Portner Flats was formerly a garden-style, 48-unit townhome apartment complex built in 1980, subsidized with a Section 8 Housing Assistance Payments contract with the U.S. Department of Housing and Urban Development (HUD). It was located on 1.1 acres of indefensible space at the corner of 14th and U Street, NW, Washington, D.C. in one of the hottest and most rapidly gentrifying residential submarkets in Washington. NCP partnered with Somerset Development Company and the Jonathan Rose Companies to redevelop the site with double the amount of affordable housing (96 units) and 288 units of market-rate housing that would cross-subsidize the affordable housing.
The property was acquired in September 2013 in cooperation with the Portner Place Tenants’ Association through the TOPA (Tenant Opportunity to Purchase Act) process, after which work on the up-zoning of the site began. A Planned Unit Development (PUD) plan for the site was approved in January 2015, and the market rate parcel was placed on the market.
The new affordable 96-unit building, Portner Flats, was financed with $27 million of cash-collateralized bonds issued by the District of Columbia Housing Finance Agency, a $24 million 221(d)(4) first mortgage loan arranged by Prudential Mortgage Capital, Low Income Housing Tax Credit (LIHTC) equity provided by Capital One Bank through Boston Financial Investment Management, $2.4 million of acquisition financing provided by the District of Columbia Department of Housing and Community Development and a significant cross-subsidy from the sale of the market rate parcel to Trammel Crow’s residential division. The financing closed in July 2016; the project was completed ahead of schedule and under budget by Clark Construction and is fully occupied.
The PUD provides that Portner Flats replicate the two and three bedroom mix that existed in the old town homes, supplemented by 48 affordable one bedroom and efficiency units. It also includes a computer lab, two community meeting room, a rooftop garden and playground, 31 below-grade parking spaces and a robust array of resident services programs.
All 48 units of Section 8 subsidy have been preserved through the approval by HUD of a special “pass-through” Section 8 contract for the temporary off-site relocation of the tenants during construction and an extension of the contract for 20 years. All of the units will have restricted rents under the LIHTC program. The 48 non-Section 8 units have rents between 1/2 and 1/3 of the neighboring market rents.