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Rockville City Council to Hold Hearing on Fireside Park Financing

Rockville Housing Enterprises is asking for $2 million in city aid toward the purchase of the mixed-income apartment community.

A request for public financing to support the purchase of the Fireside Park Apartments will be the subject of a public hearing during Monday’s Rockville City Council meeting. 

The council will meet at 7 p.m. at City Hall. The meeting’s full agenda has not yet been released.

Rockville Housing Enterprises, which administers public housing in Rockville, has asked the city to commit $2 million toward the $36 million purchase of the 236-unit garden-style Fireside Park complex at 735 Monroe St.

The complex, which was built in 1961 and provides mixed-income rental housing, went on the market in April. A Florida-based company has made an offer for the property, but RHE is pursuing the purchase under the county’s right of first refusal, which gives the county and designated housing agencies the first chance to purchase properties for affordable housing.

The complex meets RHE’s goal of providing workforce housing to families who cannot afford market rate rents, RHE executive director Ruth O’Sullivan told a meeting of Rockville residents on Sept. 18.

There is a concern that a private buyer would raise rents, O’Sullivan told the council during a Sept. 24 presentation on RHE’s plans for the property. 

Under the plan, RHE would preserve 40 percent of the complex—94 units—at rental rates affordable to people earning 60 percent or less of the area median income, $64,500 for a family of four. 

Rents for families earning 60 percent of AMI would range from $1,209 a month for a one-bedroom unit to $1,613 for a three-bedroom unit, O’Sullivan said.

The other 60 percent of the units would rent at market rates. The current average market rent is $1,302 a month, according to an investment summary of the property from commercial real estate agent Transwestern

Click here to view the PowerPoint presentation and here to read a city staff report.

Video of the Sept. 24 council meeting and presentation is available here.

RHE would take out a $32.4 million mortgage on the property.

Montgomery County has agreed to finance $2.8 million of the purchase, contingent on RHE and the city contributing an additional $2.5 million. Rockville is considering a mix of loans and a $200,000 grant through the city’s Housing Opportunities Fund, according to a report by city staff.

Click here to read Rockville Patch’s coverage of the Fireside Park Apartments sale.

To sign up to testify at Monday’s hearing, call 240-314-8280 by 4 p.m. on Monday.

Click here for more background on the purchase proposal, including a timeline and here for more on the hearing, including how to contact city staff.

John Smith October 04, 2012 at 04:02 PM
Where will the money come from, Tom?
Tom Moore October 04, 2012 at 06:09 PM
John, at the end of the day, virtually all the money -- $1.8 million -- will come from RHE and its renters. The City will loan the money to RHE for seven years, they will pay it back, and taxpayers will be made whole. Only roughly $200,000 will be a grant from a restricted fund that can only be used for affordable housing, and I believe even this money came from developers, not taxpayers. I've been thinking of it this way: When a bank gives me a mortgage, it doesn't mean the bank is paying for my house. I'm paying for every bit of it, plus interest. Just because the bank fronts me the money doesn't change that essential fact. With Fireside, the City is being asked to front the money to its own housing authority, an independent government agency charged with creating affordable housing in our City. Keeping a good number of neighborhoods affordable has been an official goal of the City for decades, and it's really RHE's *only* job.
Marilyn Johnson October 16, 2012 at 02:11 PM
I think there is a misunderstanding that there are those who support affordable housing and therefore, favor the RHE proposal, and those who don't, and therefore favor a commercial purchase. As a person who has spent many a night as staff in the women's homeless shelter at Rainbow place, I most certainly care very much about affordable housing. The question is what is the best use of our funds, not whether we care about affordable housing. If the tax revenue lost by having RHE purchase the property were put to use by providing vouchers, we could avoid the risk involved and the low income renters would get to live in a very nice place. With an RHE purchase, the property will continue to deteriorate. Do we really want to follow the path to an out-an-out slum so that the rents can be affordable?
Tom Moore October 16, 2012 at 04:08 PM
Ms. Johnson -- RHE is no longer asking for tax forgiveness. How does this change your analysis? From everything I hear, RHE does a great job handling its properties. I have every expectation that they will do so in this case. There is no reason that after decades of providing and maintaining properties quite well all over this City, RHE should suddenly be interested in becoming a slumlord.
Marilyn Johnson October 16, 2012 at 11:42 PM
My chief concern is that RHE is under-estimating the difficulties and costs involved in the Fireside venture. So while waiving the tax forgiveness would make more fiscal sense to the City in selecting RHE over a commercial developer, it only increases my concern that RHE would be able to manage without such a break. I did not intend my comments about a slum to mean that there was any problem with RHE per se. But RHE is not proposing to do much beyond necessary repairs while Priderock is. I have personal experience with interest only loans. In 1976, my husband and I bought a house with a balloon loan second mortgage. By the time the loan came due, we didn't have the principle and the house had not increased in value, so we couldn't refinance. I still have that house today only because my mother was able to loan me the money. I don't see any information about how or when RHE plans to repay the principle and there's certainly no way of knowing what the loan refinance rate would be. There were comments in the meeting last night about the true value of Fireside. The city doesn't want to pay more than it is actually worth. I know nothing about valuation, but my guess is that the value is tied in some pretty direct way to the amount one could hope to recoup in rent minus the amount one would be spending in renovation and upkeep. That would mean that the actual value of Fireside is lower for RHE.

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