ALEXANDRIA HOUSING AFFORDABILITY ADVISORY

Transcription

ALEXANDRIA HOUSING AFFORDABILITY ADVISORY COMMITTEEVIRTUAL MEETINGDATE: JUNE 3, 2021TIME: 6:30-8:30 P.M.AGENDA1. Introductions, Virtual Meeting Notice, and Chair remarks (Chair)6:30 p.m.2. Modification of Loans to AHDC for Lacy Court and The Bloom(Helen McIlvaine/Jon Frederick)Action Request: Review and Vote on Loan6:35 p.m.3. AHDC Seminary Road Project Update (Jon Frederick/Matt Rhodes)6:55 p.m.4. Chair Election (Full Committee)7:25 p.m.5. Report Outs (Committee Members)7:35 p.m.6. ARHA Updates (Carter Flemming)7:45 p.m.7. AHDC Updates (Jon Frederick)7:50 p.m.8. Information Items:Financial Report7:55 p.m.9. Staff Updates (Staff)8:00 p.m.10. Announcements and Upcoming Housing Meetings (Staff)8:15 p.m.2021 Virtual Northern Virginia Housing ExpoNoVaHousingExpo.orgARHA Redevelopment Work GroupVirtual Meeting, June 17, 2021; 5:30 pm11. Other8:20 p.m.Adjournment (Chair)8:30 p.m.Due to the COVID-19 Pandemic emergency, the June 3, 2021 meeting of the Alexandria HousingAffordability Advisory Committee is being held electronically pursuant to Virginia Code Section 2.23708.2(A)(3) and/or the Continuity of Government ordinance adopted by the City Council on April 18,2020. All of the members of the Committee and staff are participating from remote locations through aZoom video conference. The meeting can be accessed live by the public through Zoom at the followinglink, https://zoom.us/s/97911304364; or dial in number: 301-715-8592; Webinar ID: 979 1130 4364;Passcode: 415142. Public comment will be received at the meeting. A recording of the meeting will beposted at alexandriava.gov/74631.1

City of Alexandria, VirginiaMEMORANDUMDATE:MAY 27, 2021TO:THE ALEXANDRIA HOUSING AFFORDABILITY ADVISORYCOMMITTEE (AHAAC)FROM:HELEN S. MCILVAINE, DIRECTORSUBJECT:AHDC REQUEST FOR ADDITIONAL HOF LOAN FUNDS OF 1.91MILLION FOR THE LACY COURT AND BLOOM PROJECTSISSUE: AHDC request for additional loan proceeds from the Housing Opportunity Fund tocover cost overruns it incurred to complete the Lacy Court and The Bloom projects.RECOMMENDATION: That AHAAC recommend City Council authorize 1,910,000 inadditional HOF loan proceeds to reimburse project overruns covered by AHDC for therenovation of Lacy Court ( 810,000) and development of The Bloom at Braddock ( 1.1 M).BACKGROUND: Since late 2019, AHDC has completed the renovation of Lacy Court, thedevelopment of The Bloom at Braddock (Carpenter’s Shelter), The Nexus at West Alex, and theacquisition of Parkstone Alexandria, adding new committed affordability in nearly 500affordable and workforce units. During their construction, Lacy Court and The Bloomexperienced significant cost overruns which AHDC covered from its organizational resources tobring the projects to conclusion. It seeks additional City loan funding to reimburse some of theseoutlays.AHDC’s request for additional loan funds (Attachment 1) summarizes the costs and theirsources. It is noted that AHDC’s request assumes deferral of its earned developer fees, to thegreatest extent feasible, to mitigate the amount requested from the City. While some excess costsresulted from impacts of the pandemic, others were incurred to address site conditions notanticipated by third-party due diligence that exceeded budgeted contingency allowances.DISCUSSION: AHDC’s four projects are fully leased and, with the provision of City and stateemergency rental assistance to residents impacted by COVID, along with the ongoing recovery,are now operating as projected. Providing additional City loan funds to cover capital costs forLacy Court and The Bloom is consistent with the City’s past practice and will enable AHDC tocomplete the permanent financing of The Bloom and its strategic re-financings of otherproperties to take advantage of the current low-interest lending environment to improve projectcash flow. Most importantly the funds will bolster AHDC’s capacity to focus on substantialprojects in its immediate pipeline, including the proposed Arlandria-Chirilagua project

