PP vesovsma rmance noEncy
January 4, 2021
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 BoardofDirectors (the
Board) of the District of Columbia Housing Finance Agency (the Agency), you are hereby
notified that on December 8, 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
$18,750,000 for the new construction and equipping of the Waterfront Station II project (the
Development). The Development is expected to be located at 1000 4" Street, SW,
Washington, DC 20024, in Ward 6. After completion, the Development is expected to consist of
one (1) building, containing a total of approximately ninety-four (94) residential rental units.
A copyofthe 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.
815 Florida Avenue NW, Washington DG 20001-3017
DCHFA Resolution No. 2020-27
Waterfront Station II
Eligibility Resolution
WHEREAS, the District of Columbia Housing Finance Agency (the
Agency) received a request on November 23, 2020 from WFS2 AH4 LLC (the
Applicant") that the Agency provide acquisition and construction financing for
Waterfront Station Il, which upon completion is expected to consist of ninety-four
(94) affordable residential units and will be located at 1000 4th Street, SW,
Washington, DC 20024, Ward 6 (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 at least 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 42-2701.01 et sea. (the Act");
WHEREAS, the Applicant has requested financing in an amount not to
exceed $18,750,000 through an offering of the Agency's Tax-Exempt 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 ora 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 $18,750,000, 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 ninety-four (94) units, at least one
hundred percent (100%) 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
Southwest Waterfront neighborhood.
NOW THEREFORE, BE IT RESOLVED by the Board of Directors of the
Agency (the Board) that:
1, Based upona review of the request by Agency staff as it relates to the
Project, the report on such review to the Board, the favorable
recommendationofthe 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
3. This reservation of volume cap in the amount of $18,750,000, 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
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
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. 2020-27
Buwa Binitie : APPROVED
Stephen M. Green : APPROVED
Scottie Irving : APPROVED
Stanley Jackson: APPROVED
Heather Howard : APPROVED
Waterfront Station II
1000 4th Street SW (Ward 6)
94 units
Maximum LTV: TBD%, Minimum Debt Service: 1.15
Kristin Chalmers
December 8, 2020
The Multifamily Lending and Neighborhood Investments (MLNI) underwriting staff requests approval
of an Inducement Resolution from the District of Columbia Housing Finance Agencys (DCHFA or the
Agency) Board of Directors (the Board) for the issuance of tax-exempt bonds in an amount not to
exceed $18,750,000 to finance a portion of the acquisition and construction costs for Waterfront Station
II (the Project or the Property), a 94 unit affordable apartment project located in Southwest DC. The
transaction will combine 9% and 4% Low Income Housing Tax Credits (LIHTC), commonly referred to as
a twinning transaction. There will also be a separate market component including ground level retail
space financed separately with taxable debt. The three components will be separated via an A&T lot
In 2016, the Sponsor team which is comprised of Hoffman & Associates, AHC Inc., City Partners, and
Paramount Development, was awarded the opportunity to develop the Project site through a public RFP
process with the Office of the Deputy Mayor for Planning and Economic Development (DMPED). As a
result, the Sponsor will enter into a 99-year ground lease with the District. At its completion,
Waterfront Station II will provide 449 mixed income rental units above almost 28,000 SF of retail space.
The retail space will be occupied by Appletree Charter School (9,100 SF), black box theater (9,000), and
neighborhood-serving retail (9,800). The Property will be eleven stories tall with a penthouse level.
Amenities will include a roof-top pool, community room/lounge, coworking areas, patio/grilling area,
patio/grilling area, a fitness facility, and landscaped areas. The Project site is situated adjacent to a
grocery store, restaurants, retail, government offices, bus routes, and the Waterfront Metro station.
Arena Stage, one of DCs premier cultural institutions, and The Wharf development are located just
blocks from the site. The site offers easy access to LEfant Plaza and other major employment
destinations via highways 395 and 695.
