June 15, 2020
The Honorable Phil Mendelson, Chairman
Council of the 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 of the Board of Directors (the
Board) of the District of Columbia Housing Finance Agency (the Agency), you are hereby
notified that on December 17, 2019, the Board enacted an Eligibility Resolution for tax-exempt
and/or taxable multifamily housing mortgage revenue bond financing in an amount not to exceed
$35,200,000 for the acquisition, construction, and equipping of Urban Village Apartments Phase
1 (the Development). The Development is expected to be located at 1501-1507 Newton Street
NW, Washington, DC 20010 in Ward 1. After completion, the Development is expected to
consist of approximately one hundred fifteen (115) residential rental units.
A copy of the Eligibility Resolution for the DC Councils 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,
Christopher Donald Digitally signed by Christopher Donald
Date: 2020.06.15 10:18:43 -04'00'
Christopher E. Donald
Interim Executive Director/CEO
Enclosures
EXHIBIT A
 DCHFA Resolution No. 2019-32
Urban Village Apartments Phase 1
Eligibility Resolution
DISTRICT OF COLUMBIA HOUSING FINANCE AGENCY
RESOLUTION AS TO THE ELIGIBILITY OF URBAN VILLAGE APARTMENTS
PHASE 1 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 July 19, 2019 from Urban Village, LLC (the
Applicant) that the Agency provide acquisition, construction, and equipping
financing for Urban Village Apartments Phase 1, which, upon completion, is
expected to consist of one hundred fifteen (115) residential units and will be
located at 1501 - 1507 Newton Street NW, Washington, DC 20010, Ward 1 (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. In the event that the Applicant elects the occupancy set-
aside option known as income averaging, one hundred percent (100%) of the
units at the Project will be set aside for households at or below eighty percent
(80%) 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 42-2701.01 et seq. (the Act);
WHEREAS, the Applicant has requested financing in an amount not to
exceed $35,200,000 through an offering of the Agency's Tax-Exempt and/or
Taxable Multifamily Housing Mortgage Revenue Bonds (the Bonds), 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 $35,200,000, 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:
1 Making available approximately one hundred fifteen (115) units,
one hundred percent (100%) of which are estimated to be
affordable to households with incomes at or below sixty percent
(60%) of AMI. In the event that the Applicant elects the occupancy
set-aside option known as income averaging, one hundred
percent (100%) of the units at the Project will be set aside for
households at or below eighty percent (80%) of AMI;
Providing opportunities for construction jobs to District residents by
requiring that the Applicant and the Borrower give priority to District
residents; and
Contributing to the overall social and economic improvement of the
Columbia Heights 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 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.
. Final approval of any financing shall be subject to such terms,
conditions and documentation acceptable or deemed necessary by the
Agency.
 This reservation of volume cap in the amount of $35,200,000, 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.
. Adoption of this Eligibility Resolution shall not constitute a commitment
from the Agency to issue the Bonds or to provide financing for the
Project.
. The 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.
|. The 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.
. This Eligibility Resolution shall take effect immediately.
DCHFA Resolution No, 2019-32
ADOPTED ON December 17, 2019
AT A MEETING OF THE BOARD OF DIRECTORS.
ROLL CALL VOTE:
Buwa Binitie : APPROVED
Stephen M. Green : APPROVED
Scottie Irving q APPROVED
Stanley Jackson: ABSENT
Heather Howard: APPROVED
odd A. Lee
Secretary to the Board
EXHIBIT B
 MULTIFAMILY UNDERWRITING MEMORANDUM
INDUCEMENT RESOLUTION
Urban Village Apartments Phase 1
1501-1507 Newton Street NW, Washington, DC 20010
Ward 1
115 UNITS
DEVELOPER:
Somerset Development Company
Housing Up
SPONSOR:
Urban Village, LLC
NEW CONSTRUCTION
NOT TO EXCEED $35,187,500
Maximum LTV: TBD%, Minimum Debt Service: 1.15
KRISTIN CHALMERS
DATE: December 17, 2019
TRANSACTION SUMMARY:
The Multifamily Lending and Neighborhood Investments (MLNI) underwriting staff recommends that
the District of Columbia Housing Finance Agencys (DCHFA or the Agency) Board of Directors (the
Board) approve an Inducement Resolution authorizing the issuance of tax-exempt bonds in an amount
not to exceed $35,187,500 to finance a portion of the acquisition and construction costs for Urban
Village Apartments Phase 1 (the Project or Property), a 115 unit affordable housing community.
