- September 27, 2016
- September 22, 2016
- September 8, 2016
Douglas Hastings is the Senior Vice President for Property Management of DEI Communities, an Omaha-based company that manages apartment communities for affiliated investment partnerships that operate under the Haley Real Estate Group. DEI is currently responsible for 47 such properties spread throughout 13 states, totaling just under 12,000 rental units.
In his position, Hastings runs the day-to-day operations of the various communities. One such property of note is Park Place, previously an affordable housing apartment community in Oklahoma City that DEI recently acquired, renovated, and rather sensitively repositioned as a market-rate community. During this time, the company forged an interesting relationship with the Oklahoma City Police Department that helped greatly in the overall effort. Hastings sat down with Operations Insights recently to discuss the project from its beginnings to its wildly successful re-introduction to the market. What follows is our chat:
NATIONAL APARTMENT ASSOCIATION: Let’s indeed focus specifically on the renovation and repositioning of Park Place community in Oklahoma City. It is now known as The Capitol on 28th. Could you start by giving a timeline starting from when DEI became involved?
DOUGLAS HASTINGS: We purchased the property in January of this year, having done our inspections in the fourth quarter of 2012. The property had previously been a Low Income Housing Tax Credit property, and the majority of the residents who were in occupancy at the time of our purchase were recipients of Section 8 vouchers through the Oklahoma City Housing Authority. The property in 2010 had a first-lien mortgage that had been foreclosed upon, and that foreclosure terminated the regulatory agreement that required the property to be operated as affordable housing and cancelled the bulk of the requirements of the Low Income Housing Tax Credits. The final remaining stipulation under that regulatory agreement allowed any residents who were occupancy in June of 2010 to remain in occupancy for a period of 36 months. That grandfather-ing of those occupancy rights for those residents terminated in June of this year. At the time we took possession, the property was occupied at about a 90 percent level. Our intent in purchasing the property was to convert it from an affordable housing community to a market-rate community, really looking to take the property to an A-/B+ workforce housing resident profile as opposed to an affordable housing resident profile.
NAA: Did DEI have a presence in the market previously?
DH: During the last five years, our investment partnerships have purchased five other properties in Oklahoma. Part of our investment strategy was focused on domestic oil production. So, we felt that Oklahoma City and Tulsa were both solid candidates for investment.
NAA: You were able to build relationships with the local police department to help in this re-positioning. Why was that important? To what benefit? And what has been the lasting result?
DH: During the course of our operation of all of our properties in Oklahoma, not just Park Place, we began to cultivate and develop relationships with local law enforcement and, in particular, the Oklahoma City Police Department. In those other properties in the Oklahoma City metropolitan area, we have engaged off-duty Oklahoma City police officers to act as courtesy officers at our properties. We were aware of the disproportionately high level of criminal activity at the Park Place apartments through the general awareness of our team members who live in Oklahoma City. As a result of that general awareness, under the Freedom of Information Act, we asked for and received a copy of the crime statistics for that address for the 12 months from November 2011 to November 2012. In reviewing the statistics that we received from the Oklahoma City Police Department, we identified that the police had responded physically with police officers in person at this address over 850 times in that 12-month period.
NAA: Wow! That must have been daunting.
DH: We were concerned about those statistics, and we began to speak with our local neighborhood crime watch officers. As we moved closer to our acquisition of the property, our intent was to put in place a seven-day-a-week, 24-hour-a-day, patrolled, on-site police presence at the property during our renovation of the property, converting the property from affordable housing to market rate. We had a three-phase renovation strategy. The first phase was the move-out and demolition phase. The second was the rough construction phase. And the third was the finish construction phase. We determined that during the move-out and demolition phases, which we initially anticipated would run from our January acquisition of the property through November of this calendar year at which time, the final remaining residents would vacate the property as we enacted a program of non-renewal of all of their lease agreements. The police strategy was part of that strategy. But part of that strategy was also conducting face-to-face meetings with each of the residents and communicating clearly with them what their options were and also interacting with the residents to help them find other suitable housing. That way, as they moved out of Park Place, they would have somewhere to go. We invited representatives of over 12 other properties in various locations throughout Oklahoma City metro to come to our property and to conduct a leasing fair. As a result of that, our residents were able to fill out applications and receive leasing information from other properties throughout the city. They were then able to facilitate their relocation from Park Place to these other communities. We also provided as part of our renovation a $500 relocation allowance for each residential apartment unit to assist them in relocating. In addition to that, we communicated early prior to our acquisition with the Housing Authority and the Oklahoma Housing Finance Agency, both of which provided assistance to facilitate the relocation of these residents out of the property to other communities within the metro area. As a result of those relocation efforts combining the efforts of these public agencies, our team members, and the other apartment communities, we were actually able to relocate all of the residents by the first week in April!
NAA: That’s outstanding. And well ahead of schedule, yes?
DH: Yes. And the intent from day one was that we would have four officers at the property 24 hours a day, seven days a week for the first 60 to 90 days. We expected those officers to begin their work in December. When the seller was not able to deliver the property until January, we ended up paying those officers anyway. They had committed to us to begin in December. We ended up paying them just to build good will and to, in effect, keep our promises to those officers who had coordinated their efforts and other moonlighting, off-duty jobs to make themselves available to us. We built good will to the officers in that way. We also had a series of meetings with the Police Department hierarchy in the local division where the property is located prior to our acquisition of Park Place. We met with officers in that police department at the lieutenant level, at the captain level, and at the commander level. We were able to engage that department or that division of the department not only to hire off-duty officers to assist us in our round-the-clock patrolling efforts, but we also helped them to see the win-win nature of renovating this property so that it would no longer be the site of a disproportionate drag on their manpower.
NAA: Good point.
DH: As they began to see that, they were willing to not only help us to identify officers who could work for us on an off-duty basis, they were also able to send additional patrol units, motorcycle units, and helicopter flyovers to assist us during the initial move-out demolition phase. As it turned out, because of the early move-out of the affordable housing residents, we were actually able to end up saving a substantial amount of money on our courtesy officer budget.
NAA: What advice would you have for other apartment owners and managers who are looking to forge similar relationships with local law enforcement?
DH: I think transparency and communication are key.
NAA: What were some of the other upgrades you made at The Capitol on 28th?
DH: We have done a number of things physically at the property. We identified a perimeter fence product that is a seven-foot fence. The bottom four feet of that fencing material is a solid-surface, recycled material that is graffiti-proof. It provides a four-foot barrier so that from the outside it appears to be impenetrable. The top three feet of the fence is wrought iron that allows for some “breathability” for the residents. So, you have this deterrent, this substantial fence that provides a sense of enclosure for the property, but you can see through it. There is a single entrance and a single exit to the property. We installed state-of-the-art ingress and egress camera access and monitoring at this entrance and exit. The technology allows for both residents to use a garage door opener or a key fob to open the gates. In addition to that, guests and visitors can use a keypad to contact residents of the property who are able to access and open the gates using their tablet or smartphone devices. There are four buildings at the property. The entrances to each of those four buildings are inside of the perimeter fence. Access to those single-entry access points to each of the four buildings is also monitored by a camera in a similar system that allows residents to buzz in their guests using their smartphones or tablets.
NAA: If you acquire different properties in Oklahoma City, will you be continuing your relationship with the Police Department?
DH: We value the relationships we have cultivated with local law enforcement agencies. Doing so has always borne fruit for our on-site teams and has mitigated a portion of our investment risk. We intend to continue this practice, not only in Oklahoma City, but also throughout our portfolio.
By Teddy Durgin
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