Highridge Costa thrives on building affordable housing throughout the country. The company sets the standard in developing, financing and construction.
HIGHRIDGE COSTA Housing Cos., which includes Highridge Costa Housing Partners LLC and Highridge Costa Investors LLC, has set the standard in the development, financing, construction and asset management of affordable and mixed income housing for families and seniors throughout the United States.
Led by president, founder and CEO Michael A. Costa, the companies were founded in 1994 by Costa, and acquired in 2011 by Costa and Highridge Partners, a diversified, privately held investment firm that has acquired, developed and/or financed assets totaling more than $7 million.
“From a big picture standpoint we have been a player that has expanded into numerous markets because the opportunities were there,” says Costa of the current portfolio that features 27,000 residential units across 276 properties in 33 states and Puerto Rico.
Highridge Costa Housing Cos.’ entire portfolio has been financed using tax credits, in particular low-income housing tax credits, as well as other types of public and private financing. In his three decades in the industry, Costa has supervised the development and financing of nearly 40,000 units of multifamily affordable and market-rate housing.
“None of our residents qualify to buy homes, even when the home credit lending fad was at its easiest,” Costa says.
Beyond creating much-needed affordable housing, Highridge Costa’s communities often serve a larger social need by playing a role in stabilizing and reinvigorating neighborhoods in decline, along with creating “infill” housing properties in urban and redevelopment areas. The entire company is committed to serving the needs of lower-income households and the cities where they live.
“We always meet the regulations standards to have residents whose income is between 30 percent and 60 percent of the area’s median income,” Costa says. “Our residents are people who live and work in the community, from retail clerks, nurses, grocery store employees as well as firefighters and police officers that are just beginning their careers. We are proud to offer homes for these valuable members of our communities.”
Through his extensive utilization of federal and state tax credit programs, Costa has gained a wealth of specialized knowledge of the intricacies of tax credit financing and syndication. He has earned a reputation as an industry expert at tax-credit management, including the numerous compliance issues associated with managing tax credit properties.
“The capital we raise is rather unique, and we have to deal with federal tax credits in the state regulatory environment,” Costa says. “To achieve the allocation for the tax credit for affordable housing, we always have to make sure the amenities, social programs and the property itself remains in compliance.
“Once we receive the allocation, we take that to major financial institutions that serve as 99 percent owner as majority investors,” Costa adds.
Those financial institutions are not investing in a yield or return like most investments. Instead Highridge Costa gives them the tax incentive and write off, usually for a 15-year time period of losses and a 10-year flow of tax credits. After that time period, Highridge Costa may reacquire the property, or they may put it on the market for a new buyer.
“In 2015, we are going to be pulling back in several markets so we can remain focused on the western part of the country – California, New Mexico, Nevada and Utah in particular,” Costa says. “We have held our properties for at least 15 years in many markets, and now we want to be concentrated west of the Rocky Mountains. Our goal is to pare back to seven to 10 states, which makes life a lot easier.”
Costa and the Highridge firm look at it as an opportunity for value creation in markets where affordable rents can be harder to find, and where there is more variation in rents within a given market.
“At the peak of the company’s production, we had 90 projects at any given time being discussed, all of which were tax-credit financed,” Costa says. “And it was usually split evenly with 30 closing construction financing, 30 in the middle of construction, and 30 that were converting to permanent financing. The demand for affordable housing is so far behind the curve, we know there will always be more work ahead.”
Costa’s work has been recognized with dozens of industry awards, including the ‘Pillars of the Industry’ award from the National Association of Homebuilders for the nation’s best affordable housing community on three separate occasions. Highridge Costa is also home to the largest affordable independent residential provider in the United States for senior citizens. For these efforts throughout his career for seniors and families, Costa received the Freddie Mac Multifamily Builder of the Year award and the SAGE award from the 50+ Housing Council. In 2012, Highridge Costa was ranked sixth among the top 50 affordable housing owners by Affordable Housing Finance magazine.
“We have a passion for providing housing to hard-working Americans, and if you drive by any of our communities they blend right in with all of the others in the area,” Costa says. “I enjoy taking people to see our communities because we have the long-term interest of the project area in mind.
“We want to build better communities and give people better lives,” Costa adds.