District of Columbia deal continues affordable housing push

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The District of Columbia Housing Finance Agency closed the 2018 fiscal year with its second bond offering under a new program to create more affordable housing for the nation’s capital.

The DCHFA priced $74.5 million of tax-exempt bonds on Sept. 28 through lead manager Wells Fargo to finance the construction and preservation of two affordable housing developments. The deal marked the 39-year old agency’s third public bond offering in 13 months under its Multifamily Parity Indenture established last year as a vehicle to attract more institutional investment capital for affordable housing.

“The final business day of Fiscal Year 2018 ended with robust investment activity in affordable housing in two of the District’s amenity rich neighborhoods where an influx of market rate development has outpaced affordable housing,” Todd A. Lee, executive director and CEO of the DCHFA, said in a statement.

The DCHFA was founded in 1979 with the goal of expanding home ownership and rental housing opportunities in Washington by offering below-market-rate mortgage loans. The agency issues mortgage revenue bonds that lower developer costs of acquiring, constructing and rehabbing rental housing.

Lee spearheaded the DCHFA’s $34.4 million sale of Federal Housing Administration-insured pass-through revenue refunding bonds on Aug. 8, 2017 in the agency’s first transaction under the flexible indenture program. The new borrowing framework enables bonds to be backed by a debt service fund created by the DCHFA if there is insufficient revenue to pay debt service in a timely manner.

“As a capital provider, your liquidity is everything and our multifamily parity indenture is integral to our ability to efficiently raise the liquidity required to fund our transactions,” said Lee.

Moody’s Investors Service wrote in a report Thursday that housing financing agencies like the DCHFA are well positioned to service a rising senior citizen population expected to comprise 22% of the country by 2040. Moody’s projects that 22% of seniors will be at or below low-income levels in 2040 with the trend driving increased multifamily loan production while boosting housing finance agency portfolios.

The new bonds for the affordable D.C. housing communities are secured by two Department of Housing and Urban Development insured mortgage loans made under DCHFA’s Level I Risk Share Program. The borrowing finances the $50.7 million Capitol Vista and $96 million Delta Towers projects developed by Washington D.C.-based Dantes Partners.

Capitol Vista in northwest D.C. will feature 104 affordable apartment homes in the Mount Vernon Triangle neighborhood. Additional financing for the Capitol Vista project was provided by $14,281,295 in equity generated by 4% low income housing tax credits and $18 million from the Department of Housing and Community Development’s Housing Production Trust Fund.

The redevelopment of Delta Towers in northeast D.C. preserved existing affordable senior housing at the complex while adding 30 additional units. Thirty of the apartments in the 100% affordable senior community will receive a Local Rent Supplement Program subsidy and 18 will be designated as permanent supportive housing with housing assistance payments via the D.C. Housing Authority.

The development, which will include 4,300 square feet of ground floor retail space, is also funded by $2.98 million in equity generated through low income housing tax credits and $23.3 million from the Department of Housing and Community Development’s Housing Production Trust Fund.

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Affordable housing bonds Primary bond market District of Columbia Housing Finance Agency District of Columbia