The Property will be located in the Columbia Heights neighborhood of Ward 1. Somerset Development
Company (Somerset) in partnership with the Urban Village Tenant Association (UVTA) currently
owns Urban Village Apartments, a 72 unit affordable garden-style apartment complex. The property
currently consists of six buildings which were built in 1978. In 2003, after the former owner of the
property allowed the project-based Section 8 contract to expire and was transitioning to market,
Somerset and UVTA partnered to acquire, renovate, preserve, and restore the affordability of the
property with Low Income Housing Tax Credits, tax-exempt bond financing, and Community
Development Block Grant funds from DHCD. The Propertys LURA, effective as of July 30, 2003, has an
extended use period which requires that the subject property operate with 65 affordable units. Of
those 65 units, 26 units are restricted at 50% of AMI and 39 units are restricted at 60% of AMI.
After the LIHTC compliance period expired in December of 2017, Somerset and UVTA proposed to
redevelop the site in partnership with Housing Up Development, a non-profit affordable housing
developer and Supportive Housing provider. The partnership proposes to demolish the aging existing
structures and redevelop the site in two separate phases. In Phase 1, 115 units of affordable housing
will be built, including 14 units of Permanent Supporting Housing (PSH). Phase 1 will add an additional
50 units of affordable housing. All current residents will have the right to return to the new Urban
Village under the same affordability terms and with comparable sized units. Phase 2 will provide an
additional 110 units of affordable housing and will commence only after Phase 2 has been completed.
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Once Phase 2 in complete, the site will provide more than triple the amount of affordable housing from
72units to a projected 225 units in a highly desirable neighborhood in the District of Columbia.
The Sponsor and Borrower entity will be Urban Village Redevelopment, LLC. The Managing Member will
be Urban Village Partners, LLC which is comprised of Housing Up Development (51%), Somerset Newton
Partners, LLC (48.99%), and Urban Village Tenant Association, Inc. (0.01%). Somerset Newton Partners,
LLC will be a joint venture between Somerset Development Company, LLC and New Community
Partners, LLC. Somerset Development Partners, LLC, a subsidiary of Somerset Development Company,
LLC, and New Community Partners, LLC (NCP) with both serve as Guarantors for the Project.
The unit mix for the Project will consist of 9 efficiency units, 31 one bedroom units, 51 two bedroom
units, and 24 three bedroom units. 46 units will be restricted to 60% of AMI, 55 units will be restricted
to 50% of AMI, and 14 units will be restricted to 30% of AMI and received LRSP.
While most of the existing tenant base qualifies at the 50% AMI and 60% AMI levels, there are currently
7 residents who are between 60% AMI and 80% AMI. The Sponsor is therefore considering Income
Averaging for the Project, which is a new minimum set aside that was added to the District of Columbia
Qualified Allocation Plan (QAP) in June of 2019.
Income Averaging
In the Consolidated Appropriations Act of 2018, also known as the omnibus spending bill, Congress
created a new occupancy set-aside option known as income averaging (IA). While states have some
discretion as to how IA will be applied in the Qualified Allocation Plan, the omnibus spending bill
requires that at least 40 percent of the units be rent-restricted (affordable) and the average of the
imputed income limitation designated for affordable units cannot exceed 60 percent of AMI. The
designated imputed income limitations must be in 10 percent increments with a minimum of 20 percent
and maximum of 80 percent.
As, noted in the 2019 LIHTC Qualified Allocation Plan for the District of Columbia, applicants that elect
the Income Averaging minimum set-aside shall comply with the following requirements:
100% of the units are LIHTC-eligible, except for preservation projects with current tenants with
documented income above 80% of AMI
The average income of the units shall be limited to 59% AMI
At least 10% of the units must be restricted at 30% AMI
Applicants must provide reasonable parity between unit size and buildings, as applicable, at
each income band
4% Tax Credit projects that elect the IA minimum set-aside will still be required to meet either
the 20/50 or 40/60 minimum applicable to tax-exempt bond financing
The capital stack for the Project will consist of permanent financing of approximately $21,679,000, and
$11,794,722 DHCD HPTF loan, $17,093,110 in Low Income Housing Tax Credit (LIHTC) Equity, and
$1,840,000 in existing DHCD debt, and $3,835,742 in Deferred Developer Fee. The total development
cost is $56,202,574 ($488,718/unit), inclusive of inclusive of acquisition, hard and soft costs, developer
and financing fees, reserves and escrows. Urban Village Redevelopment, LLC will be the owner and
borrowing entity (Borrower or Sponsor) for the transaction. At closing, Urban Village
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Redevelopment, LLC will admit a 99.99% tax credit investor member into the partnership to facilitate
the LIHTC equity.
