The Alexandria Redevelopment and Housing Authority (ARHA) is requesting a $1 million loan after unexpected development costs and a new designation that could give it a tax credit boost.
Both the loan and the tax credits would go toward the Samuel Madden Redevelopment Project. The project involves the demolition of the existing 66-unit Samuel Madden Homes and replacing them with two multifamily buildings at 899 and 999 N. Henry Streets.
The new development would include 532 rental units, with more than 60% of those being affordable units for those making 30-80% of the area median income.
The first part of ARHA’s request to the City Council at the Saturday, Feb. 25 meeting is a $1 million loan to support redevelopment. The loan request comes after construction cost inflation and fluctuations in interest rates have pushed up costs for the projects.
“According to ARHA, recent changes in the financial markets including construction cost inflation and upward fluctuations in interest rates necessitate its request for $1 million in City Housing Opportunities Fund (HOF) funds to maintain project feasibility,” a memo from Helen McIlvaine, director of the Office of Housing, said. “City financial support was not initially anticipated beyond a small predevelopment loan.”
The loan funding comes from a $3.1 million reserve built up by contributions from other nearby developments around the Braddock neighborhood.
The second part of ARHA’s request is to have the site classified as a revitalization area.
A memo from McIlvaine said the change in title could help boost ARHA’s efforts to get more state funding.
“The Resolution designating the ARHA Samuel Madden site a revitalization area helps make ARHA’s application for low-income housing tax credit equity more competitive in terms of aligning the project with funding priorities established by Virginia Housing,” McIlvaine wrote.
What’s more, McIlvaine said city staff agrees with the revitalization area designation — noting a site where economically beneficial development will not occur without government assistance.
“Consistent with the City Attorney’s past interpretation of the relevant Virginia Code Section, staff believe that the proposed development of affordable housing at this site provides an economic benefit to the City that would not otherwise occur without government assistance,” McIlvaine wrote, “including local financial support and federal tax credits, as well as other planned public and private resources, which criteria comply with requirements of the designation.”
Separately from this loan and designation request, the Samuel Madden development has raised some eyebrows among City leaders in the past for a proposed tax exemption that could set a notable precedent. ARHA has previously discussed asking the City Council to make the Samuel Madden project tax-exempt, but given that ARHA is working with private developers, that could lead to affordable housing tax exemptions for private entities charging market-rate rents — not affordable housing.
“ARHA properties owned by ARHA are tax exempt, those are off the tax rolls, but when they do a redevelopment that involves a private entity, those projects would go on the tax rolls,” Mayor Justin Wilson said in a recent city coucnil meeting. “All the affordable housing projects that exist in the city that are owned by nonprofits do pay taxes. In this case, ARHA is partnering with a private entity, so the ownership structure is a little bit complicated.”
The loan and designation status are scheduled for review at a City Council meeting this Saturday, Feb. 25.
