District of Columbia Housing Finance Agency Fairmont I and II Mortgage Revenue Housing Resolution of 2001
PR 14-115

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A PROPOSED RESOLUTION IN THE COUNCIL OF THE DISTRICT OF COLUMBIA

To approve the District of Columbia Housing Finance Agency's Proposal for the Fairmont I and II Apartments

RESOLVED, BY THE COUNCIL OF THE DISTRICT OF COLUMBIA, that this resolution may be cited as the "District of Columbia Housing Finance Agency Fairmont I and II Mortgage Revenue Bonds Resolution of 2001".

Sec. 2. Pursuant to Section 207 of the District of Columbia Housing Finance Agency Act, as amended (D.C. Law 2-135, D.C. Code § 45-2117), the Council of the District of Columbia approves the District of Columbia Housing Finance Agency's proposal for issuance of its not to exceed $ 19,360,000 Multi-Family Housing Revenue Bonds, in connection with the acquisition and rehabilitation of the Fairmont I and II Apartments located at 1400 and 1401 Fairmont Street, N.W., in Ward 1 where such financing has been determined by the District of Columbia Housing Finance Agency to be a housing undertaking that meets the requirements of the District of Columbia Housing Finance Agency Act, D.C. Law 2-135, as amended (D.C. Code § 45-2101 et seq., by enactment of an eligibility resolution dated January 30, 2001).

Sec. 3. The Council of the District of Columbia shall transmit a copy of this resolution, upon its adoption, to the Executive Director of the District of Columbia Housing Finance Agency.

Sec. 4. This resolution shall take effect immediately.

DCHFA Resolution No. 200102 Fairmont I and II Apartments Eligibility Resolution

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DISTRICT OF COLUMBIA HOUSING FINANCE AGENCY RESOLUTION AS TO THE ELIGIBILITY OF THE FAIRMONT I AND II APARTMENTS FOR TAX-EXEMPT/TAXABLE MORTGAGE REVENUE BONE) FINANCING

WHEREAS, the District of Columbia Housing Finance Agency (the "Agency") received a request on December 15, 2000 from the Fairmont I and II Tenants Association (the "Applicant") that the Agency provide acquisition and rehabilitation financing for the Fairmont I and II Apartments, 2 five story apartment buildings located at 1400 and 1401 Fairmont Street, N.W., Ward 1. The project will consist of One Hundred Seventy-seven (177) units, of 80 one-bedroom, 72 two-bedroom and 25 three-bedroom units (the "Project");

WHEREAS, the Agency has conducted a preliminary review of the request for financing of the Project in order to determine, among other things, that the Project, and the financing requested therefore, comply with the requirements of the District of Columbia Housing Finance Agency Act, D.C. Law 2-135, as amended, D.C. Code § 45-2101 et seq. (the "Act");

WHEREAS, the Agency Staff recommends the issuance of its Tax-Exempt and Taxable Multi-Family Revenue Bonds in an amount not to exceed $19,360,000 on behalf of the Applicant or an affiliate or related entity to be formed (the "Sponsor");

WHEREAS, providing the financing requested for the Project will confer a public benefit and serve the public interest by lowering the cost of and expanding available housing opportunities for low and moderate income residents of the District, all in accordance with and in furtherance of the purposes of the Act in the following manner:

1. Making 100 percent of the 177 housing units to be rehabilitated available to low and moderate income individuals and families;
2. Contributing to the overall improvement of the District's housing stock;
3. Providing opportunities for construction jobs to D.C. residents by requiring that the Applicant give priority to D.C. residents;
4. Contributing to the overall social and economic improvement of the Columbia Heights area of Washington; and
5. Making a positive impact on the tax base by increasing the value of the property.

NOW THEREFORE, BE IT RESOLVED by the Board of Directors of the District of Columbia Housing Finance Agency:

1. Based upon a review of the request by the Staff as it relates to the Project, the report on such review to this Board, the favorable recommendation of the Acting Executive Director, and upon due deliberation and consultation with the staff, the Board of Directors hereby determines that, based on the requirements of eligibility for financing by the Agency, the Project and its financing by the Agency will meet the requirements of the Act.
2. Final approval of any financing shall be subject to such terms, conditions and documentation acceptable or deemed necessary by the Agency.
3. Adoption of this Eligibility Resolution shall not constitute a commitment from the Agency to provide financing for the Project.
4. The Acting Executive Director is authorized to undertake such actions as are required to be taken pursuant to the Act and the regulations of the Agency, including selection of bond professional services.
5. The Acting Executive Director, is hereby authorized and directed to send to the Chairman of the Council of the District of Columbia written notification of the adoption of the resolution describing the nature of the Project and the benefits designed to result therefrom as required by Section 207 of the Act, (D.C. Code § 45-2117).
6. This Resolution shall take effect immediately.

ADOPTED ON JANUARY 30, 2001 AT A SPECIAL MEETING OF THE BOARD OF DIRECTORS.

