SHEA
May 28, 2020
The Honorable Phil Mendelson, Chairman
Councilofthe District of Columbia
1350 Pennsylvania Avenue, N.W., Suite 402
Washington, DC 20004
Dear Chairman Mendelson:
Pursuant to D.C. Official Code 42-2702.07, and on behalf ofthe Board of Directors (the
Board) of the District of Columbia Housing Finance Agency (the Agency),-you are hereby
notified that on May 26, 2020, the Board enacted an Eligibility Resolution for tax-exempt and/or
taxable multifamily housing mortgage revenue bond financing in an amount not to exceed
$72,500,000 for the new construction and equippingofThe Residences at Kenilworth Park (the
Development). The Development is expected to be located at 1650 Kenilworth Avenue, NE,
Washington. DC 20019, in Ward 7. After completion, the Development is expected to consist of
approximately one hundred fifty-seven (157) residential rental units.
Acopyofthe Eligibility Resolution for the DC Council's review is enclosed as Exhibit A. A
detailed description of the Development and its intended benefits are provided in the
development financing memorandum enclosed as Exhibit B. If you have any questions, please
contact me at (202) 777-1600.
Sincerely,
; Digitally signed by Christopher Donald
Christopher Donald pite:20200327 1335408 0400
ChristopherE.Donald
Interim Executive Director/CEO
Enclosures
815 Florida Avenue NW, Washington DC 20001-3017
EXHIBIT A
 DCHFA Resolution No. 2020-13
The Residences at Kenilworth Park
Eligibility Resolution
DISTRICT OF COLUMBIA HOUSING FINANCE AGENCY
RESOLUTION AS TO THE ELIGIBILITY OF THE RESIDENCES AT
KENILWORTH PARK FOR TAX-EXEMPT AND/OR TAXABLE MULTIFAMILY
HOUSING MORTGAGE REVENUE BOND FINANCING
WHEREAS, the District of Columbia Housing Finance Agency (the
Agency) received a request on May 6, 2020 from The Residences at Kenilworth
Park, LLC (the Applicant) that the Agency provide new construction and
equipping financing for The Residences at Kenilworth Park, which, upon
completion, is expected to consist of one hundred fifty-seven (157) residential
assisted living units and will be located at 1650 Kenilworth Avenue, NE,
Washington, DC 20019, Ward7(the Project);
WHEREAS, the Applicant has elected, pursuant to Section 142 of the
Internal Revenue Code of 1986, as amended (the Code), to set aside at least
forty percent (40%) of the units for households at or below sixty percent (60%) of
the area median income, adjusted for family size ("AMI");
WHEREAS, the Applicant is eligible for Low Income Housing Tax Credits
pursuant to Section 42 of the Code, and has elected to set aside one hundred
percent (100%) of the units at the Project for households at or below sixty
percent (60%) of AMI;
WHEREAS, the Agency has conducted a preliminary review of the
request for financing of the Project in order to determine, among other things,
that the Project and the financing requested therefor, comply with the
requirements of the District of Columbia Housing Finance Agency Act, D.C. Law
2-135, as amended, D.C. Code 42-2701.01et seq. (the Act);
WHEREAS, the Applicant has requested financing in an amount not to
exceed $72,500,000 through an offering of the Agency's Tax-Exempt and/or
Taxable Multifamily Housing Mortgage Revenue Bonds (the Bonds) for the
financing, including the financing of reasonably related and subordinate facilities
and any permissible reimbursement expenses of the Project;
WHEREAS, all or a portion of the Project may be financed with proceeds
of the Agency's Tax-Exempt Multifamily Housing Mortgage Revenue Bonds, and
such portion that is not financed with the Agency's Tax-Exempt Multifamily
Housing Mortgage Revenue Bonds may be financed with proceeds of the
Agency's Taxable Multifamily Housing Mortgage Revenue Bonds;
WHEREAS, Agency staff recommends the issuance of the Bonds in an
amount not to exceed $72,500,000, in one or more series, for the benefit of the
Applicant or other related entity affiliated with or related to the Applicant that will
own and operate the Project (the Borrower); and
WHEREAS, providing the financing requested for the Project will confer a
public benefit and serve the public interest by lowering the cost of and expanding
available housing opportunities for low and moderate income residents of the
District of Columbia (the District), all in accordance with and in furtherance of
the purposes of the Act in the following manner:
4. Making available approximately one hundred fifty-seven (157) units,
one hundred percent (100%) of which are estimated to be
affordable to households with incomes at or below sixty percent
(60%) of AMI;
 2. Providing opportunities for construction jobs to District residents by
requiring that the Applicant and the Borrower give priority to District
residents; and
3. Contributing to the overall social and economic improvement of the
Kenilworth neighborhood.
