A Delaware-based developer has received tentative agreement from D.C. housing officials to sell him a city-owned apartment building on upper 14th Street and to lend him more than $1 million to pay for it.
Under the proposed arrangement William Ross and his copartner Bernard Beal will renovate the New Amsterdam apartments, a massive eight-story apartment building prominent among the mix of old and new buildings lining the 14th Street corridor. The building has been vacant since the 1968 riots.
But as redevelopment in the neighborhood heats up, Ross' proposal, backed by housing officials, seems to be heralding a rebirth of the 55-year-old Amsterdam. Ross' proposal to the department was unsolicited.
The housing department has tentatively agreed to lend Ross $1,010,000 for 40 years at low reduced interest rate to buy the building from the city. Ross would then ask the Housing Finance Agency, another city agency, for a $3.6 million loan to pay for restoring the 90-apartment red brick building at 2701 14th St. NW by 1987.
Ross would have to raise about $500,000 in start-up costs. In return for the loan from the housing department he would have to guarantee the city 35 percent of the net cash flow generated by the project, and 15 percent of proceeds from the sale if he refinances the building.
Developers generally try to generate little cash flow from rental properties to allow them to take advantage of lucrative tax benefits. In addition repayment of the housing department loan would be deferred for the first five to seven years of the project.
At a recent public hearing on the proposed sale Ross declined to talk to a reporter, saying that press coverage of his plans would "jinx the deal."
Shirley Tolbert Diamond, director of the housing department's Neighborhood Improvement Administration, which is handling the project, said the city was supporting it because, "After the riots the building fell into disrepair and then Metro bought it and it became vacant in the mid- to late 1970s. After discussions with Metro we bought it because we are always interested in returning vacant units like the Amsterdam into service so that they will start bringing in taxes."
She said Ross has until the end of next month to coordinate a final financial package that meets the department's approval.
"The next hurdle is for him to get his financing together. He has a lot of work ahead of him," Diamond said. "That doesn't mean the sale will go through the way it was proposed, but we are going to let him try."
Under the proposal, the renovated building would contain 30 one-bedroom units renting for $550 a month plus utilities and 60 two-bedroom units renting for $650 a month plus utilities.
The city has asked that 18 apartments be set aside for low-income tenants. These would rent for $372 to $422 a month plus utilities.
The city also would sell the developers four adjacent lots that would be converted into a parking lot for tenants, and a small portion of the building would be reserved for commercial use, according to a predevelopment proposal submitted by Ross.
Diamond said the New Amsterdam, which could begin renting by mid-1987, would become one of the few market-rate apartment buildings in a neighborhood where the city has only built federally subsidized housing for the elderly and low- and moderate-income tenants.
"The rents in the building will be comparable to what the going rates are in the area," Diamond said. "They will not get top of the line rents initially, but we believe that over time they will attract a heterogeneous mix of incomes. We don't want to keep pushing low income housing projects in the neighborhood," she added.
James R. Smith Sr., commissioner of ANC -- 1B, said he also supports the sale.
"That building has been a sore thumb for the neighborhood and I think it is a good idea, but we need to iron out some things that the community wants and needs. We don't want to be left out."
Smith said, however, he hopes to persuade Ross to increase the number of apartments set aside for low income tenants to 23 apartments instead of 18, and assurances that some of the jobs associated with the development will go to neighborhood residents.
Until the proposal, the Amsterdam was under the control of Metro, which bought the building in 1979 and planned to tear it down when the Green Line was extended into the neighborhood, according to spokeswoman Marilyn Dicus.
The city purchased the building from Metro for $1 with an agreement to pay about $200,000 to shore up the Amsterdam's aging foundations before the Green Line construction begins.
"You have to do the underpinning before the tunnel comes along, so the foundation of the building won't sneak into the construction, Dicus said. "We already have a check from the city for our contractor to do the work before we start tunneling."