Saturday, August 21, 2010

In Washington, federal money gets a Forest City project started; the adaptive re-use looks like... Brooklyn

It shouldn't be a surprise that the first new construction in two years for Forest City Enterprises, outside of the Atlantic Yards arena, is a building that depends significantly on government subsidies.

What is something of a surprise is that the federally-insured mortgage loan for Foundry Lofts, a 170-unit, 80/20 multifamily apartment building at The Yards, a Forest City project in Washington, involves the adaptive re-use of historic former Navy Yard industrial building (right).

That looks a bit like Newswalk in Brooklyn, or the Ward Bakery, or the building once owned by Henry Weinstein near them at 752 Pacific Street.

The Ward Bakery is already demolished, with the Weinstein building (below; photo taken December 2008 by Tracy Collins) likely to serve as offices during the construction phase of the arena, even thought Forest City Ratner executive Maryanne Gilmartin said in court papers that the developer plans to demolish that building.

Park comes first

Also notable is that, like Battery Park City but unlike Atlantic Yards, at The Yards a park will come first.

In fact, it will feature a 5.5-acre public park--not publicly accessible private space, as at MetroTech and planned for Atlantic Yards--though, as with many parks today, the financing is creative.

As announced in May 2009:
The Yards Park is being constructed through the use of public sector funds involving the “Payment In Lieu Of Taxes” (PILOT) program for financing such projects. Upon completion, the project will be dedicated as a public park for the District of Columbia. It will be managed and programmed by the Capitol Riverfront Business Improvement District.

Yesterday's press release
Forest City Enterprises, Inc. today announced that a subsidiary closed a $46.1 million HUD-insured mortgage loan for Foundry Lofts, a 170-unit, 80/20 multifamily apartment building at The Yards, Forest City's mixed-use project in southeast Washington, D.C.

"This financing is an important milestone for The Yards for several reasons," said Charles A. Ratner, Forest City president and chief executive officer. "It is the beginning of active construction on our first building at The Yards. It also demonstrates the strength of the public/private partnership that has persevered through difficult financial and economic conditions. Most important, we believe it marks the start of a new period of economic revitalization and opportunity for this neighborhood and all of southeast D.C."

"Foundry Lofts is also significant for us as a company," Ratner added. "With the exception of the Barclays Center arena in Brooklyn, this is the first new construction we have started in two years. Throughout the recession and into the current recovery, we've consistently stated that we would only start a project when there was a combination of market demand and available financing. The D.C. market has held up very well during the downturn, giving us confidence in the market. The innovative financing behind this project provided the other necessary piece. The project also highlights the significant entitlements we hold in quality markets that enable us to move forward on projects as markets and financing allow."

The 41-year financing, at a 4.66 percent interest rate (before mortgage insurance), was completed through a risk-sharing program between the District of Columbia Housing Finance Agency and the U.S. Department of Housing and Urban Development, and was funded by a total of $47.7 million of New Issue Bond Program (NIBP) bonds. The NIBP program, which was implemented as part of the Housing and Economic Recovery Act of 2008, is designed to help provide market liquidity for bonds that housing finance agencies use to provide financing.

The Yards is located on 42 acres along the Anacostia River in the Capital Riverfront District adjacent to Nationals Park, the home of the Washington Nationals major-league baseball team. At full build-out, The Yards is expected to have a total of approximately 5.5 million square feet of development, including nearly 3,000 units of residential multifamily housing, 1.8 million square feet of office space and up to 400,000 square feet of retail space.

The Yards will also feature a 5.5-acre public park that will be a gathering place and recreational focus for the entire community. Forest City broke ground on the publicly funded park in May 2009. A formal grand-opening ceremony for the completed park is planned for September 7, 2010.
(Graphic below originally from DCYards.com)
The Yards DC Aerial

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