Sunday, December 03, 2006

The Money Issue

Announcements!

Before I get into the meat of today’s post, please notice a few things:

  1. An email address change (so glad to be out from under Verizon—they don’t seem to understand that they’re a communications company). The new one: HeraldTrib@gmail.com (please make a note of it and update your spam filter).
  2. I’ve signed on with FeedBurner. Now you can automatically get notified when I update the blog (and then tell me and I’ll cut you from my email list). Sign up here.
  3. This is a new version of blogger; the photos and scans I post can be larger. With luck, you’ll see the neighborhood as never before.

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Showing You the Money

Looking at how the county might help fund the redevelopment of Buckingham Villages 1 and 3 is a journalist’s dream: it’s a lot of complex information dealing mainly with tax breaks and AMI. Plus, I'm exhausted as I write this. It's a recipe for disaster. Cue the “Ocean Sounds” CD right now and head off to dream land…

A developer has to consider the different shapes, sizes and types of buildings it will construct, obviously; parking lots are cheaper than above ground garages which are cheaper than underground garages.

Consider this: the way the buildings in Buckingham Village 1 are structured—literally the number of affordable units per building—changes what federal and state tax benefits Paradigm Development Companies is entitled to for the affordable units they build.

Once they figure out the plan for the site, some of the tax credits must be won from the state on a competitive basis; so where they qualify automatically for a lower tax break, they have to compete with other builders of affordable units for a better tax break. Who knows if they’ll win.

The buildings they build and the size of the tax breaks affect the size of the subsidy the county will have to put into each unit, and therefore how many units the county feels it can afford.

Add to that the idea of what “affordable” is. People involved in all this, talk about the AMI, or the area median income, a number that the federal department of Housing and Urban Development comes up with to tell counties and developers where the “affordable” threshold is. The county and Paradigm look at different tax breaks and different subsidy levels depending on which threshold they want to use: households that earn below 50, 60, or 80 percent of AMI. Each number comes with a different batch of tax incentives. [See Ducks, below.]

Complicate that with the idea that some of the affordable units may actually be for sale, not for rent, and the subsidy numbers shift again. If nothing else, the county must change which line in the budget pays for them. [See Co-op-eration, below.]

Finally, it could all fall apart, come March. That month, the Memorandum of Understanding reached between Paradigm and the county comes due, and either Paradigm or the county could say they just can’t reach an agreement over all of this.

What happens then is the county labels all of Buckingham Village “Historic” (the Historical Affairs and Landmark Review Board has already said this property easily falls within the definition). A legal battle ensues in which destruction and construction are stopped, but the county must find a market-rate, affordable housing buyer within a year. Estimates put the property at somewhere around $100 million. A buyer who would maintain the affordable nature of the site would not be easy to find.

At the end of the year, if there is no buyer, Paradigm sweeps back in, and develops it “by right,” meaning, basically, they can do whatever the current code allows, about 36 units per acre. BV2, where the buildings have already been razed on N. George Mason and N. Henderson Road are being developed “by right” as part of the MOU compromises.

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Village 3 Co-op-eration.

All or parts of Buckingham Village 3 may turn co-op or condominium, allowing current BV3 and BV1 renters to become owners at subsidized rates, say county officials.

The 140 units of BV3 would first be refurbished, including renovations inside, and possibly a pool and “bump-out” additions at the rear of some buildings (similar to Gates of Ballston). All of this must first pass through the Historical Affairs and Landmark Review Board process, currently underway.

The county held a meeting on Wednesday, Nov. 29, to gauge the interest of the residents and turn-out was at least 50 people, attendees have said.

County Board Member Walter Tejada, who attended the event, said he was “pleasantly surprised” at the turn-out, which he placed at about 75 people. “Good turnout for a weeknight.”

“It’s good to see people roll up their sleeves and work,” he said in a telephone interview, adding, “It made me feel good that there are people willing to fight hard” to save the community. He said there’s a lot of work left, however, if people want to pursue this.

“People want to buy,” Lois Athey said in a telephone interview. She is a long-term activist with the Buckingham Village/Gates of Arlington Tenants Association. “The idea is to give people options.”

BV3 sits on the north side of Pershing Drive, between N. George Mason Drive and N. Thomas Street. It is bordered on the north by N. 4th Street.

Paradigm Development Companies owns the property and would be responsible for refurbishing the units, paid for in part with county subsidies, as per the county’s
memorandum of understanding with the developer, signed at the end of last summer.

According to the MOU, the county wishes to maintain the historic apartment complex, and preserve the community. That is, the buildings have to look much the same as they do now, and people who live there now shouldn’t be forced to move away.

What’s more, Athey said many of the families living in the villages now earn between 60 and 80 percent of AMI. It’s more expensive for the county to subsidize people at the 80 percent level—that is, who are relatively better off than those who only earn 60 percent of AMI.

For Mr. Tejada this brings into question whether all 16 buildings of BV3 can be turned co-op. Perhaps a portion would remain rental.

Money to help subsidize the purchase of the units could come from a move the county made in October to OK the sale of properties it owns in the Rosslyn-Ballston metro corridor. (It’s not quite as simple as this; see the
Nov. 8, Arlington Connection story or listen to the board meeting—Oct. 24, Item 51—for more information.) The county earmarked about $6 million of the estimated $7 million of the sale to help people purchase units in Buckingham.

Many questions remain, both Ms. Athey and Mr. Tejada said. But here are two big areas:

If Paradigm decides it’s willing to sell these units, who buys them? What entity would need to be created to buy all the units at once and then resell them to the individual renters? Would the entity agree to Paradigm’s asking price?

Also, the MOU states that the county is trying to maintain 300 affordable units in the neighborhood. The 140 units in BV3 have been tallied into that 300 by people at different meetings. What happens if the units are no longer rentals, but condos?

“Would that be credited toward a committed [affordable] unit?” asked Lois Athey. “I don’t know.”

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Ducks in a Row

Which duck, of all those different variables above, is the Mother Duck, the first duck that must fall into place for the others to follow? I put that question to David Cristeal in the county’s housing division. (Yes, we finally got together at the Cosi Café in the Courthouse neighborhood.)

He said the basic plan for the site needs to be chosen first, and then the county and Paradigm can work out which mix of rentals, purchases, tax credits and the like will make this valuable both to the county and the developer. He started rubbing his brow in tension at one point while running through all the options.

This Thursday’s
Site Plan Review Committee meeting (Dec. 7, 7 p.m., Walter Reed Center, 2609 S. 16th Street) will be very important as the SPRC makes some final decisions about the plans.

“Hopefully we can keep the compromise going,” he said, referring to the months of discussions and meetings since the MOU was signed. “We have to make this comparable to by right” development, he said, in order to keep Paradigm at the table.


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