NOW THEREFORE, BE IT RESOLVED by the Board of Directors of the
Agency (the Board) that:
1. Based upon a review of the request by Agency staff as it relates to the
Project, the report on such review to the Board, the favorable
recommendation of the Interim Executive Director/CEO, and upon due
deliberation and consultation with Agency staff, the Board hereby
determines that, based on the requirements of eligibility for financing
by the Agency, the Project and its financing by the Agency will meet
the requirements of the Act.
2. Final approval of any financing shall be subject to such terms,
conditions and documentation acceptable or deemed necessary by the
Agency.
3. This reservation of volume cap in the amount of $72,500,000, to the
extent available to the Agency, is for a period of twelve (12) months
which period may be extended at the sole discretion of the Board.
4, Adoption of this Eligibility Resolution shall not constitute a commitment
from the Agency to issue the Bonds or to provide financing for the
Project.
5. The Interim Executive Director/CEO is authorized to undertake such
actions as are required to be taken pursuant to the Act and the
regulations of the Agency, including the selection of tax professional
services.
6. The Interim Executive Director/CEO is hereby authorized and directed
to send to the Chairperson of the Council of the District of Columbia
written notification of the adoption of this Eligibility Resolution
describing the nature of the Project and the benefits designed to result
therefrom as required by D.C. Code 42-2702.07.
7. This Eligibility Resolution shall take effect immediately.
DCHFA Resolution No. 2020-13
ADOPTED ON MAY 26, 2020
AT AMEETING
OF THE BOARD OF DIRECTORS.
ROLL CALL VOTE:
Buwa Binitie : RECUSED
Stephen M. Green : APPROVED
Scottie Irving : APPROVED
Stanley Jackson =: APPROVED
Heather Howard =: APPROVED
Christopher Donald 322stisosz tauose-0900
Christopher E. Donald
Interim Secretary to the Board
EXHIBIT B
 MULTIFAMILY UNDERWRITING MEMORANDUM
INDUCEMENT MEMORANDUM
The Residences at Kenilworth Park
1650 Kenilworth Avenue, NE (WARD7)
Washington, DC 20019
157 UNITS
DEVELOPER:
Foundation Housing, Gragg Cardona Partners, The Carding Group
NEW CONSTRUCTION,
SENIORS (Age 60+)
NOT TO EXCEED $72,500,000
Maximum LTC/LTV: N/A, Minimum Debt Service: 1.35%
CHRISTOPHER MILLER
DATE: May 26, 2020
 eee
ce Qo mad.
TRANSACTION SUMMARY:
The Multifamily Lending and Neighborhood Investments (MLNI) underwriting staff requests the
inducement resolution approval from the District of Columbia Housing Finance Agency's ("DCHFA or
the Agency) Board of Directors (the Board) for the issuanceof taxable and tax-exempt and bonds in
an amount not to exceed $72,500,000 to finance the acquisition and new construction of The
Residences at Kenilworth Park (the Development or the Property), The subject transaction is a
construction to permanent loan currently underwritten for $52,500,000 funded through a private
placement of tax-exempt bonds issued by DCHFA. In addition to the tax-exempt bonds, the borrower
hhas elected to also include a taxable bond in the amount of $5,500,000 in order to cover ineligible costs.
Total issued taxableand tax-exempt bonds will be $72,500,000.
The proposed site is currently owned bya private individual. Gragg Cardona Partners, oneof the co-
developers on this project, has a purchase and sales agreement with the owner to purchase the site for
the amount of $4,921,262. An additional parcel that is a necessary assemblage to provide access to the
Development is currently under contract for $200,000 and closing is contingent upon closing of the main
site parcel.