The Project site has gone through the Planned Unit Development (PUD) zoning approval process. The
First Stage PUD (PUD 1) was approved on July 31, 2003. The PUD 1 was for eight parcels in total and
was led by a partnership of Forest City, the Kaempfer Company, and Bresler & Reiner, Inc. As part of the
PUD 1 process, the District retained one parcel (the northeast parcel) and led an RFP process to select
the Sponsor team to develop the site. The Second Stage PUD (PUD 2) was approved on April 8, 2019.
The PUD 2 stipulates that the Sponsor will develop the site in accordance with the Land Disposition and
Development Agreement (LDDA) which the developer and the District entered into on December 13,
2018. As detailed in the LDDA, 30% of the residential units (136 units) will be restricted to households
earning less than 50% of AMI, with half of those set aside for households earning less than 30% of AMI.
Prior to closing, each component of the Project will enter into a ground lease with the District for a term
of 99 years. Under this structure, the components will enter into reciprocal use and easement
agreements to ensure that all residents have access to the common areas and amenities.
The Sponsor entered into a Land Disposition and Development Agreement (LDDA) with the District of
Columbia on December 13, 2018 to redevelop the Project site. The LDDA expires on March 29, 2021.
The unit mix for the Project will consist of 118 efficiency units, 241 one-bedroom units, and 90 two-
bedroom units for a total of 449 units. The development will have 68 units set aside for households
earning 30% of Area Median Income (AMI) or less and 68 units set aside for households earning 50%
of AMI or less. The remaining 313 units will be unrestricted.
The capital stack for the 4% transaction will consist of permanent financing in the approximate amount
of $4,400,000 as a Freddie TEL, a 20,327,985 Sponsor Loan, $8,405,186 in Low Income Housing Tax
Credit, or LIHTC Equity. The capital stack for the 9% transaction will consist of permanent financing in
the amount of $2,820,000 as a taxable Freddie Loan, a $1,049,693 Sponsor Loan, and $10,010,000 in
LIHTC Equity. The capital stack for the market component will consist of permanent financing in the
amount of $120,824,113 as a taxable Freddie Loan. The total development cost is $167,836,978
($373,802/unit), inclusive of acquisition debt repayment, hard and soft costs, developer and financing
fees, reserves and escrows. The Borrowing Entity is WFS2 AH4 LLC (the Owner or Borrower). The
Managing Member is WFS2 AH4 MM LLC and consists of WFS2 JV LLC (100%) and AHC Waterfront 4 LLC
(0%). WFS2 JV LLC is the Sole Member and is comprised of AHC Inc. (18%), Paramount Development
LLC (8%), PNH WFS2 LLC (62%), City Partners LLC (9%), and Hoffman & Associates Inc. (3%). AHC
Waterfront 4 LLC is the Non-Member Manager that is wholly owned by AHC Inc. LH 1-Manager LLC and
PNH WFS2 LLC are both affiliates of Hoffman & Associates.
The remaining members of the development team consist of Clark Construction as General Contractor,
Torti Gallas Urban, Inc. as Architect, and Bozzuto as Property Manager.
1. Market Risk: The proposed development will be have a large market component with 70% of
total units unrestricted which introduces market risk to the transaction. Supply in the
surrounding area has been high for unrestricted market units.
o Mitigant: DCHFA tax-exempt bonds will only cover the affordable units that will be rent
restricted at 30% and 50% of AMI.
o Mitigant: The market component will be underwritten to 1.25x DSCR as opposed the
typical 1.15x.
2. Execution Risk: The development financing plan includes a structure that combines the 4% and
9% LIHTC in one structure known as twinning.
o Mitigant: DCHFA have completed three twinning transaction and will be able to assist
with structuring the financing.
o Mitigant: A tax lot structure will be in place to separate the interests between the 4%
tax credits and the 9% tax credits.
