ARLINGTON COUNTY, VIRGINIA

Transcription

1 ARLINGTON COUNTY, VIRGINIA County Board Agenda Item Meeting of November 16, 2004 DATE: November 5, 2004 SUBJECT: Allocation of Fiscal Year (FY) 2005 Affordable Housing Investment Fund (AHIF)/HOME) loan to AHC Inc.; Consideration of County support of up to $23 million for the issuance of tax-exempt housing revenue bonds and adopt the proposed resolution authorizing the Arlington County Industrial Development Authority (the IDA ) to issue tax-exempt housing revenue bonds to assist with the refinancing and substantial renovation of the Gates of Ballston Apartments. C. M. RECOMMENDATIONS: 1. Allocate up to $8,500,000, of which $1,700,000 is from the Housing Reserve Fund (HRF) ( ), and $6,800,000, in FY 2005 AHIF/HOME loan funds ( ) of which $500,000 will be placed in a County-held contingency account while other financing sources are pursued, to AHC Inc. or its designated County-approved ownership affiliate, as financing assistance for the refinancing and substantial renovation of the Gates of Ballston Apartments. This financing assistance would be in the form of a subordinated loan subject to the terms and conditions outlined in this report. 2. Authorize the County Manager to execute the required loan documents for a loan of up to $8,500,000 to AHC Inc. or its affiliate, and authorize and direct the trustees for the County s Deed of Trust to execute the required loan subordination documents subject to approval by the County Attorney. 3. Allocate up to $480,000 in FY 2005 AHIF/HOME funds ( ) to AHC Inc. or its designated County-approved ownership affiliate, to fund a tenant assistance fund (TAF) at the Gates of Ballston Apartments. 4. Approve a support agreement ( Agreement ) as credit enhancement for approximately $23,000,000 in tax-exempt revenue bonds as detailed in the staff report and authorize the County Manager to execute the required Agreement and related documents subject to approval by the County Attorney. County Manager: County Attorney: Staff: David Cristeal, Tunji Akiwowo, Winsome Craig, CPHD, Housing Division

2 5. Acknowledge the receipt of FY 2005 loan repayments in the amount of $600,000 and reappropriate that amount to the FY 2005 AHIF/HOME ( ). 6. Adopt the proposed resolution (Attachment A) authorizing the Arlington County Industrial Development Authority (the IDA ) to issue up to $30,000,000 in taxexempt revenue for the refinancing of the Gates of Ballston Apartments. 7. Authorize the County Manager to designate one or more County representatives to serve as voting members on the Board of Directors of the ownership affiliate. 8. Authorize the County Manager, with the concurrence of the County Attorney, to act as the County Board s representative in approving financing or program revisions that are necessary to remove any ambiguity or inconsistency or which improves the County s financial security, financial position, or enhances the housing program and which changes do not adversely affect the County financially, prior to or after execution of the County s financing documents. ISSUES: 1. Should the County allocate up to $8,500,000 in FY 2005 AHIF/HOME loan funds for the refinancing and substantial renovation of the Gates of Ballston Apartments and $480,000 in FY 2005 AHIF/HOME funds for a tenant assistance program? 2. Should the County provide $23,000,000 in credit support and approve the IDA action to refinance the Gates of Ballston Apartments? SUMMARY: After a two-year holding period, AHC, Inc. proposes to refinance and substantially renovate the Gates of Ballston Apartments. This property was purchased by AHC in 2002 after a lengthy community process in order to ensure that some portion of the property would be preserved and remain affordable for the long term. AHC s plan is to keep 348 of the 465 units (75%) at rents affordable to households earning up to 60% of area median income (AMI) for 60 years, with the remaining 116 units to be leased at market rents. AHC originally requested up to $6.2 million in AHIF/HOME funds to complete the refinancing and rehabilitation project. After receiving revised construction cost estimates from their consultants, they are now requesting up to $8.5 million in AHIF/HOME Funds. The total project costs have risen from $77 million to $98 million. In addition, an IDA tax-exempt variable-rate housing bond of up to $30,000,000 with County credit support of approximately $23,000,000 on the bonds is requested to provide additional low cost financing. This financing package will allow AHC to repay the County s AHIF bridge loan, the General Electric Capital first trust and provide funding for construction and associated costs needed to complete the project. AHC proposes a substantial renovation of all 465 units, construction of a new rental office/community center and the construction of a new 19-unit market-rate condominium building. The project also includes 37 ( bump out ) additions at the rear of 22 buildings, which will add 147 total bedrooms to the complex, including 72 new three-bedroom units. The work BrdRpt-102-Gates - 2 -

