Subject
title
Twinbrook Place - Housing Opportunity Fund Deployment
end
Department
Housing and Community Development
Recommendation
Staff recommends that the Mayor and Council authorize the City Manager to execute an agreement, of the same or similar terms, with Ardennes Housing Owner LLC in the form of a low-interest loan of $1,500,000, and accompanying documents to support the development of 125 affordable unit located at 12501 Ardennes Avenue, Rockville, MD.
Discussion
Background
Twinbrook Place is an adaptive reuse of an existing LEED Gold concrete commercial building constructed in 2004. The site is approved for 125 units within an affordable multi-family rental community to be built using 4% (non-competitive) Low Income Housing Tax Credits (LIHTC). The project represents the redevelopment of an existing commercial/office property located at 12501 Ardennes Avenue off of Twinbrook Parkway. Units at Twinbrook Place will be restricted to households earning at or below 30 percent, 40 percent, 50 percent, 60 percent, 70 percent and 80 percent of the Area Median Income (AMI). Five percent of units will meet Uniform Federal Accessible Standards and be considered UFAS units and two percent will be reserved for households with visual/hearing impairments. The community is planned to include studio, one, two, and three-bedroom units in a seven-story, elevator-served, mid-rise building with interior corridors and structured garage parking under the building.
Unit amenities include internet and cable access, a dishwasher, garbage disposal, in-unit washer and dryer, secured building parking, and secured building & unit entry. For the overall property amenity package, Twinbrook Place includes a storage room w/ private storage, on-site laundry room w/heavy-duty W/D, indoor play area, package room, a community room w/ kitchen, fitness center, and a work center with private workstations.
Furthermore, the development will exceed all current local and state building codes and green standards for developments of this nature at the City and County levels. See Attachment 1 - Twinbrook Place Project Narrative for more details.
Gap Financing Request
The development is in the process of finalizing its 4% tax credit request and bond amount with the Maryland Department of Housing and Community Development’s (DHCD) Community Development Administration (CDA), which acts as the state housing finance agency. The tax credit investor, construction lender, and perm lender obtaining the 1st mortgage Freddie Forward TEL is PNC Bank, who is fully signed up on the transaction and in active due diligence. The Montgomery County Green Bank is in the committee process for allocation of up to $7m in subordinate funding, with a $1,550/unit Payment In Lieu Of Taxes (PILOT) reduction and $10,625,000 Housing Initiative Fund funding request from Montgomery County Department of Housing and Community Affairs (DHCA). Additionally, Rockville Housing Enterprises will be providing 8 Project Based Vouchers and Pepco will be providing rebates at cost certification once all green improvements are verified.
The developer is seeking $1,875,000 in soft funding from the City of Rockville. Due to limited resources, staff is recommending $1,500,000 in gap financing from the Housing Opportunities Fund (HOF) and is working closely with the developer to address potential cost reductions to further close their financial gap. Staff recommends a 40-year loan term at a three percent interest rate paid annually to the HOF. Principal will be paid in full at the end of the term. The term is tied to affordability. In addition, the city will pay up to $330,000 in development fees, on behalf of the developer, to close the remaining financial gap.
Evaluation and Scoring
Projects seeking Housing Opportunities Fund (HOF) support move through a staged review process designed to focus staff resources on proposals that are both highly impactful and realistically positioned to proceed. Staff conducts a rolling pre-application review and applies an eligibility and fatal-flaw screen to confirm that a project meets basic program requirements, have a credible development and financing plan, and do not present significant unresolved issues related to site control, entitlements, environmental conditions, sponsor capacity, or overall feasibility. Projects that pass this initial review are then evaluated using the HOF’s 105-point scoring rubric, which places the greatest weight on the number of affordable units produced or preserved and the depth of affordability, particularly units serving households below 50% AMI and, where applicable, below 40% AMI. The scoring also considers project readiness, financial feasibility and leverage, and the experience and capacity of the development team.
The scoring process is intended to identify the strongest projects for more intensive review rather than serve as the final funding decision. The highest-scoring proposals advance to submission of the full due diligence package and detailed underwriting of the development budget, capital stack, operating pro forma, project risks, and long-term affordability commitments. Staff uses the results of the scoring and underwriting process to develop a funding recommendation, proposed loan amount and terms, and any conditions that should be satisfied before closing or disbursement. This staged approach allows the city to compare projects consistently and transparently while concentrating limited HOF resources on projects that provide the greatest affordable housing impact and have a strong likelihood of successful delivery.
Twinbrook Place Apartment received 102 out of 105 possible points and a recommendation of support was brought to the multi-departmental committee for consideration. See Attachment 2 - Twinbrook Place - Evaluation Sheet for more details.
Impact Statements
Equity
All 125 units are income-restricted to households at or below 80% of AMI. The rent tiers are as follows:
|
AMI tier |
Units |
|
30% |
12 |
|
40% |
18 |
|
50% |
18 |
|
60% |
24 |
|
70% |
26 |
|
80% |
27 |
That means 48 units, or 38%, serve households at or below 50% AMI, and 30 units serve households at or below 40% AMI. The 8 RHE Project-Based Vouchers make the lowest-income units reachable for extremely low-income households, including targeted populations referred by RHE.
Five percent are UFAS-accessible units (about 6 to 7 units), and 2% are set aside for households with hearing or visual impairments, which serve residents with disabilities.
Residents will also get unit features usually found only in market-rate buildings, including in-unit washers and dryers, larger units, and free parking. They will live in locations with robust transit options and amenities which support or expand access to jobs, groceries, and services.
