PEABODY — The clock is ticking for tenants of Tannery I, an affordable apartment complex on Crowninshield Street.
Unless the WinnCompanies of Boston, one of the largest managers of multifamily housing in the U.S., can come up with millions to match a market rate offer from another buyer for the property within a month, rents in the 235 affordable apartments could skyrocket.
Constructed in 1915 at the former A.C. Lawrence Tannery, the seven-story masonry building was converted into housing in the 1970s with financing from MassHousing. The state’s affordable housing bank provides developers with incentives, such as low interest mortgages, in exchange for keeping rents low.
The quasi-public agency raises money by selling bonds and lends the proceeds to developers who build or preserve affordable or mixed-income apartments.
Peabody-based Crowninshield Management Corp., the owner of the building, has reached the end of a 40-year agreement with MassHousing. Under the terms of the deal signed in the 1970s, the landlord was required to keep rents affordable for income-eligible tenants.
Monthly rents for the affordable units in the historic apartment community range from $618 for a studio apartment to $720 for a one-bedroom, according to affordablesearch.com. Similar market rate units in Peabody are fetching from $1,800 to $2,100, according to apartments.com.
City Councilor-at-Large Anne Manning-Martin, who will hold a hearing on the proposed sale on Thursday night at City Hall, said Winn’s offer of $23 million earlier this year was rejected by Crowninshield.
A second developer, TrueNorth Capital Partners LLC of Stamford, Conn., has made an offer of $37.5 million, according to MassHousing. Winn has 30 days to match that offer, and if so, the property is expected to stay affordable for years to come.
The eye-popping offer may appear staggering, considering the building is assessed at $13.6 million. But Greater Boston’s hot real estate market is driving prices up, say brokers.
While state law allows Crowninshield to sell the property to the highest bidder, they are required to allow the Department of Housing and Community Development (DHCD), or its designated buyer, the right of first refusal on that offer. In this case, DHCD has designated Winn as the preferred developer.
But Winn said they will need financial assistance from the state and city to make the deal happen. Their timeline to match the full price offer expires at the end of the month.
“I am optimistic,” said Michael O’Brien, an executive vice president at Winn. “But there’s a tremendous amount of work ahead for this partnership. It’s a tall order.”
One thing in the tenants’ favor is the commitment of the mayor and the City Council to keep Tannery I affordable, he said.
“It is an important priority to the city and that’s a driver to a solution,” he said. “That same passion is shared at Winn and exists at the state level and that can provide momentum to make it happen.”
Mayor Edward Bettencourt Jr. said he is hopeful that an agreement will be reached to keep Tannery I renters in place.
“It’s important for Peabody and for the tenants,” he said. “The solution is a number of players coming together to work through this to see if we can come up with a way to make this happen.” The city will need assistance from Winn, DHCD and MassHousing, the mayor said, but he also offered city money.
“Peabody is willing to contribute money from our Community Preservation Fund for affordable housing and other potential grants that might help,” he said. “We want to work collectively for a solution.”
Paul McMorrow, a MassHousing spokesman, said if Winn cannot match the higher offer and the property is sold to TrueNorth Capital Partners, tenants are protected against rent increases for three years.
In addition, he said, residents living at the 173-unit Tannery II Apartments will not be impacted. MassHousing issued $28 million in financing two years ago to keep 143 one-bedroom apartments and 30 two-bedroom apartments affordable.
“We are staying on top of it,” said Manning Martin. “There’s a
human element because we’re worried about the folks who may lose their home,” she said. “But we are also concerned about Peabody losing any of its affordable housing stock.”
Still, Community Development Director Curt Bellavance said if Winn buys the property, it is unclear how many units will stay affordable.
But McMorrow said the goal is to keep every unit affordable.
“Our top priority is to protect every resident,” he said.
Deborah Collier-Comins, president of Crowninshield, and Jeff Gaynor, TrueNorth Capital Partners’ managing director, did not return calls seeking comment.