Oh, Chevy Chase (DC affordable housing)!

[Anonymous]

A lease describes the terms and conditions of a rental agreement. In a ground lease, the developer rents the land from the District for a term of 99 years. Typically rents for ground leases are set at market rents.

In this case the developer isn't getting any kind of freebie. The developer is simply renting the District's land, instead of buying it.

I would be surprised if this was anything different than what I have described. But I think it is necessary to understand this particular ground lease.

Where the hell does the $1 that people keep mentioning fit in?

[Anonymous]

The $1 is the typical deal the DC government gives for a 99 year lease - look at things like the former Carnegie Library on Mt Vernon Square (now the Apple store) as an example.

[Anonymous]

So then maybe everything should be priced correctly. The developers pay the market rent for the land, and the District pays rent to the developers for the new library and community center. I suppose the a priori expectation is that it's a wash.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Thanks, doesn't the ground lease require the developer to pay annual rent for the land? Or is the rent in this case set to $0?

The "rent" is in the form of affordable housing subsidies for 99 years.

Seems very not worth it if that's it!

So let's say the city puts up $20 million each for a new library and new Community Center, that is $40 million. The two buildings would actually cost closer to $80 million to build. Add to it 75 new apartments that are 1-3 BR each and half of them are affordable to 50% AMI. The whole project costs $400 million and in return, the developer pays the city $1 for a 99 year ground lease to build the whole thing.

That seems very worth it.

Yes, based on your made-up numbers, the City was paid $40 million for the land and got a bunch of affordable housing. So in your make-believe world, that's a great deal for DC. I wonder what the real cost and benefit is, though.

[Anonymous]

Not in RE development but work in finance. The deal seems ridiculous for a small handful of affordable housing. But self proclaimed social justice warriors like ward 3 councilperson Matt Frumin care only about the optics.

[Anonymous]

Does anyone know whether the RFP requires that bidders make the project financials transparent? Seems fair. Like regulated industries that are limited to a certain ROI. That would appease some of the pushback.

[Anonymous]

Anonymous wrote:Does anyone know whether the RFP requires that bidders make the project financials transparent? Seems fair. Like regulated industries that are limited to a certain ROI. That would appease some of the pushback.

Normally, the financials or some consolidated statement of financials, are part of an RFP submission. The ANC could ask that a summary be made available for each bid.