3 will be phased so that residents will be relocated to vacant units in the complex and AHC will seek off-site units at the adjacent Buckingham Village Apartments. BACKGROUND: In 2002, the Buckingham Working Group worked with the County Manager and staff to formulate a proactive approach to preserving the Gates property. After discussions with several potential purchasers of the property, the Working Group designated AHC as the organization that best addressed the following objectives: To preserve the historic character of the property To create multiple bedroom units for larger families To provide homeownership opportunities To create a substantial number of units for households earning between 40-50% of AMI To prevent displacement of existing tenants. On June 22, 2002, the County Board approved a $500,000 AHIF loan to AHC to be used as down payment assistance and for due diligence activities. On September 14, 2002, the County Board approved an allocation of up to $17 million in AHIF funds, of which $16 million was disbursed to AHC to be used as a three-year bridge loan for acquisition, interim repairs and due diligence for the long term development program,. The loan included $10 million from a Fannie Mae credit facility, $5.5 million in pay-go county funds, and the original $500,000 in AHIF assistance. AHC purchased the property on November 27, 2002 and agreed to hold the property for two years while developing the long term plan for refinancing and funding the anticipated renovations. The interim financing to be repaid includes a $21.4 million loan that AHC assumed from General Electric Capital and the $16 million County loan (as described above). During the holding period, AHC has performed essential repairs and substantially improved the maintenance and management programs. During this holding period, staff has been working with AHC to develop renovation, tenant relocation and financing plans that provide maximum leveraging of County funds while striving to meet the goals of the Working Group. Prior to acquisition, rents at Gates were affordable to households in the range of 45% to 60% of AMI as shown in the table below: Existing Unit Mix and Rents: Unit Size # of Units Current Rent Efficiency 9 $750 1-bedroom 298 $850 2-bedroom 157 $1,028 3-bedroom 1 $1,375 Proposed Affordable Housing Plan: AHC s base proposal would maintain 348 units (75% of total) affordable to families earning up to 60% of the AMI and 116 units (25% of total) would be leased at market rents. BrdRpt-102-Gates - 3 -

4 Proposed Rents: (75% at 60% of AMI and 25% at Market) Affordable Market Rate Unit Size # of Units Rent # of Units Rent Efficiency 22 $863 7 $881 1-bedroom 159 $ $1,066 2-bedroom 113 $1, $1,460 3-bedroom 54 $1, $1,808 Total County Funding Request: AHC is requesting a County loan of up to $8.5 million at 3.5% interest rate for 30 years, secured by a subordinated deed of trust and payable from cash flow. County funding is necessary to keep the rents affordable for the loan term and to leverage other public and private funds (see Source and Uses chart below). Proposed Financing Plan: The financing plan includes a $21.1 million fixed-rate first trust from VHDA tax-exempt bond proceeds, up to $30 million variable-rate financing in IDA bond proceeds, $10.1 million in equity from the sale of 4% Low Income Housing Tax Credits (LIHTCs), and a combined $14.3 million in federal and state historic tax credits. The remaining financing gap would be filled by the County AHIF loan of up to $8.5 million, $8.7 million of deferred developer fee, $3.5 million in condominium sales proceeds, and $1.9 million from other AHC sources. Sources and Uses of Funds: SOURCES Millions USES Millions 1 st Trust VHDA Bonds $21.1 Land Acquisition $ nd Trust IDA Bonds $30.0 Const. Hard Costs $38.7 County AHIF Loan $ 8.5 Const. Soft Costs $12.8 LIHTC Equity $10.1 Financing Cost $ 6.0 Historic Tax Credits (Fed) $ 7.8 Start up/escrows/ $ 2.0 Historic Tax Credits (State) $ 6.5 Reserves AHC Loan $ 0.5 Owner Equity $ 0.4 Sandwich Lease $ 0.5 Owner Notes/Partner Loan $ 0.5 Condo Sales Profits $ 3.5 Deferred Development Fee $ 8.7 Total