Northwest One Phase I – 2 L Street NW, Washington, DC
Total Development Cost – $80,600,000
Construction and Permanent Financing Closed October 2020
Audubon Enterprises was engaged by MidAtlantic Realty Partners LLC (MRP), Taylor Adams Associates, and CSG Urban to lead the financing processes for their ground-up, mixed-income development located at 2 L Street NW. The development team was selected through a competitive process administered by the Deputy Mayor for Planning and Economic Development (DMPED) to redevelop the former Temple Courts Apartment site at North Capitol and K Street NW, as part of the District’s New Communities Initiative. Upon completion, the first building in the phased development will consist of 220 residential units, 150 of which will be set-aside for affordable tenants at 30% or 60% of the Area Median Income; the remaining 70 units will be market-rate. The project will also include a large amenity area with fitness and entertainment options. This 220-unit building will be the first of three phases of the Northwest One redevelopment project which will eventually deliver approximately 750 new, mixed-income residential units to the redevelopment site.
Despite turbulent financial markets in the wake of COVID-19, Audubon was able to source, structure and close on $80.6MM of financing using a mix of public and private capital sources. Due to the mixed-income and mixed-financing structure, separate air rights A&T lots were utilized in order to collateralize the different mortgages. This structure insulated the affordable financing partners from risks associated with operating the market-rate components of the project, along with a long-term sublease and SNDA. The owner entities will ground lease the site from DMPED for 99 years, preserving affordability for the long-term benefit of District residents.
The affordable component was funded through a combination of tax-exempt bonds issued by the District of Columbia Housing Finance Agency (DCHFA), 4% LIHTC equity, gap funding from DMPED, and deferred developer fees. The market-rate financing structure consisted of a taxable permanent mortgage funded by Deutsche Bank, RedStone Partners and Hilltop Securities. Many of the 30% AMI units will supported by project based rental assistance administered by the District of Columbia Housing Authority through the Local Rent Supplement Program.