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County ratifies financing plan for Barcroft Apartments redevelopment despite push from advocates for deeper affordability

The Barcroft Apartments on Columbia Pike (via Arlington County)

Arlington County Board members and advocates were split this weekend on how many units at the Barcroft Apartments should be set aside for Arlington’s lowest-income earners.

Two years ago, the county and Amazon loaned $150 million and $160 million, respectively, to developer Jair Lynch Real Estate Partners to purchase the aging garden apartment complex, located on 60 acres near the corner of S. George Mason Drive and S. Four Mile Run Drive.

The purchase agreement stipulated all 1,335 units would be affordable to households earning up to 60% of the area median income, or AMI, for 99 years, in an effort to avoid displacing the 1,100 resident families who lived there.

After community members advocated for deeper affordability, Jair Lynch developed a financing plan that further commits the county and property owner to keep at least 134 units for households earning up to 30% AMI. This would be the county’s largest commitment of 30% AMI units to date, among the properties in its affordable housing stock, according to a county report.

Board members celebrated the plan, which outlines how Jair Lynch will refinance the county’s loan to cover various renovation and redevelopment phases and try to achieve savings for the county in the long run. During remarks when they approved the plan, members said it documents how this project can be financially viable, despite cripplingly high interest rates.

“There are so many good things that are happening here,” County Board Chair Christian Dorsey said. “The areas where people want improvements are absolutely doable because the partners involved are committed not only to making this a financially viable experience but a good experience.”

He said that Saturday’s discussion was not the time or place to add in a new affordability commitment.

Advocates wanted to see a total of 255 units set aside for 30% AMI households — a single person earning $31,65o or a family of four bringing in $45,210. That number reflects that 255 households at the Barcroft Apartments that reported earning up to 30% AMI in 2021, when Jair Lynch purchased the complex, according to the Arlington Community Foundation.

“Deeper affordability should not expire when the current residents move on,” Arlington Community Foundation Director of Grants and Initiatives Anne Vor der Bruegge said. “We acknowledge the sobering financial dynamics at play and the need to protect the viability of this deal, however, we believe that our goal can ultimately be accomplished using land use and other tools that have not yet been explored.”

Interim County Board member Tannia Talento was not so sure.

“When we look at other committed affordable properties in Arlington that are not able to maintain a good quality of maintenance for their buildings, I just cannot in good mind say, ‘Let’s deepen affordability and we’ll figure it out later,” she said. “I just can’t do it.”

Should market conditions improve or Jair Lynch finds other funding sources, the county and the developer will revisit this minimum commitment, which will hold if market conditions worsen instead, per the report.

“Part of the financing plan is utilizing these potential savings to pay down the County’s debt while still meeting County goals,” a report says. “These anticipated savings are important due to the significant increase in the cost of capital to the County because interest rates have jumped dramatically since the 2021 acquisition.”

Debt service on the county’s short-term line of credit is currently $9 million annually for interest alone — more than four times what was projected in 2021 for the 2023 fiscal year, the report says. The county says this puts a strain on its Affordable Housing Investment Fund, or AHIF, and its ability to take on new projects.

“That is an understatement, considering AHIFs total appropriation for FY 2024 is $20.5 million,” said former independent County Board candidate Audrey Clement, the lone speaker this weekend opposed to the project.

She also said the costs are too high for the first renovation phase.

This phase comprises 93 units averaging up to 60% AMI, including nine units for permanent supportive housing — or rent support combined with services for any household member with a disability.

Eighteen two-bedroom homes will be converted into 14 three-bedroom homes and 4 four-bedroom homes, the family-sized units in high demand in Arlington County.

The per-unit cost will be around $600,000 compared to the per-unit cost of new affordable apartments at three developments, which ranged from $410,000 in 2019 to $583,000 in 2023, Clement said.

“The high, exorbitant per unit costs of Barcroft Apartments is due to the mostly grossly inflated purchase price of $425 million or three times the $138 million assessed value of the dilapidated property at the time of sale,” she said.

Meanwhile, displacement and transparency remain concerns for tenants. Jair Lynch has made assurances no existing tenants would be displaced and rent increases would not begin until 2023, then would be capped at 3%.

Still, concerns persist today that undocumented residents and blended households could be displaced under federal affordable housing guidelines.

Representing tenants, Esther Nuñez said residents want more transparency when it comes to renewing leases and would like the information Jair Lynch is sending to the county every month.

“All the tenants in Barcroft, we are working together to develop this plan and to inform how we would like to participate in the process,” Nuñez said. “We want to defend our rights.”

Board Vice-Chair Libby Garvey noted what tenants say and what Jair Lynch reports it is doing are often different. She chalked it up to how individualized the process of meeting with tenants about rent agreements and increases is.

“If anybody wants to send me later some information about somewhere that is doing it better I’d be interested to know, it feels like you’re doing really incredible work,” she said.

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