Rockville Should Not Support Purchase of Fireside Apartments

Oct. 21, 2012,

Dear Mayor and Council,

I read the staff report about this pending purchase. It's all about affordable housing, but that's almost a red herring in this discussion. I urge you to halt this purchase, and outline steps to consider instead.

As a federally charted housing authority that receives HUD funds, RHE's [Rockville Housing Enterprises] mission is to serve "low income, very low income and extremely low income." According to RHE's five-year-plan to HUD, submitted in 2010, an estimated "8%" of city residents are below the poverty line. According to this document, the first mission of RHE is to "expand the supply of assisted housing."

Assisted housing. Not affordable housing. Assisted housing. The staff report does not address the number of people in the city who are too poor to qualify for affordable housing and how their needs are supposed to be met. This pending acquisition does nothing to help the nearly 10,000 people on RHE's waiting list. There is a much greater need to help those individuals.

Also, as HUD is a primary source of RHE's funding, has HUD or any federal housing officials been informed of this pending purchase and reviewed the details?

As Ruth O`Sullivan, director of RHE told me earlier this month, and which I included in my testimony, "We have 4281 on the Public Housing Waiting List of whom 1836 live and/or work in Rockville.  We have 4517 on our Housing Choice Voucher Program Waiting List of whom 1942 live and/or work in Rockville.  Keep in mind that these waiting lists are for our programs that serve extremely low income household who very likely would not be able to afford Fireside Park regardless of what the rents are.  The last time we opened our waiting lists was one year ago at which time we received 5,000 applications within a 3 day period.  We don't anticipate opening the waiting lists for several years.  Normal turnover in our Public Housing and Housing Choice Voucher Programs average no more than 30-40 households per year for both programs. Regarding Fireside, we likely would lease units on a first come first serve basis as we do now for our MPDU development.  We do not maintain a waiting list for that development."

Reviewing this pending purchase as related to affordable housing, it does not even add a net increase to the current affording housing stock. It blows RHE's entire bank account and credit on this project. "Insulated"  or not from a possible failure, there appear to be no unallocated RHE funds or "savings" left after this from what has been presented. I see nothing that indicates RHE will pay itself back the $500,000. Let's put aside all the many questions about this financing deal and the propriety of the PR campaign RHE is now waging with the residents of Fireside. Put aside the concerns of every other renter in Rockville who worries about his or her rent going up, who would just love a government agency to come in and stabilize their rents. Let's put aside that the tenants of Fireside, under RHE, will have to forgo any modernizations for at least seven years.

I urge you to look at the big picture.

I continue to call for a long-range strategic plan for low and moderate income housing in Rockville. I have yet to see anything from RHE that shows a purchase like this was ever in a strategic plan or how it fits with meeting its overall mission and goals. As such I urge you not to approve this purchase and instead do the following.

RHE should save its energy and resources and forgo this purchase, pull back and start to repair some of the damage that has been done to its credibility through this very bumpy purchase process.

Instead:

1. The city should request a staff report on the housing needs of low income and poverty level residents, addressing the number of units available vs. the need, resources are devoted to helping and how more can be brought to bear. The report should also look at the performance of RHE in serving these residents. It should also review national trends and how other cities are meeting their residents' needs. See, for example, the city of Hagerstown's projects, which serve 1,200 residents right now (NOT including its voucher program). See http://htown.yourinfo.com.

2. The city, with RHE, should develop a long-term plan for addressing the housing needs of low and moderate income residents. This plan should be creative, visionary and have high but realistic goals. It should emphasize, where legally possible, meeting the needs of seniors, the disabled and veterans and explore all ways of increasing available housing, including through new construction and creative affiliations with private developers. Changing Rockville laws, such as requiring an MPDU[moderately priced dwelling units]-like set aside when buildings turn over should be considered. A city-funded voucher program should be discussed. The plan should also review whether the city is fairly allocating the housing fund resources it has available, ensuring that charities and other organizations that serve the homeless and other vulnerable populations are not being short-changed.

3. As part of this plan, the city and RHE should evaluate whether owning a building such as Fireside makes sense, for itself, and for taxpayers--RHE is supported by Rockville residents and federal taxpayers through HUD funds--not just whether such a deal is doable, through the financial acrobatics such as are going into making this deal possible. The assessment should look at the government assistance level per unit, compared to the rent on the usual market.

4. If owning such a building does make sense, the city and RHE  should  explore what options might be available for such a purchase and approach a property owner directly to make the best deal. In the case of Fireside, RHE would be forced to pay a premium because the price was already set through a private sale arrangement. RHE should also explore other federal and state funding programs available to assist with acquisition and financing.

5. RHE and the city should work together with Priderock to preserve as many units as possible for "moderate" rental prices and with any other private owners and sellers when similar situations arise.

Thank you for your consideration.

Theresa Defino

Click here for more information from the city's website.