By Robert E. Pierre and Paul Schwartzman
Washington Post Staff Writers
Monday, May 21, 2007
Sayles Place Homes in Southeast Washington badly needs new windows and doors, a perimeter fence, landscaping, perhaps a new roof. No one disputes that.
But whether it is better to sell the 61-unit complex to a private developer or let a residents' cooperative purchase it is a matter of contention.
To the dismay of residents and city officials, the U.S. Department of Housing and Urban Development plans to foreclose and sell Sayles Place to the highest bidder at auction Wednesday. Residents are lining up financial backing, hoping to fend off foreclosure and buy it on their own.
"It's not as beautiful as it was," said Mary Charles, 65, the co-op president, who moved into Sayles Place 34 years ago with four young children and now pays $498 a month for her three-bedroom apartment. "But it's ours, and we want to keep it. That's why we're fighting so hard."
HUD officials say the cooperative, which has a HUD-backed mortgage, has failed several maintenance inspections in recent years, kept records poorly and fallen behind on the bills, throwing it into what is known as technical default even though the mortgage is current. Whoever purchases it would be required to make repairs and maintain it as affordable housing.
The administration of D.C. Mayor Adrian M. Fenty (D) supports the residents, who say they are confident they can obtain the money to pay for repairs.
Leslie Steen, the District's housing director, said the city is urging HUD to postpone the foreclosure sale to allow the residents time to pay off the loan. She said a HUD official suggested the District purchase the property for $3.5 million to $4 million or bid on it in the foreclosure sale.
"It's not a bad property," Steen said. "The owners of the property have done a relatively good job of managing their homes. They should not be forced out."
The controversy over Sayles Place is occurring amid a renaissance of development across Washington. Although it has been a boon for city coffers, it has squeezed areas that have long been bastions of affordability -- many of them east of the Anacostia River.
Many middle- and lower-income residents have complained that rising real estate prices have dashed their dreams of homeownership and threatened to displace them. Their concerns were underscored by the latest census numbers, released last week, showing a 6 percent decrease in black people living in the District between 2000 and 2006.
At Sayles Place, residents worry they could be the next to go.
Their complex was built in 1970 and converted to a cooperative in 1973. Purchasers don't own their units but paid a $2,500 fee to buy in. They pay rents of $1,000 or less, depending on income, which goes to pay a mortgage insured by HUD with a commitment that 12 of the units will be set aside for low-income families.
Although the mortgage payment is up-to-date, HUD said in a statement that it is foreclosing because the residents "did not improve physical and financial conditions to an acceptable level." Among other things, the property was cited for windows that don't open, doors that don't close properly and stove burners that don't work. Under HUD rules, that was enough to place it in technical default.
Foreclosure was a last resort, taken only after Sayles Place failed six inspections in seven years, according to HUD records.
It does not mean residents will be forced to move, HUD officials said. Purchasers would be required to make repairs and keep rents at an affordable level for current and new residents.
"Our goal is always to preserve affordable housing," said Jereon M. Brown, a senior HUD spokesman. "We're only asking that they meet certain standards."
HUD's assurances are met with skepticism.
New houses nearby are selling for $300,000 or more, an unattainable figure to most at Sayles Place. Many residents are convinced that HUD is helping an attempt to push longtime residents -- most of them black -- out of homes they can afford and, ultimately, out of the city.
"They're railroading us out," said Dianne Glover, 50, who has worked at the U.S. Department of Labor for 33 years. "This property needs some work, but half of the people trying to put us out need some work on their own homes."
Even as the foreclosure sale approaches, residents have been working with private developers and lenders to avert the sale. They had secured a commitment loan, but it expired. Now they say they have verbal commitments to finance the roughly $1 million debt and have obtained pledges from the District government to help refurbish roofs, air-conditioning systems, bathrooms and kitchens.
They have enlisted Fenty, the Harrison Institute for Public Law at Georgetown University and D.C. Council member Marion Barry (D-Ward 8) to help them.
"HUD is just unfair," Barry told residents recently. "I'm going to fight as hard as I can to get this turned around."
Michael Diamond, director of the Georgetown University law school's housing and community development clinic, which has represented the tenants for the past five years, said he was stunned at HUD's rejection of the tenants' offer to prepay the outstanding loan balance.
"They would rather put it up for foreclosure," he said of HUD. "It's bizarre. For people who are struggling to keep their dreams, the government is yanking it from them when they're ready to pay. What could possibly be the rationale for that?"
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