D.C. Council members yesterday lambasted a private deal to redevelop the Sursum Corda housing cooperative, saying they don't trust a Virginia company to keep its promise to help Sursum's poor residents become homeowners.
"I don't like the deal. I don't like it at all," said council member Sharon Ambrose (D-Ward 6), who represents the low-income housing complex 10 blocks north of the U.S. Capitol. "My fear is that the folks at Sursum Corda will end up having no place to live."
Ambrose, who chairs the council's economic development committee, yesterday held a daylong hearing into city plans to preserve affordable housing in the rapidly gentrifying Northwest neighborhood that includes Sursum Corda.
Ambrose and committee members praised Mayor Anthony A. Williams (D) and City Administrator Robert C. Bobb for their $558 million proposal to replace 520 heavily subsidized units in Sursum Corda and other housing complexes with 1,698 townhouses, condominiums and apartments that would help attract affluent families to the neighborhood.
Yesterday, committee members Ambrose, Vincent C. Gray (D-Ward 7) and Kwame R. Brown (D-At Large) said they were excited about the program the mayor has dubbed the New Communities initiative. But Ambrose and Brown said they were less pleased by the deal between Sursum Corda and Vienna-based KSI Services Inc., despite the developer's assurances that the company shares the city's New Communities vision.
Under a deal cut last month with Sursum residents, who own the property, KSI will give them 49 percent of profits on the redevelopment, as well as a one-time payment of $80,000 per household.
Under questioning by Ambrose, KSI Senior Vice President Richard I. Knapp said Sursum's 167 families can either take the money and leave the property or can use the cash to defray the cost of a new unit at Sursum Corda. For example, for those who want to continue leasing, KSI would invest the $80,000 "at an investment rate, and the earnings thereof would count as tenant income," Knapp said.
For those who want to buy, Knapp said, the $80,000 would become a down payment on, for example, a two-bedroom condominium priced at about $400,000.
"And if $80,000 were the down payment, what would the mortgage be?" Ambrose asked.
"The balance: $320,000," Knapp replied.
"And given the demographic data we just heard today" -- indicating that Sursum residents earn an average of $10,000 a year -- "how many Sursum Corda residents could get a $320,000 mortgage?" Ambrose said.
"We don't know if a lot of them would," Knapp said. But they wouldn't have to, he said, because KSI guarantees that most will continue to pay no more than a third of their income for housing.
For example, faced with a $2,000 monthly mortgage, a family making $10,000 a year would pay about $250, and federal housing vouchers would pick up an additional $1,250, Knapp said. That would leave a $500 gap that would have to be paid by the city, he said. Knapp has previously said the project depends on the District's providing $40 million in public funds.
Ambrose seemed stunned, and she asked Knapp to meet with her later so she can "make sure that these residents are, frankly, protected."
"What I hear you saying is you're going to be looking for heavy-duty subsidies from HUD and/or the District government. And that's not the deal," she said. "I don't see you bringing very much to the table, sir."
Afterward, Knapp said he was "surprised" by "how little understanding Chairman Ambrose had about the economics of a public-private partnership."
"It means we have a lot of education to do," he said. "I think, for the first time, the reality of the cost of this effort is coming through."
The mayor's office is drafting legislation asking the council to approve the New Communities initiative.