Dionne Nelson founded Charlotte-based Laurel Street Residential in 2011 to plan and develop communities that are affordable for seniors and working families. The firm is known for developing high quality, mixed-income communities up and down the East Coast, but it was the senior housing shortage in Laurel Street Residential’s own community that was one of Nelson’s more complex challenges to address.
Gaston County, located just west of Charlotte, has an acute senior housing shortage. When Laurel Street began working in the area, the county had just 800 affordable, age-restricted units, and these units had a vacancy rate of below five percent. Neighboring Mecklenburg County offered few affordable options for seniors, with most privately run assisted living services requiring entry fees ranging from $15,000 to $600,000 and higher monthly rents than many area seniors could afford.
Under Nelson’s leadership, Laurel Street partnered with the Southern Benedictine Society to develop the Loftin at Montcross, a development for moderate-income seniors that would be developed in two phases. At the time of its completion in March 2014, the 72-unit Phase I of the Loftin was already at 100% occupancy and had a waitlist of 145 seniors.
As Laurel Street sought to develop the second phase of the project, which will include 100 one- and two-bedroom units, Nelson found that a lack of critical early stage capital might put the project at risk—The bulk of financing for the $12.7 million Phase II project was to be provided through a HUD 221(d)(4) loan. However, Laurel Street could not access this HUD funding without critical early stage capital.
Initiative Capital worked with Laurel Street to develop a flexible financing option that would close the funding gap for Phase II of the Loftin. The result was a $400,000 loan that leveraged more than $10.4 million in FHA loan financing from HUD and over $2.5 million in private equity financing. This second phase of the Loftin will be ready for occupancy in spring 2019.
Initiative Capital has worked with Laurel Street to bring affordable housing to other communities as well. Its financing has helped to support several affordable housing projects including some in Winston-Salem, High Point, Charlotte, Salisbury and New Bern.