The address of the proposed Project is 1650 Kenilworth Avenue NE and the site is located along the
boundary line for the District of Columbia and Prince George's County, Maryland. The structure will
consist of a 157 unit age restricted (60+) 5 story mid-rise building with 27 parking spaces. Each unit will
feature a kitchenette, includinga sink, refrigerator, microwave and cupboards, closets, emergency call
system and window coverings. Common area amenities will include a dining room, private dining room,
general store, mail pavilion, fitness/wellness center, hair salon, and a green roof. The property operator
will provide meals, personal care services, and scheduled transportation. A commercial kitchen will
serve meals daily in the dining room. Each residential floor will include different common area space.
HFA
The property management company, HallBridge Partners, LLC, will be licensed by the DC Department of
Health to operate the Development as an Assisted Living Facility (ALF). As a licensed ALF, the facility's
staff must provide residents with three meals per day in a central dining area, access to support services
such as medical, dental, rehabilitative, and counseling services; assistance with activities of daily living,
including eating, bathing, toileting, grooming, dressing and mobility, and 24-hour supervision to ensure
resident safety. The owner and operator will apply for the license to operate as an ALF as the building
rears completion and the license is expected to be awarded once the building has passed a life safety,
fire authority and AL Program review.
Residents.of age-restricted LIHTC properties are prime candidates for affordable assisted living due to
both their affordability and service needs. Aging residents want to continue to live in a private room in a
community setting but are often placed in nursing homes due to service needs.
There is only one comparable operating affordable assisted living property in the market area today and
one currently under construction. The 15 unit Marigold at 11" Street opened in 2014 through the
Washington, DC Housing Authority and accepts Medicaid Waiver residents. It is located 5.09 miles from
the subject in the Columbia Heights neighborhood and has a 10-month waiting list. Compared to the
subject, The Marigold has modest dcor and amenities. The Residences at Thomas Circle, located on
1330 Massachusetts Avenue NW is a market rate comparable. Built in 1976, the property consists of 26
assisted living units with monthly rates ranging $7,000-$9,000 depending on the level of care and is
reporting 96% occupancy. The Livingston Place at Southern is currently under construction in Ward 8
and will be the first tax credit financed assisted living facility in the District.
The capital stack for the Development will consistof construction to permanent financing in the amount
of $52,500,00 (Tax Exempt Bonds), $5,500,000 (Taxable Bonds), $20,472,837 (Low Income Housing Tax
Credit, or "LIHTC Equity), $4,990,325 (Deferred Developer Fee), $450,000 (NOI During Lease Up),
$70,000 (Bond Reinvestment Income }, and $80,000 (Interest Earnings on CAP! Funds). The NO! during
Lease Up is projected during the 24-month projected lease up period. The project generates
approximately $800,000 in NOI during the 24-month period, about of 55% of which is being included as
a source. If the NOI is not sufficient to meet this projected source amount, the deferred development
fee amount would be increased to offset the shortfall. The total development cost is $84,063,162
($535,434/unit), inclusive of acquisition, hard and soft costs, developer and financing fees, reserves and
escrows.
The Residences at Kenilworth Park LLC, a District of Columbia Limited Liability Company will be the
owner and borrower for the transaction. Ownership of the borrower is comprised of the 0.01%
Managing Member, Kenilworth Avenue North Ventures, LLC, and the 99.99% Investor Member is AHP
Housing Fund 219, LLC, an affiliateof Affordable Housing Partners, Inc. (AHP).
The members of the managing member will be Kenilworth Manager, LLC with a 45.0% interest,
controlled by The Foundation (The Foundation), CDP GC Washington, LLC, an affiliate of The Carding
Group, with a 22.5% interest, GCP AALC, LLC, an affiliate of Gragg Cardona Partners with a 22.5%
interest, and HallBridge Partners with a 10% interest. The Foundation will serve as the Guarantor for the
transaction.
SHEA
The remaining members of the development team consist of Whiting-Turner Contracting Company
{General Contractor), Environments for Health Architecture (Architect), and HallBridge Partners, LLC
(Property Manager).
ASSISTED LIVING PROGRAMS:
EPD Waiver Program:
The Washington, DC Elderly and Physically Disabled (EPD) Waiver program is administered by DC
Department of Healthcare Finance (DCHCF) and provides services to help qualified older adults and
persons with disabilities live in their own homes or community, instead of a nursing home. Nursing
homes generally offer a higher level of care than an assisted living facility and are more institutional,
dormitory style housing. In order to qualify for the EPD Waiver program, residents must be frail
individuals who require assistance with two or more Activities of Daily Living (ADLs), with an individual
annual income less than $27,000 for a single person and assets less than $4,000. Couples will have
annual income less than $40,500 with assets less than $6,000.
