Pre towne emance-snencr
November 22, 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 ofthe BoardofDirectors (the
Board) of the District of Columbia Housing Finance Agency (the Agency), you are hereby
notified that on November 9, 2021, the Board enacted an Eligibility Resolution for tax-exempt
and/or taxable multifamily housing mortgage revenue bond/obligation financing in an amount
not to exceed $36,990,000 for the Terrace Manor Apartments project (the Development). The
Development will be located at 3301 23 Street, SE, Washington, DC 20020, in Ward 8 which,
after completion is expected to consist of one hundred thirty (130) residential rental units.
A copyof the Eligibility Resolution for the City Councils review is enclosed as Exhibit A. A
detailed descriptionof 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,
PH.
Michael L. Y ame ne
General Counsel
Enclosures
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815 Florida Avenue NW, Washington DC 20001-3017
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EXHIBIT A
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 MULTIFAMILY UNDERWRITING MEMORANDUM
INDUCEMENT RESOLUTION APPROVAL
TERRACE MANOR
3301 23* STREET SE, WASHINGTON, DC 20020 (WARD 8)
130 UNITS
DEVELOPERS:
WC SMITH
ANACOSTIA ECONOMIC DEVELOPMENT CORPORATION (AEDC)
NEW CONSTRUCTION
NOT TO EXCEED $36,990 MILLION (120% of Bond Issuance)
HUD 50/50 RISK SHARE PERMANENT FINANCING
Maximum LTV: 85%, Minimum Debt Service: 1.15
LINDA HARTMAN
DATE: November
9, 2021
 Multifamily Lending and NeighborhoodInvestments
Credit Ag oval Request.
Terrace Manor
Project Address SaDL Bard Sree SE, Washington, OG, 20020
ae =
ensue Ta was
[boa/acr? Yes
feof units 130
utaing Type Tew Constucion
[rimary Developea WESrath (Guarantor and ABDC
ax Bxampt Sond stance AnGURE $30,025,000
[Ave Restrictions KAM oFLess
Iagpicable subsidy Yes
Team:
[senerai Contractor: WES Construaion, LE
Property Manager: We Smith
[architec Slober rassoictes
[construction Lender Wills Fa
DEHEA sk Share Fest Nor elo)
[Sone Counsel: "a0
(submarket
[Neighbornoad Tandle Reig
[wksear: 2
France core 34
[Detrimental influence
ExtateConsiderations:
frtal Development Cost Per Unit $510,576
[Underwriter Vacancy Rate oa
[Underwriten OpxPerUnit sa
[PAM GoEx Per UnitRan 361 STD(After Asien)
[appraisedValue $24,500,000
lav: 7%
(capuure nate Naw
[enetraton Rte Naw
{Bond lsuanee:
eer:
f0/soni share pvsieoTTenn
ionTest
Tx txempt Bond Amount Aggregate Sasis/Bond Base
$30,825,000 357.078 347
[Permanent Bebe
Debt Execution DOHA [se hare First Mortgage Loan
[ream Snest lDnderwaten
[amount $15985 00
interest Rate 3.0%
[amortisation 0
a7
sca:
lone [roi Amoune:
[Federal UATC Raise Rate 305, $05 245
[DcUMTC RiceRate S070 SAR
HFA
 TRANSACTION SUMMARY:
The Multifamily Lending and Neighborhood Investments (MLNI) underwriting staff requests the
inducement from the District of Columbia Housing Finance Agency's (DCHFA or the Agency) Board of
Directors (the Board) for the issuance of tax-exempt bonds in an amount not to exceed $36,990,000
inclusive of the estimated $18,985,000 HUD 50/50 Risk Share permanent loan to finance a portion of
the costs to develop 130 units at Terrace Manor Apartments (the Development or the Property). The
Risk Share Mortgage Loan will be constrained to 85% stabilized Loan to Value (LTV) and 1.15x amortizing
debt service coverage ratio (DSCR).
Terrace Manor, a low-income housing tax credit (LIHTC) property in its extended use period, was
purchased by Sanford Capital in 2012. An Indenture of Restrictive Covenants for Low-Income Housing Tax
Credits encumbered the Project site on June 8, 1995 (recorded date in land records), and it required all
residential units at the property be restricted at 60% of AMI or less. The tax credit compliance period
expired in 2010; however, the termination date of the restrictive covenants was set for 2025 (15 years
after the compliance period).
In 2016, the DC Office of Attorney General (OAG) filed a suit against Sanford Capital LLC, Oakmont
Management Group LLC, Terrace Manor LLC, and Aubrey Carter Nowell (former owners and managers of
Terrace Manor) forvariousviolations of DCs Housing Code and Consumer Protection Procedures Act. The
DC OAG and former owners of Terrace Manor agreed to a court-monitored abatement plan in February
2017, DC OAG filed motions for contemptofcourt and receivership in March 2017 against Sanford Capital,
and the Court appointed athird-party Receiver in May of 2017. The DC OAG approached WC Smith in the
spring of 2017, as the former owner of Terrace Manor prepared to go through bankruptcy court and DC
OAG sought to make affordable housing owners/operators aware of the opportunity to purchase Terrace
Manor.