In Rockville, Black and Hispanic households are more likely to rent and to be cost-burdened by systemic disparities, and they are over-represented among households below 50% AMI. These gaps reflect historical exclusionary housing and lending practices and current wage gaps. Because the project concentrates deep affordability in a high-cost, well-resourced submarket, it is likely to benefit these households disproportionately.
The site is a vacant or underused office building, so the project does not displace any residents. However, some limits are worth noting:
• Large families. Only 6 units (5%) are three-bedroom, and there are no four-bedroom units. Large, lower-income families are therefore less served than smaller households.
• Lowest-income households without vouchers. Households at 30% AMI who do not receive a voucher may still find even the 30% AMI rents a strain.
Affordability will be tracked through annual LIHTC compliance reporting to CDA, MPDU covenant monitoring, and HOF loan reporting to City staff. Staff could also ask for annual demographic and occupancy data so the city can confirm that the intended populations are actually being served.
The anticipated impact is positive.
Environment
The project is converting an existing 2004 concrete office building into 125 affordable apartments. Reusing the building instead of demolishing it and building new avoids most of the embodied carbon of a new structure, because the concrete frame, foundation, and structured garage stay in place. Construction waste and new material use will also be much lower than for comparable new construction. The project is targeting the National Green Building Standard (NGBS) Emerald designation, the standard’s highest tier. The developer reports that the building will exceed both the City’s energy code baseline and the County’s standards. Units will have energy-efficient appliances, and Pepco rebates will be paid at cost certification once the green improvements are verified.
The loan is mainly a housing affordability investment, not a climate measure. However, it directly supports a project designed to do better than code on energy performance. The Montgomery County Green Bank is providing $7 million in subordinate financing, which signals that the project’s efficiency measures meet the Green Bank’s clean-energy investment criteria.
Relationship to Climate Action Plan goals and categories:
• GHG emissions and energy efficiency. High-performance residential conversion and efficient appliances lower per-household electricity use compared with typical existing rental stock.
• Transit and walkability. The site is about a quarter mile from the Twinbrook Metro Station, next to a RideOn stop, and about half a mile from a grocery store and Rockville Pike retail. Housing lower-income households near high-capacity transit supports lower vehicle miles traveled. One partial offset is that the project provides free structured and surface parking, which can encourage car ownership.
• Resilience. Low-income households are often the most vulnerable to extreme heat and energy costs. Affordable units with efficient building systems and interior corridors in a concrete structure lower residents’ energy burden and exposure to heat. Because the site is already developed, the project adds no new impervious surface.
The anticipated impact is positive for GHG emissions and positive for community resilience.
Economy
The project adds 125 income-restricted rental units in a market with very little vacancy. Stabilized vacancy is 2.3% overall and 1.5% among LIHTC communities. About 44% of market-area renters spend more than 30% of their income on rent. The market study projects excess demand for about 695 rental units over the next three years, even after counting this project and the pipeline. As the first office-to-residential conversion in Rockville, the project returns a commercial building to productive use instead of leaving it underused, which supports nearby property values. It also gives the City a precedent for future conversions.
The $1.5 million City loan is a small part of a larger capital stack leveraging substantial funding that includes 4% LIHTC equity and tax-exempt bond financing, a first mortgage from PNC, millions from the Montgomery County Green Bank, and over $10 million from the County.
Construction will create temporary jobs. The site is close to the Twinbrook and North Bethesda employment and life-sciences corridor. Housing there that is affordable to households earning roughly $31,600 to $128,700 supports employers who need workers to live nearby.
Rents set at 30% to 80% of AMI, plus financial-literacy and employment-readiness programming from TM Associates Management, should lower housing cost burden for residents. That frees household income for local spending, savings, and economic mobility.
The anticipated impact is positive.
Mayor and Council History
Housing is one of the Mayor and Council’s five focus areas. In June 2024, a high-level briefing was presented outlining the city’s housing crisis and policy landscape. Later in 2024, there were three work sessions on the city’s housing strategies, during which increasing support and financing for affordable housing was approved by the Mayor and Council as one of the strategies to further both housing supply and subsidy.
In summer 2026, the Mayor and Council received a presentation about the City’s Housing Needs Assessment which recommended supporting LIHTC development through gap loans among other supports.
During the August 3, 2026, meeting, the Mayor and Council approved the MPDU Agreement via consent agenda.
Fiscal Impact
The execution of this loan requires an additional $110,000 General Fund contribution to the Housing Opportunities Fund. After this award, very few resources will remain in the HOF. However, staff anticipates the annual interest payments to the HOF and the repayment of a separate $1.2 million loan which will provide resources to support future affordable housing projects. The November 9, 2026, budget amendment will reflect the additional General Fund contribution and appropriate the $1.5 million for this loan.
Next Steps
Once authorization is given to the City Manager to execute the agreements, staff will route finalized versions of Attachments 3 - MPDU Deed of Trust, Attachment 4 - MPDU Promissory Note, and Attachment 5 - MPDU Loan Agreement through Docusign for review, approval, and signatures from both the City Attorney and the City Manager. Staff will then provide the signed documents to the developer for inclusion in their closing documents. Once closing is complete, the City will receive executed copies of the loan documents to retain. The upcoming budget amendment on November 9, 2026, will also reflect the movement of the HOF funds and allocation to the Twinbrook Place Apartments.
Attachments
Attachment 1 - Twinbrook Place Project Narrative
Attachment 2 - Twinbrook Place - Evaluation Sheet
Attachment 3 - MPDU Deed of Trust
Attachment 4 - MPDU Promissory Note
Attachment 5 - MPDU Loan Agreement
Attachment 6 - 2026.11.02 Presentation - HOF - Twinbrook Place Apartments