In July 2016, a joint venture between Somerset Development Company (“Somerset”) and Jonathan Rose Companies (“JRCo”) closed on the financing for Portner Flats, a new 96 unit affordable housing high rise to be built on the former site of Portner Place Apartments located in the 1400 block of U and V Streets, NW. The closing included the sale of the U Street portion of the site to a national developer who will take the lead in the development of another new building with approximately 288 market rate units and ground floor retail. The redevelopment of this property will double the number of the affordable units on the site; and provides for the return of the current residents. The redevelopment is well aligned with the District’s priorities for preserving and expanding affordable housing options in walkable, infill locations with excellent access to mass-transit.
Previously, Portner Place was a distressed 48-unit, HUD Section 8, garden style housing complex located on a 1.1 acre site. The property was purchased by the joint venture and Rose Green Cities Fund in 2013. The property is being developed in collaboration with the Portner Place Tenant Association, which exercised its right of first refusal through the Tenant Opportunity to Purchase Act (TOPA) and assigned those rights initially to Somerset and then to the joint venture team. At the time of purchase, the property consisted of 4 garden-style apartment buildings with a large surface parking lot; and suffered from deferred maintenance in a rapidly gentrifying neighborhood. Citi Community Capital provided the initial first mortgage loan through Freddie Mac, and Rose Green Cities Fund provided additional equity and bridge financing. The DC Dept. of Housing and Community Development provided an acquisition loan.
The development team was successful in gaining broad neighborhood support for the redevelopment of the site into a new mixed-income, mixed-use property to preserve the affordability for the original tenants and double the affordable housing units by using the market strength of the site. The project plans were approved by the Historic Preservation Review Board and a Planned Unit Development was secured to increase the allowable density on the site for a maximum of 403 units.
The redevelopment of the site will begin in July 2016 with the construction of the 96 affordable building on V Street called Portner Flats, and simultaneously with the construction of the 288 unit, market rate building at 1441 U Street market rate building with ground floor retail. Using the market strength of the site, the joint venture team will not only double the current number of affordable apartments, but provide significantly more and deeper affordability than the requirements under inclusionary zoning. The affordable units will be set-aside for households at or below 60% AMI, less than the 80% AMI level required by IZ.
At Portner Flats, the joint venture team obtained a Pass-through Section 8 for the current residents contract to assure affordability for the residents while they are off-site during construction and with their return, the team has obtained HUD approval to extend the Section 8 contract for 20 years. The team is providing support services to current residents during their temporary off-site relocation and their return to Portner Flats.
The design integrates sustainable design principles, emphasizes resident health and wellbeing, and includes high-quality resident amenities and outdoor landscaped spaces. Amenities include a playground, a community garden, community spaces, a computer lab, and a fitness room. A robust set of resident services will be offered at Portner Flats, such as computer training, after-school and senior programs, and job training.
The development of Portner Flats is being financed with tax exempt bonds and 4% tax credits through the Low Income Housing Tax Credit program. Prudential is underwriting FHA insured construction and permanent loans through the 221(d)4 program. Boston Financial is serving as the Tax Credit Syndicator and Capital One as the investor. Owner financing (the joint venture team) is providing internal subsidy to expand the affordability and the amenity package. Clark Construction has signed a Project Labor Agreement for the construction of Portner Flats. The building was designed by Eric Colbert & Associates.