Over the summer of 2017, WC Smith workedwith the Tenants Association, which consisted of 11
households represented by Bread for the City, to developa plan for the property. WC Smith voluntarily
executed a Memorandum of Understanding (MOU) with the Tenants Association. The MOU outlines
the scope of rehabilitation/redevelopment, terms of the temporary relocation, right of return, and rents
upon return to the rehabilitated/redeveloped property. The Tenants Association unanimously voted to
select WC Smith as the developer. WC Smith executed a Purchase & Sale Agreement with the former
owner (Sanford Capital) in August 2017. In September 2017, the US Bankruptcy Court approved the sale
and on October 26, 2017, WC Smith closed on the purchaseof Terrace Manor.
Since Terrace Manor was acquired through bankruptcy court, the Tenant Opportunity to Purchase Act
(TOPA) regulations did not apply to the sale. In late January 2018, WC Smith approached the Tenants
Association and received approval to demolish the existing buildings, as well as construct a new
multifamily development. The former Terrace Manor tenants, per the MOU, were relocated to other
nearby WC Smith properties and they are expected toreturn to the Development, post completion. The
new owner and borrowing entity ("Borrower") for the proposed transaction is Terrace Manor
Redevelopment LP. The site is designated a Qualified Census Tract (QCT) for 2021 and 2022 and, thus,
eligible for a 30% LIHTC basis boost.
SHEA
The former Terrace Manor residential structures, which consist of 12 vacant buildings with 61 units, will
be demolished. The proposed new construction low-incomehousing tax credit (LIHTC) Project will replace
those 61 units, as well as produce an additional 69 units, in one four-story, L-shaped building. The former
tenantsof Terrace Manor, per an MOU with the Tenants Association, have a rightoffirst refusal to a new
apartmentat their current rent with annual increased based on CPI
The 130-unit Project will consist of 75 one-bedroom units, 47 two-bedroom units, and eight three-
bedroom units that are restricted at the 30%, 50%, and 60% AMI levels. Additionally, the fourteen (14)
30% AMI units will be permanent supportive housing (PSH) units and will operate with Local Rent
Supplement Program (LRSP) subsidies from the District of Columbia HousingAuthority (OCHA). Tenants in
the subsidized PSH units will contribute 30%oftheir income, not to exceed the maximum allowable 30%
AMI rents. PSH supportive services will be paid by the DC Department of Human Services (DHS), and
Community Connections (CC) or Community of Hope will provide ongoing, wrap-around PSH supportive
services. The PSH supportive services provider will develop a service planfor thetenants in the PSH units
and the service plan will address/set goals in the following areas: living situation, vocational/educational
heeds, psychiatric/behavioral, substance abuse, physical health, family and social relationships, and legal
concerns. DCHFA has not received copies of the LRSP contract with DCHA, PSH supportive services
contract with DC DHS, and PSH supportive services contract with the service provider. DCHFA will require
copies ofthese contracts to be provided before closing
The Developments in the Randle Heights neighborhood in Ward 8. Its in censustract 0074.03, a Qualified
Census Tract. The Project site is designated as Somewhat Walkable by Walk Score, which indicates that
some errands can be accomplished by foot. The Project site is located approximately 0.7 miles from the
Southern Avenue metro station, which services the Green Line. The metro station is not easily accessible
by foot; however, it is accessible by Bus Route 32, The Project site is located within 0.1 miles from the
Route 32 bus stops along SavannahStreet Southeast, as well as 0.2 miles from the Routes 92, V7, W4, and
W6 bus stop along Alabama Avenue Southeast.
Property amenities will include free garage parking spaces, bike storage spaces, community
room/business center, fitness center, elevators, exercise facility, various resident services, and on-site
management. The various resident services will include access to training at the Skyland Workforce
Center, summer midnight basketball league at THEARC, and free shuttle service and access to the Village
of Parkland Splash Park, which is owned by WC Smith and located approximately 0.2 miles from the
Project site. A total of 52 garage parking spaces will be offered at the Project, which equates to a parking
ratio of 0.4 parking spaces per unit. As previously noted, the Project will be located within 0.2 miles from
multiple local bus routes.
The security amenities will include buzzer intercom system, limited access, 24-hour front desk, perimeter
fencing, andvideosurveillance. in-unit amenitieswill include blinds, central air-conditioning, coat closets,
dishwashers, garbage disposals, microwaves, ovens, refrigerators, and in-unit washer/dryers.
