City of Alexandria, Virginia
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MEMORANDUM
DATE: NOVEMBER 10, 2025
TO: THE HONORABLE MAYOR AND MEMBERS OF CITY COUNCIL
THROUGH: JAMES F. PARAJON, CITY MANAGER
FROM: HELEN MCILVAINE, OFFICE OF HOUSING
DOCKET TITLE:
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Consideration of a Resolution for the City to Provide a Secondary Guaranty to Facilitate Virginia Housing (VH) Construction Financing for Housing Alexandria’s (HALX’s) Sanse Project.
(This is not a public hearing item)
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ISSUE: Provision of a City secondary guaranty to facilitate HALX’s use of VH tax exempt bond funding to finance the final phase of construction of the Sanse Apartment building in Arlandria.
RECOMMENDATION: That City Council approve the attached Resolution (Attachment 1) indicating its support for a secondary guaranty of $9.54 million to secure a Letter of Credit for HALX to facilitate VH bond funding for construction of Sanse Phase II (“GMV4b”), as described below, and authorize the City Manager to sign documents memorializing the guaranty which substantially conforms to the Term Sheet provided by Truist Bank (Attachment 2).
BACKGROUND: Housing Alexandria (HALX) is in the process of developing the Sanse and Naja projects located at the intersection of Mount Vernon Avenue and Glebe Road in Arlandria and is closing on the funding to complete the last phase of the Sanse building (Attachment 2). When completed, the development will provide at least 474 affordable housing units (including 25% deeply affordable to households with incomes at 40% AMI). The project has been designated Alexandria’s highest housing priority and City financial commitments spanning multiple fiscal years through FY 2028 have been provided by Council, with City support leveraged 5x by other sources including, but not limited to, 9% and 4% Low Income Housing Tax Credits, Virginia Housing grants, loans and bonds, VA Department of Housing and Community Development grants, Amazon Housing Equity Funds, ARPA funds, a federal earmark, and a HUD CDBG Section 108 loan (application pending).
Following the project’s October 2023 groundbreaking, construction has progressed without interruption, with the initial ARPA grant-funded phase making significant infrastructure improvements to benefit current and future development in the neighborhood. Remarkably the project was able to complete all initial stages of the work prior to vertical construction starting, including site work, infrastructure improvements, the underground/structured space parking garage and building platform using only grant and other soft funding sources, with borrowing occurring as vertical construction started. The project is running slightly ahead of schedule and is currently under budget. Its 100+workers and two tower cranes are a daily reminder of the project’s positive economic benefit for the neighborhood as well as a symbol of the ongoing transformation of the neighborhood and the affordable housing and other resources coming. When completed in late 2026, the ground floor of Sanse will offer flex space for city offices and agencies, including Housing’s landlord tenant services, DCHS, the Health Department, and RPCA, including recreational space for teens, and a food hub.
DISCUSSION: A first VH bond/construction loan closing for Sanse occurred in December 2024, and a second, to carry construction of Sanse to completion, including conversion of the loan to permanent financing, is planned for mid-November. While construction risk is mitigated naturally by the progress already made and its inherent value, Virginia Housing requires that all borrowers - in this case, HALX - provide a Letter of Credit for 30% of the construction funding being provided. The portion of the VH bonds issued (totaling $55 million) ascribed to this phase of construction is approximately $32 million, so to meet VH’s requirements, HALX must provide a Letter of Credit in the amount of $9.54 million. Truist, with which the City has its banking contract, in exchange for the City’s guaranty, will provide a Letter of Credit to HALX to bridge the period prior to FY 2027 (July 1, 2026) when City funding intended for the project will be available. The funds will then be loaned to HALX to secure the Letter, ending the City’s guaranty. At completion of construction of Sanse, the funds on deposit will repay VH pursuant to conversion of its construction loan to a permanent loan.
Staff believe that subject to City Council’s appropriation of already obligated and identified City dedicated affordable housing funds in the upcoming FY 2027 budget process, providing the guaranty is consistent with the City’s support for construction of the project, and for HALX, as most recently confirmed in June 2024. The funds proposed to be used for the City guaranty are part of a multi-year funding plan already reviewed and approved by City Council, but which are subject to appropriation as part of the FY 2027 budget process. As such, the funds have been incorporated in the proposed Capital Improvements Program’s 10-year budget. Staff would note that, unlike the recent guaranty provided on behalf of the Alexandria Redevelopment and Housing Authority (ARHA) for acquisition of The Alate, the funds proposed for the guaranty here are already anticipated in the FY 2027 CIP and City budget process.
FISCAL IMPACT: Subject to City Council’s appropriation of already-obligated project funds in the upcoming FY 20207 budget process, providing a secondary guaranty is consistent with the City’s intended support for construction of the Sanse project, and for HALX, as confirmed in the funding commitments approved by Council on June 11, 2024.
ATTACHMENTS:
(1) Resolution to Approve City Guaranty
(2) Truist Terms Sheet
(3) Graphic of Sanse and Naja Projects (depicting project/building phases)
STAFF:
Emily Baker, Deputy City Manager
Christina Zechman Brown, Deputy City Attorney
Kevin Greenlief, Director, Finance Department
Morgan Routt, Director, Office of Management and Budget
Amanda Hamm, Deputy Director, Office of Management and Budget
Arthur Wicks, Budget Manager - Capital Improvements Program, Office of Management and Budget
Julia Taylor, Budget Management Analyst II, Office of Management and Budget
Meghan McGrane, Budget Management Analyst II, Office of Management and Budget
Helen McIlvaine, Director, Office of Housing
Gypsy Roberts, Division Chief, Finance and Administration, Office of Housing