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Gardner Capital


Gardner Capital is building several affordable, high-quality multifamily developments in Texas with its new construction subsidiary. By Russ Gager

Just because an apartment building is affordable doesn’t mean it has to be low quality. “Our interest is delivering quality affordable housing units,” emphasizes Dan Rigney, senior vice president of Gardner Capital Construction Texas. “Just because a family today finds themselves on the lower economic rungs of the economy doesn’t mean they should expect an inferior product, and the developer shouldn’t accept it either. So I’m absolutely opposed to cheapening our product.

“Building quality affordable housing can be a challenge, knowing where to spend and where not to spend,” Rigney continues. “Too often, value engineering can result in not only a lower cost, but a lower quality product. For example, we will always insist on using a 30-year or better roofing product based on long-term performance and maintenance factors, but we will limit the use of architectural-grade shingles to the developments’ clubhouses and lower-level areas. For roofs that are three or four stories in the air where they really aren’t seen, we’ll maintain the 30-year roofing but eliminate the architectural shingles. This way, we maintain the underlying quality and architectural design while still being cost-effective.

“The only difference between a Chevy, a Buick and a Cadillac is the quality of the finishes inside and whether you get vinyl, leather, or cloth seats and all the fancy bells and whistles,” he continues. “They’re all sitting on the same frame and they should all work effectively. The user should expect the vehicle to perform well regardless of the nameplate – that’s the other aspect of quality. I view it the same way in the product we are building. Quality is about how well things work. I want the families and seniors who live in our communities to experience that type of functional quality.”

That expectation of quality extends to Gardner Capital Construction’s subcontractors and vendors. “I have made it clear to all our subcontractors and vendors,” Rigney emphasizes. “Far too often I’ve heard subcontractors say, ‘This is low-income housing and you’ve got to expect a lower quality,’” Rigney says. “I don’t accept that. I expect our usability to be just as good as anybody else in town and better if possible. To many people, it’s just, ‘How many units did you put up?’ but we strive to maintain quality all the time. Sometimes it’s a struggle. Sometimes in purchasing, it seems easier to buy based on price, but in the end, we continue to push for the product that will perform best.”

Gardner Capital’s affordable developments feature learning centers with Internet access for families who can’t afford a home computer. Each development also includes a fully accessible play yard with a wet play area where children can be refreshed in shallow water pools, and large metal mushrooms or umbrellas spray water in the summer. “We’re spending as much if not more on our common area facilities than a lot of the market-rate units are,” Rigney maintains.


Tax Credits

Gardner Capital is a developer, syndicator, investor, contractor and property and asset manager. The company specializes in the area of state tax credit financing of affordable housing. “Gardner has been in the tax credit industry for better than 25 years, originally as a syndicator of state credits and also moving into the area about 20 years ago of being a tax credit developer, primarily in the central Midwest region,” Rigney explains.

As part of a federal program, each state receives tax credits that can be applied to the cost of affordable housing. The credits can be sold or syndicated to corporations that need a tax write-off or to banks and financial institutions with community reinvestment programs. The result is that the project receives an equity investment nearly double the investment in a typical market-rate development. This in turn lowers the long-term mortgage debt on the property and allows the apartments to be offered at rents that are often 50 to 60 percent of market rates.

Gardner Capital builds and holds its developments. “In the tax credit world, you really have to build and hold, because every development is under at least a 30-year agreement to maintain a certain level of rents,” Rigney notes. “Also, It’s almost impossible to sell a project before 15 years because of the developer guarantees that are involved. We view this as a never-ending warranty because we are our own construction company.”

Quality Projects

Gardner Capital has several affordable housing projects under development or construction in Corpus Christi, McAllen, Fort Worth/Arlington, Sugarland and McKinney, Texas. Many of Gardner’s projects use the same basic unit floor plan and extend up to four stories. “You try in this business to repeat things as much as you can,” Rigney asserts. “You learn lessons, so why not go forward? If you get a new plan that works, you should use it.”

Apartment building sizes range from 60 to 148 units with one, two and three bedrooms. Because affordable housing is designed for families, more of the units have two and three bedrooms. A one-bedroom unit usually is approximately 850 square feet, with the largest units measuring 1,190 square feet.

All of Gardner Capital’s apartment buildings are designed to exceed the energy standards of the state in which they are located by 10 to 15 percent. They usually are wood-frame construction on slab-on-grade foundations. Exteriors are from 30 to 60 percent stone or masonry with fiber cement siding. “We want local communities in which we build to know that our product is going to be a quality product,” Rigney insists. GardnerCapInfo

Early Involvement

Gardner Capital Construction gets involved with the company’s development arm early, when the tax credits are being requested from a state. Once a project is targeted to go forward, the construction division provides preliminary estimates of its cost. “For the most part, it’s pretty simple on our end to provide accurate cost information,” Rigney maintains. “We build four or five basic products and we know what those products cost.” The construction division also considers the state in which the project is located, the cost differentiations and labor force issues there and even the weather patterns.

Newly formed Gardner Capital Construction functions as the general contractor and hires from 30 to 35 subcontractors and vendors for a typical multifamily project. “I’ve been onboard almost two years with the company,” Rigney relates. “My job was to analyze the situation and look at the opportunities to develop a business plan for the construction company as a general contracting entity, and to also look at other opportunities we’d have potentially to develop outside of Gardner Capital projects.” That effort is continuing, he says.

For more than a decade, Rigney was in charge of the construction risk group at one of the nation’s largest syndicators of tax credits. That – coupled with his 20 years of building primarily single-family homes as a joint venture developer – has given him expertise in all aspects of tax credit construction.

Single-family homebuilding is the background he most often seeks when recruiting employees. “The important part of that is that a single-family-trained person has generally got that owner/builder mentality,” Rigney says. “These are people are used to having their company’s name on their product, and the best ones want to be proud of what they help build.”

Rigney estimates that approximately 85 percent of the company’s projects in Texas are affordable housing, and he attributes the company’s success to knowing its niche. “We’ve developed a flight plan for success in the world of developing and building successful tax credit projects,” Rigney declares. “Our business model is based on two things: While it’s a very complicated market to be in, it happens to be a market that we at Gardner understand how to negotiate through successfully. We are proud of what we do, and while we are clearly a part of the for-profit sector in the industry, we are also privileged to know that we’re meeting a service needed in our communities by providing quality affordable housing.”

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