Construction has begun on a major affordable housing development next to the Fairfax County Government Center in Fairfax, Va.
The community is the first exclusively affordable property developed by Jefferson Apartment Group (JAG), which has teamed with Stratford Capital Group on the deal.
The $58 million Residences at Government Center uses a combination of 9% and 4% low-income housing tax credit financing.
“We have done largely market-rate housing, but most of our projects are mixed-use and mixed-income,” says Greg Lamb, executive vice president and partner at JAG.
The next step was to build a 100% affordable project. The workforce housing development is also what Fairfax County desired.
The 270-unit Residences at Government Center is being built on land owned by the county, which is leasing the site to the developers for $1 per year in exchange for creating affordable housing, according to Lamb.
The development will be adjacent to the government center, where 3,000 people work. Some of these county employees will likely be residents of the new complex, which will serve households earning no more than 50% and 60% of the area median income.
“It’s ideal,” Lamb says. “There is a tremendous need for affordable housing in Fairfax County. There is retail immediately across the street. You’ve got offices close by, and you certainly have the government center immediately next door.”
To finance the project, the team split the $58 million development in two transactions. The first condominium involves 150 units and is funded with 9% low-income housing tax credits (LIHTCs) from the Virginia Housing Development Authority (VHDA). A second condominium features 120 units and uses 4% LITHCs from VHDA and tax-exempt bonds from the Fairfax County Redevelopment and Housing Authority.
Stratford Capital Group is the co-developer and the LIHTC syndicator. TD Bank is the LIHTC investor, and Wells Fargo is the lender.
When they began the project several years ago, developers originally envisioned the property being one large 4% LIHTC and bond transaction. However, a combination of factors, including an increase in interest rates on the tax-exempt bonds and a rise in construction costs, made the deal difficult to pencil out.
Two years ago, the team came up with a new plan to use a combination of 9% and 4% credits.
“We think this structure is very creative,” Lamb says. “There are projects where we can repeat this with other jurisdictions.”
Although it is still to be built, the project has been recognized by the Washington Smart Growth Alliance and the ULI Terwilliger Center for its innovative approach to providing affordable housing. The project was commended for its unique public-private partnership.
“The Residences at Government Center represent best-in-class tax credit development,” stated Steve Wilson, president and principal at Stratford Capital Group’s Virginia office. “We are confident that upon delivery the end product will be met with great enthusiasm by the market and community.”
The Residences at Government Center will include two four-story buildings and an above-grade parking garage with 367 spaces. The development will include energy-efficient design elements, such as Energy Star appliances, programmable thermostats, and low-VOC paint.
Units will mostly contain one- and two-bedrooms, with a smaller representation of studio and three-bedroom apartments. Construction is expected to be completed by the end of 2016, with pre-leasing beginning summer 2016.
The property will include more than 5,800 square feet of community-focused space. Residents will have access to multiple outdoor areas including two courtyards, grill stations, a swimming pool with lounge seating, a fenced playground, and walking trails. Indoor amenities will include a community room, an exercise area, and a business center.
JAG will continue to look for more mixed-income housing opportunities. The percentage of affordable housing may grow overall, but Lamb says there are no plans to pursue 9% LIHTCs as a core business at this time.
McLean, Va.-based JAG is a full-service real estate firm, specializing in multifamily and mixed-use real estate investments.
Source: Affordable Housing Finance
I have worked with the principals of the Stratford Capital Group for several years and have invested in a number of their multifamily offerings as an economic joint venture partner, for tax credits and also as a bridge loan participant. They are disciplined, know what the objectives are and detailed from an asset management perspective. Our relationship has been rewarding, and throughout it, they have treated us like partners.