies for the construction and maintenance of the project.

Although it would be nice to believe that Aaron pursues these projects solely to "do the right thing," the developer said he does turn a profit.

"We'll make some money," Aaron admitted, "but I think this is great because I can make money and do a good thing. If you have an opportunity to just make money or to make money and provide a necessary service, then that's what you should go for. That's not canned, that's how I truly feel."

IT'S ALL ABOUT THE TAX CREDITS, BABY

While rents for the units are based on a median income, Aaron said Birchez makes an effort to place more units into lower income brackets. This decision isn't purely altruistic, since it helps a project score more points on the application for tax credits.

"Our job as a developer is to put together the absolute best, strongest application," Aaron said. "We seek out competitive prices on construction and materials.

" The higher the need for these units and the more services they can provide for the tenants, the better a project will score. Aaron makes efforts to achieve the maximum number and is a strong advocate of the use of tax credits.

"This is a proven program," he said. "It's been around for 15 years. RUPCO used it for their project down in Rosendale and Rich Gerentine used it for Jenny's Garden."

Each single-story unit of the Birches at Saugerties will have its own front door illuminated by an emergency light, and there will be a community room similar to the 2,000-square-foot one at the Chambers complex. Tenants will also be able to take advantage of the bus system and programs such as Meals on Wheels. The frail elderly will receive preference when it comes to placement. "If someone who qualifies as frail elderly is low on the list, they will go right to the top," Aaron said. Why? This too aids the project in gaining the needed tax credits.

"There are minimum design standards," Aaron explained, adding that in his projects, he goes beyond that, because it helps garner points from the tax credit program.

Although the units are slightly larger than those at the Chambers complex, Aaron said they will retain the cottage-style ambiance of those found at the town of Ulster project. On its more recent projects, Birchez has employed Robert Kurzon, an Albany architect known for Hope Six, a showcase housing project in the Capital District.

"We go above and beyond," Aaron said. "We're proud of what we do."

WE'RE NOT GETTING ANY YOUNGER

Armed with a heavy stack of support letters penned by just about everyone who's anyone - congressman Maurice Hinchey, town supervisor Greg Helsmoortel, Ulster County Office for the Aging director Kathryn Puglisi, Ulster County legislator Joe Roberti, Ulster County Chamber of Commerce president Ward Todd and Ulster County legislature chairman Richard A. Gerentine, just to name a few - Aaron had no problem securing project approval from the state Division of Housing and Community Renewal. The next step was getting the town of Saugerties to take the bait.

"We picked the site because it was in the town. The village is well represented with affordable housing," Aaron said. "It is a site that, once the project is up, it will be easy to find. Not being able to build in the village, there are still services literally up the street in a small shopping center. From an economic development standpoint, the town was happy to see it [Birches] there because it will mean 60 apartments and hopefully bring some commerce back to that area."

Town officials could not be reached for comment by press time.

Aaron first approached the town about the project last year, after spending some time crunching numbers "I have access to a lot of statistical demographic data," Aaron said. He uses that data to determine which areas could be deemed in need of senior housing.

"Saugerties has one of the largest senior populations in the county," he said, based on information from the Ulster County planning office. "There are several senior projects in Saugerties, and the waiting lists to get in are between one and three years."

Aaron said the waiting lists for senior housing in Saugerties are similar to those of the city of Kingston. "We contacted Carolyn Maines, from the Saugerties Public Housing Agency (PHA), and she identified 90 seniors on their list alone that would be qualified and eligible for this kind of housing."

Maines confirmed that the list for subsidized housing in Saugerties was composed of "40 to 50 percent seniors and we're very slow at our turnover as far as putting people on."

At her most recent count, Maines said there were approximately 104 seniors that this project could potentially affect - and the numbers are only getting higher. "It's definitely increasing," she said. "It went from 25 percent to 40 percent within the last three to five years and it definitely will increase with the aging community. People are living longer and are looking for affordable housing."

A growing senior population with limited income translates into tax credits for Birchez Associates. Hardly sentimental about the process, Aaron said, "that [proving tax creditworthiness] is very much part of the whole process." Maines feels the Birches project is a "wonderful idea. It will be a real asset to the community and the fact that it's highly accessible makes it a very nice concept."