The remaining members of the development team are Whiting-Turner Contracting Company as General
Contractor, Eric Colbert and Associates as the Architect, and Habitat America, LLC as the Property
Manager.
STRENGTHS:
1. Sponsorship/Guarantor: Somerset Development Company is a renowned real estate
development company based in Washington, DC. Founded in 2000, Somerset is a woman-
owned, mission-driven company that is committed to smart growth, transit-oriented urban
development, sustainability, and investment in human capital. Somerset has won numerous
awards for their affordable housing developments including the 2018 Readers Choice Award for
Best Preservation Project from Affordable Housing Finance for Portner Flats on V Street. In
addition, Somerset won the 2018 Excellence in Affordable Housing Award from Urban Land
Institute for Channel Square Apartments in SW. Somerset owns and operates assets valued at
over $400 million, with over 1,750 residential units in Washington, DC and Baltimore, MD.
Somerset has completed a number of projects with DCHFA including Faircliff Plaza West, Faircliff
Plaza East, Galen Terrace, Hubbard Place, Webster Gardens, and Portner Flats.
2. Location: The Project is located in the highly desirable neighborhood of Columbia Heights, just
0.4 miles from the Columbia Heights Metro stop, 0.2 miles from the 14th Street dedicated bike
lanes, and just outside the front door is the 16th Street priority bus corridor. Shops, restaurants,
and big box retailers such as Target, Best Buy, Marshalls, and Bed Bath & Beyond are all in close
proximity. According to REIS, asking rents in this neighborhood are higher five of the Districts
nine submarkets. The third quarter of 2019 represents the submarkets fifth consecutive
quarterly gain in asking rents indicating that renters are willing to pay a premium for the
location.
LOAN STRUCTURE:
The Project will be partially financed through the issuance of $28,150,000 million ($6,471,000 short term
bonds and $21,679,000 long term bonds) in DCHFA tax exempt bonds. The Sponsor has not selected a
construction or permanent lender at this time but is considering the following: Fannie MTEBs, Freddie
TEL, and Risk Share with DCHFA.
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SUMMARY OF CONSTRUCTION SOURCES AND USES:
Sources $ Uses $
Construction Loan $33,223,000 Acquisition $8,200,000
DHCD HPTF $11,496,956 Construction $30,765,520
Existing DHCD $1,840,000 Soft Costs $5,269,551
LIHTC Syndication Proceeds $2,563,967 Financing $4,888,852
Total Construction Sources $49,123,923 Total Construction Uses $49,123,923
SUMMARY OF PERMANENT SOURCES AND USES:
Sources $ Uses $
DCHFA Senior Loan $21,679,000 Acquisition $8,200,000
DHCD HPTF $11,794,722 Construction $30,765,520
Existing DHCD $1,840,000 Soft Costs $5,269,551
LIHTC Syndication Proceeds $17,093,110 Financing $4,888,852
Deferred Developer Fee $3,835,742 Developer Fee $6,105,385
Reserves & Escrows $1,013,266
Total Permanent Sources $56,242,574 Total Permanent Uses $56,242,574
FINANCIAL ASSUMPTIONS:
Permanent Loan All-In Interest Rate 4.25%
Permanent Loan Amortization 40 years
Permanent Loan Term 17 years
Minimum Amortizing DSCR 1.15
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DCHFA FEE SCHEDULE
Application Fee $28,150
Financing Fee $563,000
Issuers Counsel $40,000
DCHFA LIHTC Allocation Fee $103,605
DHCD LIHTC Allocation Fee $69,070
Construction Monitoring Fee $307,655
DHCFA Bond Admin Fee (Short Term, Construction) $51,229
DHCFA Bond Admin Fee (Long Term, Permanent) $137,300
Total $1,300,009
TAX CREDIT STRUCTURE:
The Sponsor not selected a LIHTC investor but has received an initial LOI from Bank of America. Per the
letter of intent (LOI) an affiliate of Bank of America will have a 99.99%