Transforming the large vacant lot at the corner of Moana Lane and Neil Road into a workforce affordable housing apartment complex has already been a 27-month journey for developer Lincoln Avenue Capital, and the project is truly just beginning.
Lincoln Avenue Capital recently broke ground on Pinyon Apartments, which consists of 252 units across two five-story buildings and a 280-space parking garage on 2.92 acres. It's much more housing density than a typical project for Lincoln Avenue Capital, which is an active owner or investor in more than 120 affordable housing projects encompassing about 25,000 units in 23 states, said Ben Taylor, vice president and project partner for Lincoln Avenue Capital.
“That’s quite dense for affordable housing,” Taylor said. “Typically, we are a little more spread out. We are close to 90 units an acre there, and a lot of the affordable we build is closer to 20 to 25 units per acre.
“We designed it to look like new, modern market-rate luxury apartments,” Taylor added. “We are expecting to really change the landscape at the Moana Lane and Neil Road intersection and hopefully give a real boost to that neighborhood.”
The two apartment buildings will be connected with sky bridges on the third, fourth and fifth floors extending from the five-story parking garage. Work has commenced on the parking garage, which is expected to be completed late next year. The two housing buildings, meanwhile, will wrap and hide the parking structure and are expected to come online in the spring and summer of 2025.
The majority of home units will be restricted to residents making 60 percent of the area median income, Taylor said.
“It’s a perfect opportunity for people making between $40,000 and $45,000 per year, all the way up to maybe $60,000,” he said. “The location is amazing given the access and proximity to jobs – there are thousands of jobs just on the other side of the (I-580) freeway.”
Kephart Architects of Denver is the lead architect on the project and was selected based on its past work history with Lincoln Avenue Capital, Taylor noted.
“They do a lot of affordable housing projects, and they also do a lot of urban infill projects, so they were a really good fit. They know our processes.”
Kimley-Horn of Reno is the project’s civil engineer, and Martin Harris Construction of Las Vegas is the general contractor on the Pinyon Apartments. Lincoln Avenue Capital will lean on the general contractor’s expertise to execute on the small footprint of that highly traveled interaction, Taylor said. Lincoln Avenue Capital did not put the project out for a competitive bid process in order to secure Martin Harris Construction as its general contractor, he added.
“They are very experienced in urban infill. We engaged them almost 18 months ago — same with our architect and civil engineer. For us, it was about hiring the right team, and that’s what we did.”
Pinyon Apartments is the fourth project in Northern Nevada for Lincoln Avenue Capital, but it’s the company’s first ground-up project. Lincoln Avenue Capital acquired three affordable housing projects regionally and has already repositioned Zephyr Pointe Apartments on North McCarran Boulevard and Whittell Pointe on Selmi Drive through significant capital improvements. It also owns the Park on Virginia Apartments at South Virginia Street and Isbell Road a block south of the Peppermill Resort Hotel.
Once the Pinyon Apartment project is complete, Lincoln Avenue Capital will own and manage more than 1,000 units of affordable housing in Northern Nevada, Taylor said. The affordable housing program requires Lincoln Avenue Capital to own and manage its properties for a minimum of 15 years, he added.
“A lot of thanks to the state of Nevada for its support,” Taylor said. “We are excited to grow our footprint in Reno because there is a huge need for affordable housing.”
The last two years have not been friendly both for affordable development and construction in general, Taylor noted. Rising interest rates and skyrocketing construction costs have radically altered the development landscape since Lincoln Avenue Capital first put the Pinyon project in play back in July 2021.
“Without the affordable housing state tax credits and Home Means Nevada Initiative loan dollars, the project would be dead in the water,” Taylor said. “When we closed on the land back in December of 2021, we got a great price on the dirt and knew we could make something work. At that time, the 10-year Treasury was at about 1.50 percent; today, it’s north of 4.5 percent. It’s effectively a 300-basis-point increase on our interest rates.
“For a big deal like this, every 10 basis points is close to $400,000 in mortgage proceeds that we lose. So it’s like $10 million to $15 million of lost debt proceeds from initial underwriting to today.”
Adding insult to injury, Taylor said, there has been an approximately 25 to 30 percent increase in construction costs over the last two years. Without a $13.6 million loan from the state’s Home Means Nevada initiative, coupled with an approximately $1.2 million offset in development fees from the City of Reno, Taylor said the Pinyon Apartments project would have withered on the vine.
“This project would not be possible but for the Home Means Nevada Initiative loan program,” he said. “Today, we would never take this deal to an investment committee and try to underwrite and move forward without that subsidy.
“Those funds were critical – we wouldn’t be talking today if we didn’t get that funding,” he added. “It’s a game of just getting to barely feasible to get this done.”