Blighted Brightwood Apartments Born Again

Mayor Adrian Fenty and Ward 4 Councilmember Muriel Bowser made their second joint appearance of the week in Brightwood today, this time to announce the commencement of major renovation procedures at 6425 14^th Street, NW – a long empty, dilapidated apartment building formerly owned notorious DC landlord, Vincent Abell.

"After essentially two decades of inactivity, frustration and blight…the District of Columbia government finally seized control of the property [in 2008]," said Fenty. "Don’t forget, it had been owned by countless private sector landlords [and] slum lords…People who just had no interest at all in making this the type of fantastic residential apartment building that it was once was and that it will be again.”

To that effect, the District has teamed with Blue Skye Development to repurpose the now-gutted apartment complex for the Tewkesbury Condominiums - a 30,000 square foot, 26-unit condo building that will, according to the Office of the Deputy Mayor for Planning and Economic Development, be comprised of 51% affordable housing.

“We want to promote home ownership,” Deputy Mayor Neil Albert told DCmud of the decision to make the building a for-sale property for the first time in its fifty plus years of existence. “It was originally conceived as a condo project and we were able to get financing for it. Again, there’s a level of affordability that’s going into this building. It’s not a luxury condo building…It’s easier to get that financed than your mid-level and high-priced condos”

Purchased by the DC government early last year for $3 million, after filing suit against its owner for “numerous building code violations,” the total cost of the renovation will come in at $4.6 million. New amenities slated for the complex, as outlined by PGN Architects, include “a community room, roof deck, energy-efficient aluminum windows...as well as outdoor spaces directly behind the building.” With selective demolition already underway inside the complex, the development is scheduled to be open by March 2010 – a full year later than the District initially anticipated when they acquired the property.

“[These] haven’t been easy projects. The reason some of these projects have taken a long time is because there’s a lot of trouble and legal trouble that the city’s been dealing with,” said Muriel Bowser of the numerous concurrent, affordable housing initiatives under way in her ward. “But this administration has taken a ‘can do’ approach. Not 'we can’t,' not 'we won’t,' but that we’ll figure out how to get it done.”

Fenty and Bowser teamed-up earlier these week to oversee demolition at 3910 Georgia Avenue, NW, future site of the 130-unit Georgia Commons project, and for the opening of the Neighborhood Development Company's Residences at Georgia Avenue in March.

District Officials Decry Condos, Celebrate Affordable Housing in Columbia Heights

A cadre of District officials, including Mayor Adrian Fenty and Congresswoman Eleanor Holmes Norton, gathered in Columbia Heights today for the re-opening of the 230-unit Hubbard Place affordable housing complex (formerly the Cavalier Apartments) at 3500 14^th Street, NW. Spearheaded by the Somerset Development Company and the 3500 14^th Street Tenants Association, the $52 million renovation has not only reinvigorated a Washington building recently added to the National Register of Historic Places, but has secured - and ensured the longevity - of a once notorious Section 8 public housing project as well.

"Just a few short years ago, fire marshals had to stand on each floor to assure the safety of the residents. It was dangerous to walk in the halls or ride the elevators…This building has been made safe again for the residents who live here…But this time with a twist,” said Somerset principal Nancy Hooff. “It has affordable rents [and] it’s near public transportation and shopping. Smart growth, indeed.”

According to the Office of the Deputy Mayor for Planning and Economic Development, residents of Hubbard Place can look forward to updated amenities that include “new elevators, the creation of new community spaces and a computer lab, secure access, new kitchens and baths, windows, roof and all new common areas.” The city block-straddling development also includes a new home for the Latin American Youth Center, which provides educational and vocational services to area youth, as well as two new businesses: the Black Lion Deli and George’s Shoe Repair. In the view of Eleanor Holmes Norton, the dramatic shift in Hubbard Place's fortunes can be attributed directly to tireless efforts of the building’s residents.

“There is no way in which the city and the federal government could have done a thing with Hubbard [Place], if there had not been a determined band of residents who said, ‘We’re not going to let this place go’…I’m just pleased to see something that I can point to that [the US Department of Housing and Urban Development] has done these days,” said the congresswoman, not quite jokingly.

The local government, however, did play a prominent role in gathering the formidable sum required for the large-scale renovation procedures, as overseen by the architects of Kann Partners and the project’s general contractor, Hamel Builders. Out of the development’s $52 million budget, the Department of Housing and Community Development provided $8.5 million for the acquisition of the property, with the District of Columbia Housing Authority pitching in an additional $4.6 million for historic preservation. The building upgrades were funded primarily through $26 million in tax exempt bonds issued by the District of the Columbia Housing Finance Agency. It’s a role that District officials, like Ward 1 Councilmember Jim Graham, were eager to hang their hat on.

