Arlington Housing Finance Corporation (AHFC)

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MOU December 13, 2022 - CC August 2, 2022 - CC April 26, 2022 - PZ January 19, 2022

District: 3 | South Arlington

• 348-Unit Multifamily HFC | 100 W Arbrook Blvd | Approved

• 275-Unit Senior HFC | 101 W Arbrook Blvd | Approved

You saved: 47m, 2h 22m, 1h 42m, 4h 24m

DISTRICT: 3

The Highlands SWC W Arbrook Blvd & Dr. Martin Luther King Jr. Dr

South Arlington | 24.12 Acres | 348 MF Units | 275 Senior Units | Approved

The Highlands Multi-Generational project, which faced significant scrutiny and debate throughout 2022, has been formalized through two separate Memoranda of Understanding (MOUs) in December 2022. These MOUs outline the structure and terms between the Arlington Housing Finance Corporation (AHFC) and Integrated Real Estate Group for the two parts of the deal: Enclave Arlington Highlands Apartments and Watermere Arlington Highlands.

The Enclave component consists of 348 multi-family units on 12.1 acres, with 178 units restricted to households at or below 80% of the area median income (AMI). Watermere, the senior living component, comprises 275 independent living units on 8.8 acres, with 141 units restricted to 80% AMI or below. Both projects will be developed through limited partnerships, with AHFC-controlled entities serving as general partners and Integrated-controlled entities as limited partners.

The financial structure includes significant one-time ground lease payments to AHFC, estimated at $5,925,000 for Enclave and $3,950,000 for Watermere. Both projects will apply for 100% ad valorem tax exemption under Section 394.905 of the Act.

For the Enclave project, AHFC will receive an annual ground rent of $60,000, while for Watermere, it's $25,000. These amounts increase annually by the lesser of 3% or CPI. Additionally, AHFC will receive a $10,000 annual Partnership Management Fee for each project, also increasing by 3% yearly.

The PILOT payments, which start at $10,000 and grow to substantial amounts ($373,781 for Enclave and $354,257 for Watermere), are designed to compensate for the property tax exemption. These payments will likely increase over time, potentially outpacing what traditional property taxes might have generated, especially considering the senior living component which typically has a lower tax burden.

The fee structure also includes provisions for AHFC to receive a portion of the development fees - 10% - and a share of refinancing or sale proceeds: 10% for Enclave and 5% for Watermere.

Enclave Arlington Highlands 

100 W Arbrook Blvd | 12.1 Acres | 348 Units | Executed

MOU 12/13/22

DISTRICT: 3

Watermere Arlington Highlands

101 W Arbrook Blvd | 8.8 Acres | 275 Units | Executed

MOU 12/13/22

Developer: Integrated Real Estate Group, Kenneth Fambro Phone: (817) 837-0565 Email: [email protected], Paul Milosevich Phone: (817) 742-1851 Email: [email protected]

Owner: Arlington Housing Finance Corporation (AHFC), Mindy Cochran (AHA & AHFC) Phone: (817) 276-6790 [email protected] LinkedIn

Staff Report: The Highlands SR

Postponed Project Plans 2021: The Highlands Plan

Approved Project Plans 2022: The Highlands Plan

Memorandum of Understanding (MOU): Watermere MOU

Memorandum of Understanding (MOU): Enclave MOU

Sentiment

The Highlands Multi-Generational project at 100 West Arbrook Boulevard faced intense scrutiny from Arlington City Council in 2022. Integrated Real Estate Group, in partnership with the Arlington Housing Finance Corporation, sought to rezone 24.12 acres from Community Commercial to a Planned Development for mixed-use, including 348 multifamily units, 275 independent senior living units, and 27,000 square feet of office space.

City Council 8/2/22

CC → PD for RMF-22 | Approved

Council sentiment remained divided. Nikkie Hunter overseeing the project’s District 3 strongly opposed the project.

Helen Moise from District 1 echoed these concerns, emphasizing the loss of commercial land and increased density.

On the other hand, Rebecca Boxall from District 5 championed the project's multigenerational aspect and proximity to schools, while Dr. Barbara Odom-Wesley from District 8 highlighted its potential to address the housing crisis.

Mayor Jim Ross's stance evolved throughout the process. Initially, he was inclined to side with Hunter's opposition, as he stated he normally sides with the project’s district council member. However, Ross's perspective shifted as he considered the long-term vacancy of the land and its commercial potential.