There are currently 40 beds accepting Medicaid Assisted Living in the District and an additional 152
under construction. As such, an individual requiring a moderate level of care will often be placed in a
high-level of care environment at a nursing home due to lack of available options. According to DCHCF,
the average annual cost of care for an individual in a nursing home is $70,000 or about
$190/person/day. Individuals requiring a level of care below nursing home level may be better suited to
a community based residential setting like an assisted living facility.
The participant in the EPD Waiver program can choosea service provider from an available list of
approved EPD Waiver Providers including a Personal Care Aide or Assisted Living Services. When being
qualified for the EPD waiver, a resident can select a specific service provider as their first preference.
The resident may also elect to transfer from one service provider to another for any approved service.
There is an ongoing effort by DCHCF to qualify residents for LIHTC simultaneously as they qualify for the
EPD Waiver in order to streamline the process and get residents into housing quicker.
In 2019, the number of available EPD Waiver slots in Washington, DC was approximately 5,260.
Prioritization on the wait list is based ona first-come, first serve basis, not based on urgency of need.
Effective April 4, 2017, the EPD Waiver was renewed for an additional five years. According to the State
Plan on Aging FY 2017-2018, a new enrollment process has greatly streamlined the EPD Waiver
Applicant experience. The new enrollment process included hiring and training Medicaid Enrollment
Specialists who have fielded more than 1,901 referrals since June 1, 2015 and submitted more than 579
EPD Waiver applications,
Medicaid is the single largest source of federal funding to the D.C. Government. Medicaid is cost-shared
30/70 between the state and federal level, so every Medicaid dollar is matched by $2.33 from the
federal government, which is one of the higher federal multipliers in the country. The multiplier is based
on the Federal Medical Assistance Percentage (FMAP), whichis computed based on the average pre
capital income of each state relative the national average.
SHEA
According to the Kaiser Family Foundation, in FY 2017, in the District of Columbia, total Medicaid
Spending was $2.8 billion, with $2.1 billion (74%) in Federal and $0.7 billion (26%) in State funding. In
the District, Medicaid spending has increased 7.4% in the time period of FY 2010-2014, and 8.9% in the
time period of FY 2007-2010.
DCHCF built in inflationary language stating the EPD Daily Waiver rate will increase based on the
Medicaid Market Basket of DCs Living Wage. On April 4, 2017 DCHCF increased the daily from $60 to
$155 in order to encourage more facilities to accept Medicaid residents. Since the 2017 increase, the
daily rate has increased at about 1.6%-2% per annum. For underwriting purposes, MLNI assumed a daily
rate increase of 1.3% per annum.
Medicald Dally Rate Increases
Year Daily Rate Annual Increase
2017 $155.00
2018 $158.12 2.01%
2019 $161.11 1.89%
2020 $163.79 1.66%
The Medicaid Daily Rate is intended to cover services provided at the property and cannot cover the
cost of rent.
STRENGTHS
/ RISKS (KEY MITIGANTS):
RISKS (MITIGANTS):
1. Declining NOI: A high expense ratio of 56% with expenses trended at 3% while income is only
trended at 2%/1.3% leads to a declining NOI.
'* Declining NOI Mitigant: The loan as currently underwritten has a going in combined
(taxable and tax-exempt) DSCR at 1.61x and 1.55x at loan maturity in year 20.
Refinance Test Mitigant: MLNI has perform a refinance test to estimate the year 20
NOr's ability to support debt at loan maturity at stressed exit parameters prior to Final
Bond. The refinance scenario assumed the HUD 223f program metrics: 1.45x DSCR and
35 year amortization. A stress range of 200-300 bps was applied to a current quoted
HUD 223f rate and the property would be able to refinance in a stressed scenario.
2. Site Risk: The Site is located in the 100 and 500 year flood plain and has contaminants that could
impact the groundwater on the site.
Site Risk Mitigant: The development plan includes extensive site work to raise the site
above the flood plain and the Sponsor is working with their environmental consultant on
ways to prevent and mitigate any contaminationof the groundwater.