“We have enough condos,” said Graham. “We can build condos where there once vacant lots surrounded by hurricane fences. But we are going to keep our diversity and we’re going to keep our low-income housing. We’re going to build new low-income housing…We’re going to do all this because we care.”

Hubbard Place is the second such affordable housing renovation opened by the city in as many weeks. Last week, Mayor Fenty presided over the grand re-opening of Jubilee Housing, Inc.’s Ontario Court project at 2525 Ontario Road, NW, in nearby Adams Morgan. New condos are being built in Washington DC.

SE Church Bringing Affordable Housing to Barry Farm

Prominent Ward 8 church Matthews Memorial Baptist has partnered with developer Community Builders (TCB) to expand their community servicing mandate into the realm of affordable housing. The Church – which has served the Barry Farm/Anacostia community for 85 years, boasts 1300 members, operates 60 different ministries and frequently hosts speaking engagements for local politicians such as Marion Barry - is now looking to bring a new housing project and community center to a large parcel adjoining their location at 2616 Martin Luther King, Jr. Avenue, SE.

According to the Office of Planning, the 79,900 square foot site currently holds five houses and an asphalt parking lot, all of which would demolished to make way for the Matthews Memorial Terrace – a 100% affordable housing development consisting of a four-story apartment building with 100 residential units, roughly of a third of which would be reserved for seniors. Next door, a three-story community center would include a health clinic (possibly an extension of the United Medical Center – itself slated for a large-scale expansion), a community room, a bookstore/café and “a dinner room/restaurant” that, according to Bishop C. Matthew Hudson, Jr., would be “Ward 8’s second full-service sit-down restaurant.” The project is being designed by PGN Architects.

“Upon learning of my desire for the Church to provide affordable housing, Community Builders contacted me and we discussed the possibility of building…on the Matthews Memorial Baptist campus,” said Hudson at a March 5^th Zoning Commission hearing. “The partnership between the Church and TCB is represented a good match to obtain our mutual goals of creating a vibrant, mixed-use affordable rental community.”

Though still in the planning stages, organizations and individuals, including the ANC 8A, the ANC 8C, the Ward 8 Business Council, the Anacostia Coordinating Council and DC City Council members Marion Barry and Kwame Brown, have all voiced their support for the project. The next step in the approval process for the Matthews Memorial Terrace lies with the National Capital Planning Commission, which will review the development team’s proposal at their May 7^th meeting. And it looks be a straight shot, given the altruistic nature of the project.

“[The Church] continuously works to revitalize and rehabilitate the Anacostia community,” said Hudson. “The Church’s goal in pursuing this project is to allow it to further serve the community which we love and are an integral part of…I’m very proud of the many ways in which the new Matthews Memorial Terrace will be able to assist Anacostia…as it continues to grow, revitalize, [and] redevelop itself for the future.”

DC Teams with Feds for Adams Morgan Affordable Project

Mayor Adrian Fenty was on hand last Thursday for a ceremonial ribbon cutting at the newly refurbished Ontario Court housing complex in Adams Morgan – a 27-unit, 100% affordable apartment building developed by Jubilee Housing, Inc. with designs by Bonstra Haresign Architects. The $9.4 renovation of the 86-year-old edifice also includes a new 4,000 square foot home for Jubilee’s JumpStart Early Childhood Development Center in the very same building at 2525 Ontario Road, NW.

David Bowers of Enterprise Community Investment, Inc. – one of the project’s backers, along with the US Department of the Treasury, the DC Department of Housing and Community Development and PNC Bank – began the festivities by leading a prayer in which he blessed not only the residents of the newly renovated building, but the project’s financiers as well – who, according to Bowers, are “not in the building business, but the people business.” Jim Knight, Executive Director of Jubilee Housing Inc., echoed that sentiment while exploring the various funding sources used to realize the project.

“Housing advocates and city officials have come together to create a funding source that goes by the name of the Local Rent Supplement Program,” said Knight. “It ensures affordability for the lowest income earners among us….The city government [also] came together and worked to create the Housing Production Trust Fund. We’re one of the few localities in the country that has one of these resources. It has been funded in the past and it is here at Ontario Court.”

According to the Mayor’s office, the project received $3.5 million from that fund for upgrades including “new mechanical, electrical and plumbing systems, new carpeting, upgraded kitchens and bathrooms, installation of new security systems, new air conditioning, and new laundry equipment.”

Far from being merely a local initiative, however, Ontario Court also received a big boost from the U.S. Treasury Department via their Community Development Financial Institutions Fund’s New Market Tax Credit Program. The program, which was created in 2000 to “provide tax incentives to induce private-sector, market-driven investment in businesses and real estate development projects located in low-income urban and rural communities,” was used to raise capital for Ontario Court - a project that Mayor Fenty says is indicative of a sea change in the DC development community.