(approximately 500 units of affordable housing, combined with community space) and theaffordable homeownership project at Seminary Road. Both are progressing through the City’sdevelopment review process, with public hearings anticipated later this year.FISCAL IMPACT: 1,910,000 in City HOF funds. Existing City loan agreements, includingpromissory notes for Lacy Court and The Bloom will be modified to include the proposedadditional amounts which will also be secured on properties. The proposed funds have not beenearmarked for any other projects currently in the City’s affordable housing developmentpipeline.ATTACHMENT: AHDC Request for Additional HOF Loan Funding for Lacy Court and TheBloomSTAFF: Eric Keeler, Deputy Director, Office of Housing

May 26, 2021Ms. Helen McIlvaineDirector, Alexandria Office of Housing421 King Street Suite 215Alexandria, VA 22314By email to Helen.McIlvaine@alexandriava.govRe: Request for Increases to City Loans to AHDC for Lacy Court and The Bloom projectsDear Ms. McIlvaine:Over the past 18 months AHDC has completed Lacy Court, The Bloom, The Nexus, and the acquisition of ParkstoneAlexandria. These four projects have created nearly 500 long term affordable and workforce units for Alexandria’sinventory of committed units. During construction, Lacy Court and The Bloom experienced significant cost overrunswhich AHDC covered to bring the projects to conclusion. This letter summarizes these costs to support a formal requestto increase the City loan proceeds for the projects in amount of 810,000 for Lacy Court and 1.1 MM for The Bloom.Lacy CourtAHDC finalized the renovation of Lacy Court Apartments at the end of 2019 and converted to permanent financing inMay 2020. Attachment A is a final cost certification for this project that was prepared for Virginia Housing (pursuant tolow-income housing tax credit regulations). It shows that not only did AHDC defer all fees for this project (unanticipatedwhen the project budget was finalized prior to construction), but also includes a sponsor loan of approximately 810,000. This sponsor loan represents the funds AHDC provided to the project to complete the renovation and AHDC isnow seeking additional City Housing Opportunity Fund loan proceeds to cover excess costs of the renovation.The extra costs associated with the Lacy Court renovation were the result of two significant issues that were notidentified during due diligence. The first was the presence of significant mold in the units, which exceeded the budgetfor remediation based on pre-construction investigations, especially impacting buildings two and three at the corner onCommonwealth and Monroe Avenues. During construction, the building was literally demolished down to studs toensure mold issues were appropriately addressed.The second issue pertains to the foundation of one building in Phase II of the project. One of the objectives of theproposed substantial renovation was to create accessible units on the ground floor of the 1512-1516 CommonwealthAvenue building. This required demolition of some portions of the concrete foundation to create ramps and adjustslope. During this process that it was discovered that the fill under the building’s concrete slab was completelyinadequate, impacting the structural integrity of the building. To address this issue, required that work stop and a newstructural design be developed which included construction of a subbase and foundation. In addition to project delay,the structural deficiency resulted in significant additional costs related to labor, materials, and time.The BloomThe Bloom experienced cost overruns of approximately 2.1 MM which exceeded AHDC’s contingency for the project.Of this amount, AHDC estimates that it can cover approximately 1.0 MM by deferring the remainder its developer feeproposed for the project. To date AHDC has used 250,000 from its organization reserves to get the project to

