$3.3 million grant will be used to leverage $13 million in affordable housing investments across D.C.’s eight wards
WASHINGTON, DC/ARLINGTON, VA – RealEstateRama – For the second straight year, Washington, D.C.’s Department of Housing and Community Development (DHCD) has named Capital Impact Partners as a manager of the District’s Housing Preservation Fund (HPF). DHCD’s new $10 million in Preservation Funds, when leveraged by the fund managers that also include LISC and the Low Income Investment Fund (LIIF), will bring the fund to a record $116 million. Capital Impact was awarded a $3.3 million grant as part of this announcement, which the organization expects to leverage at a 3:1 ratio to deploy an additional $13 million in loans to help preserve more than 340 homes across the District.
Mayor Muriel Bowser launched the fund in 2018 to increase the preservation of affordable housing in the District by supporting the efforts of organizations like Capital Impact to provide low-cost and flexible financing to mission-driven nonprofit and for-profit developers working on multifamily housing projects in the District.
“This is our affordable housing goal. We looked at what is happening in our region and city. People want to live in our city and region,” said Mayor Bowser. If we are going to continue the type of growth that we have, then we have to continue robust, neighborhood-sensitive” investment.
“It is our challenge to be more creative in leveraging all of our resources, whether public or private, to preserve existing affordable housing,” said DHCD Director Polly Donaldson. “We are delighted to have partners that can help increase our capacity to preserve more affordable housing in the District. We have a lot to be proud of, but there’s more work to do.”
In just its first year, Capital Impact leveraged its grant from the city to deploy more than $28 million in financing to support five projects and help protect 860 affordable homes. This directly supported an estimated 1,960 residents, 1,948 who have low-to-moderate incomes. Combined with the efforts of a second HPF manager, LISC, the number of homes protected in the first year far exceeded the Mayor’s initial goal of 1,000.
A unique aspect of the program is how it works to support the Tenant Opportunity to Purchase Act (TOPA). The Act gives residents of multifamily buildings that are up for sale the right of first refusal to buy their properties, allowing them to work with mission-driven developers to purchase the buildings. This helps keep rents affordable and prevents residents from being displaced in the face of rapid gentrification in mixed-income neighborhoods.
“Building communities of opportunity requires that all residents have equitable access to affordable places to live and thrive, especially in neighborhoods that are rapidly gentrifying,” said Diane Borradaile, chief lending officer at Capital Impact. “That is why we are thrilled DHCD has entrusted us once again to preserve affordable housing in key communities across Washington, D.C. in partnership with mission-driven developers.”
2019 Housing Preservation Fund Impact Stories:
“This innovative tool is delivering more than we actually thought that it could. We are leveraging the fund to $137 million. The Preservation Fund has preserved 1,300 housing units. What does that correlate to? We are really talking about housing units and families,” said Drew Hubbard, deputy director for operations at the D.C. Dept. for Housing and Community Development.
These new funds will allow Capital Impact to continue to quickly provide short-term financing for acquisition, critical repairs, environmental remediation, and predevelopment costs to eligible borrowers. Properties targeted for fund investments are occupied multifamily housing of at least five units, in which at least 50 percent of units are currently affordable to households earning 80 percent or less of the Median Family Income (MFI).
In 2019, Capital Impact partnered with a number of mission-driven developers and long-time residents on a variety of high-impact housing loans, including:
Ridgecrest Village: Originally built in 1951, Ridgecrest Village is a community of 273 apartment units that house approximately 900 residents in Washington, D.C.’s Congress Heights community. About 10 percent of residents within the complex have lived there affordably since the 1970s, and 90 percent of residents earn 60 percent or less of MFI. When the complex owner decided to sell, the Ridgecrest Village Tenant Association assigned their TOPA rights to The NHP Foundation to ensure long-term affordability of the Village’s units and make way for tenant-designed improvements. Capital Impact provided $7.5 million as part of $31 million in financing with Chase and W.C. Smith to support the purchase of the property as well as future improvements preserving the affordability. Now this community can control its future and financial stability, and can take advantage of an increasing amount of amenities across the city.
