Committee recommends $15 million loan for Avonlea Phase 2 affordable apartments

The Finance, Government Operations and Economic Development Committee on Jan. 14 recommended that the Board of Supervisors approve a $15 million loan from the county housing fund for Avonlea Apartments Phase 2, a 137-unit affordable rental development proposed by TrueGround Housing Partners (formerly Arlington Partnership for Affordable Housing).

Travis Pearlman, housing finance development administrator, told the committee the Affordable Multifamily Housing Loan Program requires units to serve households at or below 60% of area median income (AMI); for Loudoun County, Pearlman noted, 60% of AMI equals $92,850 for a family of four. The county program has funded more than 1,150 affordable units across 13 developments since 2018.

Pearlman said the applicant revised its original request of roughly $19 million down to $15 million after staff and the third-party underwriter asked for reductions and for strategies to shrink the financing gap. At $15 million, the request represents about $109,000 in county subsidy per affordable unit and a leverage ratio of roughly 1:3.8 (county funds to total development cost).

Staff noted the request was the largest single loan request the county has considered under the program to date and that recent market conditions have pushed total development costs and interest rates higher. The presentation to the committee compared this proposal with the recently approved Avonlea Phase 1 (senior housing) and described program-specific factors that affected equity and required subsidy — notably a change in federal census-tract designations and the availability of targeted programs that benefitted Phase 1 but are not available for Phase 2.

Committee members asked about the county housing fund balance and staff confirmed there are funds available in the housing fund (noting roughly $16.6 million in unrestricted local-tax-derived housing dollars) and that the recommended $15 million would be appropriated from that housing fund. Pearlman said the loan would be structured with the terms and conditions described in the staff materials; the application removed a request for project-based vouchers at staff direction.

Supervisor Turner moved approval of the $15 million loan; the motion passed on a 5-0 vote. Staff said the loan recommendation would be forwarded to the full Board of Supervisors for final action. The developer and the county’s third-party underwriter were present at the meeting to answer technical questions.

If approved by the board, the loan will be awarded under the county’s Affordable Multifamily Housing Loan Program and the project would be subject to a long-term affordability period (staff indicated at least 75 years). The project team said phase 1 has begun construction; Pearlman said the applicant plans to submit applications for state tax-credit programs on timelines tied to Virginia Housing deadlines that will require timelier board action if needed to support those submissions.