completion and place the building in service at the end of 2020, however, AHDC requests an additional 1.1 MM in HOFloan proceeds for The Bloom to reimburse the monies that it has expended and cover remaining cost overruns for theproject so that AHDC can close out the project and convert to permanent financing in June.Several factors contributed to the 2.1 MM in excess cost, but the majority was associated withcontaminated/unsuitable soils or street utility conflicts that are identified in Table 1. These costs were unforeseen asthe Phase I and Phase II environmental studies and all soil borings came back with no trace of soil contamination duringthe due diligence period and exceeded the project budget amount and contingency for this work. The second significantfactor was caused by unidentified conflicts in the stormwater lines in public streets surrounding the site. Duringinstallation of the stormwater line in Fayette Street AHDC identified several major conflicts that required additionalengineering work and the replacement or movement of surrounding stormwater lines not part of the project scope.These two factors slowed construction and account for approximately 1.3 MM of the 2.1 MM budget overrun.Table 1. Sitework Cost OverrunsUnsuitable/Contaminated SoilsUtility ConflictsTotalProject Site 738,141 738,141Street 194,154 374,942 569,096Total932,295374,942 1,307,237Schedule delays caused or amplified by COVID – 19 were the other major factors that contributed to additional costsincurred. Originally the project was scheduled to be completed in June 2020 but was delivered in November: the projectsuffered some early delays, and due to fallout from COVID -19, lost its ability to catch up as the general contractorreduced its schedule from six days/week to four, and had to shut down production down twice briefly due to COVID -19positive tests among the work crew, despite COVID protocols onsite. These delays were exacerbated by supply chainissues that resulted in a disjointed schedule.The completion of Lacy Court and The Bloom were significant accomplishments for AHDC last year. These projects, aswell as The Nexus at West Alex and Parkstone Alexandria are fully leased and, with City and state rental assistance, areoperating as projected. The additional loan funds sought by AHDC will allow the organization to finalize its 2020 projectsand move forward with substantial development opportunities in Arlandria and along Seminary Road.In closing, I appreciate Housing’s consideration of this request and look forward to briefing AHAAC next week, and thenCity Council. In the meantime, if you or other staff have questions, please contact me at 703-739-7775 or han FrederickPresidentcc: Eric Keeler, Deputy Director, Office of Housing

Alexandria Lacy Court Limited PartnershipSchedule Of Sources And Uses Of FundsAnd Calculation Of Eligible Low-IncomeHousing Tax Credit BasisDecember 31, 2019

Independent Auditors' ReportOwner's Name:Alexandria Lacy Court Limited PartnershipProject Name:Lacy Court ApartmentsProject Number:VHDA #9836/Deal 3245We have audited the costs included in the accompanying Virginia HousingDevelopment Authority (VHDA) Final Cost Certification (the “Final Cost Certification”)of Alexandria Lacy Court Limited Partnership (the “Owner”) for the Lacy CourtApartments (“the Project”) as of December 31, 2019. The Final Cost Certification is theresponsibility of the Owner and the Owner’s management. Our responsibility is toexpress an opinion on the Final Cost Certification based on our audit.We conducted our audit in accordance with generally accepted auditing standards.Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the Final Cost Certification is free of material misstatement.An audit includes examining, on a test basis, evidence supporting the amounts anddisclosures in the Final Cost Certification. An audit also includes assessing theaccounting principles used and significant estimates made by management, as well asevaluating the overall Final Cost Certification presentation. We believe that our auditprovides a reasonable basis for our opinion.The accompanying Final Cost Certification was prepared in conformity with theaccounting practices prescribed by the Internal Revenue Service, under the accrualmethod of accounting, and in conformity with the format and qualified allocation planrules set by VHDA, which is a comprehensive basis of accounting other than generallyaccepted accounting principles.In our opinion the Final Cost Certification presents fairly, in all material respects, theactual costs of 17,762,820 and eligible basis of 9,475,032 of the Owner for theProject as of December 31, 2019, on the basis of accounting described above.BUILDING RELATIONSHIPS DELIVERING SUCCESS

Alexandria Lacy Court Limited PartnershipIndependent Auditors’ ReportPage TwoThis report is intended solely for the information and use of the Owner and the Owner’smanagement and for filing with VHDA and should not be used for any other purpose.We have no financial interest in the Project other than in the practice of our profession.Hertzbach & Company, P.A.Owings Mills, MarylandApril 16, 2020

