Pennrose Closes On Former Cape Cod 5 Building

by Ryan Bray
Pennrose has closed on the former Cape Cod 5 headquarters on West Road, which the developer plans to convert into 62 units of affordable housing.  FILE PHOTO Pennrose has closed on the former Cape Cod 5 headquarters on West Road, which the developer plans to convert into 62 units of affordable housing. FILE PHOTO

ORLEANS – In 2017, Alan McClennen came to Dorothy Savarese, then CEO of the Cape Cod 5 Savings Bank, with an idea to convert the bank’s former Orleans headquarters into housing. Now development of the 62-unit project, years in the planning, is set to get underway.

McClennen, who chairs the town’s affordable housing trust fund board, was informed just after Christmas that Pennrose, the project’s developer, had closed on the $30 million project and that demolition was to begin at the West Road property shortly after the new year.

“It’s unique to be involved with the very beginning of an idea and see it come to fruition finally,” McClennen said when reached by phone last week.

Pennrose will redevelop the property into 62 housing units, 52 of which will be rented as affordable to people who make up to 80 percent of the area median income in Barnstable County. The remaining 10 units will be rented as attainable housing for people who make up to 110 and 120 percent of AMI.

The Pennrose project, which involves the repurposing of the existing bank building as well as a new addition to the building’s west side and the construction of two new townhouses, is one of three affordable and workforce housing projects in line to break ground this spring. Housing Assistance Corporation plans to develop 14 affordable units at the site of the former Masonic Lodge at 107 Main St., while plans have also been filed to develop the former Underground Mall property off of Route 6A into 29 housing units. The town is also weighing bids from developers interested in the former Governor Prence Inn.

For McClennen, who has been directly involved in plans for many of those projects, the forward momentum Orleans is seeing on the housing front is the result of years of hard work by many.

“What it shows, I think, is that Orleans has its act together in a lot of ways,” he said. “You have a select board that’s committed to housing. We have a committee that predates the trust that’s really into it, and now the trust. Everybody’s really committed to digging in to make this work.”

A feasibility study in 2018 found that the Cape Cod 5 building could be converted into housing, and the town’s affordable housing committee and affordable housing trust fund board eventually hired an architect to create design options for the project.

But while the town had conversations about purchasing the building from the bank, the two sides failed to come to an agreement, McClennen said.

“We had one or two discussions with the bank, and it appeared their understanding of value and our desire for a discount were not compatible,” he said.

Enter Pennrose. In the summer of 2020, Charlie Adams, the company’s regional vice president, made a deal to purchase the building from Cape Cod 5. In 2021, town meeting voters authorized bonding $2 million in Community Preservation Act funds for the project. The following year, Pennrose secured low income tax credits for the project from the state.

“All of a sudden all the pieces came together,” McClennen said.

In addition to the $13.5 million in state low income tax credits, the project is being funded through an additional $9.5 million in federal low income tax credits, $3 million in “soft loans” from the state, and an additional $500,000 in CPA funds from the towns of Brewster, Chatham, Eastham, Provincetown, Truro and Harwich.

But the project’s many financial stakeholders made closing on the project a lengthy, time intensive affair. McClennen noted that while local permitting for the project took about 90 days, closing on the property took three years.

“Everybody is checking to make sure that the documents reflect what the towns and the state and the federal government all require,” he said. “There’s a lot of work back and forth, and ultimately in the end, there’s some negotiation.”

But the Pennrose project, as well as those coming on its heels, are helping Orleans reach another important milestone, McClennen noted. With the completion of Pennrose and the project at 107 Main St., the town will eclipse the state’s 10 percent affordable housing benchmark. Towns in which at least 10 percent of local housing stock is affordable can better protect themselves from unwanted development under Chapter 40B, which while useful in incentivizing the creation of affordable housing often gives developers more leverage to override local zoning regulations.

As a planning process and a zoning process, 40B “has a lot of opportunities that you can take advantage of when you’re not under the hammer because you’re at less than 10 percent,” McClennen said.

Work will first begin with interior demolition of the existing bank structure, McClennen said. The project’s contractor Dellbrook JK Scanlan could break ground on the exterior construction in March, he said.

Meanwhile, McClennen said HAC is in the process of closing on the 107 Main St. property. Chris DeSisto, who is privately developing the Underground Mall project, said last week he plans to go before the zoning board of appeals for a special permit in February. Both of those projects could also break ground in the spring.

While it’s been a long time from concept to completion, McClennen said the Pennrose project can serve as a guidepost the town can use to help steer itself through future housing efforts.

“I think the exciting thing about this is it shows it is possible to pull deals like this together if you know on the front end they make sense,” he said.