Sponsorship/Guarantor: AHC Inc. and Hoffman & Associates will serve as Co-Developers for the
Project. AHC Inc. is an experienced affordable developer in the Mid-Atlantic region with over 40 years of
experience. To date, the organization has developed or preserved over 50 communities providing more
than 7,500 affordable, workforce, and market-rate apartments. Hoffman & Associates is a premier
developer of urban residential, office, hotel and mixed-used neighborhoods. Since its formation in
1993, H&A has successfully completed numerous award-winning projects that include more than 4,900
residential units, 1.3M SF of office space, 690 hotel rooms, 440,000 SF of retail and entertainment
space, and 10+ acres of parks and green space. Between leading the rebirth of 14th Street NW,
renovating historic properties in the East End, developing projects in Adams Morgan, and delivering The
Wharf, H&A is a leader in pioneering DCs urban growth through the development of vibrant, active
The Development will be financed through the issuance of $15,000,000 million in DCHFA tax exempt
bonds ($10,600,000 short term bonds and $4,400,000 long term bonds). Merchants Bank will be
providing a construction loan for 36 months with one 6-month extension option. The construction loan
will be priced at one month Libor plus a spread of 200 bps. Upon conversion, the construction loan will
be paid off by LIHTC equity and a Freddie Mac Tax Exempt Loan (TEL) in the amount of $4,400,000.
The Freddie TEL will have a 15 year term and 35 year amortization and is priced based on 10-year
treasury plus a spread of 291 bps.
Sources: 4% 9% Mkt Total
Construction Loan $15,000,000 $11,462,700 $105,280,600 $131,743,300
Sponsor Loan: $16,490,703 $666,598 $0 $17,157,301
LIHTC Equity: $1,260,778 $1,600,340 $0 $2,861,118
Sponsor Loan $0 $0 $15,166,560 $15,166,560
Total Sources: $32,751,480 $13,729,638 $120,447,160 $166,928,279
Uses: 4% 9% Mkt Total
Acquisition: $454,522 $201,489 $1,686,886 $2,342,897
Construction: $23,831,703 $10,648,208 $93,777,089 $128,257,000
Soft Costs: $2,547,617 $1,129,356 $13,371,192 $17,048,165
Financing Fees: $3,854,051 $788,720 $7,099,511 $11,742,282
Developer Fee: $2,063,588 $961,865 $4,512,482 $7,537,935
Total Uses: $32,751,480 $13,729,638 $120,447,160 $166,928,279
Sources: 4% 9% Mkt Total
DCHFA Senior Loan: $4,400,000 $2,820,000 $120,824,113 $128,044,113
Sponsor Loan: $20,327,985 $1,049,693 $0 $21,377,678
LIHTC Equity: $8,405,186 $10,010,000 $0 $18,415,186
Total Sources: $33,133,172 $13,879,693 $120,824,113 $167,836,978
Uses: 4% 9% Mkt Total
Acquisition: $454,522 $201,489 $1,686,886 $2,342,897
Construction: $23,831,703 $10,648,208 $93,777,089 $128,257,000
Soft Costs: $2,547,617 $1,129,356 $13,371,192 $17,048,165
Financing Fees: $3,854,051 $788,720 $7,099,511 $11,742,282
Developer Fee: $2,063,588 $961,865 $4,378,709 $7,404,162
Reserves and Escrows: $381,691 $150,055 $510,726 $1,042,472
Total Uses: $33,133,172 $13,879,693 $120,824,113 $167,836,978
Permanent Loan All-In Interest Rate 4.15%
Permanent Loan Amortization 35 years
Permanent Loan Term 15 years
Minimum Amortizing DSCR (YR 3) 1.15
Application Fee $15,000
Financing Fee $300,00
Issuers Counsel $40,000
DCHFA LIHTC Allocation Fee $51,996
DHCD LIHTC Allocation Fee $34,664
Construction Monitoring Fee $237,539
DHCFA Bond Admin Fee (Short Term, Construction) $185,500
DHCFA Bond Admin Fee (Long Term, Permanent) $61,600
The Sponsors selected Goldman Sachs (GS) as LIHTC investor for the transaction. Per the letter of
intent (LOI) an affiliate of GS will have a 99.99% ownership interest in the