Alexandria City Council voted unanimously Tuesday night to provide a moral obligation backing the Alexandria Redevelopment and Housing Authority’s plan to acquire The Alate senior living facility for $56 million using Virginia Resources Authority bonds.
The 7-0 vote authorizes ARHA to purchase the 110-unit building at 1122 North First Street to relocate age-eligible residents from the deteriorating Ladrey Senior High-Rise at 300 Wythe Street. The federal Department of Housing and Urban Development has terminated operating support for Ladrey and issued vouchers to relocate its 168 residents.
“There are really three choices before the council,” Mayor Alyia Gaskins said before the discussion began. “Choice one is to vote no. Choice two would be to vote yes. Choice three would be to vote yes with modifications or some changes or proposals to the performance agreement.”
The moral obligation requires the city to backstop approximately $3.5 million in annual debt service payments if ARHA cannot meet its obligations. While not a legal guarantee, the commitment carries serious consequences if the city fails to honor it, including potential state intervention to withhold funds from Alexandria.
“If we did not honor our moral obligation, a couple things can happen,” Finance Director Kevin Greenlief explained. “One bond rating would be severely impacted. Rating agencies expect you to keep your promises. The state of Virginia also has the capacity, if we failed to step in and meet our moral obligation to pay the debt service, they could step in and intercept any state funds necessary that the city already gets to cover that debt.”
Council members expressed concerns about the financial risks and communication failures that marked the proposal’s development. Several residents of The Alate learned about the potential sale through newspaper coverage rather than direct communication from the property owner or ARHA.
“The communication did not go well,” said Chris Cobb, representing property owner Bonaventure. “The fact that a lot of these residents heard about this through the newspaper and articles is very embarrassing to me personally and to Bonaventure.”
ARHA Executive Director Erik Johnson acknowledged the communication problems, explaining that uncertainty about the project’s viability led to limited disclosure. “Until I got more certainty about what could happen, we tried to keep the project as tight as possible,” Johnson said.
The city negotiated extensive safeguards in a performance agreement to mitigate financial risks. ARHA will provide a $6 million letter of credit and pledge revenues from real properties valued at approximately $6 million as collateral. The housing authority also agreed to reimburse the city for any payments made under the moral obligation.
“We actually crafted the performance agreement with the intent of preventing the default,” Deputy City Attorney Bonnie Brown said. “We put these provisions in there as default prevention.”
Additional protections include a 30-year affordable housing use restriction on The Alate property, the city’s right of first refusal if the building is sold, and requirements for experienced third-party property management. ARHA also committed to prioritizing completion of Ladrey’s renovation before proposing new development projects to the council.
The acquisition faces uncertainty from potential federal funding cuts. The current administration has proposed reducing HUD voucher funding by up to 45 percent, though most officials do not expect such drastic reductions.
“If they lost federal voucher funding, for example, they said they would try and reallocate vouchers to the Silver Fox property,” Greenlief said, referring to ARHA’s contingency plans. “So they would try to shore up with that. That would certainly buy time.”
Council members questioned ARHA’s experience managing a Class A senior living facility like The Alate. Johnson said the housing authority currently manages over 1,100 units in Alexandria, including “several class A properties in Old Town.”
The current property management company at The Alate declined to continue after the sale, creating additional uncertainty. ARHA is conducting a procurement process for new management services, though the selection will not be completed before the city manager’s July 21 go/no-go decision deadline.
Councilman Canek Aguirre emphasized the poor conditions at Ladrey as justification for the proposal. “I’m tired of seeing that happen,” Aguirre said, referring to recurring power outages that leave elderly residents without air conditioning or elevators. “It’s really inexcusable for our community.”
The Housing Affordability Advisory Committee endorsed the acquisition while expressing concerns about federal funding uncertainty and potential impacts on citywide voucher availability. The committee noted that financing difficulties could reduce ARHA’s ability to serve 30 to 80 additional households depending on the cost of alternative funding sources.
Approximately 30 current residents of The Alate may remain in the building, while others will receive relocation assistance from Bonaventure if they choose to move. The building’s amenities and services will continue under ARHA ownership, though specific details about service delivery remain to be determined through the property management selection process.
The Virginia Resources Authority requires the city’s moral obligation as a condition for providing the below-market rate financing. Without the city’s backing, ARHA would need to secure more expensive private financing, potentially reducing resources available for other affordable housing initiatives.
Councilman John Chapman made the motion to approve the resolution, with Councilman Aguirre providing the second. The approval includes authorization for continued negotiations on the performance agreement’s final terms, with the city manager retaining authority to withdraw from the deal if conditions are not satisfactorily met.
The bond pricing is scheduled for July 22, after which the city would be locked into the commitment if all conditions are satisfied.
