FULL TEXT: Why Housing Corporation Gave Up on Wilden

By FALLS CHURCH TIMES STAFF

August 5, 2010

Falls Church Housing Corporation Executive Director Carol Jackson issued the following press release today:

Topic:  United decision by contract Owners to end their combined project, The Wilden/McKeever Mixed Use, Affordable Housing Development, actively readying for construction start early September

Location:  City of Falls Church, VA, Combined Site Plan at 350/360 S. Washington Streets

Background:  On Thursday, July 29, 2010, City of Falls Church City Council convened a Special Meeting to consider an early release of City of Falls Church loan funds previously set aside in March 2010 by City Council Resolution for use as local government match funds by The Wilden Senior Apartments in its plan to develop and operate permanently affordable rental housing for seniors. The funds release request Thursday night was made by The Wilden Partners, LP, the entity established by Falls Church Housing Corporation (FCHC) and The Community Builders (TCB) for the purpose of developing, owning and operating The Wilden.  That meeting ended with a motion to table the requested action until the City Council’s regularly scheduled public hearing on Monday, August 9, 2010, where The Wilden Partnership’s request to release $1 million (50% of the currently approved $2 million City loan) will be discussed again on the Agenda.

The purpose for the request of the advance was to enable The Wilden to contribute the project’s share of the acquisition and development cost of the parking required for the development.  The decision to locate parking on the adjacent 360 parcel in a structured facility that would also be developed as an office tower was a direct result of input and negotiations with the City Council and economic development and planning officials last winter to determine that an enhance commercial development spanning a combined 2 parcel site would be the best path to pursue to obtain united City Council and staff support.

Current Events:  Since Friday morning, no written confirmations have been received from any sources currently involved in providing the variety of public and private equity and debt sources of financing for the total development cost, @$17 million, for The Wilden Senior Apartments, including its land and parking.  To date, The Wilden partners have heard verbally from their liaison at Virginia Housing Development Authority (VHDA) the following:

  • The Wilden 2009 award of $4 million from Tax Credits Assistance Program (TCAP) funds is officially withdrawn as of the July 30, 2010 deadline, identified to all parties at last week’s hearing;
  • The VHDA tax credits division chief has been working hard the last 4 days to locate and create a package of funds that will be a dollar for dollar substitute match to replace the TCAP funds withdrawn;
  • The exact nature of those funds will be worked through between VHDA and the tax credit investor representatives;
  • Whatever precise combination of $4 million in funds from low income housing tax credits (LIHTC) to be now made newly available to The Wilden, eligible uses will remain restricted as currently regulated by VHDA, HUD and IRS compliance divisions; timing will yet be of the essence to begin construction early fall 2010
  • As was true Thursday night when the request was made to City Council, $1 million of the City’s approved loan funds are the only available source of eligible funds to get The Wilden fully underway.  Using the funds to provide for the parking needs of the senior housing development are an allowable expenditure within the City’s existing commitment, and this amount has been included in all approved project budgets.  The need for the change to the timing of the funds relates to the current economic climate in which the funds were needed by the developer of the McKeever office building in advance  to secure the site and proceed with construction financing, rather than to be used as a reimbursement of acquisition and construction costs after the garage has been completed.  The Wilden partnership did its best to explain and clarify answers to complex sources of funds regulations, found routinely in LIHTC deals, but understandably complex to all who have not worked in this arena.

Consequently, Falls Church Housing Corporation Board President, Steven Rogers, DVM, in an interview today with Nicholas Benton, Editor/Publisher, Falls Church News Press, issued the following statement,

In cooperation with our partners, The Community Builders (TCB) and Jefferson Investment Group led by our friend and supporter, Bob Young, I regret to inform you that today we have ended our efforts to redevelop and build the combined mixed use development for affordable residential and commercial office on properties currently located at 350/360 S. Washington Street in the City of Falls Church.

On behalf of the Board of Directors for Falls Church Housing Corporation (FCHC) and our partners, we are deeply saddened that we have not been able to achieve majority support among the members of the City Council who have made it clear that they will vote down our reasonable and necessary request to advance the timing of funds release for a portion of the City of Falls Church loan, currently approved to The Wilden.

The FCHC Board of Directors is not willing to risk as collateral, Winter Hill Senior Apartments, which, we have been told by our lending sources, is our only potential option to bypassing the City’s advance of funds. FCHC has stewarded and carefully used its specifically designated project development funds, long directed to the mission-driven risk and rewards of non-profit affordable housing development.  We can not justify Winter Hill collateral to be at risk to assist the development of an office building that has become the linchpin for The Wilden, mandated by some on the Council as the “only desirable” product of the senior housing combined development.