DRAINAGE, SCHMAINAGE

"The shortage of senior housing has become compounded as the baby boomers are starting to come of age," Aaron said. "Housing prices since 9/11 have doubled and rental prices have doubled. In subsidized housing, there is less than a 1 percent vacancy factor throughout the county.

"Typically, when you model a community, you model a 5 percent vacancy," Aaron continued. "This is a direct reflection on the gross disparity between income and the cost of housing. Anything over 30 percent over your income is considered challenged. In Ulster County now, especially in the senior population, the high is 60 percent of the income for housing. If Ulster County was in New York City, we'd be eligible for emergency rent control."

The Birches at Saugerties seems to have everyone's blessing according to Aaron, so what's the holdup? At the February 15 public hearing for the project at meeting of the Saugerties planning board, the community had an opportunity to discuss its concerns. One item of concern was drainage, and, according to planning board chairman William Creen, it was "the only glitch."

Creen can't predict whether the flooding that has plagued the adjacent properties of R.I.C.H Farms and Guardian Self Storage will be a problem for the Birches at Saugerties. "Everything sort of drains toward the Birches," admitted Creen, who then proposed that all of the businesses affected by the problem should join forces "and find a storm-water drainage system that will drain the whole plot."

Is this a plan that is enforceable? Creen said the town cannot mandate Birchez to work in concert with the surrounding properties; however a neighborhood effort, "would be the right thing to do." However, if Birchez can come up with a solution for its property alone, then as long as it is approved by the Department of Environmental Conservation (DEC), it will likely also receive the board's go-ahead. Creen commented that the board would also need to see a traffic impact study. Otherwise, the chairman feels it will be a "positive" addition to the area.

"We're definitely in need of senior housing and the location is close to amenities seniors could walk to, and is also easy access for fire trucks and ambulances," he said, perhaps oblivious to the dangers posed by the rapid and incessant traffic of Route 9W to a slow-moving senior. "I hope they can come up with something because I would hate to see this go down."

"We put together a preliminary site plan, and received sketch plan approval from the planning board over a year ago," Aaron said. "A comprehensive site plan with storm-water management was submitted in December and the town engineer, Brinnier and Larios, provided with us comments. Birchez did its best to address anything they had a problem with."

Repeating what he said at the February 15 planning board meeting, Aaron promised, "If we can't satisfy the town engineer that this site is going to be proper, then we won't build it." Aaron did acknowledge that: "The percolation [at the site] is not the best. It's a challenged site, but our engineers felt very confident that with an in-ground infiltration system and holding ponds that we could readily accommodate all of our own runoff and take some off of the neighbors. We want to be good neighbors."

Aaron said Birchez is attempting to set up meetings with the neighboring property owners. In the site's current plan, Aaron said retention ponds will be located at the rear of the property and "using new technology," storm-water collection chambers will be underneath the parking lot. He described this as a "very expensive process" that will control not only the storage, but the quality of discharge.

GOING WITH THE FLOW

Although Aaron is only the developer on this project, and will eventually hand over all responsibility to the Catskill Mountain Housing Corporation upon completion, he must remain in touch with the federal government's level of interest in subsidized senior housing.

Aaron admitted he is "monitoring [president George W.] Bush. When I've got my affordable housing hat on, I'm very concerned that tax reform will hurt the value of tax credits. Any time there's less money being spent on affordable housing, it sends a ripple through the industry."

Aaron has watched the government "push more first-time home ownership" than senior housing, and is worried by the agenda, although he is confident that demand for sheltering seniors will not abate any time soon.

He is reluctant to limit himself entirely to tax credits, and sensing the wave of the future, is facing the "challenge to pool other resources and put a quality application together," whether he has to cobble together HUD and other funding grants, but, unfortunately for Aaron, "most of that money is already spoken for."

If all goes according to Aaron's plan, the Birches at Saugerties will be completed and ready for residents by the end of 2005. In the meantime, the developer has plenty of other projects to think about, properties to scope and communities to enchant.

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