Fairfax authorities are studying a troubled cooperative in the county to find out what went wrong in their efforts to promote home ownership among low-income residents.
The Island Walk cooperative in Reston has been plagued with problems throughout its five-year history, according to residents and county officials. In contrast, the Yorkville co-op, also in the county, has been trouble-free. Officials compare the two to illustrate the perils and pleasures of home ownership for low-income families.
Like Reagan administration officials, some Fairfax authorities want to continue to promote home ownership by low-income people.
"A co-op has appeal because you can transfer ownership with careful control" to renters who have never owned their own home, said John J. Castellani, chairman of the Fairfax County Redevelopment and Housing Authority. Thus, it is important to find out why Yorkville has been successful while Island Walk still is struggling, Castellani said.
Residents of Island Walk, the first low- and moderate-income cooperative in Fairfax and one of the first in the nation, say the 12-building complex had serious construction defects when the Fairfax housing authority turned over ownership in 1980. The county is demanding that the co-op help pay for repairs, but Brenda Hines, president of the Island Walk board of directors, said the owners are being asked to pay for the housing agency's mistakes.
Officials of the housing authority -- which developed Island Walk, holds a seat on the board of directors and approves the operating budget -- counter that the complex has no construction faults and that its deterioration is the result of neglect by the owners. "We've clearly had a case of fiscal mismanagement and also an inability to carry out very badly needed repairs," said Deirdre Coyne, a housing authority spokeswoman.
By comparison, Yorkville, in central Fairfax County, has been running smoothly since the owners assumed control in 1981, Coyne said. The co-op "has a history of seeing a repair or replacement that needs to be made and doing it. They get the work done, they don't say it's someone else's fault," she said.
Island Walk and Yorkville had similar beginnings in several respects. Both experienced construction problems and changed developers midway through the work. Their first residents were trained for co-op management by the same Fairfax housing authority staff members, according to Castellani. But the similarities end there.
"We're not going to do another co-op until we find out" what made the difference, Castellani added. County Supervisor Martha V. Pennino, whose district includes Reston, agrees. She recently formed a committee of architects, engineers, county housing inspectors and Island Walk residents to "see if we can come up with the truth."
Pennino said she "cannot believe" that inspectors for the county and the U.S. Department of Housing and Urban Development, who approved the construction, "would go in and check off things that were faulty." If HUD and the housing authority are at fault, however, "I'll find a way to make them pay up," she said.
The dispute over Island Walk's deteriorating buildings came to a head this past spring, when First Virginia Bank, which holds the mortgage, moved to take over the co-op to protect its investment.
"It had become clear that there was a deep rift between the co-op board and the housing authority staff," and the bank grew worried about the co-op's rundown condition, Castellani said. "We felt we had to get control of the situation and correct it." Once repairs were made under the direction of the bank, "we intended that the bank would turn the co-op back to the owners."
Island Walk residents resisted the bank's effort to take over, pointing out that they were not behind in their mortgage payments, according to their attorney, Brian M. O'Connor.
After what O'Connor termed "threats and arguments about foreclosure," the co-op board, the housing authority and First Virginia Bank agreed on a schedule for making repairs in the 102-unit project. The housing authority will spend $100,000 on repairs, and the co-op will contribute $102,000 from its operating budget. The housing agency will help the Island Walk board get a loan to complete the work, Castellani said. How much more money will be needed is unclear, he said, adding, "We need a good engineering assessment of the problems."
A lawyer for First Virginia Bank could not be reached for comment.
Island Walk leaders and county authorities agree major problems at the co-op include damp and occasionally flooded basement apartments, leaking roofs and siding that is coming off. But they dispute the causes.
The difficulties "go back to when the place was built. There are defects in the construction," said Hines, the co-op board president. "Maintenance will not cure the problems."
A 1982 study of Island Walk by John Keegan Associates, a Falls Church architectural and planning firm, found that "both design and workmanship played an important part in causing the problems observed." The report noted that "for a project completed in 1980, we are concerned at the extent of problems which already have developed at these buildings. The degree of failure and the exterior waterproof integrity of the basement and exterior frame wallboard and batten and its finish is high and regressive."
In a letter dated April 1983 to Walter D. Webdale, head of the Fairfax housing authority, a HUD official said the history of Island Walk revealed "a trail of defects directly related to poor construction." The official, S. Daniel Raley, told Webdale that "a course of legal restitution may be considered, if necessary, to protect our mutual interests."
The housing authority replied that the disadvantages of suing outweighed the advantages, and HUD did not press the issue, Coyne said.
Island Walk's $4.6 million loan is federally insured and tax exempt, and the co-op's owners receive HUD help in paying their housing costs, through the Section 8 program. Owners pay no more than 30 percent of their monthly incomes for mortgage payments and other expenses.
The housing authority has its own experts to counter the claim of construction defects. The county Department of Environmental Management reported last August that it found "no indication of structural inadequacy in any of the buildings." Department inspectors, however, found "building and site-related deficiencies," which were the result of "marginal materials and poor workmanship and installation practices."
If the Island Walk board had ordered repairs made when these deficiencies surfaced or in 1983, when HUD directed the co-op owners to carry out a property improvement plan, "it would have taken considerably fewer dollars to repair them" than will be needed now, Coyne said.
"That's just not fair," said O'Connor, Island Walk's attorney. The housing authority "had their own person on the board from the beginning and approved all the budgets" submitted to the county by the co-op directors. "Now they complain. I just find that incredible," he added.
Castellani hopes the wrangling over who is at fault is past now that an agreement has been reached on how renovations should proceed and an oversight committee has been appointed. The committee -- which is separate from Pennino's group -- is made up of representatives from Island Walk, the housing authority and the bank, along with a nonvoting representative from the Reston Community Association.
"I want to turn Island Walk back to a model housing development that promotes home ownership," he said.
In the view of county authorities and residents, Yorkville has been a model development all along.
In addition to keeping the co-op's 236 units and the grounds in good condition, the board of directors has "worked closely with surrounding homeowner and condo associations" and planned after-school activities for kids and teen-agers, Coyne said.
"We try hard" at managing Yorkville, said Cheryl Hill, president of its board of directors, who has lived there for four years. "We're kind of like a melting pot" of young and old, single-parent families, couples and kids of all ages, many from Asia and Central America, she added.
An employe keeps the community room open three nights a week for teen-agers, supervising games, helping with their homework and encouraging them to keep busy, she said.
The efficient maintenance and management pays off, Hill said. "We have only three vacancies now."
A private developer began work on Yorkville, then called Beach Park Gardens, in the early 1970s using low-interest financing. The project was to be a federally assisted rental complex. When the developer went under, HUD assumed ownership; the buildings -- then nearly complete -- stood empty for about six years, until the Fairfax housing authority purchased the complex and completed construction, Coyne said. The $8.6 million in permanent financing came from HUD's Section 8 program