ARLINGTON COUNTY, VIRGINIA County Board Agenda Item Meeting of September 18, 2004 DATE: August 25, 2004 SUBJECT: Consideration of the Refinancing and Refunding of the Lee Gardens Housing Corporation (an AHC affiliate) multifamily residential rental housing facility project C. M. RECOMMENDATION: Adopt the proposed resolution (Attachment A) authorizing the Arlington County Industrial Development Authority (the IDA ) to issue its tax-exempt revenue and refunding bonds in an amount not to exceed $23,000,000 and its taxable revenue bonds in an amount not to exceed $7,000,000 to assist Lee Gardens Housing Corporation refunding all or a portion of the outstanding principal balance of the IDA s Multifamily Housing Revenue Refunding Bonds, Series 1998A and 1998B. ISSUE: Should the County authorize the IDA action to refund the Multifamily Housing Revenue Bonds (Woodbury Apartments Project). SUMMARY: AHC is requesting approval of bond refunding to refinance and renovate the Woodbury Apartments, a 364-unit mixed income Apartment complex. Additionally, the affordable housing compliance period would be extended for 60 years and the affordable units would increase from 200 to 204 units as required under the Woodbury North site plan conditions. BACKGROUND: On October 8, 1998 the Arlington County Board approved the issuance of $30 million of housing revenue bonds by the IDA to refinance the Woodbury Apartments, a garden-style apartment complex, totaling 364 units. The project is located at the north side of 10 th street at the intersection of 10 th Street and Arlington Boulevard. The property, built in 1949 and substantially rehabilitated in 1988, consists of seven three story buildings containing three efficiencies, 187 one-bedroom, 130 two-bedroom and 44 three-bedroom units. Two hundred units (200) received Section 8 Housing Assistance Payments (HAP) for a 15 year period but all have since been converted to Housing Choice vouchers. No county loan is held on this project. On October 4, 2003 a site plan for the Woodbury North project was approved by the County Board to build 108 affordable rental units and 99 market rate condominium units on the Woodbury overflow/visitors parking lot adjacent to Fairfax Drive. The development site will be subdivided from the existing parcel. As part of the site plan conditions, the length of the County Manager: County Attorney: Staff: Barbara Donnellan, DMF; Winsome Craig, CPHD; Gus Vega, DMF
Woodbury Apartments housing affordability period was extended and four of its market rate units were made affordable. DISCUSSION: The purpose of this proposed refinancing is to enable AHC Inc., a Virginia not for profit, through its single-purpose entity affiliated 501(c) (3) owner, Lee Gardens Housing Corporation, to continue to preserve 200 affordable units plus add four additional units, totaling 204 units as affordable; complete much needed capital improvements to the project; and free up funds for the Woodbury North project. AHC proposes to do a moderate renovation of approximately $5,500 per unit for the existing units. By August, the scope of work will be detailed upon receipt of Capital Needs Assessments ordered for Woodbury. No tenant relocation is anticipated. AHC is applying for up to $30 million in IDA bond proceeds. Approximately $21.4 million of the proceeds will refund the old bonds, $7 million for an AHC loan to assist within the Woodbury North Project, $2 million for project improvements and $1.8 million for soft costs (such as reserves and cost of issuance fees). (See Table 1 - Sources and Uses of the Multifamily Housing Mortgage Revenue Refunding Bonds, 2004). TABLE 1. SOURCES AND USES- MULTIFAMILY HOUSING MORTGAGE REVENUE REFUNDING BONDS, 2004. SOURCES Tax Exempt Bond proceeds $21.3 Taxable Bonds $7.0 Existing Reserve $3.9 Total Sources $32.2 USES Refunding Escrow $21.4 Capital Improvements $2.0 AHC loan (Woodbury N) $7.0 Reserves/C of I/ Soft Costs $1.8 Total Uses $32.2 The County affordability period will be extended for 60 years. The affordable housing plan will allow at least 56% of the units to be affordable to families earning up to 60% of the area median income. A 501(c) (3) bond structure requires 40% of the units to be affordable to household earnings up to 60% of median income, plus an additional 35% of the units affordable to households earning Refinancing/Refunding of AHC, Inc. - 2 -
less than 80% of the area median income. The project tenant population currently satisfies the tax exempt bond criteria. At a meeting of the IDA held on July 22, 2004, the Authority considered the AHC application, heard a series of presentations related to the proposed refunding, and held a public hearing. No speaker attended the public hearing. Following the public hearing, the Authority approved the attached Inducement Resolution, which identifies the public purpose of the project, induced the applicant to undertake the improvements and to otherwise retain and improve the Projects 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. FISCAL IMPACT: Real estate taxes to be paid on the property in 2004 are $282,485. This refinance will not result in any loss or addition of taxes. CONCLUSION: Approval of the refunding of the bonds for Woodbury will allow AHC to: Renovate the buildings to extend their useful life and make them more attractive to the residents; Extend the affordable housing period and increase the number of units in the properties for households earning up to 60% of median income; Borrow $7 million to assist with the construction of Woodbury North project; Realize savings on the bond debt service Housing Choice Vouchers. Refinancing/Refunding of AHC, Inc. - 3 -