Worthington Woods: Also located in Congress Heights, Worthington Woods is preserving affordable housing for residents with lower incomes. The community has 394 units of affordable housing for more than 900 renters. It is also near shops, groceries, and three bus lines. The Worthington Woods Tenant Association assigned their TOPA rights to the Montgomery Housing Partnership (MHP) in exchange for a commitment to preserve the property as affordable, make improvements, and avoid tenant displacement. Capital Impact provided MHP with a $6.1 million loan as part of a $40 million transaction including financing from Sandy Spring Bank to purchase the property.
1101 Euclid: Located in the Columbia Heights neighborhood, which has experienced a rapid loss in affordable housing, this building had fallen into disrepair. Through HPF, Capital Impact provided a $3.2 million loan, helping the tenants work with black-owned developer Banneker Ventures to acquire their building and make critical repairs while maintaining affordability for up to 78 residents.
Cascade Park: Cascade Park Apartments, a 132-unit, multifamily rental property located in SE Washington, D.C., has experienced a long period of disinvestment, resulting in poor living conditions for residents, high vacancy rates, and operating losses. Capital Impact provided $8.9 million as part of a larger financing package to Dantes Community Partners, a D.C.-area affordable housing developer, to preserve the affordability of the property for its approximately 429 residents. Dantes Partners will also work to improve property management and address immediate repairs.
2384 Champlain St NW: Located in the Adams Morgan neighborhood, this building has provided extremely affordable housing to individuals and families for years. The neighborhood has experienced considerable gentrification and increased home prices, putting this vital resource at risk. When the building came up for sale, Capital Impact provided a $6.5 million loan and worked with MED Developers to acquire the building so that tenants who want to remain in their homes and community can do so. The loan will allow the developer to make critical repairs to the building while maintaining deep affordability of the building rents.
This work builds on Capital Impact’s other efforts in D.C. where the organization has invested more than $137 million in Washington, D.C. to support multiple projects delivering critical social services. This includes working with a variety of partners and organizations, including Martha’s Table and Terrace Manor Apartments in Ward 8; Unity Health Care in Ward 5; and the District of Columbia International School and residents of Takoma Place Apartments in Ward 4. Based in Arlington, VA, Capital Impact has disbursed more than $2.7 billion nationally since 1982 to champion social and economic justice in communities long subject to systemic disinvestment.
Capital Impact was selected from responses to a DHCD solicitation in August 2019 that outlined the following duties: 1) leverage public funds with private and or philanthropic funds to provide loans to borrowers for eligible activities; 2) market, underwrite, originate and service the preservation loans; 3) ensure compliance with the terms of the Housing Preservation Fund; and 4) coordinate monthly with DCHD on the use of the Housing Preservation Fund.
Mayor Bowser’s Commitment to Affordable Homes
Today’s announcement was part of Mayor Bowser’s “New Year, New Housing” initiative. The goal of HPF is to aid in achieving the policy objective of the DC Housing Preservation Strike Force: preserving the affordability of 100% of the District’s existing federally and city-assisted affordable rental homes. It offers eligible borrowers short-term financing for the pre-development and acquisition of occupied multi-family properties with more than five (5) housing units and half of the households earning up to $77,600 for a family of four.
About Capital Impact Partners:
Through capital and commitment, Capital Impact Partners helps people build communities of opportunity that break barriers to success. We deliver strategic financing, incubate new social programs, and provide capacity-building to help ensure that low-to-moderate-income individuals have access to quality health care and education, healthy foods, affordable housing, and the ability to age with dignity. A non-profit community development financial institution, Capital Impact Partners has disbursed more than $2.7 billion to champion social and economic justice for communities since 1981. Our leadership in delivering financial and social impact has resulted in Capital Impact being rated by S&P Global and recognized by Aeris for our performance. Headquartered in Arlington, VA, Capital Impact Partners operates nationally, with local offices in Detroit, MI, New York, NY, and Oakland, CA. Learn more at www.capitalimpact.org.