District of Columbia housing authorities expect to make homeowners of 28 low-income families within the next few months as part of a new federal government experiment, a city spokesman said this week.
The families, who live in Wylie Court, a complex of town houses at 13th and I streets NE, were selected by the District nearly five years ago to take part in an earlier attempt at home ownership for the poor. The houses were built with federal funds under the Turnkey program, authorized by legislation passed in 1967.
Although the residents moved into Wylie Court five years ago, the condominium envisioned under the Turnkey program has not been created "because a lot of elements had to be put in place" to make it a successful ownership program, said Oliver W. Cromwell, a spokesman for the city's Department of Housing and Community Development. It is being operated as a rental project by that department.
"In the meantime, the new home-ownership demonstration came along, and we decided it was more viable," said Saundra Boyd-Owens, home-ownership coordinator for the department. "There's a lot more flexibility with the program, structure and sales prices."
The District is one of 18 communities chosen by the Department of Housing and Urban Development to take part in the Reagan administration's latest effort to help poor families become homeowners by selling them the public housing units in which they live, HUD announced last week. The city is moving ahead with plans to implement the new program, while it awaits a decision on its application to make two other District projects, the 54-unit Frontiers East and West, part of the demonstration. The two projects are located on 14th Street NW, between S Street and Riggs Road, and on 11th Street NW, between M and N streets.
Wylie Court is an ideal project for the new ownership program because "it's small enough for us to do a really good job and . . . the city is very much involved in a revitalization of the H Street corridor, so it fits right in," Boyd-Owens said. The H Street area was a busy shopping district until it was destroyed during the riots following the 1968 assassination of Dr. Martin Luther King Jr.
Sales prices of the Wylie Court condominiums will vary from $40,000 to $50,000 depending on buyers' incomes, according to the city's housing department. Families must make down payments equal to 5 percent of the sales price, but the amount of credits they would have accumulated if the Turnkey lease-purchase program had been been implemented will be deducted from the down payment. This credit will average $3,500 per family.
Purchasers will be required to pay no more than 30 percent of their incomes monthly for the mortgages, taxes, insurance and utilities, with the totals estimated to range from $460 to $575 per month. The department will calculate the amount each family can afford under this formula and establish the amount of the mortgage accordingly, Boyd-Owens said. The city Housing Finance Agency will give purchasers 30-year loans at 10.75 percent interest.
A second mortgage making up the difference between the first trust and the fair-market value of the homes will be held by the housing department. To help keep the homes affordable for low-income families, the second trusts will be rolled over to subsequent buyers when the first owners decide to sell. The city also will put a five-year moratorium on resale of the units by the original buyers and each purchaser thereafter.
City housing officials are still grappling with the question of how to allow low-income families to benefit from the appreciation of their homes' values -- a stated aim of the Reagan administration and of the city -- while keeping the town houses in a price range that later low-income buyers can afford. "We have not yet worked out" the question of whether or how to limit the build-up of equity in the condominiums, Boyd-Owens said. "We want to make sure that everything goes along with District law . . . what we can permit and can prevent."
An opponent of the ownership programs, attorney Florence Wagman Roisman, said the sale of public housing to tenants "is a terrible idea. You can't house low-income tenants without substantial subsidies, whether you call them owners or tenants.
"The administration is promoting home ownership exclusively because it wants to get out of the business of subsidizing low-income residents, and that will be the result of this home-ownership program," said Roisman, who is with the National Housing Law Project. A major disadvantage of the ownership projects is that they will remove units from the public housing stock, she added.
The District hopes to avoid this problem by using part of the proceeds from the Wyle Court sales to buy single-family, two-unit and four-unit buildings for public housing, which, in turn, can be rented to tenants with "home-ownership potential," Boyd-Owens said.
Another portion of the sale proceeds will be used to establish a maintenance reserve fund for the condominium association.
A $2.1 million construction debt remaining on Wylie Court will be paid off by HUD as part of the demonstration program.
City housing authorities also have sought to avoid problems that could arise if residents discover they cannot handle the expense of ownership. Residents were carefully screened before they moved into Wylie Court, to assure they had the financial ability and "social background" needed for home ownership, said Boyd-Owens. Most "are employed and have a continuing source of income. There is one who is on disability assistance and another is a retiree," she said.
"I'm excited" about the prospect of becoming a homeowner, said Carolyn Lilly, president of the Wylie Court Homebuyers Association Inc. and a secretary for the city housing department. "It's an opportunity that we wouldn't have had if it weren't for this program. We're all looking forward to ownership , but we understand there's a lot to be done."
Lilly, who lives in a four-bedroom house with her three children and a grandson, said residents "have done a lot to keep up" the homes during the past five years.
Boyd-Owens said two of the development's families may not purchase their units, but they can remain as renters because HUD has stipulated that residents who do not buy cannot be forced to move out. The apartments could be turned over to the condominium association, which would continue to rent them to the families, or the housing and community development department could continue to operate the rental units, she said.
The first of three rounds of training for Wylie Court residents in "what home ownership is about and what the responsibilities are" took place last fall, Boyd-Owens said. The second phase, set to begin in August, will last 21 weeks and cover condo management, and the third will continue through the time residents purchase their homes, she said.