The Y-Site – RST Development LLC
High-end affordable housing in Gaithersburg, Maryland
Written by: Matt Dodge
Produced by: Sean O'Reilly
Located just steps from the historic Olde Towne Gaithersburg central business district in Gaithersburg, Maryland, The Y-Site is a new five-story, 199-unit multifamily development.
Built and developed by RST Development LLC, the wood-framed complex includes a slate of leading amenities including a courtyard with an outdoor kitchen, clubroom, workout facility and pool that give the affordable housing development the feel of a market-rate project.
“This is really high-end affordable housing,” says Scott Copeland, principal and co-founder of RST. “It’s probably some of the nicest affordable housing in the country.”
The 265,000-square-foot development is attached to a six-story parking garage, ensuring ample room for residents’ vehicles. Situated next to the CSX railway and located in Olde Towne Gaithersburg, the development is named after the plot’s “Y” shape, formed by a former railroad loop once used to help locomotives change directions.
The development’s proximity to a working train track presented hurdles as developers had to coordinate with CSX to ensure that the construction process didn’t obstruct the tracks. Construction began on the $35 million Y Site project in May 2015 and is expected to wrap up by September 2016.
RST first came across the Gaithersburg site in 2011 and quickly identified the property’s potential to be transformed from a disused industrial lot into a high-end take on affordable housing. After buying the site from the City of Gaithersburg, RST bided it’s time until economic conditions were more favorable to new development. “We got it entitled and got our site plan approvals in 2011, but then we kind of sat on it waiting for the market and financing opportunities to come around,” Copeland says.
Breathing new life into an old site
Completed as a design-build project by RST Development’s wholly owned subsidiary, Triangle Construction, The Y-Site will eventually be managed by Hercules Real Estate Services, RST’s management company. The building features a windowless Northeastern-style warehouse façade designed to complement the unique architectural style of the town’s most historic district and limit noise disturbance from passing railcars. The sustainable development is also Energy Star rated.
Sited on a small, 2.1-acre parcel of land, the small footprint presented challenges for the team at RST Development. In an effort to meet zoning and parking requirements, RST had to acquire an easement for 100 parking spaces in the existing garage to complement the six-story, pre-cast, 190 parking spaces being developed on-site. “That’s what really allowed us to get through all the requirements,” says Copeland.
The site’s small footprint also presented challenges during the construction process, according to Triangle Construction project manager Eric Thomas. “Site access was constricted and we didn’t have access from two-and-a-half sides,” he says. “When we installed the masonry sound wall, we had to build it from the inside out, which is an old-school construction technique we had never tried before.”
In an effort to keep the development affordable and open to a wider range of residents, RST used a hybrid steel structure on the first, second and third floors, topping the building off with wood stick-frame construction. “Wood was the most cost-effective option,” says Thomas. “We want to be on the forefront of wood frame projects in the mid-Atlantic.”
While RST has completed a number of affordable and market-rate projects in Maryland and beyond, the use of low-income housing tax credits added another layer of complexity to the development process.
“It was a struggle for a while; we financed this with low-income housing tax credits which is a very complicated form of financing and a very time-intensive, long-term process,” says Copeland. “The state of Maryland issued the credits, we worked with the local housing authority to issue the bonds, then we involved a Citibank that bought the bonds and eventually Wells Fargo was the purchaser of the tax credits.”
Initially RST went back and forth on whether to build the Y-Site as an affordable or market-rate development, but ultimately it was the area’s existing housing stock that influenced its decision. “This one really lent itself to an affordable deal because there are so many other market-rate apartments in the market, so it’s a better investment from an occupancy standpoint in the long term,” says Copeland.
A background in value-added renovation
RST was formed 20 years ago as a partnership between brothers Scott and Todd Copeland and their father, Robert. Originally conceived as a development company with a focus on low-income housing tax credits, RST hired a third-party contractor to complete many of its initial projects.
“When we got more mature in the industry we brought in Alex Mays, who had an extensive construction background, and we mainly focused on renovations,” says Copeland. RST would purchase existing properties and perform a range of value-added renovations and remodels, occasionally spending $15,000 to $25,000 per unit. “Some of them we ripped down all the way to the studs,” he says.
As the company continued to mature, RST began to seek out its own development opportunities, familiarizing itself with the land acquisition and entitlement process. RST continued to use outside general contractors until three or four years ago, when the company expanded Triangle Construction’s function and brought a majority of new construction work in house.
Hercules Real Estate Services and Triangle Construction both fall under the purview of RST Development. Formed in 1995, RST is the parent company of Hercules Living and Triangle Construction. The family-owned and -operated company is headquartered in Virginia Beach, Virginia, managing more than 40 properties in seven states, including more than 9,000 apartment units.
The company’s portfolio includes a range of both market-rate and affordable properties completed as new construction, renovation and adaptive reuse projects. A recent multifamily development project in Silver Spring, Maryland, saw a mix of affordable and market-rate units, while current projects in Chesapeake, Virginia, and Apex, North Carolina, are both market-rate developments.
As the company continues to grow, RST is looking to continue to perform a mix of market-rate and affordable developments. “We’re in a growth mode and trying to find deals that make sense in both new construction and acquisition renovation,” says Copeland. “We’re continually looking for those types of opportunities, as well as a handful of land deals that would require rezoning or an entitlement process, which we’re comfortable with at this point.”
Using a proven low-income tax credit model with which the company has become comfortable over the years, RST Development’s newest multifamily housing project, The Y-Site, is transforming a site in Olde Towne Gaithersburg into a prime example of affordable housing that doesn’t skimp on the amenities.
Read more here: http://www.usbuildersreview.com/case-studies/the-y-site-rst-development-llc/
For supplemental multimedia or information please visit: www.herculesliving.com