The Real Estate Wonk: Despite economy, affordable-housing renovations go forward - Baltimore homes, apartments, real estate: Buying, selling, renting and housing news from reporter Jamie Smith Hopkins

Demand might be high for low-rent apartments, but building them is even more difficult than usual these days. Financiers have pulled back. The market for the Low Income Housing Tax Credit program -- an important source of money for affordable-housing developers -- is a shadow of its former self. And it's not as if local government agencies have extra dough to dish out.

That's what Greater Baltimore AHC was up against when it was putting together a deal to acquire and fix up a dilapidated apartment complex in Northwest Baltimore. The group, part of nonprofit developer AHC Inc., is excited that the project came together despite it all.

The two 13-story towers on Violet Avenue -- originally Greenhill Apartments, but renamed MonteVerde Apartments -- are earmarked for seniors and younger residents with disabilities. The apartments cost $30 million to buy and remodel.

Construction will probably be finished next month. To give you an idea of the work involved, here's one of the kitchens before the project began (in a photo supplied by Greater Baltimore AHC):

And here's an "after":

A hallway before:

And a hallway afterward:

"When this property was built in the '70s, it was really built with every expense spared," said Andrew Vincent, director of Greater Baltimore AHC. "It was really just a bare-bones residence. ... We wanted to completely change the look and feel of the property."

The hallways, for instance, struck him as the sort in "the dreariest high school I've ever been in." They were redesigned to instead look like "a high-end hotel," he said.

Vincent said the nonprofit initially tried to buy the property in 2005, which would have been much easier from a financing point of view. Its offer wasn't accepted, but the winning bidder never closed on the deal.

"Finally we signed a purchase agreement in spring of 2007," he said. "We thought we were going to close in first quarter 2008."

Then, as you will probably recall, the housing market tanked, the economy fell into recession and all hell broke loose on Wall Street.

"Basically the tax credit market dried up; public financing dried up," Vincent said. "We had this huge gap in our financing all of a sudden. So we had to completely restructure the financing of the project."

Some of the financing changes were complex -- hello, variable-rate bonds -- and some required players in the deal to do things differently. The seller, for instance, agreed to finance part of the property.

Closing got pushed back to September of 2008 as Greater Baltimore AHC negotiated these changes. That timing made for a lot of last-minute drama.

Freddie Mac, which backed Greater Baltimore AHC's bonds, "went into conservatorship the week before we closed." Merrill Lynch was a partner in the deal; "they were sold over the weekend."

Vincent said the renovations, once started, were done around residents rather than the sort of fix-up that requires everyone to move out (possibly never to return). Residents had the choice of switching to a rehabbed unit or having theirs rehabbed around them. (Almost everyone opted for the latter, he said.)

Besides fixing up the buildings, the nonprofit added community spaces, a fitness center and an entryway that connects the two towers.

"We're really happy to not only have preserved this housing but also to have completely transformed what it was," Vincent said.

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