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http://www.twincities.com/stpaul/ci_21656260/st-pauls-affordable-housing-deals-draw-fire?source=rss
St. Paul's affordable-housing deals draw fire
Posted: 09/29/2012 10:18:48 PM CDT
Updated: 09/29/2012 10:18:56 PM CDT
A slew of St. Paul deals with a private, for-profit developer to fix up
several properties has a few neighbors grumbling.
For years, the city has mostly relied on nonprofits to handle affordable
housing partnerships and rehab projects.
But the city recently sold three East Side duplexes and a 12-unit apartment
building to BB Housing Associates for $1 apiece. The city then helped provide
the developer $1.8 million to fix up the properties to be rented out as
affordable housing.
Over two years, BB Housing has acquired 18 properties and millions of dollars
in federal rehab funds from St. Paul.
East Side resident Bob Schmidt told the St. Paul Housing and Redevelopment
Authority on Aug. 8 he would have been happy to buy the duplexes -- at 732
Jessamine, 697 Cook, and 696-698 Hawthorne -- for the $1 price. And he would
have put his own cash into rehabbing them, saving taxpayers the money.
Two other critics also spoke out against the uptick in rentals on their
street before the housing authority -- composed of the seven members of the St.
Paul City Council -- approved the sale and funding agreements.
The Payne-Phalen District 5 Planning Council also supported the sale.
"It's been extensive staff time to put this together," Cecile Bedor, director
of Planning and Economic Development for the city, told the Housing and
Redevelopment Authority recently. "BB Housing has done an excellent job for us
in the past."
Al Carlson, director of housing for the
city's Planning and Economic Development Department, says there's solid
reasoning behind the city's strategy with BB Housing, a partnership between
Loren Brueggemann's Phoenix Development and Michael Buelow's general contracting
company, Clinton Company Builders.
Using federal stimulus money, the Housing and Redevelopment Authority has
bought dozens of vacant, foreclosed properties and either rehabbed them for sale
or demolished them. The goal of the Neighborhood Stabilization Program is to
help the housing market recover in distressed neighborhoods.
Using federal money, the city offers a subsidy to cover the gap between the
rehab costs and sale value.
"With the properties that we're rehabbing for ownership, the difference
between what it costs us to purchase and rehab the house, less what we sell the
properties for, is about $75,000," Carlson said.
Most of the homes under this section of the Stabilization Program become
rentals.
Carlson said Brueggemann and Buelow have a good reputation in the community
and approached the city with the idea of using their expertise in rehabbing and
managing the rentals.
Brueggemann said he has been developing low-income housing for a dozen years
in the Twin Cities. The challenge of the Stabilization Program comes from
working on projects scattered throughout a community, as opposed to large
complexes.
"We've also found in this area a lot of our tenant population is single
working moms with children," Brueggemann continued. "It's really rewarding,
because our tenant base has been really good. ... Our philosophy is you give
somebody a really nice place to live in, so their home is a sound, safe place,
that really goes a long way to stabilizing the community. These people become
really good residents."
To get Stabilization Program homes into the hands of lower-income tenants,
the city recently sold houses to BB Housing and the groups Frogtown Community
Development Corp., Project for Pride in Living, Hmong American Partnership and
Dayton's Bluff Neighborhood Housing Services.
Each received a "forgivable" loan requiring that the properties remain
affordable for 15 years. If the properties are resold before the loan term ends,
the developers must pay 50 percent of the appraised value to the city.
Stricter rules apply in the case of BB Housing, which must pay 75 percent of
the appraised value if they sell within 15 years, Carlson said. In addition, BB
Housing will set up expense accounts for the low-income residents, helping them
earn savings.
To skeptics, Brueggemann says, "They have to understand that this is a
federal program. ... This is how it's set up. And then we have to monitor their
incomes. We will go through an audit every year. We have to comply with HUD, and
if we don't comply with renting to families at 50 percent or less of area median
income, we will lose the property to the city."
Fifty percent of median income for a family of four in St. Paul is about
$42,000 a year, Brueggemann said.
Betty Revoir, who lives near the duplex at 696 Hawthorne Ave., said the site
was a former sober house. But turning the duplex into rental property would add
relatively transient residents and population density into a community eager to
see permanent residents, she said.
"I just think that's a lot of money to be putting into a house -- each one of
them is going to be about $350,000 to rehab," Revoir told the authority Aug. 8.
"Houses in our block are only worth $100,000 and something, if that. ... We wish
it was owner-occupied on one of the floors."
Frederick Melo can be reached at 651-228-2172. Follow him at
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twitter.com/FrederickMelo.
RECENT DEALS BB Housing Associates has acquired 18 properties and millions of dollars in federal rehab funds from St. Paul. -- Aug. 8: City sold three duplexes in Payne-Phalen neighborhood, and gave $1.06 million in rehab funds. The city also sold a 12-unit building at 754 Payne Ave., to be converted into four two-bedroom apartments, with $741,000 in rehab funds. -- May 9: City sold 242-244 Maria Ave. in lower Dayton's Bluff, and gave $420,000 in federal rehab funds. -- March 14: City sold five duplexes in Dayton's Bluff and Payne-Phalen, helped give $1.44 million in federal funds toward rehab. -- March 9, 2011: City sold five duplexes in Dayton's Buff and Payne-Phalen and gave $1.15 million in rehab funds. -- June 23, 2010: City sold three duplexes in the North End and gave $542,000 in federal rehab funds.
RECENT DEALS BB Housing Associates has acquired 18 properties and millions of dollars in federal rehab funds from St. Paul. -- Aug. 8: City sold three duplexes in Payne-Phalen neighborhood, and gave $1.06 million in rehab funds. The city also sold a 12-unit building at 754 Payne Ave., to be converted into four two-bedroom apartments, with $741,000 in rehab funds. -- May 9: City sold 242-244 Maria Ave. in lower Dayton's Bluff, and gave $420,000 in federal rehab funds. -- March 14: City sold five duplexes in Dayton's Bluff and Payne-Phalen, helped give $1.44 million in federal funds toward rehab. -- March 9, 2011: City sold five duplexes in Dayton's Buff and Payne-Phalen and gave $1.15 million in rehab funds. -- June 23, 2010: City sold three duplexes in the North End and gave $542,000 in federal rehab funds.
CCA Associates v. United States
Pending petition| Docket No. | Op. Below | Argument | Opinion | Vote | Author | Term |
|---|---|---|---|---|---|---|
| 11-1352 | Fed. Cir. | TBD | TBD | TBD | TBD | TBD |
Issue: (1) Whether the Emergency Low Income Housing Preservation Act of 1987 and the Low-Income Housing Preservation and Resident Homeownership Act of 1990 effected a taking of petitioner’s property without just compensation in violation of the Fifth Amendment of the Constitution because the legislation required petitioner to house qualifying tenants for a period of years and otherwise unfairly compelled petitioner, rather than the public as a whole, to bear the societal cost of low-income housing; (2) whether the government breached its contractual obligations to petitioner when it outlawed prepayment because the prepayment right formed part of the overall agreement among petitioner, Department of Housing and Urban Development, and the lender.
SCOTUSblog Coverage
Briefs and Documents
Certiorari-stage documents
- Opinion below (Fed. Cir.)
- Petition for certiorari
- Brief in opposition
- Amicus brief of Pacific Legal Foundation
- Amicus brief of National Federation of Independent Business Small Business Legal Center
- Amicus brief of Plaintiffs in Anaheim Gardens v. United States
- Reply of petitioner
