This move — approved Tuesday — is an unusual one, but Arlington County says it did what was necessary in a short amount of time to support the sale to Jair Lynch Real Estate Partners. The company has agreed to keep the property — Arlington’s largest market-rate affordable apartment complex — as committed affordable housing for 99 years.
This includes 612 two-bedroom and 47 three-bedroom committed affordable units, with larger affordable units in short supply in Arlington.
Amazon is also chipping in $160 million to pay for the acquisition of the property at 1130 S. George Mason Drive.
Here’s what else we know about the project.
It’s a big deal.
The last time the county secured a line of credit for a large affordable housing project was in 2007, when it acquired Buckingham Village 3, an apartment building in the Buckingham neighborhood near Ballston.
“Line of credit financing is typically sought when there is an immediate need and when long-term bonds would not be appropriate or possible to issue in the required timeframe,” Erika Moore, a spokeswoman for the Department of Community Planning, Housing and Development, tells ARLnow. “It is a strategy the County uses sparingly and only for short-term types of obligations.”
In addition, Arlington has policies on the books ensuring government operations don’t rely too heavily on this financing. According to that policy, only 20% of the county’s debt can be made up of credit lines and variable-rate debt.
The apartments need some work.
“Based on preliminary due diligence, staff anticipates units at Barcroft Apartments will need substantial rehabilitation and/or redevelopment,” a county report says. “It is initially planned that phasing for the rehabilitation/redevelopment of the site will be completed over the next ten years, and the majority of the affordable housing units that are renovated or redeveloped may utilize Low Income Housing Tax Credits.”
Jair Lynch told the County Board during its recessed meeting Tuesday that a majority of units will be renovated and “a selection” of vacant units will be demolished and reconstructed.
The company envisions adding free WiFi in common areas, a clubroom, a co-working space, fitness spaces, outdoor grills, improved bike storage and a package room with Amazon lockers.
A forthcoming “Master Financing and Development Plan” will have more details on the timeline for redevelopment, what immediate repairs are needed and how they’ll be paid for.
Moore deferred to Jair Lynch as to what work is needed. Jair Lynch tells ARLnow it can’t say anything beyond what was shared Tuesday.
“Regarding your inquiry, due to the confidential nature of this ongoing transaction, we are unable to provide additional information beyond what has been shared publicly by Arlington County Government at this time,” a spokeswoman said. “We’ll be happy to share more information regarding our involvement on this matter after the sale has been finalized.”
Jair Lynch will likely add some market-rate residential units to the expansive, 60-acre property, the county says.
But how will the loan actually work?
Jair Lynch is requesting a $150 million subordinate loan from the county that it will pay back over the course of 35 years, after paying down its more senior loans, including Amazon’s. The D.C. real estate company will pay a 1% interest rate, or $1.5 million annually, on the loan for the first five years. From then on, the annual interest rate will be to 2.5%, or $3.75 million.
For the first five years, Arlington will only pay PNC a fluctuating interest rate on the credit, Moore explains. Jair Lynch’s annual interest payments will offset this, and anything leftover will be paid for through the county’s Affordable Housing Investment Fund. which helps pay for county affordable housing projects.
From now through June, six months of interest payments totals $850,000. Next fiscal year, interest payments are projected to up to $2 million.
Where is the money coming from?
To get together the money fast enough for the acquisition, which is supposed to be finalized this month, Arlington County took out a line of credit with PNC Bank.
“In effect, the County is drawing funds from its PNC line of credit and then loaning these funds to the buyer,” Moore said.
When PNC’s credit line expires in five years, Arlington County will convert the credit into long-term debt. It will pay that down similar to how it borrows money to pay for buildings and transportation projects.
Civically-active local resident Suzanne Smith Sundburg, a frequent critic of the County Board, said in public comments ahead of the Board’s Tuesday vote that the arrangement and the size of the loan is unusual, calling it “one of the sketchiest and scariest staff proposals I’ve ever seen.”
“I strongly urge the County Board to slow down and take more time to evaluate this proposal in terms of its realistic ability to achieve the stated goals and in terms of cost-effectiveness and the safeguarding of taxpayer funds,” she said, before the loan was ultimately approved, unanimously.
What is the county doing to be fiscally responsible?
The county expects the annual debt service will be $5-7 million in the long term. But Arlington and Jair Lynch will try to find ways to reduce the cost of the acquisition, Moore says.
“Through a Master Financing and Development Plan process in 2022, the County and buyer will see if the project can secure other resources (such as tax credits) before that 5-year date so that the size of the County loan (and by extension, the long-term debt financed by the County) is minimized,” she said.
Jair Lynch will have 12 months to present this plan to County Board members for their approval.
It’s not just the apartment buildings
Jair Lynch plans to use separate financing to acquire two commercial properties linked to the Barcroft Apartments complex, according to a county staff report:
In addition to the residential parcels, the sale of the property to the Borrower includes the acquisition of two commercial parcels. One of the commercial parcels is located at S. Four Mile Run Drive and Columbia Pike, and currently contains a small shopping center with a Goodwill (this shopping center dates to 1950 and ranks in the “Important” category of the HRI). The other commercial parcel is at S. George Mason Drive and Columbia Pike, and currently contains a 7-11 convenience store and a Penske truck rental facility. The Borrower will use separate financing to acquire the commercial parcels.
Who is Jair Lynch Real Estate Partners?
Named for President and CEO Jair Lynch, it’s a D.C.-based real estate company that is known for its work in affordable housing.
To date, the company has made $450 million in investments in affordable housing and has 20 affordable housing projects in development, Lynch told the County Board during its meeting on Tuesday.
Good Friday evening, Arlington. Let’s take a look back at today’s stories and a look forward to tomorrow’s event calendar. 🕗 News recap The following articles were published earlier today…
A former ABC News producer whose Columbia Pike apartment was raided by the FBI last year has been sentenced. James Gordon Meek, 53, pleaded guilty in July to transportation and…
Metrorail service was suspended on the Blue and Yellow lines today after a train derailed.
4 bedroom 3 bath 2 car garage 1/4 acre Jamestown Williamsburg Yorktown pyramid
At Generation Hope, we’re dedicated to supporting teen parents in college as they work toward earning their degrees. We are in need of caring child care volunteers for upcoming events on Saturday, October 21st (in Washington, DC), and Saturday, November 4th (in Arlington, VA). Join our growing volunteer community and support us at an event this fall!
At all of our events, we provide free onsite child care for the children of the teen parents we serve, creating a nurturing environment for the kiddos while their parents learn valuable life skills and build community.
If you enjoy working with children and are looking to make an immediate impact in your community, please visit https://www.generationhope.org/volunteer to learn more.
Join us for Arlington’s biggest civil rights & social justice event of the year. The banquet is back in person at the Arlington Campus of George Mason University.
Our keynote speaker this year is Symone Sanders from MSNBC and former Chief of Staff for Vice-President Kamala Harris.
The Master of Ceremonies is Joshua Cole, former state delegate, NAACP President, and local pastor.
Tickets/seating are limited. Purchase your ticket today! Sponsorship opportunities available.
Cody Chance and Dick Nathan of Long & Foster are hosting an online workshop on the topic of “down-sizing” Wednesday, October 4 from 5:30-7:00 p.m. Every great endeavor begins with a great plan. This workshop will give you the tools