Ross ultimately decided to support the deal, citing these reasons:

1. The need for senior housing: ‟I'm going to support this because I think the seniors need someplace good to live.

2. The inclusion of medical office space: ‟I do like the 27,000 square feet of medical space up front.

3. The developer's efforts to accommodate council requests:‟Y'all busted your butt trying to give the city what the city has been asking for."

Despite his support, Ross acknowledged ongoing concerns, noting he’s "not thrilled about the multifamily, the big complex in there" but determined it's going to be a "good project overall."

Between its postponement in April 2022 and the August 2022 approval, the developer made significant changes to address concerns. They increased masonry and glazing at key corners, enhanced landscaping and public art elements, increased one-bedroom unit size, added a playground, and provided elevations for commercial office buildings. They also agreed to begin construction of the independent living facility before the multifamily units and committed to partnering with Create Arlington for public art installations.

The project was finally approved on first reading on August 2, 2022, by a 6-2-1 vote. Council Members Moise and Hunter voted against the deal. This decision reflected a complex balancing act between preserving commercial land, addressing housing needs, and managing city growth. The approval came despite ongoing concerns about the loss of commercial land, increased density, and the potential impact on tax revenues. The final second reading approval came on August 23, 2022 with no discussion.

City Council 4/26/22

CC → PD for RMF-22 | Postponed

Council members primarily worried about losing valuable commercial land, increased density and traffic, and potential tax revenue loss due to partial exemptions. The project was postponed in April when questions arose about tax exemption discussions with the Arlington Housing Finance Corporation. Mayor Jim Ross pointedly asked if AISD was aware of these discussions, highlighting the council's concern about transparency and financial implications.

Two past council members, District 7’s Victoria Farrar-Myer and Ruby Faye Woolridge of District 6, expressed difficulty reconciling the current proposal with previous arguments made in 2018 and concerns about increased traffic density. Both of these Council Members’ terms have expired.

Raul Gonzalez, District 2 Council Member, felt uncomfortable voting without fully understanding the newly presented information. Gonzalez requested the postponement which ended up adding 4 months to the approval process.

Planning & Zoning 1/19/22

CC → PD for RMF-22 | Denied

The Planning and Zoning Commission hearing for The Highlands Multi-Generational project on January 19, 2022, featured a detailed discussion among commissioners, many of whom are no longer serving in their roles:

Cameron Atkins, whose term has since expired and who is now a Planning Assistant in Arlington, expressed significant concerns about the site design.

Atkins emphasized the need for better streetscape and connectivity.

• David Greer, who remains Commissioner for Place 7, inquired about the project's phasing, asking about the phasing of the project.

• Ron Reber, whose term has since expired, focused on pedestrian connectivity, questioning about access to The Highlands.

• Charles Brady, the Chair at the time whose term has since expired, had previously inquired about proximity to grocery stores.

The commissioners discussed the project's density, building size, and its deviation from the existing commercial zoning. While some saw merit in the multigenerational concept, others worried about the loss of potential commercial development.

Interestingly, despite the concerns raised, it was Commissioner Greer who made the motion to approve the project. However, the commission's split 5-4 vote against approval reflected the complex nature of the project. While some commissioners appreciated the concept and the developer's efforts to address walkability and amenities, others felt the deviations from zoning regulations and the loss of commercial land were too significant to overlook.

The close vote and subsequent denial at this stage set the stage for further revisions and discussions that would eventually lead to the project's approval by the City Council in August 2022.

Community Sentiment

Community sentiment towards The Highlands Multi-Generational project evolved over the course of 2022. Initially, there was significant opposition, particularly regarding the loss of commercial zoning. Richard Weber, a local resident, voiced this concern at the January Planning & Zoning Commission meeting, stating, "This is zoned commercial for a reason... We're losing commercial. That's a mistake."

However, as the project progressed and the developers made modifications, support began to grow. By August, several community members spoke in favor of the project. Jim Maibach praised the development, saying it would "enhance the highlands" and "keep seniors in Arlington because they have a place to live and a place to shop."

The Arlington Independent School District became a strong supporter, with Kelly Horn stating, "The district is in full support of this zoning case tonight."

Concerns about traffic and density persisted among some residents, as expressed by Jesse Jasso: "I don't see any benefit for the neighborhood because that intersection... is so hectic as it is already."

Overall, the community sentiment shifted from initial skepticism to a more balanced view, with strong support from institutional stakeholders and mixed opinions among residents.

You saved: 47m, 2h 22m, 1h 42m, 4h 24m

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