Growing DC’s Affordable Housing Stock Through Creative Financing
AHC’s Paul Bernard on a project that shows the way for more mixed-income, mixed-use communities across the country.
In Washington, D.C.’s bustling Southwest Waterfront neighborhood, a facade with angular balconies at 350 Maple Drive SW stands out. The Westerly is not a typical affordable housing building, although it does house 136 low-income households.
Affordable Homes & Communities and its partners recently opened this mixed-income and mixed-use community, which is part of D.C. Mayor Muriel Bowser’s goal to create 36,000 new homes in the District, 12,000 of them affordable.
The Westerly was made possible through a combination of market-rate equity and 4 and 9 percent low-income housing tax credits, an innovative solution that helped fund this much-needed market-rate and affordable housing community. Multi-Housing News asked AHC President & CEO Paul Bernard to reveal details about what it takes to deliver a community where residents of all income levels live side-by-side.
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When and how did the opportunity to work on such a project appear? What were your primary goals with The Westerly?
Bernard: In 2016, the Washington, D.C., government issued a request for proposals to develop the last remaining vacant parcel on the block containing the Waterfront Station Metro stop. This parcel is in the district’s growing Southwest D.C. neighborhood and is part of the Anacostia Waterfront Development Zone.
One of the most ambitious requirements in the RFP was a mandate to provide 30 percent of all proposed residential units as affordable housing—half the units affordable at 50 percent AMI and the balance at 30 percent AMI—so the community could truly serve the households with lower incomes in the area. Hoffman & Associates—along with partners Affordable Homes & Communities, CityPartners and Paramount—submitted an innovative proposal to develop a vibrant, 449-unit, mixed-use and mixed-income development.
AHC was excited to partner with Hoffman as their dedication to empowering communities and community-led design was a perfect mission fit for our organization. And of course, the project hit D.C.’s goals of providing retail, residential—both market-rate and affordable—commercial and public space as well as other civic amenities at a transit-oriented location.
Tell us more about The Westerly’s design and how the development serves not only the needs of its residents, but also the needs of the neighboring community.
Bernard: The Westerly is in a great location that works for its residents, while also including ground-floor retail that benefits the surrounding community. The building is adjacent to a grocery store, restaurants, a large public library, government offices, bus routes and the Waterfront Metro station. Plus, Audi Field and Nationals Park, theaters and The Wharf entertainment area are located just blocks away. The community also has easy access to other major employment destinations via highways I-395 and I-695.
The Westerly has 29,000 square feet of neighborhood-serving retail. Retailers include GoodVets veterinarian services, GoodCompany Doughnut Cafe—a family-owned and -operated neighborhood restaurant—and AppleTree Public Charter School, which provides classrooms and an enclosed play area. There’s also a dedicated cultural space that a local theater group currently occupies.
On the design side, The Westerly has unique modern elements that complement the surrounding neighborhood, including angular glass balconies that mirror the movement of the wind and water. The community’s extensive indoor and outdoor spaces include an outdoor courtyard with a fire pit, a large fitness center, coworking and meeting spaces, and a rooftop offering panoramic views of Southwest D.C,, the Capitol Building and the Washington Monument.
Designed by Torti Gallas + Partners, The Westerly came online last year. Hickok Cole served as the interior designer, along with Michael Vergason as the landscape architect and Clark Construction as the general contractor. All images courtesy of Affordable Homes & Communities 
The Westerly includes nearly 20,000 square feet of amenity space. 
The rooftop pool deck provides panoramic views of Southwest D.C., the U.S. Capitol Building and the Washington Monument. 
The property’s outdoor courtyard has a fire pit where residents can relax and socialize. 
Approximately 29,000 square feet of retail space on the ground floor of the building serves the entire neighborhood. 
The 12-story property includes more than a dozen amenity spaces. 
Common-area amenities include a fitness center, coworking and meeting spaces. 
The units feature European-inspired kitchens with quartz countertops and stainless-steel appliances.
Can you elaborate on the unique financing structure that made the affordable housing component possible?
Bernard: Innovative financing is certainly a core element of this new, mixed-income, mixed-use community. The market-rate units help underwrite the deeply affordable units and enable AHC to provide onsite resident services funded from property operations. The Westerly has 449 apartments, with 30 percent of those dedicated to affordable units. The affordable units include studios, one- and two-bedroom apartments. Half of these apartments—68 units—are available to household incomes at 30 percent AMI, and the remaining half at 50 percent AMI.
To finance the construction, the development team combined market-rate equity with equity generated by the sale of 4 and 9 percent federal and state LIHTCs, a ground lease from the district and a payment-in-lieu-of-taxes on the affordable units. To access the LIHTC while retaining access to market equity, the project is legally divided into three separately owned and financed entities: one for the market-rate units, one for the 9 percent tax credits and one for the 4 percent tax credits.
The deal was carefully structured to meet the tax-exempt bond requirements for the 4 percent LIHTC units as well as ensure that the combination of 9 percent and 4 percent LIHTC in the same physical structure didn’t violate IRS regulations against cross-subsidization.
How did you make sure that the property will maintain its affordability in the long term?
Bernard: Another condition of the RFP was that the District of Columbia retain ownership of the land. To achieve this, the land was ground leased to the venture for 99 years. The affordability covenant runs coterminous with the ground lease, ensuring affordability effectively for a century at which time ownership of the land—and the building constructed on it—will revert to the district.
The Westerly is aligned with the city’s commitment to affordable housing goals tailored to each neighborhood and contributes materially towards the city’s target of 850 affordable units in the Waterfront submarket.
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What sustainable features were incorporated into The Westerly?
Bernard: The Westerly is designed to achieve LEEDv2009 Gold standards. It has more than 3,000 square feet of solar panels on the roof to increase sustainability and reduce energy costs. Additionally, the building has over 18,000 square feet of green roof space.
The Westerly also supports energy-efficient transportation options with the capacity to charge up to 12 electric vehicles at once using seven EV chargers as well as more than 160 bicycle parking spaces.
Ultra-low flow toilets installed in amenity spaces and residences reduce wastewater usage by more than 50 percent over LEED baseline metrics. The Westerly is also pursuing the Energy Star Multifamily New Construction certification.
What elements of this development do you believe will become benchmarks for future mixed-use projects across the country?
Bernard: The approach to funding creates a replicable model for buildings that contain a sizable percentage of affordable units and have a significant delta between market and affordable rents.
In today’s challenging development environment with construction costs still reflecting the run-up during the pandemic, higher interest rates and rising operating costs, the strategy of achieving financeable mixed-income developments by combining market-rate equity with LIHTC is a model that can be applied across the country. The success of the Westerly paves the way for the production of more mixed-income, mixed-use communities and has been recognized with awards from Multi-Housing News, NAIOP and Commercial Property Executive.