Alexandria Lacy Court Limited PartnershipSCHEDULE OF SOURCES AND USES OF FUNDS ANDCALCULATION OF ELIGIBLE LOW-INCOMEHOUSING TAX CREDIT BASISSOURCESCapital Contributions1st Mortgage Loan - VHDACity Of Alexandria LoanInterim IncomeDeferred Developer FeeAHDC Sponsor LoanTotal Sources 7,762,820USESTotalAcquisition - LandAcquisition - BuildingConstruction - Hard CostsBuilder's OverheadBuilder's ProfitConstruction ContingencyBuilding PermitsArchitect & Engineer Design FeeArchitect's Supervision FeeArchitect - OtherEngineeringAppraisalMarket StudyConstruction ManagementConstruction Loan FeesInterest During ConstructionTaxes During ConstructionInsurance During ConstructionBuilders Risk InsurancePerm Loan FeesPerm Loan - OtherLender LegalLetter Of CreditAccounting / Cost CertificationTitle and RecordingBorrower LegalTax Credit FeesTax Credit ConsultingTenant RelocationFurniture and FixturesOther - ConsultantsOther - InspectionsOther - MiscOther - Bank FeesSecurityUtilites During ConstructionDeveloper's FeeSyndicationOperating ReserveRent Cap ReserveTotal UsesEligibleIneligible 67,691 018,0526,65659,8792,1821,268,647- 7,45967,691 17,762,820 9,475,032 8,287,788

FY 2021 Affordable Housing Development Funds Financial Report May 27, 2021Balance Remaining: otalDeveloper Contributions Received 0 0 0 344,882 176,574 48,987 537,512 57,523 20,824 52,059 0 0 1,238,361Multifamily Loan Repayments 0 0 0 0 0 0 0 0 0 0 0 0 0New Revenue Allocated by City Council 6,212,000 0 0 0 0 0 0 0 0 0 0 0 6,212,000Total 6,212,000 0 0 344,882 176,574 48,987 537,512 57,523 20,824 52,059 0 0 7,450,361FebruaryMarchCommitments and emberJanuaryAprilMayFY TotalJuneRunning TotalHousing Trust FundBraddock Small Area Plan FundCLIPilot Rental AssistanceRebuilding Together Alexandria (RTA)Temporary Relocation AssistanceHousing Trust Fund Total 1,423,273 0 0 0 0 0 0 0 0 0 0 920,000 0 920,000 2,343,273 0 0 0 0 0 0 0 50,000 0- 50,000 0 0 0 0 0 870,000 0 0- 4,450- 2,225 0 0- 14,870- 9,660- 5,210- 8,628 0 0- 45,043 824,957 0 50,000- 50,000 0 0 0 0 0 0 0 0 0 0 0 0 11,000 0 0 0 0 0 0 0 0 0 0 0 0 0 11,000 2,304,273 50,000- 50,000- 4,450- 2,225 0 0 35,130- 9,660- 55,210- 8,628 920,000 0 874,957 3,179,230 500,000Housing Opportunity FundAHDC - ArlandriaAHDC - Carpenter's Shelter / The BloomAHDC - OperatingAHDC - SeminaryARHA - Ramsey / The Lineage 0 0 0 1,700,000 0 0 0 0- 500,000 0 0 0 0 0 0 0 0 0 - 1,700,000 0 0 0 0 0 0 0 0- 1,700,000 0 0 275,000- 275,000 0 0 0 0 0 0 0 0 0 0 0 0 0 0 250,000 1,396,500 0 0- 196,034 0 0- 250,000 0 0 0 0 0 0 0 0- 104,679- 494,148 0- 436,530 0 0 0- 165,109 0- 1,396,500 0 0EHIP 0 0 0 200,000 0 0 0 0- 23,000- 15,000 0 0 0 162,000 162,000Landmark Towers 0 0 0 2,500,000 0 0 0 0 0 0 0 0 0 2,500,000 2,500,000 7,250,000- 5,780,000 0 0 0 0 - 1,470,000 0 0 0 0 0 0- 7,250,000 0 0 0 0 400,000 0 0 0 0 0 0 0 0 0 400,000 400,000 10,346,500- 5,505,000- 494,148 - 2,220,000- 436,530- 23,000- 15,000 0- 165,109 0- 7,284,500 3,062,000Wesley - Fairlington / The WaypointWesley - Parcview IIHousing Opportunity Fund Total- 275,000 3,653,966 - 1,804,679Page 1 of 1

The Final Cost Certification is the responsibility of the Owner and the Owner’s management. Our responsibility is to express an opinion on the Final Cost Certification based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan an