County housing agency teams up with Lee for 3-building complex in Silver Spring

By Sonny Goldreich

The county’s Housing Opportunities Commission today approved a plan to increase its stock of affordable housing in downtown Silver Spring, under a proposal to redevelop a pair of its buildings in partnership with Lee Development Group, which will add a third tower offering a mix of low-income and market-rate units.

The proposed Elizabeth Square complex, courtesy Lee Development Group

The preliminary project plan submitted to the county Department of Planning would create a 908-unit, mixed-income complex two blocks from the Metro Red Line station, where the housing agency now owns the 160-unit seniors’ Elizabeth House and the 312-unit mixed-income Alexander House. When the multi-phase Elizabeth Square project is completed, the three buildings will occupy about 771,000 square feet of space, an increase of 314,000 square feet over the existing buildings.

“It really revives what has been a rather quiet corner and makes it an amenity-rich, transit-oriented community,” said HOC housing acquisition manager Christopher Donald. “And it’s important to understand that but for public housing, this would not be happening.”

The new community would transform the blocks bounded by Fenwick Street to the North, Second Avenue to the East, Metro rail lines to the West and Apple Street to the South. The new housing plaza will feature public-use facilities, including a swimming pool and fitness center and Holy Cross health system’s senior source and wellness center.

"Our partnership with Lee Development Group is a first-of-its-kind public/private initiative," Stacy L. Spann, HOC’s executive director, said in a press release. "With Elizabeth Square we’re looking to change the paradigm of how we connect clients to high-quality, amenity-rich housing in Montgomery County, and hopefully elsewhere, as we demonstrate this model can be successful.”

Lee Development brings to the table Fenwick Professional Park, a two-story townhouse-style office complex built in 1953. The office park will be demolished to make room for the new expanded Elizabeth House, ensuring that existing senior tenants will not face the disruption of relocating during construction of their new home, Donald said.

"We joined with HOC for this project because we are confident that Elizabeth Square will elevate the vision for HOC’s affordable housing, while bringing a new community to Silver Spring that will be attractive to retailers, residents and the surrounding neighborhood, at the same time addressing the need for more affordable homes, said Bruce Lee, president of Lee Development.

Construction on the new 277-unit Elizabeth House is expected to start in 2016 and take two years to complete. The existing 160 affordable units will be moved to the new building, and about half of the additional 117 units will be set aside for affordable housing. HOC will own the building and Lee will own the underlying property under a long-term ground lease.

In the second development phase, Lee will demolish the existing Elizabeth House, which was built in 1966, and replace it with a 319-unit, mixed-income building.

Alexander House, which was completed in 1996, will undergo a full renovation and maintain its mix of units, with 40 percent of its apartments set aside for low-income renters.
Elizabeth Square is the latest in a series of HOC redevelopments of aging properties with private partners.

“The strongest, most sustainable affordable housing deals—those that don’t need deep subsidies—are mixed income,” Donald said. “That’s best practice in affordable housing.”

The housing agency owns or manages 6,998 units and is on an aggressive campaign to add more through redevelopment with private partners. Backed by a $246.9 million budget, the HOC has positioned itself as a real estate development firm.

In the past year, the agency has moved toward a major expansion of affordable housing not just in the Georgia Avenue corridor but in expensive areas of the county where land costs typically put neighborhoods out of reach for anyone not making an upper-bracket income.

In July, the HOC won sketch plan approval from the county Planning Board to develop 329 new apartments and townhouses in Chevy Chase, which will replace 68 garden-style apartments owned by the agency. The project involves a deal with developer EYA of Bethesda, which bought a portion of the site to build the townhouses, netting $19-24 million for the housing commission.

Now, the agency is seeking higher density for its 157-unit Barclay apartment building to position it for redevelopment as part of the new Bethesda Central Business District master plan that the county is writing.