RESOLUTION OF THE COUNTY BOARD OF ARLINGTON COUNTY, VIRGINIA WHEREAS, the Industrial Development Authority of Arlington County, Virginia (the Authority ), has considered the application and plan of financing (the Application ) of Lee Gardens Housing Corporation, a Virginia nonstock corporation (the Corporation ) that is an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the Code ), and that is exempt from federal income taxation pursuant to Section 501(a) of the Code, whose principal business address is 2300 S. 9th Street, Suite 200, Arlington, Virginia 22204, for the Authority to issue its tax-exempt revenue and refunding bonds in an amount not to exceed $23,000,000 (the Tax-Exempt Bonds ) and its taxable revenue bonds in an amount not to exceed $7,000,000 (the Taxable Bonds, and together with the Tax-Exempt Bonds, the Bonds ), pursuant to the Industrial Development and Revenue Bond Act, Title 15.2, Chapter 49 of the Code of Virginia of 1950, as amended (the Act ), to assist the Corporation in (a) refunding all or a portion of the outstanding principal balance of the Authority s Multifamily Housing Revenue Refunding Bonds (Woodbury Park Apartments Project), Series 1998A and 1998B (the 1998 Bonds ), the proceeds of which were used to refinance the AHC Service Corporation Variable Rate Demand Housing Revenue Bonds, 1987 Series A, issued by the Virginia Housing Development Authority to finance the acquisition, rehabilitation and equipping of a 364-unit multi-family rental housing development for persons and families of low and moderate income, known as Woodbury Park Apartments located on the north side of 10 th Street at the intersection of 10 th Street and Arlington Boulevard in Arlington County, Virginia (the Project ), (b) financing additional renovations and capital improvements to the Project, including but not limited to HVAC replacement, brickwork and other infrastructure improvements and renovation of apartment unit interiors (the Improvements ), (c) funding reserve funds for the Bonds if required and (d) financing certain costs of the issuance of the Bonds; WHEREAS, the Tax-Exempt Bonds will be issued as qualified 501(c)(3) bonds for the benefit of the Corporation, and a portion of the proceeds of the Taxable Bonds may be used by AHC Inc., an affiliate of the Corporation and whose address is the same as the address of the Corporation, in furtherance of its corporate purposes; WHEREAS, the Project will be operated as a multifamily residential rental facility for persons of low and moderate income within the meaning of Section 142(d) and Section 145 of the Code; WHEREAS, of the 1998 Bonds being refunded, an amount not exceeding $2,000,000 will be treated as having been reissued (the Reissued Bonds ) prior to the refunding in accordance with the remedial action requirements of the United States Treasury Regulations, and the proceeds of the Reissued Bonds will finance capital improvements and renovations to the Project, including but not limited to infrastructure, parking and landscaping (the Remedial Action Improvements ); Refinancing/Refunding of AHC, Inc. - 4 -
WHEREAS, the Authority held a public hearing on the Application, including the issuance of the Bonds and the Reissued Bonds, on July 22, 2004; WHEREAS, the Authority has requested the County Board of Arlington County, Virginia (the Board ) to approve the issuance of the Tax-Exempt Bonds and the Reissued Bonds to comply with Section 147(f) of the Code and Section 15.2-4906 of the Act; WHEREAS, the Authority was created by an ordinance adopted by the Board, the Project to be refinanced, the Improvements to be financed by the issuance of the Bonds and the Remedial Action Improvements to be financed by the Reissued Bonds are located in Arlington County, Virginia (the County ) and the Board constitutes the highest elected governmental unit of the County; and WHEREAS, a copy of the Authority s resolution preliminarily approving the issuance of the Bonds, subject to the conditions noted therein, a reasonably detailed summary of the comments made at the public hearing and a fiscal impact statement with respect to the Project have been filed with the Board; BE IT RESOLVED BY THE COUNTY BOARD OF ARLINGTON COUNTY, VIRGINIA: 1. The first and fourth WHEREAS clauses above are hereby adopted as part of this Resolution. 2. The Board approves the issuance of the Tax-Exempt Bonds and the Reissued Bonds by the Authority for the benefit of the Corporation to the extent required by Section 147(f) of the Code and Section 15.2-4906 of the Act, to permit the Authority to assist in the refinancing of the Project and the financing of the Improvements and the Remedial Action Improvements. 3. The approval of the issuance of the Tax-Exempt Bonds and the Reissued Bonds, as required by Section 147(f) of the Code and Section 15.2-4906 of the Act, does not constitute an endorsement of the Tax-Exempt Bonds or the Reissued Bonds or the creditworthiness of the Corporation, and, as required by Section 15.2-4909 of the Act, the Bonds shall provide that neither the County nor the Authority shall be obligated to pay the Bonds or the interest thereon or other costs incident thereto except from the revenues and moneys pledged therefor, and neither the faith and credit nor the taxing power of the Commonwealth of Virginia, the County or the Authority shall be pledged thereto. 4. This resolution shall take effect immediately upon its adoption. Refinancing/Refunding of AHC, Inc. - 5 -
CERTIFICATE OF RESOLUTION 1. A regular meeting of the County Board of Arlington County, Virginia (the Board ), was held on September 18, 2004, at which meeting the following duly elected members were present or absent: PRESENT: ABSENT: Such members constituted all of the members of the Board on the date of such meeting. 2. Attached hereto is a true and correct copy of a resolution duly adopted at such meeting by the following vote. AYES: NAYS: 3. The resolution referred to above has not been repealed, revoked, rescinded or amended but is in full force and effect on this date and constitutes the only resolution adopted by the Board relating to the issuance by the Industrial Development Authority of Arlington County, Virginia of its qualified 501(c)(3) revenue and refunding bonds and taxable revenue bonds for the benefit of Lee Gardens Housing Corporation for financing and/or refinancing the project and improvements referred to in the resolution. WITNESS my hand and the seal of the County Board of Arlington County, Virginia, this day of September, 2004. (SEAL) Clerk, County Board of Arlington County, Virginia #1291250 213687.000041 Refinancing/Refunding of AHC, Inc. - 6 -