“When the market-rate housing boom was coming through the District, people said, ‘This is the renaissance of the District of Columbia. This is the city come to life,’” said Fenty. “Market-rate housing has a place, but what we’ve seen over the past two or three years, as the market has stabilized and returned a little bit to normalcy, is an appetite and patience for building what is probably even more important to the District of Columbia – and that’s affordable housing."

In the coming months, the Department of Housing and Community Development will continue to pursue such developments in the Adams Morgan area by “putting money into” renovation projects at 1703 Euclid, 1720 Euclid, 1631 Euclid and 2233 18^th Street, NW - the last two both Jubilee properties.

Logan Circle Wardmans Revamped for Affordable Housing

With $8 million worth of renovations now largely complete, the R Street Apartments have gone a long way in proving that green building practices and affordable housing are not mutually exclusive. Purchased by tenants in 2007 through the Tenant Opportunity Act, the new owners’ first order of business was to form a partnership with the National Housing Trust-Enterprise Preservation Corporation (NHT) and the Hampstead Development Group (HDG) - one that would ensure the restoration, revitalization and environmentally sound character of their five historic buildings at 1416, 1428, 1432, 1436, 1440 R Street, NW in the District's Logan Circle neighborhood.

After two years of renovations, the apartments will meet, if not surpass, those goals. The 241 units in the 97-year old complex were initially constructed by famed DC developer Harry Wardman with architect Albert Beers and placed on the National Register of Historic Places in 1984. According to NHT, the laundry list upgraded amenities now available at the site include “new solar reflective roofs, new kitchens and bathrooms with energy star appliances and low-flow water fixtures, rain barrels to harvest water, an upgraded security system, American Disability Act accessible units and free high speed wireless internet access,” in addition to a slew of open community space and a new, energy efficient HVAC system.

The eco-friendly overhaul at the R Street Apartments is second its main raison d'etre: affordable housing in an ever more gentrified (read: increasingly expensive) Northwest neighborhood. Under the terms of the project’s restructured rate system, only 6 of the newly minted units will be renting at market-rate with varying “tiers” of affordability below that – starting for residents making 60% area median income (AMI) all the way down to 30% and below - compared to the 30% AMI cap that had been in place prior to the renovations and ownership change. Per the terms of the Five Voices of R Street Tenant Association’s agreement with the NHT and HDG, the apartments shall remain affordable for the next forty years.

Making sure they last that long, however, didn’t come cheap for the government. Together, the two development partners raised a total of $24.5 million for the purchase and renovation of the properties via Historic Rehabilitation Tax Credits, federal Low Income Tax Credit equity, tax-exempt bonds, a Department of Housing and Community Development acquisition loan, a $50,000 Enterprise Green Communities Grant and a healthy smattering of “owner capital.” According to Michael Bodaken, President of the National Housing Trust, it was well worth the effort and expenditure.

“By 2010 more than 10,000 affordable apartments could be lost in the city as owners contemplate exiting government programs and raising rents…[The R Street Apartments] could easily have been converted to condominiums or higher priced rentals, but by maintaining their affordability, we are safeguarding the well being of the families and seniors who call R Street home,” said Bodaken in a press release announcing the project’s grand re-opening.

A ceremony highlighting the development’s new lease on life is currently scheduled for April 17th at 11 AM. Mayor Adrian Fenty, DC Housing Authority Executive Director Michael Kelly, Ward 2 Councilmember Jack Evans and members of the R Street Tenant Association and development team are all expected to be in attendance. Remarks to the public will followed by a tour of the revamped apartments and a reception.

New Capital for Capitol Gateway?

Almost a decade after it was first announced, Washington DC’s Marshall Heights neighborhood, bordering the Prince George's County line, may soon receive its long overdue shot in the arm. Developers just last week filed an application with the District government to demolish the abandoned towers on the site (or, in the words of the Office of the Chief Financial Officer, the "unclaimed" property). The Capitol View Plaza public housing complex and neighboring 14-story building, at 5901 and 5929 East Capitol Street, SE will soon be razed to make way for a 110,000-square foot retail center and mixed-income housing.

In 2000, under the administration of former DC Mayor Anthony Williams, the US Department of Housing and Urban Development (HUD) allotted a $30.8 million grant under its Hope VI program to the redevelopment of Capitol View Plaza's 12-story tower - then designated public housing for the elderly and disabled - across from the Capitol Heights Metro. Though the project had initially been scheduled to proceed in 2003, this is the first public sign since 2007 that the redevelopment remains on the District radar.