Sources $98.3 Total Uses $98.3 County Credit Support: In addition to the AHIF loan, County credit support is requested for a portion of the IDA tax-exempt bonds which will be weekly variable rate bonds. AHC is requesting credit support of approximately $23 million for a 10 year period. This support agreement is needed only for a portion of the bond amount and while it assists the project finances overall, it also reduces the amount of AHIF loan that would otherwise be needed for the project. The County will need to secure a direct pay letter of credit from a major well-rated financial institution on this portion of the bond issue. Since the interest rate on these bonds is BrdRpt-102-Gates - 4 -

5 variable, the purchasers of the variable rate bonds need assurances that funds will be available if the bonds are put (redeemed at the end of the weekly period by the purchaser) and cannot be immediately remarketed to another purchaser if the project is unable to meet scheduled interest or principal payments. By providing a support agreement, the County Board will agree to consider making an appropriation to cover any principal or interest payment where the project s income is insufficient to make such payments. This type of support, while not legally binding to the County, represents an undertaking that the bond markets take seriously. A support agreement does not pledge the County s taxing authority, but is considered in the financial markets to be a strong statement of planned intent, and there is an expectation in the bond market that future County Boards, while not legally obligated to fulfill the commitment, would, in fact, fulfill this limited non-binding obligation. Failure of the County to provide an appropriation(s) to cover missed payments would likely negatively impact the County s bond rating and the cost of borrowing, as well as result in the inability of the County to use further support agreements in bond financing. It is expected that the IDA s bonds will also be secured by a reserve fund of $2,000,000 or such other amount as may be permitted by federal tax regulations. AHC loan to the project will be subordinate to the taxexempt bonds and will not receive any repayment until the interest payments and scheduled principal amortization are paid on the support agreement portion of the bonds. In addition, 40% of the net cash flow of the project will be used to amortize the County credit enhanced IDA bonds. Previously, the County had provided support agreements on Woodbury Park Apartments of $33 million and Historic Ballston Park of $13 million. Both agreements have been satisfied and the County never was required to make a payment. In order for AHC to receive tax-exempt bond proceeds, the IDA must hold a public hearing. At its September 23, 2004 meeting, the IDA considered AHC s application, heard presentations related to the proposed refinancing, and held a public hearing. There were no speakers at the public hearing. Subsequent to the public hearing, the Authority approved the Inducement Resolution, which identifies the public purpose of the project, induced the applicant to undertake the improvements and to otherwise retain and improve the project as low and moderate-income multifamily residential rental facilities in the County. The Inducement Resolution also forwards the project to the County Board and recommends its approval. Final approval by the IDA of the use of its issuing authority for tax-exempt bonds will be given based upon its acceptance of the final project financing plan. In order to meet Virginia Code requirements, the County Board is required to approve the IDA financing within 60 days after the public hearing held by the IDA on September 23, DISCUSSION: Project/Rehabilitation Plan: The scope of renovation includes 37 additions on 22 buildings that would result in 147 additional bedrooms, 72 new three-bedroom units and an increase in the proportion of larger-sized units from 34% to 50% of the development. It is anticipated that the renovation would be completed in four stages over a thirty-month period. The plan includes new electric and mechanical systems, fully renovated kitchens and bathrooms, individual heating and air conditioning units, insulation of exterior walls, attics and crawl spaces, interior wall repairs and new floor finishes. Exterior improvements include comprehensive site landscaping, roof replacement, new windows and doors, a new community/marketing center and the construction BrdRpt-102-Gates - 5 -

