Arlington County Board members probably hoped that their Jan. 4 meeting with the Arlington County Civic Federation would have been a forward-looking affair.
But a good chunk of the meeting was spent on a complex – and in some quarters, controversial – real-estate deal the county government helped finance at the end of the year just gone by.
Responding to concerns raised by delegates to the Civic Federation, all five County Board members said there was nothing untoward either about the contribution of a loan totaling $150 million to the project, or to the lack of transparency and public input involved in it.
At issue: The acquisition of the 1,334-unit Barcroft Apartments in the Columbia Pike community by Jair Lynch Real Estate Partners, a Washington-based development firm, that used the county government’s line of credit and a $160 million loan from Amazon as two facets of the overall financing package.
The county government’s participation in the project only surfaced days in advance of the December County Board meeting, where the funding was approved on a 5-0 vote.
The speed and hush-hush nature of the proposal struck some budget-watchers as concerning.
“There was no public process on the front end,” said Suzanne Smith Sundburg, a Civic Federation delegate active in budget issues. “I’m just curious what the justification for that was, considering the huge amount that’s being spent and the fact that we don’t even know all the partners.”
In response, all five County Board members took time to deliver varying justifications and explanations. (For those playing the County Board home game, when all five board members feel the need to weigh in, it is generally assumed that they are feeling some heat on the topic under discussion.)
New-for-2022 County Board Chairman Katie Cristol said the deal was financially sound, did not put taxpayers or the county government at undue risk, and provided a path forward in saving a large amount of relatively low-cost housing in a county that is growing increasingly unaffordable for many.
“This is really about leveraging and bringing new resources to the table,” she said. “We’re growing the pie on what can be spent on affordable housing.”
Sundburg and other critics have raised concerns that, should the developer default on the deal, Arlington taxpayers could be on the hook for any financial losses. Worst-case scenario: The county government itself might have to renege on its obligations, potentially obliterating its coveted AAA bond ratings in the process.
At least one County Board member acknowledged the risk involved, then in the same breath discounted it.
“If the county were to default, what would be the impact? Very, very bad,” board member Christian Dorsey said. “But we’re not going to, so that shouldn’t be a worry.”
Dorsey said that bringing the public into the discussion before a deal was in place “would be very unusual” and “wouldn’t ever work.”
The Barcroft Apartments and associated commercial buildings were constructed in the late 1930s by the DeLashmutt family. (Ironic plot twist: At the time, a member of the family – Basil DeLashmutt – was serving on the County Board.) The family has held onto the property ever since, but in the third quarter of 2021 began soliciting proposals from developers.
County Board member Libby Garvey said that the Jair Lynch deal was the best option to maintain the existing units, or future units on the site, as committed-affordable housing.
“If we had not moved forward . . . it’s likely it would have gone to another bidder,” Garvey said. “At least some if not all of them were not interested in doing affordable housing at all.”
As for the stealth involved? “We had to move fast . . . or we would have lost it,” Garvey said. “It’s really the only way we could have preserved Barcroft Apartments.”
Jair Lynch formally closed on the transaction the last week of December, and announced its future plans, which include:
• Bringing a new management company in.
• Preparing for the renovation of some units and the demolition of others, to be replaced by an equal number of apartments units. Residents will be moved among buildings rather than displaced during construction and renovation.
• Spending 2022 creating a master plan to guide the future of the parcel.
In exchange for the county government’s participation in financing, Jair Lynch agreed to maintain units on the parcel as affordable to residents earning no more than 60 percent of area median income for the next 99 years, a term far longer than is agreed to in most Arlington affordable-housing deals.