ROLL CALL VOTE:

Rosalyn P. Doggett: Approved
Jacqueline M. Massey: Absent
Isaac Green: Approved
Kathleen Miles: Approved
Michael L. Wheet: Approved

Zoreana Barnes, Acting Secretary to the Board

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Exhibit B

PROJECT OVERVIEW
FAIRMONT APARTMENTS I and II

Background - The DCHFA Board of Directors has adopted an Eligibility Resolution for tax-exempt and taxable bonds, in an amount not to exceed $19,360,000 for the acquisition and rehabilitation of two five-story apartment buildings known as Fairmont I and Fairmont II Apartments (the "Project"). The Project is located at 14`i and Fairmont Streets in the Columbia Heights area of Northwest Washington, (Ward 1, Census Tract 37). Both Fairmont I and II were built 1921 and partially rehabilitated in 1987. The Project currently consists of a total of 218 units with 114 units located at Fairmont I and 104 units located at Fairmont II.

Although the Project was renovated in 1987 there is still a need for significant upgrades to the living units and common areas, including adding new carpet, appliances, light and bathroom fixtures, refurbishing hallways, and upgrading the lobbies. The proposed rehabilitation costs will be approximately $7,000,000, which is roughly $39,500 per unit or 43% of the requested bond amount ($16,133,000). In accordance with IRS requirements for tax-exempt bond financing, the developer has elected to set-aside at least 40 percent of the units for households at or below 60 percent of area median income.

Provided that at least 50 percent of the total project costs are financed with tax-exempt private activity bonds, the Project will be eligible for an automatic allocation of 4% Low-Income Housing Tax Credits. With respect to qualifying for a tax credit allocation, the developer intends to set aside 100 percent of the units for families with incomes at or below 60 percent of the area median. The developer projects that the Project will qualify for an allocation of tax credits sufficient to yield $8,475,000 in equity from an investor-limited partner.

Staff received a proposal from another developer, KSI Services Inc., for the acquisition and rehabilitation of Fairmont I and II Apartments, but has decided to advance the Fairmont I and II Tenant's proposal to the Board instead of KSI's proposal due to the tenant's Right-of-First-Refusal.

Development Team/Ownership Structure - The Fairmont I and II Tenant Association, the sponsor, has engaged the Development Corporation of Columbia Heights (DCCH) to be the developer for the Project. It is proposed that the ownership structure will be a limited partnership. DCCH will also serve as the general partner and have a .01 ownership interest in the Project. DCCH's affordable housing activities have produced more than 110 units of affordable housing for families since its first project in 1991. DCCH has developed two commercial developments, the Latin American Youth Center and the Nehemiah Retail Shopping Center, and is currently developing 2 projects, 45 units total, in the Columbia Heights area and that will be financed by the Agency. DAP Development Consulting Group and Rinker and Associates will serve as development consultants. DAP is led by Paxy Harry, who has over 15 years of experience in real estate and economic development and is a former bond underwriter for the Agency. Rinker and Associates is led by Charles Rinker, which specializes in providing technical assistance to tenant associations that are attempting to purchase the multi-family properties in which they reside. Monarc Construction will be the general contractor and has constructed numerous apartment buildings in the Washington, D.C. area, and such notable affordable housing projects as Benning Park Apartments and Park Southern Apartments. The proposed management firm is Realty Management Associates located in Herndon, Virginia. Realty Management has managed 37 HUD projects and over 3500 rental units.

Scope of Work - The proposed Project will be a substantial rehabilitation of two five-story buildings, consisting of 218 rental units. Rehabilitation will include reducing the number of rental units from 218 to 177 to allow for larger two-bedroom units and the creation of 25 three-bedroom units. The two- and three-bedroom units will have two full baths.

Please see attachment for proposed detailed scope of work.

Rent Levels/Market Feasibility- The current and proposed rent levels are illustrated in the following chart:

Financing Structure- The developer proposes to issue roughly $16.1 million in tax-exempt and taxable bonds, combined with $8.4 million in tax credit equity for acquisition and rehabilitation costs. The projected total development cost is $26.2 million, which includes $1.6 million in deferred developer's fee.

Neighborhood Impact - The Project will prevent potential displacement of low-income residents and, with the creation of a limited-equity cooperative, will create ownership opportunities for current residents. It is anticipated that no resident will be permanently displaced from the property involuntarily. The reduction from 218 to 177 units is expected to be addressed from current vacancies in the property and vacancies created by residents wishing to live elsewhere. The developer has proposed a relocation plan that will temporarily relocate residents within the property as rehabilitation and unit reconfiguration occurs. Vacant units will be renovated in one wing of the buildings one at a time and current residents will be moved to units in other wings temporarily and then moved back once renovation is completed.

As evidence of local support, the Fairmont I and II Tenants Association has received a letter of support from Jim Graham, Councilmember for Ward 1.

FAIRMONT APARTMENT (I and II) PROJECT INFORMATION SHEET