6 of a 19-unit market rate condominium building. The proceeds from the market-rate condominium units are included as a source of funds in the development budget for the affordable housing plan. The renovation costs are estimated at $51.5 million, including associated soft costs. This level of renovation is necessary to assure purchasers of the taxexempt bonds and LIHTC that additional renovation and funding would not be needed in the future. In addition, the value of LIHTC equity is directly related to the renovation cost. There is some uncertainty regarding the required roof replacement materials that will meet the Federal Historic Tax Credit criteria. If authentic slate is required as a replacement material instead of synthetic slate (as currently proposed), the construction costs could increase by $1.0 million to $2.0 million. Market-rate Condominium Building: AHC proposes to build a 19-unit market-rate condominium building on the site of an old incinerator structure located at the south end of the site. The construction and associated costs for the proposed condominium building will not be funded out of the refinancing budget for the Gates of Ballston apartment project; however, the profit from the sale of the units will be used as a funding source to subsidize the affordable units. Community Center: The proposed community center at the Gates of Ballston complex offers an opportunity to meet social and recreational needs of the Buckingham and surrounding community. Staff recommends development of the community center at the Gates of Ballston apartment complex as proposed with the rental/marketing office, exercise room, kitchen, community room, and Arlington County Department of Human Services (DHS) outreach center. This recommendation is based on a review of unmet needs that shows gaps in programs for school age and teenagers during after-school, evening and weekend time periods. These needs could be met by the DHS outreach center and AHC resident services program to be located on the 2 nd floor of the proposed two-story community center. Relocation Plan: The relocation plan has been reviewed twice by the Tenant-Landlord Commission and approved on October 12, The plan includes 120-day Notice to Vacate that would be sent to each household and in phases beginning with Village 4. AHC has employed the services of a relocation consultant to assist families with the relocation process. Families will continue to pay current rents for temporary units; AHC will provide moving assistance to temporary units, pay for the transfer of utilities, and make relocation payments as required by Arlington County Housing Relocation Assistance Guidelines, as follows: Unit Type Relocation Payment Relocation Payment for Very Low Income Residents Efficiency $750 $1,125 One-Bedroom $900 $1,350 Two-Bedroom $1,050 $1,575 Schools Impact: Arlington Public Schools (APS) staff reports that 171 students currently live at the Gates of Ballston. APS staff projected that post- renovation unit mix, including the addition of 147 new bedrooms, could result in a projected total of 297 APS Pre-K to 12 th Grade students or an additional 126 APS students. It is projected that the students will fall into a 55%-22%- BrdRpt-102-Gates - 6 -

7 23%- breakdown of elementary, middle, and high school with the greatest impact on Barrett Elementary and Swanson Middle Schools and Washington & Lee High School. Housing Commission: At its meeting on October 14, 2004, the Citizens Advisory Commission on Housing reviewed AHC s proposal and AHIF/HOME loan request. The Commission voted 5 to 2 in support of AHC s original request of a $6.2 million AHIF loan and to establish an ad-hoc committee to further study the need for a tenant assistance fund (TAF) or depth subsidy programs for existing tenants and the space configuration and use of the community center. A survey conducted by AHC found that a significant number of current tenants would be unable to afford the proposed 60% of AMI rents, and would require assistance in order to remain living at the Gates. The ad-hoc committee was comprised of three members of the Housing Commission, a member of the Tenant-Landlord Commission, a member of BU-GATA, AHC and County staff. The committee has met three times and will be making a recommendation to the Housing Commission at its November 4, 2004 meeting. It is anticipated that the Housing Commission will send a separate letter to the County Board on this matter. Ad Hoc Group: Staff has been working with the Housing Commission Ad-Hoc group and AHC to develop an alternative depth subsidy program using the cash flow from the property and create a tenant assistance fund (TAF) that will be pre-funded with AHIF/HOME funds. The