CHA Partners, a real estate development company in the tri-state area that specializes in creative public-private partnerships, has a particular focus on projects that seek to leave a lasting positive impact. Wherever they do business, they aim to help municipalities generate employment opportunities and unlock property value.
William T. Colgan, partner at CHA Partners, has raised and procured more than $250 million of capital for the company. Multi-Housing News asked Colgan to reveal the intricacies of public-private partnerships.
What goes into the process of putting together a successful public-private partnership?
Colgan: Public-private partnerships are successful when both parties understand the respective goals of each party and structure a mutually beneficial relationship. We take pride in working with—not in opposition to—municipalities and being a good neighbor in every town we do business.
Please tell us about the main trends you’re seeing in the public-private partnership space right now.
Colgan: We see a lot of municipalities thoughtfully evaluating their assets and formulating a plan to enhance their town. Ultimately, it is important for a developer to try and accomplish the town’s objective, but also take a longer-term viewpoint on development that matches the town’s time frames and goals.
Can you please talk about specific examples of successful public-private partnerships in the multifamily sector?
Colgan: In our hometown of Bloomfield, N.J., the downtown center was blighted and designated as an area in need of redevelopment. It lacked investment for many years. CHA Partners worked with the municipality—two administrations—to take out the blighted parcels and deliver a walkable, live-work-play downtown center with smart, transit-oriented development adjacent to the NJ Transit stop.
Ultimately, CHA Partners has delivered or is underway with over 600 units, 1,000 parking spaces and 70,000 square feet of retail in the downtown area, with numerous other projects also kicking off as a result of this significant investment. The collaborative partnership has been a win-win, increasing the township’s ratables, downtown infrastructure and desirability.
You’ve raised and procured more than $250 million of capital for CHA Partners over the past two years. What were some of the biggest challenges you’ve faced?
Colgan: Not all projects are “straight down the fairway.” CHA’s development projects are often complex public-private partnerships that can involve hurdles—such as approvals, environmental challenges etc.—and the establishment of a new market that lacks a clear comp set.
Considering your experience with new markets tax credits, to what extent do these tax credits impact community investment?
Colgan: The impact is tremendous. With the cost of construction and land prices rising, projects are increasingly difficult to have penciled out. Cities and towns need as many tools in their tool belt to move projects forward, as it often creates a domino effect where the incentives can create/stimulate further investments, increasing both the tax ratables and appeal of the area.
Please tell us about the first NMTC deal that the New York City Economic Development Corp. completed as a newly formed community development entity for CHA Partners.
Colgan: CHA Partners was fortunate to have NYCEDC’s trust and confidence in our ability to deliver the Rockaway Beach Medical Arts Complex. This project was critical to the area as it would bring much-needed health-care services and jobs to an area deemed “medically underserved,” as it had lost one of its major hospitals—Peninsula—during Hurricane Sandy.
NYCEDC identified the project as fulfilling its mission to better New York City and recognized CHA Partners as the right sponsor to recruit health-care providers to bring services to the Rockaways. Ultimately, we are happy to report the building is 100 percent leased and anchored by St. John’s Episcopal Hospital and the ASC of Rockaway Beach, which brings incredible value and services to the region.
What are your expectations for the end of the year regarding the multifamily capital markets, and where do you see public-private partnership opportunities in 2022?
Colgan: We have seen two different marketplaces for multifamily. The term loan market is ultra-competitive right now as many capital providers are competing for high-quality product. This has led to a tightening of spreads and an overall attractive interest rate environment.
On the construction side, lenders are increasingly cautious as the marketplace has experienced volatility in material pricing and delivery schedules due to supply chain disruptions. This is not just a real estate problem, but a challenge that’s affecting nearly every industry. The capital is there, but it’s critical to be sure you are partnering with experienced sponsors/contractors who understand this disruption and have it priced into their project costs.