Apr 17, 2023
River City Capital, others have multiple phases of multifamily construction planned in opportunity zone
Image: Rendering of how Parmer Gateway could look once all four phases of multifamily are complete.
More than 1,000 apartments are set to rise in the coming years next to Samsung’s Northeast Austin semiconductor factory.
River City Capital Partners LLC is partnering with the Austin Affordable Housing Corp., a subsidiary of the Housing Authority of the City of Austin, along with development firm LDG Multifamily and investment manager Battery Global Advisors to transform property located just outside city limits along East Parmer Lane into workforce housing.
Dubbed Parmer Gateway, the development is set to include 1,076 units across four distinct projects, two of which are expected to break ground in May.
River City in 2020 purchased 69 acres of undeveloped land at the intersection of East Yager Lane and East Parmer Lane, adjacent to Samsung Austin Semiconductor's massive manufacturing campus.
Image: River City Capital Partners purchased this northeast Austin property in 2020.
Also nearby are the Shops at Tech Ridge retail center and Karlin Real Estate's 2 million-square-foot Parmer office campus, where companies such as Apple, Qualcomm and BAE Systems are located.
"It's a near-in Austin location that is in high demand," said Rich Leisy, partner at River City Capital. "The proximity to a number of large employers and logistics hubs is just another huge draw for this location."
In addition to the apartments, the developers plan to sell two pad sites on the property for a convenience store and a hotel. Both of the contracts are in the final stages of negotiations but Leisy declined to identify the buyers.
Parmer Gateway marks the continuation of a partnership between River City, LDG, Battery Global and the Austin Housing Authority — they are also working together on the 518-unit Urban East apartment complex under construction at 6400 E. Riverside Dr. The first phase of that development is set to open in June, while the second phase is expected to break ground later this year, River City said.
Suzanne Schwertner, director of development for the Housing Authority, said its strong relationship with the developers "made us want to go in on the Parmer Gateway project."
"That area is a very hot area for development," Schwertner said. "There’s warehouses going up, there’s retail going up, there’s huge master developments. Most of the multifamily that’s going up there is market rate.”
What's coming first
The first two phases of Parmer Gateway got the green light earlier this year.
Bartlett Cocke, the general contractor on those phases, was issued a notice to proceed on April 11. Dirt should start moving in May and both builds are expected to take about two years to complete.
The development "qualifies for tax benefits" through the Housing Authority, Leisy said. But he added that partnership does not use a public facility corporation, or PFC, a state program that has drawn scrutiny for its generous tax benefits and inconsistent benefits.
Parmer Gateway will serve families in the Housing Authority's voucher program, where participants find their own housing within the authority's jurisdiction and pay between 30% and 40% of their monthly income in rent. The vouchers cover the remaining rent, according to the Housing Authority's website.
Schwertner said Austin Affordable Housing Corp. accepts the vouchers at every one of its partner projects. She added that the project is eligible for a property tax exemption that lasts as long as the Housing Authority holds the ground lease. The Housing Authority also gets a portion of project revenue, which Schwertner says go directly to supporting the voucher program.
And because the site is located in a federally designated opportunity zone — the federal incentives program created by the 2017 Tax Cuts and Jobs Act — investors can qualify for a variety of federal and state tax benefits.
The first apartment complexes is slated for 11.47 acres at 3901 E. Parmer Lane and will consist of 273 units. Fifty percent of the units will be "affordable to tenants earning less than 80% median family income" while the remaining will be market rate, according to Housing Authority records. For a family of four in Travis County, 80% MFI in 2022 was $88,250.
Image: Google Maps
The developers have obtained $58 million in financing through IBC Bank. The total development cost has been estimated at nearly $86 million.
Developers are planning for 178 one-bedroom units between 707 square feet and 980 square feet; 86 two-bedroom units between 1,069 square feet and 1,301 square feet; and nine three-bedroom units between 1,460 square feet and 1,694 square feet.
Kelly Grossman Architects is the architect of record on the project, while Urban Foundry is the interior architect and Jamison Engineering is the civil engineer.
The second phase is a garden-style apartment being spearheaded by LDG Multifamily. It could have 300 units on a 24.7-acre tract at 4835 E. Yager Lane. The complex is expected to have 24 one-bedroom units, 168 two-bedroom units, 96 three-bedroom units and 12 four-bedroom units. Amenities will include a clubhouse, fitness center, playground, pool and green space.
The developers obtained a $59 million loan from Comerica, according to public records. The development is expected to cost roughly $98 million.
Moving forward, Leisy said River City Capital is looking to get into industrial real estate development and is interested in several sites to help meet "a growing need" for logistics and warehouse space.
The company also owns 600 acres in Creedmoor, south of Austin, that is likely to become a "mix of multifamily and single family," Leisy said.
Originally posted on Austin Business Journal