Revitalizing R Street

AFFORDABLE HOUSING FINANCE • October 2009

Developers help to preserve historic D.C. apartments for the long term

BY CHRISTINE SERLIN

The project’s buildings were originally built by Harry Wardman, who developed a large portion of Washington, D.C.’s rowhouses in the early 1900s. (Photo by Lloyd Wolf)

WASHINGTON, D.C. More than 10,000 affordable housing units could be lost in Washington, D.C., by next year as owners contemplate exiting government programs and raising rents, according to the National Housing Trust.

But the affordable units at R Street Apartments in the gentrifying Logan Circle neighborhood will remain that way for the next 40 years, thanks to NHT/Enterprise Preservation Corp. and Hampstead Development Group.

In 2007, the two preservationfocused organizations teamed up to acquire, preserve, and rehab the 124 affordable and six market-rate units in the five four-story buildings. After working with the Five Voices of R Street Tenant Association to ensure the residents understood their rights under the D.C. Tenant Opportunity to Purchase Act, the association endorsed the redevelopment plan and became part of the development team.

The developers financed the $24.5 million acquisition and rehab with a combination of historic tax credits, 4 percent low-income housing tax credits (LIHTCs), tax-exempt bonds from the D.C. Housing Finance Agency, a D.C. Department of Housing and Community Development acquisition loan, owner capital, and an Enterprise Green Communities grant. The LIHTCs and bonds were purchased by MMA Financial.

However, the property’s already existing Sec. 8 Moderate Rehabilitation contract posed a problem for the developers, since at the time, the Internal Revenue Code prohibited LIHTCs to be used with Sec. 8 Mod Rehab.

Scott Kline, vice president of NHT/Enterprise Preservation Corp., says the only way to make the deal work was with the LIHTCs, so the developers decided to opt out of the Mod Rehab contract. They worked with the District of Columbia Housing Authority to replace the Sec. 8 Mod Rehab subsidies with tenant-based enhanced Sec. 8 vouchers so all residents would be able to continue living at R Street Apartments.

The other challenge at hand was doing both a historical and green rehab for long-term preservation. Built in 1912, the project was listed in the National Register of Historic Places. The last minor rehab had been done in the mid-1980s, and the property was in need of repairs.

While adhering to the historic tax credit requirements, the developers were able to create new roofs with solar reflective materials, provide new bathrooms and kitchens with energy-efficient appliances and low-flow fixtures, new heating and cooling systems, and upgraded security systems. R Street Apartments had its grand re-opening in April.

“I know in my heart that this project would have been lost if we had not preserved it because of its location and the character of the buildings,” says Kline. “I know that we saved 124 units that serve households at very low incomes that otherwise would not have been able to live in this part of D.C.”