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Authorization for the Pomeroy Apartments General Partner to accept the assignment of Limited Partner Interest from the Investor. end
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Development Address |
Community Area |
Target Population |
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Pomeroy Apartments 5650 N Kenmore Ave Chicago, IL 60660 |
Edgewater |
Seniors |
presenter
Presenter: Kemena Brooks, Chief of Staff
Recommendation
The Chief Executive Officer (“CEO”) of the Chicago Housing Authority (“CHA”) recommends that the CHA Board of Commissioners (“Board”) authorize the CEO or his designee to: 1) accept the assignment of Limited Partnership Interest from the Investor Limited Partner, Redstone Equity Holding, LLC and Red Stone Equity Manager, LLC (collectively referred to as Red Stone) in Pomeroy Senior Housing Limited Partnership; and 2) execute and deliver such other documents and perform such actions as may be necessary or appropriate to implement the foregoing.
Property Summary
Pomeroy Apartments is located in the Edgewater community area at 5650 N Kenmore Ave. The development is a 9-story public housing building comprising 104 one-bedroom units for seniors.
The property was originally constructed in the 1920s and owned by CHA since the early 1970s. It was subsequently vacated in 2005 due to the building’s deteriorating physical condition, including aging mechanical systems and the prohibitive cost of ongoing repairs. CHA rehabilitated the building, and in 2011, brought newly renovated senior units back online in the Edgewater neighborhood.
Funding
N/A
Compliance
N/A
Background and Approach
In 2011, CHA completed a gut rehabilitation of the building through a mixed-finance, 4% low-income housing tax credit transaction. The tax-exempt bond/low-income housing tax credit financing required the establishment of a single-purpose limited partnership.
CHA created Pomeroy Senior Housing Limited Partnership, whose purpose was to rehabilitate and operate Pomeroy Apartments. Pomeroy Housing Development LLC was formed to serve as the general partner of the limited partnership. CHA is the only member of the general partner, Pomeroy Housing Development, LLC, with 0.1% ownership. As the sole member of the general partner, CHA is responsible for the overall management of the property and engages a third-party property manager, WinnCompanies, to handle day-to-day management issues. At initial project closing, Red Stone Equity Holding, LLC, joined the Limited Partnership as the Limited Partner with 99.899% ownership and Red Stone Equity Manager, LLC, as the Special Limited Partner with 0.001% ownership of Pomeroy Senior Housing Limited Partnership. The Limited Partner is an investor in the property and does not participate in the general operations or assume liability for the property.
As is customary for a low-income housing tax credit limited partnership at the completion of the tax credit compliance period in year 15, Red Stone wants to exit from its combined 99.9% ownership in the partnership. Red Stone has agreed to assign their interest to CHA or a CHA-controlled entity, and it is anticipated that the transfer will be completed in Q4 2026. Red Stone has agreed to exit in return for a $76,000 exit payment to cover asset management fees, the capital transaction fee, and legal costs owed to them.
Once Red Stone’s interest is transferred, CHA will be able to make long-term financial decisions regarding capital needs for the property without the consent of an investor partner. Once Red Stone exits the partnership, the property will no longer have to pay Asset Management fees to the investor at approximately $7,500 a year. Most importantly, Pomeroy Apartments will continue to serve existing senior residents and the community as a CHA senior affordable housing asset.
The requested action complies in all material respects with all applicable federal, state and local laws, and CHA policies. CHA staff have completed the necessary due diligence, including required reviews of project documents and regulatory compliance and consulted with Rubin Brown, the project’s tax advisor, to support the submission of this request.
Next Steps
• Submit transfer of Investor ownership interest request to HUD for approval in Q3 2026
• Complete limited partner exit transaction in Q4 2026
Respectfully Submitted:
______________________
Keith Pettigrew
Chief Executive Officer