Ad-Hoc group also discussed other issues including the use and configuration of the community center and the establishment of working groups to mediate tenant complaints and monitor AHC s activities during construction.. The Ad-Hoc group explored depth subsidy and TAF options as follows: Depth Subsidy Option Funded with Cash Flow: This option would provide for either 10% of total units (46 units) or 20% of total units (92 units) at rents affordable to households earning 50% of AMI or less in perpetuity. Staff initially looked at two ways to provide long-term funding to reduce the rents (from 60% AMI to 50% AMI). The first would be as an upfront/capital subsidy. This would result in an increase in the AHIF loan amount by $1.2 million or $2.5 million. The second way would be to subsidize the rents from the cash flow from the property. This scenario would require an annual subsidy of $105,000 for 10% or 46 units or $210,000 for 20% or 92 units. Eligibility for the 50% of AMI units would be limited to current residents of the Gates of Ballston earning 50% of AMI or less and paying no more than 35% of gross monthly income for rent post rehabilitation. This option will require initial AHIF/HOME funds of either $315,000 or $630,000 for the first 3 to 5 years. This option has been determined to be inadequate to assist current households that would be rent burdened by the proposed 60% of AMI rents. Tenant Assistance Fund Option: This option would reduce the rent burden that would otherwise result from the increases between current rents and post-rehabilitation rents. This scenario would require an initial funding of $480,000 in AHIF/HOME funds for the first 3 to 5 years. Eligibility for TAF program will be limited to current residents of Gates of Ballston earning less than 60% of AMI and in place when AHC purchased the property in This option will sunset as assisted households leave the Gates of Ballston through normal attrition. The chart below shows two options for subsidizing the rents of households that would be either under-housed and/or income burdened by post-rehabilitation rents. BrdRpt-102-Gates - 7 -

8 Option 1 Assumes households will move into the same size units based on self-reported household size and income after rehabilitation. The best case and worst case scenarios are based on the self reported information provided to AHC by the residents: Best Case Worst Case Number of Households Annual Subsidy $77,356 $101,000 Option 2 Assumes households will need to move into two-bedroom or three-bedroom units in the event that the household size and tenant income is not correctly reported: Best Case Worst Case Number of Households Annual Subsidy $132,500 $162,500 After four meetings, the Ad-Hoc group recommended to the Housing Commission a hybrid tenant assistance program. The tenant assistance program would be funded using the worst case scenario in option 2 above with an initial funding of $500,000 in AHIF for the first 3 to 5 years. Staff recommends an initial funding of $480,000 to implement this program. After 5 years, the Ad-Hoc group recommends that 46 units will be converted to 50% of AMI units as tenants leave the Gates of Ballston through normal attrition. This conversion would result in the creation of 50% of AMI units in perpetuity funded out the project cash flow. Civic Association/Community Process: The Buckingham Civic Association and by BU- GATA raised concerns regarding several aspects of the project. These include AHC s management of the property in responding to maintenance issues, AHC s communication of its plans and inclusion of the Civic Association and BUGATA in the decision making processes relating to the post-rehabilitation affordability and rental rules affecting the project. In addition, there have been concerns regarding AHC s plans for the Community Center and the competing needs of AHC s programming and how it will be used in the future for neighborhood or BU- GATA functions. It is anticipated that separate letters from the Civic Association and BU- GATA will be provided to the County Board with more specific information regarding the concerns and their relative priorities. Affordable Housing Goals: This proposal meets many of the County Board adopted Affordable Housing Goals and Targets as follows: Goal 1, Target 1A and Goal 5, Targets 5A and 5B: 195 of the affordable units would be available to families with children (123 two-bedroom and 72 three-bedroom units). Goal 2, Targets 2A-D: All 464 units would be substantially renovated according to current building codes. Goal 3, Targets 3B and 3C: 348 affordable units (within a 4-block walk to the Ballston Metro stop) would be added to the County s committed affordable housing stock. Goal 4, Target 4B: A depth subsidy program would be needed to meet this goal and target. BrdRpt-102-Gates - 8 -