The capital stack for the Development will consist of permanent financing in the approximate amount of
$18,985,000 as a DCHFA Risk-Share First Mortgage Loan, a $16,537,535 DHCD HPTF loan, $26,182,453 in
Low IncomeHousing Tax Credit, or LIHTC Equity, and $4,652,170 in the District of Columbia Low Income
Housing Tax Credit, or LIHTC Equity. The total development cost is $66,374,868 ($510,576/unit),
inclusive of acquisition debt repayment, hard and soft costs, developer, and financing fees, reserves and
escrows.
Terrace Manor Redevelopment LP will be the ownerand borrowing entity (Borrower) in thetransaction
The 0.01% managing member and general partneris Terrace Manor GP LLC and it consists of AEDC Terrace
Manor LLC, the managing member (Managing Member), WCS Group Terrace Manor Investment LLC,
and Smith Terrace Manor Investment LLC. WC Smith will be the guarantor of the Project. At closing,
Terrace Manor Redevelopment LP will admit 99.99%tax credit investor members, TBD Wells Fargo Entity
(federal LIHTCs) and TDB Entity (DC LIHTCs), into the partnership to facilitate the LIHTC equity investment.
The remaining members of the development team consist of WCS Construction, LLC as General
Contractor, Stoiber + Associates as Architect, and WC Smith as Property Manager.
STRENGTHS / RISKS (KEY MITIGANTS):
1. Credit Risk: DCHFA will issue an estimated $18.985 million permanent mortgage loan and assume
first loss exposureof approximately $9.493 million (50/50 risk share with HUD) in the eventof a
defaultbythe borrower.
Credit Risk Mitigant: DCHFA will require that the guarantor maintain liquid assets equal
to 10% of the permanent loan amount or 12 months of principal, interest, and mortgage
insurance premium (MIP). In addition, the loan will be required to meet conversion
requirements, including: 1) lien free completion of construction, verification of
compliance with affordability and construction wage requirements, and 90% physical
occupancy with a 1.15 or greater Debt Service Coverage Ratio (DSCR) for 90 days.
2. Environmental Risk: The September 2019 Asbestos, Lead-Based Paint, and Mold Screening
Report, which is considered to be a Supplemental ESA, found evidence of asbestos in someofthe
common areas and roofs of the former Terrace Manor residential buildings. Additionally, the
report noted the presence of mold in some portions of the residential building interiors and lead-
based painton the metal stairwell risers and stringers.
Environmental Mitigant: The developer will utilize a DC-licensed asbestos abatement
contractor thatwill follow regulatory guidelines and requirementsfor theproper disposal
of materials, as recommended in the Supplemental ESA. In order to ensure that the
limited presence of lead-based paint does not create hazardous waste during the
demolition process, demolition contractor will perform a Toxicity Characteristic Leaching
Procedure sampling prior or during demolition. The cost of the Toxicity Characteristic
Leaching Procedure sampling, as well as any costs incurred to remove the lead-based
paint, is included in the subcontractors pricing.
SHEA
 3, Security Risk: The Project site is in an elevated crime risk index area.
Security Risk Mitigant: The Project will offer various security amenities such as buzzer
intercom system, limited access, 24-hour front desk, perimeter fencing, and video
surveillance. Of note, the Project will offer one lobby area with a 24-hour front desk. Two
front-desk employeesthat will be paid hourly, as well as one on-site leasing consultant,
will be responsible for the 24-hour front desk. The projected annual security expense per
unit for the Project is $1,126 per unit.
4. Reputational Risk: DCHFA will be providing $30,825,000 in tax-exempt volume cap to the
transaction, and will be publicly associated with the Development.
Reputational Risk Mitigant: The sponsor and development team are experienced.
Sponsor WC Smith has worked on other successful housing developments with DCHFA
financing including, most recently, Petworth Station, Archer Park, Juniper Court, and
Sheridan Station | & Ill
STRENGTHS:
1, Tenant Retention: WC Smith voluntarily executed a Memorandum of Understanding ("MOU")
with the Tenants Association, which consists of 11 households. The former Terrace Manor
tenants, per the MOU, were relocated to other nearby WC Smith properties and they have the
rightoffirst refusal to a new apartmentat their currentrent with annual increased based on CPI
2. Sponsorship/Guarantor: Since 1980, Anacostia Economic Development Corporation (AEDC) has
co-developed the Knox Hill Village Townhomes and The Residences at St. Elizabeths East
developments. Additionally, AEDC was the managing general partner of the partnership of the
Randle Highlands Townhomes development,
William C. Smith & Co. (WC Smith or WCS), the lead developer on the Project, is a developer
and property manager in the Washington, DC area. The firm currently owns and manages 10,000
housing units. The development arm, WCS Development, has developed over