City Finds Potential Buyer For Dwight Co-Op Homes
by Allan Appel | Apr 22, 2010 4:22 pm
Even though Bobby Ewing would still like to return to “the old days,” when tenants like him owned Dwight Co-Op Homes and the complex resounded with the voices of little kids, he plans to stick around to see what happens when the classic modest-income co-op gets turned over to a private developer.
The city has lined up one such developer to take over Dwight Co-Op Homes on Edgewood, which after decades has fallen into disrepair as well as arrears and is about to be foreclosed by the mortgage holder, the federal Housing and Urban Development Agency (HUD). Click here to hear Ewing and others tell that sad tale.
The latest news is that HUD and the city have succeeded in bringing in First National Development Company, a Bridgeport-based for-profit rehabilitator of distressed urban properties, to buy and redevelop Dwight Co-Ops as mixed-income apartments.
“First National has agreed to the unit mix and the repairs,” said Cathy Schroeter, Livable City Initiative’s administrative services director .
A call to First National Managing Partner and R & D Director Garfield Spencer was not returned by press time. Spencer has been First National’s principal in negotiations with the city.
The city delivered the news to Ewing (pictured above) and the other residents at a meeting at the Dwight substation Tuesday evening.
The city has been working on the arrangement for about a month. The city is also offering up to $1 million as its contribution to sweeten the deal. “We reached out to HUD to see if we could work with a developer to preserve the housing and upgrade the development due to extensive deferred maintenance and other necessary repairs,” said Economic Development Director Kelly Murphy.
The money will come out of the LCI budget, and Murphy said the city’s $1 million is an “up to” amount, the final deal still being negotiated with the developer. Murphy and Schroeter said the city had reached out to other developers, both for-profit and non, but that First National had the best proposal.
“We [the city and First National] are in agreement with the affordability provision set by HUD. We look forward to working with First National to complete the renovations and for it to be a vibrant mixed-income community in New Haven,” said LCI chief Erik Johnson.
By its terms, HUD would foreclose and on the same day turn the property over to the city. The city would then turn the property over to First National as the owner of a now rental complex for redevelopment, and lots of repairs will be the first order of business.
While it is by no means yet a done deal, Schroeter said First National and HUD had recently resolved what had been the two sticking points: the mix and cost of repairs.
The 80-apartment complex will have 20 units set aside for people whose income is 50 percent of area median income, or AMI.
Another 20 will be set aside for those with 60 percent AMI; 20 at 80 percent AMI, and, finally, 20 at 115 AMI. Schroeter characterized the latter as about market rate.
In expectation of a happy ending, the Housing Authority of New Haven also passed a resolution Tuesday night at its board meeting to empower its executive director to approve up to 40 project-based rent subsidy vouchers to eligible families who might live at the re-furbished Dwight Co-Ops.
The other sticking point in the negotiations had been repairs. “The developer has agreed to $4.5 million in repairs,” Schroeter said. The complex, she added, has seriously leaking roofs and mechanical problems and failed HUD inspections “about a million times.”
The tab for the repairs may come in for even more than the $4.5 million agreed on, perhaps up to $5 million, Schreoter said. But any developer who picks up a HUD owned property must do all the repairs cited in the list.
“If HUD says do 52 pages of repairs,” she said, then they must be done if you buy a once-owned HUD property. Even if the tab goes higher than the dollar figure agreed upon.
Another rub that was worked out. The developer must perform the full list of repair work within 24 months of purchase, she said.
That’s likely to dissuade another and private buyer from coming in at the foreclosure sale and bidding against HUD. Although unlikely, it is possible.
She said the city hopes for an outcome like the transfer of another ‘60s-era coop into private hands, Canterbury Gardens on Sherman Parkway.
“We don’t know if HUD is going to get title. If it goes to someone we don’t know, we don’t know if they’re going to be a good landlord. It’s a lot of units. We don’t want them to just patch it up. We want to give them [the residents] a better quality of life.”
“If that’s the case [that is, if it goes to a buyer other than HUD], everything we’re working for is for naught.”
The foreclosure sale is likely to take place within a month or two. Even though HUD owns the property, it must bid on it at the sale. Its bid will be its debt.
It’s always possible someone will bid a dollar higher, but then that bidder would still need to perform $4 to 5 million in repairs. Schroeter speculated therefore that it was unlikely another buyer would prevail over HUD.
The purpose of the Tuesday community meeting was informational. “We want to bring them [the residents] into the daylight.”
The not-knowing was what was so scary to residents, she suggested.
And Tuesday’s meeting appeared to have dispelled some of that anxiety. About 25 people came to the Dwight Street substation, according to one long-time tenant who attended and spoke to a reporter Wednesday.
He said he preferred to remain anonymous due to continued hard feelings among residents over the loss of tenant ownership but described the gathering as “a positive meeting.”
The Board of Alderman needs to approve the arrangement with First National, which is likely to occur in early May. If everything works out, the foreclosure sale and the turning over the property to the developer should happen in early summer.
Dwight Home Co-Op tenants are scheduled to have a second updating meeting on May 11 at the substation at six.
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