9 Goal 6, Target 6B: This project would preserve existing affordable housing resource and provide 348 affordable units for households earning 60% of AMI or less. Goal 7, Targets 7B and 7C: Sponsor has been providing home ownership education and marketing available units at Arlington Oaks condominium to tenants of the Gates of Ballston. Goal 8, Target 8: The County s agreement with the owners include strong anti-discrimination clauses, including a requirement that that the owner not discriminate against tenants on the basis of race, color, creed, religion, sex, disability or national origin. In any instance where the County is involved in an affordable housing project, monitoring of the property reduces the likelihood that discrimination could go undetected. Goal 9: This project leverages County AHIF funds with federal and state tax credit programs. Loan Terms and Conditions Approve a loan of up to $8.5 million of which $1,000,000 will be placed in a County-held contingency account, to AHC Inc. or its designated County approved ownership affiliate, as project financing assistance for the refinancing and substantial renovation of the Gates of Ballston Apartments subject to the following terms and conditions: 1. The County Board s approval of the AHIF/HOME loan is conditioned upon AHC refinancing the Gates of Ballston and repaying to the County the principal of $16 million AHIF/HOME loan plus accrued interest. 2. The applicant shall execute a generally standard AHIF/HOME Program Agreement and loan instruments for the County loan in a form acceptable to the County Manager and the County Attorney. 3. The $8.5 million AHIF assistance would be in the form of a subordinated residual receipts loan, secured by a deed of trust, and repayable from the cash flow of the property. This loan will be made at an interest rate of 3.5% compounded annually, over a term of 30 years. 4. The AHIF/HOME loan is also contingent upon AHC securing approximately $25 million in VHDA and $30 million in IDA bond proceeds. 5. The applicant agrees to implement a tenant assistance fund (TAF) program to be funded with $480,000 in AHIF to assist the existing tenants. Existing tenants are tenants in place prior to AHC acquisition of the property who pay more than either 35% of their income for rent or more than their current rent, whichever is higher, after construction completion of the project. The funds for the TAF will remain in a County reserve account until needed as tenants move into permanent units. AHC further agrees to work with County staff to implement the depth subsidy program using a portion of its cash flow to provide 46 units at rents affordable to households earning up to 50% of the AMI within five years after stabilization of the project. 6. AHC agrees to work with the County on developing a plan for an equitable split on all the cash flow after payment of operating expenses and debt service on the 1 st and 2 nd mortgages, such plan would be subject to approval by the County Manager or his designee. BrdRpt-102-Gates - 9 -

10 7. The applicant must comply with the affordable housing set-aside for the rental units as follows: Three Hundred Forty Eight (348) rental units will be affordable to households earning 60% or less of AMI for 60 years. The developer agrees that the affordable rents shall be set on basis of VHDA/Low Income Housing Tax Credit rent limits set for Arlington County. Rents shall not exceed the established affordability level for the rents, as published by HUD, minus a utility allowance (if applicable) as per the Utility Allowance Schedule annually approved by HUD for the Arlington County, VA Section 8 Housing Certificate/Voucher Program. AHC further agrees that rent increases for tenants continuing in occupancy shall be based on area median income increases as published by HUD. 8. AHC or its designee shall provide a minimum of 9 units affordable to DHS clients (DHS affordable rental units) through one of two financing mechanisms: 1) if Housing Choice Project Based Vouchers are available, the non-profit affiliate developer or its designee shall utilize the Housing Choice Project Based Vouchers to subsidize rents of 9 DHS clients, or 2) if Housing Choice Project Based Vouchers are not available, the affiliate developer or its designee shall commit a minimum of 9 of the 50% of AMI units for DHS clients using Local Public Assistance Cost Allocation Plan (LPACAP) funding to further lower rents to an initial amount not greater than $275 per month for a term of 30 years. The LPACAP funds required to lower rent on the 50% of AMI units will be negotiated based on a present value formula and be based on the current 50% of AMI rent and subject to agreed upon increases. 