NALHFA 2012 ANNUAL CONFERENCE
CASE EXAMPLES OF AFFORDABLE
HOUSING PRESERVATION
By Aseem Nigam
Director Real Estate Finance and Grants
Management
Fairfax County, Department of Housing
and Community Development
Creekside Village
Project Description
•319-units located in Alexandria, Fairfax
County – Built 1976
•Original configuration:
– 2 phases- both phases purchased
by developer
– Phase 1: 110 units; HUD Section
236 financing; additionally, 50 of
110 units receive Rental
Assistance Payment (RAP)
contract- both expire 2018
– Phase 2: 209 units; “market” rate
not subject to HUD restrictions
but rents affordable to 50% AMI
•Project needed renovation in order to
provide upgrades in appearance,
security, energy efficiency and long term
durability (preservation)
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Creekside Village
Summary of Sources and Uses
• For both phases:
 Construction costs/unit: $38,131
 Acquisition cost/unit: $126,066 (buildings only)
 Land Cost/unit: $15,000 (ground lease
Uses
Phase 1
Phase 2
Total
Acquisition
$27,734,500
$12,480,500
$40,215,000
Hard Costs
$7,874,955
$3,440,093
$11,315,048
Soft Costs
$4,789,996
$2,370,715
$7,160,711
Developer’s Fee
$5,070,000
$2,685,450
$7,755,450
$45,469,451
$20,976,758
$66,446,209
TOTAL
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Creekside Village
Sources
Phase 1
VHDA Existing
Mortgage
Phase 2
$1,450,033
New VHDA TaxExempt Bonds
Total
$1,450,033
$4,100,000
$4,100,000
VHDA Taxable
$4,575,000
VHDA- SPARC
$3,000,000
$5,000,000
$8,000,000
VHDA- REACH
$2,000,000
$1,000,000
$3,000,000
SPARC Deferred
$1,000,000
LIHTC Equity
$4,575,000
$1,000,000
$21,247,875
$4,080,542
$25,328,417
AHPP
$9,700,000
$4,515,000
$14,215,000
Deferred Dev Fee
$2,496,543
$2,281,216
$4,777,759
$45,469,451
$20,976,758
$66,446,209
TOTAL
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Creekside Village
Unit & Income Targeting- Phase 1
Reconfigured
Bedroom Size
No. of Units
Maximum AMI (%)
1br, 1ba
25
50%
1br, 1ba
26
60%
1br, 1ba
4
80%
2br, 1.5ba
25
50%
2br, 1.5ba
15
60%
2br, 1.5ba
5
80%
2br, 2ba
30
50%
2br, 2ba
32
60%
2br, 2ba
4
80%
3br, 2ba
30
50%
3br, 2ba
20
60%
3br, 2ba
4
80%
Total Units
220
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Creekside Village
Unit & Income Targeting- Phase 2
Reconfigured
Bedroom Size
No. of Units
Maximum AMI (%)
2br, 1.5ba
25
60%
2br, 1.5ba
20
80%
3br, 2ba
30
60%
3br, 2ba
24
80%
Total Units
99
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Creekside Village
 Roadblocks
• Section 236 financing limited rent increases over time and rents/revenues
from Phase 1 were very low
 Financially infeasible without cash flow from Phase II to carry it
 As a result, the project was limited to how much debt it could carry
• Non-displacement of tenants
 Solutions
• In order to make Phase 1 financially feasible, changed distribution of units
between Phase 1 and Phase 2
 Phase 1- 220 units with the following levels of affordability: 110 units @
50% AMI, 93 units @ 60% AMI, and 17 units @ 80% AMI
 Phase 2- 99 units with the following affordability- 55 units @ 60% AMI
and 44 units @ 80% AMI
• Created condominium regime to maximize LIHTC for the property
• Needed to preserve some units as market rate so as not to displace tenants
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Creekside Village
 Purchase of Land Using Penny Funds
• Helps to reduce the overall cost the developer needs to finance
• Unsubordinated ground lease
• 99-year lease to borrower, 75-year to lender; at end of term, land
and improvements revert back to the FCRHA and therefore, the
FCRHA can maintain perpetual affordability
• Long term preservation is achieved
 Preservation and the AHPP
• Requirements such as the ROFR, affordability covenants and in
cases where we have a ground lease, the FCRHA is able to maintain
and preserve units as affordable for the long term
 With the ROFR, the FCRHA can purchase the property
 Affordability covenants may extend affordable restrictions beyond the
credit compliance period
 Ground leases also revert land/buildings back to the FCRHA’s
ownership
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Crescent Apartments
• 181 units in Reston Va. –
Built 1967
• Redevelopment /
revitalization opportunity
• Adjacent to Lake Anne –
oldest planned community
• Acquisition cost per unit
$276,316
• Affordability
– 20% units at 50% AMI
– 80% units at 60% AMI
• Unusual Aspects
– Part of a larger portfolio
sale (Mark Winkler)
– Purchased to redevelop
the site
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Crescent Apartments
• Property is owned by Fairfax County
• Ground Lease to the Fairfax County
Redevelopment and Housing Authority
(FCRHA) for property management
• Payment agreement for the County to make
the bond payments
• Property contributes some revenues to the
bond payments.
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Crescent Apartments
• Purchased in 2006 for $49,500,000
• Sources of financing:
– BANs - $40,600,000
– Penny for Affordable Housing - $9,136,826
• 2007 the original BANS were rolled over for another year at 4%
interest rate
• 2008 County issued 5 year BANS to allow time for the redevelopment
plans to be completed.
–
–
–
–
–
Note had a 3 year call provision
Interest rate of 3.308%
County paid interest payment
Property contributed to principal pay down.
Bond ratings: Moody’s Aa2 and S&P AA+
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Crescent Apartments
• 5 year note refinanced in 2011
– Same maturity
– Lowered the interest rate to 0.75%
– Net present value of Interest savings $1,642,152
• Responses to the RFP for redevelopment are due April 30, 2012
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Crescent Apartments
• Recommendations from the RFP
– Preservation of the 181 units as follows
• 10% affordable to households earning up to 30% of AMI
• 20% affordable to households earning up to 50% of AMI
• 70% affordable to households earning up to 60% of AMI
– Non-replacement Units 20% affordable pursuant to the ADU and
WDU ordinance
– Land Unit consolidation options
•
•
•
•
•
Unit A - 3.6 acres
Unit B - 4.2 acres
Unit C – 3.8 acres
Unit D – 17.3 acres (Crescent Apartments)
Unit E – 6.0 acres
• Unit F – 5.75 acres (Current Shopping Area)
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Crescent Apartments
Land Unit
Full Consolidation Option
Redevelopment Option
A
Residential 175 Units
Commercial 105,000 SF
Residential 125 units
Commercial 85,000 SF
B
Residential 120 Units
Commercial 130,000 SF
Residential 120 Units
Commercial 130,000 SF
C
Residential 100 Units
Residential 100 Units
D
Residential 935 Units
Commercial 8,000 SF
Residential 750 Units
Commercial 4,000 SF
E
Residential 425 Units
Commercial 4,000 SF
Residential 320 Units
Commercial 2,000 SF
F
Current Shopping Area
Total
Residential 1,755 Units
Commercial 247,000 SF
Residential 1,415 Units
Commercial 210,000 SF
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Crescent Apartments
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QUESTIONS?
Contact Information:
Aseem Nigam
703.246.5167
aseem.nigam@fairfaxcounty.gov
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