We know we have made it clear to City Hall staff and City Council members that the City loan funds are THE necessary source within the regulated timing available to get The Wilden and its parking underway.  We honestly thought in making a cogent request to Council last week that those who state their priorities to be in support of commercial development as the way to a good future for our city would have provided a majority of members in favor of the $1 million release request that was identified as the surest way by which to begin development of the McKeever property.  Our Wilden partnership deeply regrets that our specific and reasonable request instead set off a reprise of the same objections to The Wilden/McKeever development heard in March.

With all due respect, admiration and gratitude for our partners and supporters who have stood with us during this long and now thwarted journey, we must now see what is true.  We are fighting an uphill fight in a vocal community that is ambivalent at best, and hostile at worst, about its need for affordable housing inside its City of Falls Church borders.  The Wilden is ready to go forward now and must be in the ground in a matter of a few short months or lose its state and federal funding. We have no other sources to explore within the timeline required of our land purchase commitments and public funds regulations.

This is the hand we have been dealt.  We will no longer ‘ fight City Hall’ to continue The Wilden at a social fabric cost now too great to our fragile community.

Today we withdraw The Wilden partnership request for the advance of funds.  While the current City Loan terms will remain in place, our partnership will release their purchase options for the properties upon which the City Loan is conditioned.  We will no longer pursue this project begun in 2007.

Our thoughts at this turn of events haves no adequate words at this time.  It is a sad day for FCHC, our many dedicated partners and financing agencies, and our collective community.  In coming days, we will try to express our grateful thoughts to our friends and supporters over these many eventful years.  We are deeply sorry the tide turned before FCHC and our partners could have sailed into safe harbor where The Wilden and McKeever development would have been a light house to many.  Now we will never know.  Good people will be free to debate, as yet another ‘what might have been’ opportunity has left the scene unfulfilled.

Thank you sincerely,
Steve Rogers,
FCHC President

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August 5, 2010 

Comments

8 Responses to “FULL TEXT: Why Housing Corporation Gave Up on Wilden”

  1. RIchard Donnely on August 5th, 2010 8:55 pm

    “The FCHC Board of Directors is not willing to risk as collateral, Winter Hill Senior Apartments, which, we have been told by our lending sources, is our only potential option to bypassing the City’s advance of funds.”

    Neither was City council. so please stop blaming them!

  2. pete talbot on August 5th, 2010 8:59 pm

    No great loss! Young and Jackson have not been forthright in this project and the city knows it – they just don’t have what it takes to say no. SO instead they spend months and years of people’s time and emotions fighting this project. I would not trust anything Jackson and Young presented to anyone.

  3. Manny Little on August 6th, 2010 9:21 am

    Thanks to the “new” City counsel. We must start to live within our means. I am still amused by how some governments use the taxpayers money for their own political agenda (good or bad). This money from the federal government is not free – we the taxpayers – will need to pay it back sometime soon. $13 Tri+ your grandchildren will still be paying off the debt.

  4. Cathy Quinn Falls Church City on August 6th, 2010 10:13 am

    I feel that the attack on Carol Jackson’s and Steve Roger’s intent and credibility is not called for – no matter where we stand on the project. There were serious issues with the Wilden, but they were asking for the only thing that might have made it work. We have all been in a position like that in our lives. Today’s economy will make other well intentioned efforts impossible too. We also need to give our new council a chance. The timing of this couldn’t have been more difficult.

  5. Stephen Siegel on August 6th, 2010 10:44 am

    Manny makes a good point that has been ignored: The federal tax money that was “lost” is money that was appropriated by the controversial Stimulus bill and directed here by Rep. Moran via the also controversial “earmarking” process.

    Earmarking is a national issue, not a local one, but it needs to start somewhere. What better place than well-educated Falls Church City?

    Government subsidies should be based on merit and need, not political power. While one can certainly argue that the Wilden filled a “need,” I don’t think it’s controversial to say that almost any other place in our country has needs that are greater.

    Rep. Moran should have worked with other members of Congress to direct Stimulus funds to areas that are really hurting, not to places like Falls Church City or northern Virginia generally. We are fortunate here and have one of the lowest unemployment rates anywhere.

    Of course, Rep. Moran is well known for being an unrepentant fan of the earmarking process, which is a subversion of congressional rules, as well as the concept of transparency in government.

  6. Richard Donnely on August 6th, 2010 1:42 pm

    I concur with Cathy Quinn….I may have disagreed with the Wilden plan, but I can respect all parties who were trying to do what they thought was best for their position. It business, not personal.

    Well said Cathy. I feel that defending people we disagree with is the sign of a good person. There is no place for absolutism today. We have all become so entrenched in our own position, that it makes comprimise impossible. Civility above all else.

  7. FCHC friend on August 10th, 2010 9:21 pm

    The latest from FCHC…..

    THE WILDEN SENIOR HOUSING PROJECT COMES TO AN END

    Dear Friends of FCHC:

    On behalf of FCHC, we want to thank our longstanding and steadfast supporters in our joint efforts to bring more affordable housing to the greater Falls Church area.

