ARLINGTON COUNTY, VIRGINIA County Board Agenda Item Meeting of June 9, 2007 DATE: June 4, 2007 SUBJECT: SP #377 Site Plan Amendment: to modify condition #62 re: affordable housing; 3409 Wilson Blvd., 909, 911 N. Kansas St. (RPC #14-034-001). Applicant: Joule Associates LLC By: William B. Lawson, Jr. Lawson, Tarter & Charvet, P.C. 6045 Wilson Blvd., Suite 100 Arlington, VA 22205 C.M. RECOMMENDATION: 1. Approve the subject site plan amendment request subject to revised Condition #62 and to all previous conditions. 2. Appropriate up to $1,618,000 in FY 2008 from Joule Associates LLC (101.357000.91102) to the Affordable Housing Investment Fund (AHIF) (101.495130.91102). 3. Allocate up to $1,618,000 in FY 2008 AHIF funds (101.456300.91102) for the purchase of affordable units. ISSUES: Should the County accept a cash payment in lieu of acquiring the affordable units for resale at market-rate prices? SUMMARY: The applicant is seeking site plan amendment approval for a change in the affordable housing program. In October 2006 the County Board approved site plan amendments for this and three other condominium projects with affordable housing units in the Rosslyn- Ballston Metro Corridor. The amendments allowed the acquisition of the affordable units at the affordable prices for resale at market-rate prices with the net proceeds coming to the County for use with other affordable housing projects. This project, the Joule, at 3409 Wilson Blvd., has been converted to an executive suites hotel and therefore has no individual condominium units to County Manager: County Attorney: Staff: Betts Abel, CPHD David Cristeal, CPHD
be sold as contemplated in the amended site plan condition. The owners have offered to make a cash payment to the County for the affordable units. BACKGROUND: The site plan for the Joule at 3409 Wilson Blvd was approved by the County Board in Dec. 2003. The 87-unit condominium building includes 5 affordable dwelling units to meet the Virginia Sector Plan requirement that 5% of the units be affordable. The unit sizes, area median income level and proposed affordable sales prices are as follows: BR Size # of Units Proposed Sales Prices AMI Served 1 BR 1 $ 96,000 50% 2 BR 3 $107,000 50% 2 BR 1 $129,000 60% These units were to be sold to eligible households and to remain affordable for the life of the project. The one 1-bedroom unit and the 2-bedroom unit at 60% AMI are fully accessible. In October 2006 the County Board approved a site plan amendment for this project as well as for three other condominium projects with affordable housing units in the Rosslyn-Ballston Metro Corridor. The amendment allowed for the acquisition of the affordable units at the affordable prices by a County designee for resale at market-rate prices with the net proceeds coming to the County for use with other affordable housing projects. The project has now been sold to an owner that will operate it as an executive suite hotel. No units will be sold to individual purchasers as condominium units. The applicant can therefore not meet the terms of the amended site plan condition calling for the affordable units to be sold at the affordable prices to a County designee for resale at market rate prices, with the net proceeds accruing to the County for use with other affordable housing programs. The applicant proposes to make a cash payment to the County in lieu of the sale program. DISCUSSION: When the condominium resale proposal was presented to the County Board in October, staff estimated the amount of net proceeds expected to be obtained from the four condominium projects based on assumptions for market-rate resale prices and for the expenses involved. The average net gain to County per unit was estimated at $242,100. However, because four of the five affordable units at the Joule were to be sold at prices based on 50% AMI, the average for those units was $299,100, for a total of $1,495,500. This amount includes deductions for the expenses for the acquisition and resale of the units as well as a management fee to the nonprofit entity designated by the County to manage the program on the County s behalf. Because the transaction/management expenses will now not be incurred for the Joule, the applicant has agreed to make a negotiated payment of $1,618,000, or $323,600 per unit. This amount, plus the $546,000 cost of the affordable units that would have been paid to the developer, is equivalent to a market-rate sale price of $403 per sf. If all of the transaction/management costs were removed from the payment, the estimated amount of net proceeds to the County would be $1,732,100, or $346,420 per unit. The addition of the cost of the affordable units would result in a market-rate sale price of $425 per sf. The negotiated SP #377 Amendment 2 06/04/2007
