Home youth program budget What we know about the county’s $ 150 million loan to preserve affordable housing on the Pike

What we know about the county’s $ 150 million loan to preserve affordable housing on the Pike


The Barcroft Apartments, an affordable 1,334 unit apartment complex along Columbia Pike (via Google Maps)

Arlington County lends $ 150 million to a Washington-based real estate company that purchases the Barcroft Apartments along Columbia Pike.

The move – approved on Tuesday – is unusual, but Arlington County says it did what was necessary in a short time to support the sale to Jair Lynch Real Estate Partners. The company has agreed to keep the property – Arlington’s largest affordable market-priced apartment complex – as affordable housing pledged for 99 years.

This includes 612 affordable two-bedroom units and 47 three-bedroom units, with larger affordable units in short supply in Arlington.

Amazon is get involved too $ 160 million to pay for the acquisition of the property at 1130 S. George Mason Drive.

Here’s what else we know about the project.

It’s a big deal.

The last time the county got a line of credit for a large affordable housing project was in 2007 when it acquired Buckingham Village 3, an apartment building in the Buckingham neighborhood near Ballston.

“Line of credit financing is generally sought when there is an immediate need and when it is not appropriate or possible to issue long-term bonds on time,” Erika Moore, spokesperson for the Department community planning, housing and development, says ARLnow. “It’s a strategy the county uses sparingly and only for short-term bond types. “

Additionally, Arlington has policies on the books ensuring that government operations are not overly dependent on this funding. Under this policy, only 20% of the county’s debt can be made up of lines of credit and variable rate debt.

The apartments need some work.

“Based on preliminary due diligence, staff anticipate that units in Barcroft Apartments will need substantial rehabilitation and / or redevelopment,” said one. county report said. “It is initially expected that the site rehabilitation / redevelopment phasing will be completed over the next ten years, and the majority of affordable housing that is renovated or upgraded can use low-rental housing tax credits.

Jair Lynch told county council at its suspended meeting on Tuesday that a majority of units will be refurbished and “a selection” of vacant units will be demolished and rebuilt.

The company plans to add free Wi-Fi in common areas, a club room, co-working space, fitness areas, outdoor barbecues, improved bicycle storage and a parcel room with Amazon lockers.

A forthcoming “Financing and Development Master Plan” will contain more details on the schedule for the redevelopment, the immediate repairs needed and how they will be paid for.

Moore has turned to Jair Lynch to find out what work is needed. Jair Lynch tells ARLnow he can’t say anything beyond what was shared on Tuesday.

“With respect to your request, due to the confidential nature of this ongoing transaction, we are unable to provide additional information beyond what has been publicly shared by the County of Arlington Government for the moment, “said a spokesperson. “We will be happy to share more information regarding our involvement in this file once the sale is finalized.”

Jair Lynch will likely add residential units at market rates to the sprawling 60-acre property, according to the county.

But how will the loan actually work?

Jair Lynch asks for $ 150 million subordinated loan county that it will repay over a period of 35 years, after repaying its most senior loans, including that of Amazon. The DC real estate company will pay an interest rate of 1%, or $ 1.5 million per year, on the loan for the first five years. From now on, the annual interest rate will be 2.5%, or $ 3.75 million.

For the first five years, Arlington will only pay PNC a fluctuating interest rate on the credit, Moore explains. Jair Lynch’s annual interest payments will make up for this, and anything else will be paid through the county. Affordable Housing Investment Fund. which helps pay for affordable housing projects in the county.

By June, six months of interest payments total $ 850,000. In the next fiscal year, interest payments are expected to reach $ 2 million.

Where does the money come from?

To raise the money quickly enough for the acquisition, which is expected to be finalized this month, Arlington County has taken out a line of credit with PNC Bank.

“In effect, the county draws funds from its PNC line of credit and then lends it to the buyer,” Moore said.

When PNC’s line of credit expires in five years, Arlington County will convert the credit into long-term debt. He will repay this in the same way he borrows money to pay for buildings and transportation projects.

Local resident citizen Suzanne Smith Sundburg, a frequent critic of the county council, said in public comments ahead of the council vote on Tuesday that the arrangement and size of the loan is unusual, calling it “one of the proposals of most sketchy and frightening staff I have ever seen. “

“I strongly urge the county council to slow down and take more time to assess this proposal in terms of realistic ability to achieve the stated goals and in terms of profitability and protection of taxpayer funds,” she said. declared, before the loan. was finally approved, unanimously.

What is the county doing to be fiscally responsible?

The county expects annual debt service to be $ 5-7 million over the long term. But Arlington and Jair Lynch will try to find ways to lower the cost of the acquisition, Moore says.

“Through a 2022 financing and development master plan process, the county and the buyer will see if the project can get other resources (such as tax credits) before this 5-year date so that the County loan size (and by extension, county-funded long-term debt) is minimized, ”she said.

Jair Lynch will have 12 months to present this plan to County Council members for approval.

It’s not just apartment buildings

Jair Lynch plans to use separate financing to acquire two commercial properties related to the Barcroft Apartments complex, according to a report from county staff:

In addition to the residential plots, the sale of the property to the borrower includes the acquisition of two commercial plots. One of the shopping plots is located at S. Four Mile Run Drive and Columbia Pike, and currently contains a small shopping center with a Goodwill (this shopping center dates from 1950 and is classified as “Important” by the HRI). The other commercial parcel is located at S. George Mason Drive and Columbia Pike, and currently contains a 7-11 convenience store and a Penske truck rental facility. The Borrower will use separate financing to acquire the commercial plots.

Who is Jair Lynch Real Estate Partners?

Appointed for the President and CEO Jair lynch, it’s a DC-based real estate company that is known for its work in affordable housing.

To date, the company has invested $ 450 million in affordable housing and has 20 affordable housing projects in development, Lynch told the county council at its Tuesday meeting.