Town endorses Royal Arms Apartments redevelopment plan thru EDA bond

The entrance to Royal Arms Apartments – Photos/Roger Bianchini

While it was a divided Front Royal Town Council that approved a resolution detailing the discovery of years of overpayments on bond issues though the Economic Development Authority on November 26, council was unanimous in approving a resolution in support of a new EDA bond issue of up to $17-million for the renovation of the Royal Arms Apartments on Criser Road inside the town limits.

Support for the bond issue was recommended to council following a late October EDA public hearing and unanimous project endorsement by the EDA Board of Directors.

During that EDA public hearing, two representatives of a nationwide affordable housing redevelopment company CPP-Housing pitched their plan to purchase and upgrade the Royal Arms Apartments. That plan, as explained by CPP-Housing Senior Project Manager John Fraser, is to upgrade the 144-unit complex, including an existing outdoor pool, but keep it affordable for the existing residents.

“The goal is for there to be no displacement of tenants during the project,” Frazer told the EDA board.

“We are a for-profit but mission-based company,” CPP-Housing Vice President Seth Gellis told the EDA. Of its “mission-based” business model, Gellis told the EDA, “It pays to care – the better you treat residents, the better they take care of the property.”

‘It pays to care – the better you treat residents the better they take care of the property,’ CPP-Housing Vice President Seth Gellis said of his company’s rental property business model. Project Manager John Frazer is partially obscured, seated to Gellis’s right.

CPP Project Manager Frazer told the EDA board and staff that the project’s “main goal” was “to preserve and extend” the lower income, affordable housing aspect of the development over an anticipated 40 to 50-year life of the existing buildings.  Frazer said his company projects additional renovation work on an approximate 15-year cycle.  Responding to a question, Frazer said the plan was to maintain federal “Section 8” housing assistance parameters.

Of working with Frazer and Gellis’ company, Citi Community Capital Managing Director Mike Hemmings is quoted on the CPP website stating, “CPP brings a creative and sophisticated approach to acquiring and developing low-income multifamily communities. Citi values their relationship with CPP because they are true professionals and have always performed as advertised.”

CPP’s Monte Vista Gardens project in San Jose, California – from CPP website

CPP-Housing, with a home office in Irvine, California, and an “Eastern Division” headquarters in Reston, Virginia, is a subsidiary of WNC, described on its website as “a leading provider of investment, asset management and development services to a wide array of partners.”

Those partners range “from for-profit and nonprofit developers and property owners to the nation’s largest corporations and financial institutions” according to the WNC website.  WNC is described as “a family-owned business for more than 47 years” which has “acquired more than 1,375 properties representing $9.3 billion in assets” since its 1971 inception.

“Our success is built on enduring partnerships with our developers and investors. We’ve earned their trust, which is why they choose to work with us time and time again,” parent company WNC’s website states.

As with the Valley Health revenue bond approved earlier by the EDA, Town and County, no liability for payment of the bond is incurred by the EDA or either involved municipality or member thereof.  The bond issue is to a subsidiary entity “Royal Arms Community Partners LP” whose address is CPP’s Irvine, California address.

CPP-Housing Vice President Gellis explained his company’s desire for the revenue bond issued through the local EDA as a means to access federal and state tax credit programs from its resulting work.

The Resolution approved by the town council on November 26 notes that the Town’s endorsement of issuance of the revenue bonds does not obligate the Town, County or EDA “to pay the Bonds or the interest … or other costs” associated with the issuance “except from the revenues and money pledged therefore” which in the Town’s case is nothing, according to the wording of the resolution.

The resolution also notes that 100% of the principal amount of the bond issues will be allocated by the Town, with 0% by the County based on an estimation of “a reasonable relationship to the respective benefits to the Town and the County” from the bond issue.

One of four, three-story buildings totaling 144 units at Royal Arms.

The Royal Arms pool facility is also earmarked for improvements.