In October 2013, Somerset Channel Square Partners, the National Housing Trust – Enterprise Preservation Corporation (NHT/Enterprise), Jonathan Rose Companies (“JRCo”), and the Rose Green Cities Fund (JRCo’s investment fund with Citi Community Capital) purchased Channel Square Apartments, a 223 unit housing complex located in the Southwest Waterfront neighborhood of Washington, DC. The 3.95 acre property was purchased in collaboration with the 325 P Street S.W. Tenant’s Association through the Tenant Opportunity to Purchase Act (TOPA). Citi provided the $24.6 million first mortgage loan. Rose Green Cities Fund and Channel Square Partners (joint venture between Somerset and NHT-E) provided additional equity and bridge financing. The DC Dept. of Housing and Community Development provided a soft acquisition loan.
Channel Square Apartments provided a unique opportunity for the joint venture to preserve and expand affordable housing within a truly mixed-income community located in a rapidly redeveloping neighborhood. The development team, working in close cooperation with the tenant association, developed a plan that integrated innovative, sustainable design principles, emphasized resident health and wellbeing, and acknowledged the existing and evolving community fabric of the neighborhood. The venture’s vision was well aligned with the District’s priorities for expanding housing options in walkable, transit-oriented neighborhoods with excellent access to services and amenities.
The property is located across the street from Fort McNair, two blocks from the Waterfront Metro Station, and less than one mile from the Nationals Stadium at the Navy Yard. The building was designed by Harry Weese, a notable American architect who designed the District’s Metro system and the original Arena Stage. Channel Square offers studios, one, two and three bedrooms apartments with beautiful views, as well as four rows of townhomes with two and four bedrooms with patios. There are many families still living at Channel Square who were the first to occupy the building when it was originally built in 1968, utilizing HUD Section 236 financing.
With the assistance of a $7.4 million dollar acquisition loan from DHCD, the building targets affordable rents to one third of its residents at or below 50% AMI; at or below 80% of AMI to another third and the remaining third of the residents are under a rent stabilization program equivalent to rent control. Given the South West Waterfront development and the rapidly changing nature of the neighborhood, the preservation of affordable rents is highly valued to the residents who would have otherwise been displaced. Phase 1 of the project consisted of a major renovation to update the building and improve the efficiency of the infrastructure systems. Phase 2 of renovations provided for a new lobby, new community spaces, new playground and community gardens, new site lighting, completion of new heating and cooling systems, and solar panels for electricity and hot water. A commercial space was converted to 9 new market rate apartments.
At the conclusion of the renovations, a Resident Services Fund was established and funded by the development team to provide a program of services which is jointly programmed and managed by ownership and the Tenant Association. An annual contribution from the property will be dedicated to sustain the resident services program over time.