9. The developer or its designee will agree to provide 10 affordable units (6 one-bedroom and 4 two-bedroom units) as Type A dwelling units in compliance with the International Construction Code (ICC) and American National Standards - ANSI A117.1 for persons with physical disabilities and to fully cooperate with an affirmative marketing program to market these units to households in need of such accommodation. 10. AHC agrees to allow the County Manager to designate one or more County representatives to serve as voting members on the Board of Directors of the ownership affiliate. 11. The agreement shall include an Affirmative Marketing Plan in substantially that form as required by the U.S. Department of Housing and Urban Development (HUD) and including, at a minimum, the elements specified in the Developer s final Affordable Housing Plan and Affirmative Marketing Plan. The Affirmative Marketing Plan shall be in a form and substance acceptable to the County Manager, with the concurrence of the County Attorney, according to the County s criteria for such marketing plans. The developer agrees that the proposed marketing plan shall call for the initial advertising and marketing of the affordable units for a period of at least 45 days before projected occupancy. 12. AHC will to work with DHS to find a mutually agreeable solution on the location of the Community Outreach Program in the new community center building. AHC will provide BrdRpt-102-Gates

11 space to DHS for their Community Outreach program(s) at current rent paid by DHS for the temporary outreach center. 13. The developer, its designated ownership entity, heirs or assigns shall provide a purchase option including a right of first refusal to the County or its designee, if the developer decides to sell the property any time prior to or at the end of the 60-year affordability term, wherein the County or its designee shall have the right, but not the obligation, for a period of up to 180 days, to purchase the property at 90 percent of its then-appraised fair market value. If the owner s appraiser and County s appraiser do not concur on the fair market value of the property, the two appraisers shall select a third appraiser using the industry-standard three appraiser method to determine the fair market value. 14 AHC agrees to the appointment of a workgroup to monitor the renovation of the Gates of Ballston project. The workgroup shall consist of County staff as designated by the County Manager, and representatives of the Buckingham Community Civic Association (BCCA) and the Buckingham-Gates of Arlington Tenant Association (BUGATA). 15. AHC agrees to redesign the Rental Office/Community Building to locate the Department of Human Services (DHS) s Outreach Center and AHC s day care center on the 1 st floor of the building. AHC further agrees to provide a stove in the kitchen of the Rental Office/Community Building. AHC further agrees to work with DHS on a mutually agreeable amicable program for access to the Rental Office/Community Center Building. FISCAL IMPACT: Allocation up to $8,500,000 from the AHIF/HOME funds is conditioned on AHC refinancing the Gates of Ballston. At closing, $6,800,000 of AHC s original $16 million AHIF/HOME loan would be converted into a permanent loan of $8,500,000. The remaining $1,700,000 will come from the Housing Reserve Fund. The Housing Reserve Fund balance is $1,722,998. If $1,700,000 of HRF funds is approved, the balance will be $22,998. The FY AHIF/HOME balance is $141,173. Reappropriation of $600,000 in repayments will increase the AHIF/HOME balance to $741,173. If $480,000 of AHIF/HOME funds is appropriated to the TAF Fund, then the balance will be $261,173. Additionally, the refinancing of Gates would increase property taxes by approximately $60,000, annually, as 19 market condominiums will be built on the site. The support agreement enables the County to provide lower cost financing to the project. It is important to know that the amounts of bonds covered by the County support agreement are included by the bond rating agencies in their calculation of the County s debt ratios. Therefore, it is absolutely necessary that the support agreement be for as short a time as possible which in this case is projected to be 10 years BrdRpt-102-Gates