Tacoma apartment project is a go after developer secures $35M

Affordable housing developer Great Expectations will break ground next week on the 199-unit Cornus House at 2502 Pacific Ave. in Tacoma now that its financing has fallen into place.

Last week it secured two loans totaling $34.8 million, with half through Pierce County’s C-Pacer program, a 30-year, low-interest financing tool.

The low interest rate was locked in early this year before the rates started spiking, said Ben Maritz, principal of Seattle-based Great Expectations.

The county loan is reserved for housing developments that are energy-efficient and have resilient features such as seismic hardening, flood readiness and stormwater management.

The project had already been slowed by a series of costly delays, including from geotechnical and permitting issues. Securing the county financing was the final piece of the puzzle, Maritz said. 

“We feel really good to have secured the low-interest financing for 30 years when we did,” Maritz said. “You can compare it to a homeowner who had secured a 30-year fixed rate at low interest rates, as opposed to those who used a five-year (adjustable rate mortgage) and are now scrambling.”

In this case, the rate difference is about 5% in January compared with around 8% or 9% now, he said. 

“That would have doubled our budget for financing,” Maritz said.

Approval was delayed because the project will use natural gas as its heating source. The C-Pacer program requires that developments use more expensive — but more environmentally friendly — electric heating. However, plans for the Cornus House were underway before the C-Pacer heating requirements were finalized, and so the project was still approved for the loan.

Switching to electric heating retroactively would have caused at least one year of construction delays, Maritz said. It would have also added another $500,000 to construction costs and required a major electrical upgrade through the utility company.

The C-Pacer rate lock was set to expire Oct. 18.

“This was a race against time,” he said. “Everything had to go just right. Luckily, it did.”

Cornus House secured its traditional construction loan financing through Stearns Bank. The JLL Capital Markets Debt Advisory team of Kaden Eichmeier and Jake Davidson were the brokers.

Stonehill Pace is the C-Pacer program lender.