"5929 we purchased from HUD because it was foreclosed upon. Then we had some issues with FHA when we purchased the building because we had a financial gap. We decided it wasn't worth taking the risk if we didn't have a way to close that gap," said DCHA's Kerry Smyser of the delays. "FHA provided an upfront grant of about $12 million, but you have to use it on their footprint and there's more to do on that site than just to do with that building."

Indeed there is. Originally dubbed “New East Capitol” by the city government, the project has now been twinned with neighboring Capitol Gateway residential project, produced by the A&R Development Corporation and the Henson Development Company. Phase I of that development has delivered “nearly 240 duplexes, townhouses and single-family homes” to an area once notorious for its violence; time and development have gone a long way in imbuing the immediate area with a suburban je ne sais quoi.

That, however, is merely prologue to the 3.4 million square feet of office space, 1450 residential units - including 669 condominiums - and 300,000 square feet of retail space slated to spring up on both sides of East Capitol once construction of the Gateway project begins. Just last year, the development team confirmed that Shoppers Food & Pharmacy will be opening its very first DC branch, a 61,000-s.f. Shoppers Food Warehouse, as part of Capitol Gateway’s mixed-use component...someday. According to Smyser, DCHA is not currently projecting a timeline for construction, nor is A&R committing to a schedule. In total, the cost of the ambitious project is expected to exceed $1 billion.

Washington DC commercial real estate development news

Residences Open for Business on Georgia Ave.

The Neighborhood Development Company (NDC) officially cut the ribbon today on Petworth's newest residential project: the Residences at Georgia Avenue. With mortgage interest rates hitting an all time low, and condo prices having dipped, homes may be more affordable than ever; nonetheless, with Mayor Adrian Fenty on hand today, the developer celebrated the $28 million building at 4100 Georgia Avenue, NW, 72-units of affordable housing and a new Yes! Organic grocery store, scheduled to open this coming summer.

"This project is a perfect example of how we can leverage our resources to both greatly improve the vitality of Georgia Avenue and provide residents with the kind of high quality and convenient neighborhood amenities they both expect and deserve," said Fenty.

The District's Department of Housing and Community Development and Housing Finance Agency cumulatively contributed almost $20 million towards the project; NDC will also receive more than half a million dollars in tax incremental financing from the city for their next scheduled project, The Heights on Georgia Avenue. DCmud recently discussed NDC’s upcoming slate with founder and CEO, Adrian G. Washington in a recent interview.

Industry Insight: Adrian G. Washington of the Neighborhood Development Company

As the founder and CEO of the Neighborhood Development Company (NDC), Adrian G. Washington has overseen numerous development initiatives in the District with a primary focus on boutique condominiums and affordable housing in Columbia Heights and along a resurgent Georgia Avenue corridor. In between working on a current slate of projects that includes the Residences at Georgia Avenue, the Heights on Georgia Avenue and a proposal for the mixed-income redevelopment of the Park Morton public housing complex, Mr. Washington spoke with DCmud about the state of development in the District of Columbia, the challenges of affordable housing and what the future of the residential market. 

Can you give us an overview of the company? 

I’ve been doing this for about twenty years. I started out as basic as it gets - rehabbing brownstones – and moved up from there. Then, I worked for a big corporate real estate company called the National Housing Partnership and we did a lot of affordable housing stuff. I started NDC about ten years ago by doing really the same sorts of things – rehabbing brownstones. By the next year, we were doing 4-unit buildings, then 10-unit buildings and it sort of just got bigger and bigger. It really kind of took off about five years ago. I brought in my partner here and a couple of junior partners, a couple of vice presidents who really brought it up to a professional level. We started doing bigger projects. We were lucky to be on teams that got selected to do CityVista and the old Convention Center site, now called City Center. We really kind of rode the condo boom when it was hot; we had a lot of really cool boutique projects. So it started out focusing on Columbia Heights because we’re always emerging neighborhood focused. When Columbia Heights became more established, we sort of shifted it. So for our last projects, we’ve done a lot of stuff up and down Georgia Avenue – projects like the Lofts at Brightwood and Lamont Street Lofts. We’ve also done some affordable rental projects like the Residences at Georgia Avenue. As the economy shifted, we started doing more affordable rental projects. Our Heights at Georgia Avenue project will be almost like a sister project – same size, same kind of concept with affordable housing on top and retail on the ground floor. Then we proposed on the Park Morton site and we’ll also be proposing on two of the DC school sites. We’ve teamed with EYA on the Hines School site and with Equity Residential on the Stevens School site. 

Indeed, most of your new construction seems to be focused on Georgia Avenue.  Are you still bullish on the area? 

