A proposal from the National Corp. for Housing Partnerships to renovate the Abingdon Apartments in north Alexandria with tax-exempt financing and then raise rents by more than 50 percent was turned down this week by the Alexandria landlord-tenant board.
Tenants had complained that, at the rates NHP proposed, most of them could not afford even the apartments that would be set aside for low-income people.
NHP, chartered by Congress in 1968 to encourage private investment in low- and moderate-income housing, is seeking to borrow $11 million from the Alexandria Redevelopment and Housing Authority -- which the agency would raise by selling tax-exempt industrial revenue bonds -- to purchase and rehabilitate the 242-unit Abingdon, at 1600 West Abingdon Dr., one of Alexandria's last affordable apartment complexes.
In exchange for tax-exempt financing, NHP would be required by federal law to set aside at least 20 percent of the apartments for low-income families.
Low-income is defined by the federal government as a person or family making 80 percent of area median income or less. For the Washington area, a family would qualify if it made $29,280 or less. NHP is also promising that the units would remain as rental apartments for at least 10 years.
The landlord-tenant panel's vote is not binding on the city council, which is expected to consider the proposal next week and could still approve the bond issue.
But tenants at the Abingdon told the board that almost none of them earned enough to pay the proposed rents on the low-income units. NHP has set the rents for the low-income units as high as allowed under the federal regulations, proposing to rent one-bedroom units for $536 and two-bedroom apartments for $645.
Rents at the complex today are $375 for a one-bedroom and $400 for a two-bedroom. Under NHP's proposal, the market-rate units, which would comprise 80 percent of the project, would be rented for even more, with one-bedrooms costing $625 and two-bedrooms at $725.
"I think a lot of people there would be happy to keep the apartments the way they are and be allowed to stay on," said William Nelson, a tenant who has lived at the Abingdon for more than five years. "I'd rather pay the same rent and continue on with average maintenance, instead of paying for this renovation."
Laura Russell, another tenant, said she moved to Alexandria because she believed the city was "committed" to low-income housing.
"I'm amazed this is even being considered," said Russell, who lives by herself in a one-bedroom unit. "If this proposal was allowed I could not afford to stay, and I earn more than most of the people who live there. If I could afford air conditioning and better electrical service, I'd be living someplace else."
The proposal from NHP calls for spending $11,000 renovating each unit, including installing heat pumps, dishwashers and garbage disposals, replacing kitchen cabinets, upgrading the electrical system, repainting and refinishing walls and floors, repairing plumbing and sidewalks, and upgrading the landscaping and lighting.
But some tenants questioned whether the apartments, which are 40 years old, really need major renovations.
"The proposed rents are too high," said Charles Frank. "I like beautifying, but those apartments don't need that much beautifying."
"I don't care if you have to raise the rents on the market-rate units to $1,000, do what you have to do to lower the rents on the low-income units," board member Steve Mellette told NHP regional director Jack Koczela. "If 95 percent of the people are going to have to move, then this, in effect, becomes a conversion."
Koczela said, however, that unless something in the financial formula for the purchase and renovation package changed, it would be difficult to scale back the rents.
"We aren't unsympathetic to the needs of the people living there, but we are complying with all the federal and local regulations, and yet they tell us that is not enough," said Koczela. "This is a tough problem and we're being caught right in the middle of it. If the city council rejects this proposal, it will send a message to us or any private developers that they don't want anyone doing renovations in Alexandria."
Koczela said that the rental rates for the low-income units were already as low as NHP could make them and that raising the rates for the other units would make them unmarketable. He said that the financing package, which includes a mortgage rate of 10 1/4 percent from the Alexandria housing authority, would require $384 a month of debt-service per unit and that the project would not start operating in the black for several years.
"With the present information we have, it is unlikely we will be able to change what we have offered unless something in the package changes, such as interest rates, the size of the mortgage available, or the renovation scheme," said Koczela. He added that it was "simplistic" to argue that the renovation shouldn't be done.
"These buildings are old, the systems past their life-expectancy and a number of units actually condemned," he said "The tenants have complained about the conditions."
The project is owned by Raymond N. Nourha, and are being sold through his company, Raymond Enterprises N.V., of the Netherlands Antilles. The purchase price is $6.25 million, which Olson of the Alexandria housing authority said was "on the outer limits of what someone would pay for it."
"It's very high-priced property, but that's the cost of land in Alexandria," admitted Koczela. He said NHP had a contract on the property and was planning to go to settlement in January.
Mark Looney, coordinator for the Alexandria office of landlord-tenant relations, said that NHP's proposal would go to the city council for approval next Saturday and that the council could opt to approve it.