    Bottom line: the economy’s fiscal realities of 2010 have brought a change of mind, heart and leadership to City of Falls Church. As a result, The Wilden (TW) is no longer a venture that the most vocal citizenry chooses to support. The new majority of our City of Falls Church City Council is no longer supportive of this low income housing tax credit project that was allocated on the basic premise of local government’s support and willing participation. Federal and state funding is legislated on the basis of local government cooperation and funding subsidies. Without demonstrated local support, tax credits would not have been allocated in 2009 to be spent beginning 2010/11.

    Under these present circumstances at the local level, The Wilden partners, The Community Builders(TCB) and Falls Church Housing Corporation (FCHC), simply could not risk allowing precious and competitive tax credit resources be endangered by trying to use them for a project that could have been successfully stopped right up until the doors opened. Penalties and repayments would have been too steep, in addition to the damage the compliance failures would bring to the state housing financing agency, VHDA. There is no recourse for not meeting the completion deadline such a tax credit project requires in response to tax law. Endangering The Wilden’s partners and funding Sources was never an option.

    In fact, commitments from all funding Sources for the construction of The Wilden had been received by June 2010, including an excellent price to be paid by Low Income Housing Tax Credit Investors (always the last Source to be committed into this type of housing venture). Agreements were actively being underwritten and prepared for late August settlement of all funding Sources, including the $2 million in loan funds approved and allocated by the Falls Church City Council.

    However, in reaction to continued tight credit market, the private Bank lenders of the commercial construction loan to the “360 Building” — the companion property required by Council to be developed in conjunction with The Wilden — demanded that the 360 land be presented as debt free collateral, requiring The Wilden to purchase its parking in advance from 360. The parking spaces condo purchase was to provide that $1 million cash for land purchase using an eligible Source of TW funds — i.e. FC City Loan funds — at Settlement of all other Sources, but a few months ahead of the release date agreed to in March 2010 Council financial package approval.

    One question we have heard from City Council members and others is why FCHC could not provide that $1 million cash needed using Winter Hill equity or another source. The answer is that FCHC’s cash was already long committed to The Wilden and previously spent for pre-development costs getting to Settlement. Remaining cash equity was being invested in the 360 land purchase as a private (side investment) to help buy 360 land debt free. The only other resource FCHC could have accessed was encumbering Winter Hill Apartments with a 2nd Trust for bridge loan.

    Unfortunately, even if FCHC’s 1 st Trust lender would have ultimately agreed to an additional encumbrance by another institution, the bank could not process this request in enough time for the cash to be available for the immediate purpose for which it was needed.

    For these reasons, FCHC made the request of City Council for the early (approximately 2-3 months) release of $1 million of the $2 million in loan funds already approved and allocated for The Wilden project. However, on Thursday, July 29th by a vote of 4-3, the City Council delayed and refused to vote on FCHC’s request to grant the early release of $1 million in loan funds. The hearing was contentious and brought to public session the unmistakable reality stated above. The current governing climate in the City of Falls Church does not favor the successful completion of The Wilden or any stand alone affordable housing venture.

    Thus, and most regretfully, on August 6, 2010, The Wilden partnership gave back to VHDA its 9% tax credits allocation and cancelled its commitments to investors and lenders and team of project development professionals.

    On behalf of FCHC Board of Directors and our Wilden partners, thank you sincerely to all our friends in the local community and among our housing collaborators and friends throughout the region. We have been honored to have your consistent support and look forward to carrying out our housing mission in lock step with you in future days.

    Sincerely,

    Mary Lynn Hickey
    Associate Director
    Falls Church Housing Corporation
    330-B South Virginia Ave, Suite 2
    Falls Church, Virginia 22046
    Phone: (703) 237-9551
    Fax: (703) 237-6985

  8. Charlie Anderson, City of Falls Church on August 11th, 2010 10:13 am

    From Ms. Hickey’s letter one can deduce:
    1. FCHC was neither willing to take on additional risk nor able to get a loan in time to fund the $1M bridge loan themselves
    2. FCHC felt the city would have $1M sitting around that could be given to them since the City couldn’t possibly arrange a loan in time either
    3. FCHC blames the current political environment for their trouble, not lack of planning on their part (last minute requests)
    4. FCHC believes that the current Council would have found a way to kill The Wilden in the future (“a project that could have been successfully stopped right up until the doors opened”)
    4. FCHC believes that the current Council will support no stand alone affordable housing initiatives.

    My issue with FCHC remains its sole focus on the current Council for its woes. An emergency council meeting was needed to provide for early release of $1M (where was the City to get this cash?). The lack of immediate and prompt Council action resulted in the death of the project. In reality was the project really viable at all? This seems to me like the end of a game of Jenga – there were a lot of other narrowly balance pieces, but FCHC wants to focus the blame only on the final move.

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