We hope so. We like it. We’re headquartered here and I live about five minutes away. We’ve always been focused on this area and we just saw it as the next “cool neighborhood.” You have Columbia Heights to the east and with Georgia being a Great Street, the city’s been really interested in what we’re doing and certainly helped out on a lot of things. We’ll be coordinating with them for some of the infrastructure improvements with Great Streets. It’s a really great transportation corridor. It’s got some good parcels that are available and, particularly at the start, there were some great industrial buildings that you could convert to lofts. There's not as much now, but it’s a great area and we kind of adopted it as our backyard. We really wanted to be focused on particular neighborhoods, which is where we are. 

How does the current state of the market affect a company that’s primarily focused on affordable housing? 

I think it’s been good and bad. When things started getting tougher, most people - me included – said affordable housing financing is not going to be affected by the credit crisis. Well, in fact, it has. The most popular mechanism for financing affordable housing is the low income housing tax credit, where essentially you get credits that allow companies to reduce their taxes. Well, a lot fewer companies have taxable gains these days, so the market for that – while it hasn’t crashed – has declined considerably. Also, the District a lot of times provided gap financing. A lot of that comes from the Housing Production Trust Fund that is funded by sale and recordation taxes. At the same time, the gaps have gotten bigger because construction costs went up and land values went up. The District used to be fairly flush and now they’re pretty tight. That’s been a little challenging, but the good thing is that the demand is still there. Land prices are starting to retract a little bit and construction costs are starting to mitigate. So it’s much tougher, just like private development is much tougher. But I think DC is really strong market with basic fundamentals like what you can rent things for and demand. I really haven’t seen things as bad yet as I read in the papers and I’m optimistic because demand for things like condos and rentals really haven’t declined as much as the headlines suggest. 

One crucial element of development is retail. CityVista, of course, has a Safeway and your newly completed building, the Residences at Georgia Avenue, is planned to include a Yes! Organic Market. How do you go about making neighborhoods once thought undesirable attractive to retailers?

Those were two very different cases. In terms of CityVista, Safeway was part of the team right from the beginning. Actually, before we became part of the team, Safeway and Lowe Enterprises, our partners, were already linked to that project. Safeway saw it as a great place to put a new urban model Safeway. The thing with Yes! Organic is that we approached them very early on. We didn’t have a broker or anything. They just saw it as a great location. We had some personal connections with Gary Cha, the head of the company, and, as matter of fact, he liked it much that he wanted to buy it because he saw the potential of the neighborhood and said, “I want to get in on the ground floor.” That’s how we’ve done it. We had the Meridian Restaurant at our Lofts at Brightwood project and it was the same type of thing – a really entrepreneurial retailer that was willing to take a chance and invest in the neighborhood in the same way we were. That’s how we traditionally work – not through brokerage channels, but with retailers who’ve really gotten it and want to get in early on a project and help design the project to meet their specifications. It sort of goes together. 

At this point, it’s safe to say that CityVista has been a success, while other projects in the immediate area have stumbled. What would you chalk that up to? 

 It’s funny because we just had a case study that ULI did and they put together all the people –developers, contractors, lawyers and architects. One of the things that we talked about was doing a true mixed-use project – some condos, some apartments and retail. It’s really hard from a construction standpoint, from a legal standpoint, from an architectural standpoint, but if you get right and you get the right mix…synergy is a corny term, but it really applies to this. We got this great Safeway, we got Busboys and Poets and we have a real mix of retailers at the base, all of which people really want. These kind of lifestyle-type things help it be a place where people really want to be. NoMa is still kind of an emerging neighborhood and people want to feel like they have a sense of community – a place where they can live, they go downstairs to shop, they can go out to eat, they can go to go the gym. And not just a little in-house gym, but a really cool gym like Results. It’s a really cool place and what we’ve seen is that it’s drawn people from all over. You think it would be people who live in different parts of DC, but we have people from Prince George’s County and Virginia. It’s just been a nice sort of synergy and I think the rental component energizes the condo component and the condo component energizes the retail component and vice versa. And I think it’s priced right. It’s not entry-level pricing, but it’s not super-luxury pricing either and a lot of people can afford it. We knew we were going to sell like that.

NDC has a record of vying for some prominent District issued RFPs, including Park Morton, CityVista and 5th and I. How would you characterize your relationship with the Fenty administration and the Office of the Deputy Mayor for Planning and Economic Development? 

