At Sursum Corda, Power of the Profit

Charles Bolden was a young man the first time the government tore down his house, a shack in an overcrowded alley in the shadow of the U.S. Capitol. In the name of urban renewal, Bolden's neighborhood was leveled and replaced with a sprawling complex for poor people known as Sursum Corda.

Four decades later, the government wants to tear down Bolden's home again. But this time, with property values soaring, Bolden and his neighbors want more than just a new place to live -- they want to make money.

So this week, they voted to accept a private company's offer to redevelop Sursum Corda in an unusual, $25 million deal that guarantees each of 169 poor families a new home, $50,000 and a share of the profits from hundreds of additional units to be built for more affluent people.

Skeptics said the agreement permits the developer, KSI Services Inc., to grab a large parcel in a rapidly gentrifying area of the nation's capital for a fraction of its true value. But others said it provides a fair price for the troubled property, as well as real hope for economic advancement among the senior citizens and single mothers who live there.

"The majority of us don't want to depend on the government. We want to be self-sufficient," Bolden, 68, said Monday night after residents voted 126 to 1 to approve the deal. "So I'm very happy. Very, very, very happy. Put all those verys in there, too. This is going to be great."

At a time when affordable housing is disappearing citywide, the fate of Sursum Corda is being watched closely by local officials and housing advocates. The deal also could affect the District's first attempt to build a "New Community," part of an ambitious initiative by Mayor Anthony A. Williams (D) to preserve low-income housing by razing concentrated blocks of poverty and building mixed-income neighborhoods instead.

Sursum Corda also attracts attention for its storied history and extraordinarily valuable location. Conceived in 1966 as a home for people displaced by urban renewal, the nearly six-acre development lies five blocks north of Union Station, within walking distance of the newly opened New York Avenue Metro stop, the new city convention center and rehabbed rowhouses selling for upward of a half-million dollars.

Like many subsidized properties, Sursum Corda has struggled financially, racking up debts of more than $8 million. This year, it was threatened with foreclosure by the U.S. Department of Housing and Urban Development because of chronic health and safety violations.

Unlike most subsidized properties, Sursum Corda is owned by its residents, giving them the ability to chart their fate.

Instead of succumbing to foreclosure and almost certain purchase by the District government, Sursum's board of directors, led by longtime resident Beverly Estes, sought a private partner to help preserve their ownership stake in the land, which the city estimates to be worth $12 million under zoning restrictions.

KSI, one of the region's largest residential developers, ultimately stepped forward. Under a deal signed by the board in June and ratified by residents Monday, KSI offered a package of benefits that included a check for $482,000 to bring the mortgage current; $2.3 million to make repairs and pay other bills; $8 million to cover debts; $5 million to maintain the property over the next few years; and nearly $10 million in payments to residents at a rate of $50,000 per household.

Last week, HUD conducted an inspection, which Richard I. Knapp, senior vice president of KSI, said he expects the complex to pass. Once the threat of foreclosure is lifted, KSI plans to ask HUD to approve sale of the property to a new entity comprised of KSI and current Sursum Corda residents.