City of Alexandria, Virginia
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MEMORANDUM
DATE: APRIL 17, 2019
TO: THE HONORABLE MAYOR AND MEMBERS OF CITY COUNCIL
FROM: MARK B. JINKS, CITY MANAGER /s/
DOCKET TITLE:
TITLE
Consideration of Additional Loan Funds of up to $940,000 to AHC, Inc. for The Spire
BODY
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ISSUE: Closing an affordable housing fund gap.
RECOMMENDATION: Approve additional City loan funds for The Spire, AHC's 113-unit affordable housing development of $940,000 for a total permanent City loan of up to $9.94 million.
BACKGROUND: In December 2017, City Council approved a loan to AHC of up to $9,000,000 (including a previously authorized predevelopment loan of $400,000) for a 113-unit affordable housing building to be developed in partnership with the Church of the Resurrection. The project received competitive (9%) low-income housing tax credits in Spring 2018 and AHC has been working to secure its full financing package, including tax credit equity, the City loan, and a first trust loan. However, due to increases in construction costs, including the projected costs of undergrounding utilities; the complexity and cost of the financing structure involved (which includes a ground lease) and makes Virginia Housing Development Authority (VHDA) lending, including Resources Enabling Affordable Community Housing (REACH) funds, infeasible: and soft costs, the project's overall budget has increased by $2.7 million (6%) since AHC's 2017 loan application. Tax credit valuation has also decreased because AHC reduced the credits in the application than was projected at the time of their initial City loan request to make the tax credit application more competitive. The price per credit they received exceeded the projection, but was based on a smaller credit award.
DISCUSSION: AHC had been able to absorb 66% of the cost increase through a recent $1.12 million State and National Housing Trust grant award (compe...
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