I’m not an insider or anything, but I value and appreciate what they’re doing and I’d like to think that they feel the same about us. I feel that our goals converge. They’re interested in developing Georgia Avenue and we are too. They’re interested in promoting local businesses and I live in the city, I work in the city and I hire people in the city. It’s matter of being on the same page and understanding their challenges. For me, having been inside the government at one time, I understand what it’s like to be on the other side of the table - the challenges that you have from a political perspective and from a legal perspective. A lot of times, you go through these long agreements with people and can seem like, “Why are they asking for that? It makes no sense.” Having been on the other side of the table, I understand that they have to get certain things through certain offices and fiscal years and so on. Having spent a bit of time in their shoes helps me understand what their hot buttons are and what’s important. That helps the negotiation process. The important thing is that we share the same goals. We want improve neighborhoods. We want to work with the community. Like most developers, we feel that we have to reflect what’s going on and what people are looking for. 

Are there any details that you can share about your proposal for the redevelopment of Park Morton? 

The first thing that I really want to emphasize is that we’ve teamed with a really great partner. They're called Community Builders. They’re Boston-based, but they have a DC office. They’re really the leading non-profit developer in the country. They’ve done over 20,000 units in terms of projects. They really specialize in these sorts of difficult public housing transformations. They have a great human capital program and do things like job training, education and public safety – things that affordable housing demands. Our team, with our local knowledge and our skill, is a great combination. Essentially, we stuck pretty close to the plan that was developed when we were part of the task force that designed the original Park Morton plan that was in the RFP submission. They’re looking for a three-phase plan – roughly a third, a third, a third - that will provide homes for all the current people who are there and then mix them up with moderate income and market rate. It’s, give or take, 500 units of housing. We’ll be demolishing this area [along Park Road] for Phase I and building a total of 195 units. We’ll have [a separate] building dedicated to senior citizens and mixed-income units. Prior to demolition, we would provide for the relocation of families that are in there now and put them in units in and around the area, so they could stay in the neighborhood. We’d then demolish the [second area along Morton Street] and move people into the first phase, along with new people from outside the community and build another roughly 250 units. Then, finally the third [along Lamont Street] would be building condominiums. By that point, we think the neighborhood will have improved, the market will have improved and that it would a great place to do a condominium building. 

Many owners of undeveloped property are now caught between inability to get financing and maturity default. How is NDC positioned to make it through the next two or so years? 

I think we’re well positioned. We’re either lucky or smart. I’m happy to take either one. We’ve done condo projects over the years and about two years ago, we began to sort of feel something in the air. Four years ago, if you built something, people were lining up. As far as two years ago, things began to slow down and we decided to decrease our exposure to condos. We did a couple of projects, but they were very value priced and we were able to sell out of those. Right now, we have zero exposure to condos. Our project across the street, the Residences at Georgia Avenue, is a moderate income rental. We’re in lease up now and we’re getting tons of responses, so we feel very good about how that project is going to perform. The Heights on Georgia Avenue that’s basically across the street from Park Morton, we just got through with PUD and we’re just looking for financing now. Again, we think we’ve created a product that’s moderately priced and we’re pretty optimistic that we’ll get financing for that. We think that we’re in a very good place. We’re lucky to be part of CityVista that, amidst all the problems, is performing well. We’re well-positioned and I think it’s a great time to be a developer. A lot of newcomers and weaker competitors will be going away. It’s more challenging – you need more creativity – but that’s kind of cool.  

Is it possible to be profitable selling new construction there in this environment? 

I think so. It has to be the right place and the right design. And one of the really crazy but cool things is that things change so quickly. Our focus has been on the kind of building - it’s called podium style - that has first floor retail with four or five stories of residential above it. It’s a stick-built product. What happened in the last few years is that the delta between concrete buildings and stick-built really expanded. This was kind of a nice sweet spot in terms of building a building that’s six-stories high, but the cost per square foot was a lot lower. That was the threshold and, if you wanted to go any higher than that, you’d have to go with concrete. We really looked at this as model for the Heights and Park Morton and we’ve seen prices for this come down. What we don’t know is if concrete construction is going to come back down and become much more competitive. You’ve got to moderate, just from a supply and demand perspective – not just in the US, but around the world. A lot of stuff is clearly not going to get built. Commodity prices, concrete construction, oil and gas, steel – all that’s come down and the demand for labor has come down as well. 

Do you see NDC starting any market-rate condominium projects in the near future? 

Oh yeah, absolutely. Whether you’re condo or rental, I think that DC is great place to live. I think in terms of a competitive advantage, with the new administration and the Stimulus Package, that the city is becoming more in demand. I liked the city before the market went down and I like it even more now. I think that supply and demand is going to come back into balance. We’re seeing things like the month’s inventory start to come down. Real estate is cyclical. We had a particularly strong up cycle and now we’ve had a particularly strong down cycle, but it’s going to come back. Just in terms of how long it takes to do things, if you look at the demand, I think the trade-up buyer has kind of decreased a little bit and speculative investment buyer has gone away completely. But that first-time buyer and the price point from three to five hundred thousand has pretty much stayed there. But nothing’s getting built. Nobody, for any kind of project of any significant size, is starting. There’s nothing in the pipeline now and the way these projects work is that if you’re not in the pipeline now, you’re not going to deliver for at least three years – more like four or five. As the economy straightens itself out and demand is solid and starts to increase, the supply is going to be way low. Things that will be delivering in two, three or four years, I think there will be a great market for. We could easily do a boutique building of under a hundred units in that time frame. I’m really bullish on that.