payment amount may be lower than might be available for market sales. However, to date, none of the affordable units at the three other condominium projects have been acquired for resale so there is no data for comparison. In addition, two of the affordable units at the Joule have been completed as accessible units and all of the units have standard rather than high-end finishes, therefore justifying a lower than average per square foot value. HOUSING COMMISSION RECOMMENDATION: On April 26, 2007, the Housing Commission voted 8-0 to recommend that the payment for the affordable units at the Joule should be equal to the gross projected sale price of the units, minus the cost of the committed affordable units, regardless of transaction costs. On May 31, 2007, the Housing Commission voted 8-0 to accept the negotiated payment of $1,618,000 to satisfy the affordable housing condition for the Joule and recommended that full payment be received no later than June 30, 2007, following County Board approval. The proposed condition requires payment within thirty (30) days after approval of the site plan amendment, with interest accruing at 6% per year if not paid by that date until 90 days after approval. FISCAL IMPACT: The FY 2008 adopted budget for AHIF/HOME is $5,628,292. Approval of the staff recommendation to appropriate up to $1,618,000 to AHIF in FY 2008 will result in an AHIF/HOME balance of $7,246,292. Approval of the staff recommendation to allocate up to $1,618,000 in AHIF/HOME funds for the purchase of affordable condominiums will result in a remaining FY 2008 AHIF/HOME balance of $5,628,292. SP #377 Amendment 3 06/04/2007
PREVIOUS COUNTY BOARD ACTIONS: December 6, 2003 June 10, 2006 July 9, 2006 September 16, 2006 October 24, 2006 May 5, 2007 Site Plan # 377 approved by the County Board. Authorized advertising on the County Board s Own Motion site plan amendments to modify conditions from approved site plans as follows: 1. Condition #61 of Site Plan # 378 The Monroe, North 10 th & Monroe Streets (approved October 2003). 2. Condition #63 of Site Plan # 371 1800 Wilson Boulevard. (approved February 2004). 3. Condition #62 of Site Plan # 377 The Joule, 3409 Wilson Boulevard. (approved December 2003). 4. Condition #63 of Site Plan # 383 The Hawthorn, North Pollard Street & Wilson Boulevard (approved April 2004). Deferred site plan amendments to the County Board meeting on September 16, 2006. Deferred site plan amendments to the County Board meeting on October 14, 2006. Site plan amendments approved by the County Board. Deferred site plan amendment to the County Board meeting on June 9, 2007. SP #377 Amendment 4 06/04/2007
SP 377 3409 Wilson Blvd. (The Joule) 62. a. The developer agrees to sell to the County or its designee the following properties: - One 1-bedroom condominium unit at a price of $96,000, - Three 2-bedroom units at $107,000 per unit, and - One 2-bedroom unit at $129,000. b. All of the above properties (units) will be sold simultaneously to the County or its designee and settlement will occur in a single transaction. c. The developer agrees to notify the County Manager, within 180 days after County Board approval of this revised condition 62: that the units are available for sale to the County; that Certificates of Occupancy have been issued for the units that will be sold; and that the units are complete and clean and ready for occupancy. The developer agrees that it will be ready, willing and able to close on the sales pursuant to the contract referenced in subpart 62.d of this condition within 60 days after such notice to the County Manager, and closing shall be consummated within said 60 days. The County Manager may, at any time up to a date that is thirty (30) days after the date of that notification, notify the developer of the name of the County s designee for purchase of the units. Upon such notification, the developer agrees that the designee may purchase the units referenced in this condition 62 under all terms and conditions that are applicable to a sale to the County. If the County and/or its designee do not perform within the stated time frames, the Developer is released of all obligations regarding the affordable units. d. The developer agrees that the sale will be completed according to the terms of the real estate sales contract for The Joule on file with the Housing Division Office of the County s Department of Community Planning, Housing & Development, with such changes, additions or deletions that do not materially adversely affect the County s position that are agreed to by the developer and the County Manager with the consent of the County Attorney. The developer agrees that transaction costs payable to the developer and/or its designee by the County and/or its designee shall be only those applicable costs set forth in the sales contract. e. The developer agrees to fully cooperate with the County, its designee, and/or any assignee to complete the sales of the units. SP #377 Amendment 5 06/04/2007
Condition # 62 is deleted and replaced by the following: 62. The applicant agrees to make a contribution of $1,618,000 to the County s Affordable Housing Investment Fund within 30 days after approval of this condition by the County Board. If the applicant fails to make the payment by that date, interest shall accrue on that amount at a rate of 6% per year (or $265.97 per day) until payment. In the event such payment is not made on or before the date that is 90 days after approval, together with any accrued interest as provided for in this condition, then the site plan amendment approved on June 9, 2007, shall be null and void and of no further force and effect and this condition #62 shall be in effect as it was approved on October 24, 2006. SP #377 Amendment 6 06/04/2007