A headline July 1 inaccurately reported the source of a federally guaranteed loan to the Batman Corp. for development of the McNair Farms project in Fairfax County. The loan came from Merrill Lynch. (Published 7/11/89)

When developer J. Bahman Batmanghelidj needed financing to build a 318-acre project at the western end of Fairfax County, he hired a Washington consultant who specialized in matching developers with an obscure Department of Housing and Urban Development program known as Title X. Batmanghelidj, who calls himself "Batman," paid the consultant, Land Development Financing, $1 million for its expertise. The $1 million bought Batmanghelidj an intervenor with ties to the Reagan administration and resulted in a federally guaranteed 10-year mortgage for up to $78 million with a fixed interest rate of 10 percent. So far Batmanghelidj has used $38 million, he said yesterday. Title X is supposed to give developers low-risk financing to buy land and install utilities so they can build affordable residential developments. HUD Secretary Jack Kemp announced Thursday that he will terminate the Title X program, which a HUD news release described as "riddled with abuse." Kemp also directed that his inspector general "examine the circumstances surrounding the processing of a loan" for Batmanghelidj's McNair Farms project, the release said. HUD said yesterday that there had been no allegations against any persons or companies, including Batmanghelidj's. "It's the process we're looking at," HUD spokesman Jack Flynn said. "The secretary has raised concerns about the number of consultants in the program and the high default rate . . . . McNair was singled out because it was a project approved at the very end of the previous administration, the previous administration official's last day." McNair Farms, now under construction near Dulles International Airport, will include 3,500 residential units, some in 90-foot apartment buildings, 400,000 square feet of office space and 327,000 square feet of retail outlets. "It's a shining star of what affordable housing is in Fairfax County," Batmanghelidj said. He said that the Title X program's intent of serving low-income residents will be fulfilled because rents at McNair Farms, starting at $550 a month, will be affordable to citizens with incomes well below the Fairfax County median of more than $60,000. "You know why it's not subsidized housing?" Batmanghelidj asked. "Because no one in the community would accept subsidized housing." Batmanghelidj said yesterday that the HUD guarantee for the loan, approved in March and borrowed from Merrill Lynch, gave him the financial stability he would need to develop McNair Farms over 10 years. In exchange for the necessary zoning at McNair Farms, Batmanghelidj made a $1 million donation to the county's affordable trust fund and is providing nearly $30 million in improvements to roads and public facilities. "It's a mixed-use development, mainly residential, for median income residents," Batmanghelidj said. According to a February 1989 internal HUD memo supplied by Batmanghelidj's office, HUD's Washington office manager apparently sought a waiver to approve Batmanghelidj's loan guarantee because of its size. However, then-Deputy Assistant Secretary James C. Nistler, who approved the McNair Farms application on March 3, 1989, his last day in office, responded that the D.C. office manager had misinterpreted the handbook requirements and that no waiver would be required. Batmanghelidj said yesterday that his firm had done nothing wrong and "regretted even the possibility that there could be an insinuation that the company could have acted improperly." "We went according to the rules and regulations of HUD," Batmanghelidj said. He said his firm hired Curtis J. Mimna, who was president of Land Development Financing, to obtain the HUD guarantee and financing through Merrill Lynch. Mimna could not be reached yesterday. Batmanghelidj said Mimna in turn hired Tricia Canzeri, a former New York investment banker whose husband, Joe, had served as an aide to President Reagan. Attempts to reach Canzeri were unsuccessful. Several investigations under way are focusing on the fees paid to consultants, many of whom are Washington insiders, for their help in obtaining HUD grants and loans. William T. Coleman Jr., former U.S. secretary of transportation who has done legal work for Batmanghelidj, said Kemp told him yesterday that the news release concerning the Title X termination was not meant to convey that Batmanghelidg's Batman Corp. had acted improperly. "He certainly indicated that there was nothing wrong with the project," said Coleman, who served as secretary of transportation under President Ford. "He {Kemp} said there was no indication whatsoever that Batmanghelidj's Batman Corp. had done anything improper." Batmanghelidj, 52, was born in Iran and is a naturalized U.S. citizen. He is one of the most visible developers in Fairfax County. In addition to McNair Farms, his major projects include a 3-million-square-foot Dulles Corner office park known as President's Park.