Washington DC commercial real estate news

More Money for Macedonia

The Arlington County Board has approved up to $2.855 million in low-interest loans for the Nauck Development Partners' (NDP) affordable housing redevelopment of the Macedonia Baptist Church

in Arlington. Per the terms of the approval, all of the building's 36 units are to remain "guaranteed affordable" for a minimum of 75 years.

NDP, which is a partnership between the Church, the Bonder and Amanda Johnson Community Development Corporation and AHC Inc., previously sought another $2.86 million low-interest loan and $40,000 County grant from the Board in January - both of which were summarily approved. NDP has secured $14 million in financing for the project, nearly $6 million of which is drawn from County funds. Part of the Macedonia's funding package will come in the form of 4% tax credits and tax-exempt bond financing via the Virginia Housing Development Authority, which the development team had been vigorously pursuing since last summer.

Located on three neighboring parcels at 2219, 2229 and 2237 Shirlington Road in the Virginia suburb of Nauck, the Bonstra Haresign-designed Macedonia will host the aforementioned 36-unit affordable in addition to two sections of commercial office space and a “small business incubator.” AHC Inc.’s Project Manager, Curtis Adams, told DCmud last December that the development team plans to begin construction in the late spring of 2009.

The Residences Delivering on Georgia Avenue

The Neighborhood Development Company’s Residences at Georgia Avenue just finished construction, thanks to Hamel Builders. The 72-unit "affordable" apartment building sits in the heart of Petworth at 4100 Georgia Avenue, NW.

Financed by $28 million from a laundry list of contributors, including the District of Columbia Housing Finance Agency, the District of Columbia Department of Housing and Community Development, the Wachovia Affordable Housing Community Development Corporation and MMA Financial, NDC founder Adrian Washington says, “The Residences is a shining example of what can be accomplished when the private sector works hand in hand with the community and the District government to move neighborhoods forward.” The project was designed by local architects, Wiencek and Associates.

The project, which broke ground in September 2007, will also be home to the District’s second Yes! Organic Market in as many years (the first opened at PN Hoffman’s Union Row development in November). The new, 10,000 square foot Yes! - Petworth’s first boutique grocer – will open this coming summer following completion of its own independent, interior build-out.

In the meantime, the Residences at Georgia itself will become an official addition to the Georgia Avenue corridor after a ribbon-cutting ceremony – to be attended by Mayor Adrian Fenty and Ward 4 Councilmember Muriel Bowser - on March 31^st at 10:30 AM.

Washington DC real estate development news

Unwanted Condos Get Affordable in Germantown

Prolific affordable housing providers, AHC Inc. - whose resume includes developments such as The Shelton and Macedonia in Northern Virginia - have just inked their first deal with Montgomery County. Using a total of $5.4 million in loans from County's Housing Initiative and Community Development Block Grant Funds, AHC has purchased 29 new condominiums at Fairfield Residential's Ashmore at Germantown development for the purpose of converting them in to long-term affordable rentals. According to the developer, "After the units are leased, AHC will refinance the property and return a portion of the funding to the County to be recycled into additional affordable housing initiatives."

While certainly not a boon to the development’s marketing strategy, the sale is certainly a relief for Fairfield; this past November, when faced with a declining market and a glut of unsold units, the developer put 45 two and three-bedroom units at the Ashmore up for auction - with some going for as little as $140,000, or one-third of the initial asking price, for those counting. Despite being sold to AHC at well below original point (the developer picked them up for approximately $186,000 each), the units at the Ashmore still boast standard amenities, including “custom cabinetry, ceramic flooring, crown molding” and a community center with a pool and fitness center.

For the County’s part, they seem pleased to have funded an arrangement that will provide affordable housing, while sidestepping the obvious the downsides of providing for a ghost town smack in the middle of the County (see the current market conditions in Florida for numerous examples of less fortuitous outcomes).

“Creating and preserving affordable housing is one of my highest priorities,” said County Executive Isiah Leggett in a statement announcing the sale. “I am pleased that the Housing Initiative Fund is being used to acquire more than two dozen condominiums and make them affordable for eligible residents.”

