City of Alexandria, Virginia
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MEMORANDUM
DATE: JUNE 20, 2023
TO: THE HONORABLE MAYOR AND MEMBERS OF CITY COUNCIL
THROUGH: JAMES F. PARAJON, CITY MANAGER /s/
FROM: HELEN S. MCILVAINE, DIRECTOR, OFFICE OF HOUSING
DOCKET TITLE:
TITLE
Consideration of a Request for a City Housing Opportunities Fund Loan of an additional $2,100,000 to Alexandria Redevelopment and Housing Authority for the Samuel Madden Redevelopment Project.
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ISSUE: Consideration of a request from Alexandria Redevelopment and Housing Authority (ARHA) for a City Loan of an additional $2,100,000 for the Samuel Madden Redevelopment Project (Attachment 1).
RECOMMENDATION: That City Council:
1. Approve ARHA’s loan request for an additional $2,100,000 for the Samuel Madden Redevelopment Project; and
2. Authorize the City Manager to execute the loan agreement and such documents as
may be necessary to indicate the City’s support for ARHA to implement the Samuel Madden Redevelopment Project
BACKGROUND: The Alexandria Redevelopment and Housing Authority has requested an additional $2,100,000 to support the redevelopment of Samuel Madden Homes, a garden-style apartment community comprised of sixty-six public housing units built in 1945. ARHA has entered a development partnership with Fairstead, Millcreek Residential, and The Communities Group to redevelop Samuel Madden Homes into a mixed-income, mixed-use development across two buildings with a total of 532 apartment homes, ground floor retail, an ALIVE! Food Hub, as well as a preschool operated by Hopkins House Preschool Academies. The development application for this project, as well as a $1,000,000 loan request from the City’s Housing Opportunities Fund (HOF), was approved by City Council on February 25, 2023.
DISCUSSION: In May 2023, ARHA submitted a HOF loan request for an additional $2,100,000 to fund the construction of the north building. The project budget increased by $2,871,332 for a variety of reasons, including increases in some construction hard costs, higher interest rates, and inflation, as well as a decrease in anticipated tax credit funding as Virginia Housing enforced limits on various pools. To fill the new funding gaps, ARHA is requesting additional funds from the City and has increased the amount of its deferred developer fee. It is noted that the Samuel Madden project is currently ranked first in the tax credit program’s initial rankings and Virginia Housing will announce final awards no later than July 2023.
FISCAL IMPACT: The fiscal impact is an additional allocation of $2.1 million from the Braddock Reserve fund (the balance of the account within the City’s Housing Opportunities Fund (HOF)). If approved, the new loan amount, plus the prior predevelopment loan of $60,000 and prior approved funding for a development loan of $1,000,000, will be consolidated into a permanent residual receipts-style subordinate loan to be repaid by ARHA out of future project revenue after senior debt and its deferred developer fee is paid out. A restrictive covenant filed in the land records at the time the loan is disbursed will ensure that the project remains affordable for at least forty (40) years; the loan agreement will also provide the City a right of first refusal in the event of a future sale or default. Given ARHA’s mission and experience, it is assumed the project will remain affordable in perpetuity. This loan request will exhaust all current funds in the Braddock Reserve fund and leave a balance of $0 for future ARHA projects.
ATTACHMENTS:
(1) Letter from Keith Pettigrew, CEO, Alexandria Redevelopment Housing Authority, dated May 17, 2023
(2) Presentation
STAFF:
Emily A. Baker, Deputy City Manager
Eric P. Keeler, Deputy Director, Office of Housing
Brandi D. Collins, Housing Program Manager, Office of Housing
Kim Cadena, Housing Analyst, Office of Housing