Maryland real estate news

Prospects Announced for Park Morton

Following last summer's Request for Proposals, Deputy Mayor Neil Albert has announced the three development teams contending for the $170 million redevelopment of the Park Morton housing project in Northwest Washington. Per the specifications of the RFP, all three are vying to reinvent the troubled public housing complex with more than 500 new units of affordable and market-rate housing and 10,000 square foot park.

The teams named by Albert are the Park Morton Partners (Pennrose Properties, LLC, FM Atlantic, LLC, and Harrison Adaoha, LLC); another Park Morton Partners (Neighborhood Development Company and Community Builders, Inc.); and, lastly, Park View Partners (Landex Corp., Warrenton Group and Spectrum Management).

"We need a partner that [is] capable of more than just building housing,” said Albert in a prepared statement. “We are looking for someone who is committed to building a healthier, safer new community. This response, especially in light of the current economic conditions, speaks volumes about the value of this opportunity.”

The Park Morton project was greenlighted under the of the New Communities initiative – a District-led program to transform blighted public housing complexes into “mixed-use, mixed-income communities." Other such developments targeted for redevelopment by the Office of the Deputy Mayor for Planning and Economic Development (ODMPED) include the long-gestating Northwest One, Barry Farm and the Lincoln Heights/Richardson Dwellings in Northeast.

According ODMPED, the bidding development teams will make public presentations regarding this plans for Park Morton at an unscheduled time “later this spring.”

Another Addition to Affordable Arlington

Helping to cement its place as the most affordable-friendly county in the region, the Arlington County Board yesterday approved up to $35 million in financing to facilitate the purchase of Buckingham Village 3, a 140-unit, 16-building historic development on the 300 block of North George Mason Drive. In the same session, the Board also approved a 75-year lease of the property to the Telesis Corporation and National Housing Trust-Enterprise Corporation (NHTEC), which will “begin to renovate the property within 12 to 24 months, then operate and manage the dwellings.” The price of the lease was not disclosed by County representatives.

The County is billing their purchase from 4319 North Pershing Drive Apartment Investors LLC, as “one of the…most ambitious efforts to date to preserve affordable housing on a single site.” 

Following the completion of renovation procedures on the 5.4-acre site, Telesis is forecasting a mixture of rental and ownership opportunities available at Buckingham Village and is pledging to contribute to a new community center. As stated in the terms of the county’s lease, all of the residential units on site will be earmarked as affordable housing for at least 75 years.

In addition NHTEC, the Telesis team, which was selected after a 2007 RFP, includes architects Wiencek and Associates, CTA Inc. Consulting Engineers, general contractor Harkins Builders, property managers Neighborhood Partners and general counsel Bean, Kinney and Korman.

While Village 3 may have been the sole subject of the County’s landmark action, it is not the only development in store for Buckingham Village as a whole. In June 2007, the Board approved a $7 million loan from the County’s Affordable Housing Investment Fund for construction of 100 new affordable units in Village 1, while Paradigm Development leveled Village 2 to make way for 69 "luxury" townhouses - since rebranded as the Buckingham Commons. The latter move sparked protests from local advocacy groups, including the Arlington Green Party and the Matthew 25 Network, and subsequent legislation – including historic protections for Village 3 and the Telesis deal – are likely to be viewed by some as peacemaking tactic.

"Home Again" Hones in on LeDroit Park

Seven years and a new mayor later, the Vacant and Abandoned Housing Initiative is still flush with properties for redevelopment. Established by former Mayor Anthony Williams in 2002, the initiative – better known to the public as “Home Again” – was tasked with converting “vacant and abandoned buildings into quality, affordable homes.” Now, two years after being awarded a bundle of unoccupied LeDroit Park properties, aptly-titled DC developer, the Neighborhood Development Company (NDC), is gearing up to begin work on the first installment of their “Home Again” redevelopment projects at 1915 6^th Street, NW.

Currently a vacant lot straddled by several historic LeDroit Park homes, NDC is aiming to reinvigorate the long vacant parcel with a new three-story “historicist” condominium development. Designed by PGN Architects, the building will outwardly appear to be a brick townhouse with “a rusticated base, precast accents and wood windows” and measure in at 1,300 square feet. The project is currently scheduled to begin construction in July 2009 - after missing the mark last September. NDC previously accrued the approval of both the LeDroit Park Civic Association and Historic Preservation Review Board in summer of 2008.

Diminutive though it may be, the 1915 6^th project is just the first of ten “Home Again” properties under the control of NDC; next up for development will be duel derelict structures, just outside of LeDroit proper, at 902 and 904 T Street, NW. In all, NDC plans to squeeze 22 units – 4 of which of will be priced at affordable housing rates – out of their LeDroit Park lemons.

Washington DC commercial real estate news