When low-income tenants in Arlandria first heard last spring that developers were interested in purchasing their apartments and rehabilitating them for a more upscale market, they organized a group called Alexandria United Tenants Organization to protest the proposals.
Located within a mile and a half of the Pentagon, Crystal City and National Airport, Arlandria has become a developer's dream. City officials agree they would like to see the housing in the area rehabilitated to prevent blight, but say they are concerned about displacing large numbers of tenants.
Now AUTO is trying to pull together a plan of its own -- one that would allow at least half of those threatened by displacement to stay in their units at rental rates close to those they pay today.
To achieve its goal, however, AUTO would have to get tax-exempt bond financing for the project, and city housing officials are concerned that Congress may change the rules for such bonds before Alexandria can approve a proposal to rehabilitate the 1,000 apartment units for sale in Arlandria.
The plan AUTO has "on paper" calls for the tenants to establish a partnership with a developer so that cash from the sale of some units as high-priced condominiums could subsidize other units left as low-income rentals, according to housing planning consultant Onka Dekker.
"We're looking for an honest developer for our partnership," said Dekker, who is a manager with Housing Counseling Services, a metropolitan Washington housing organization. "We've talked with several developers, including some interested in buying the apartments themselves."
Nearly 1,400 apartments in Arlandria have been put up for sale over the last year, including the 879-unit Layton Estate properties. Plans by developers to use tax-exempt bond financing to purchase and renovate the apartments triggered concern that as many as 3,000 lower-income and elderly residents could be forced to look for housing elsewhere.
Alexandria has gradually lost most of its housing for lower-income families, and developers from all parts of the country are interested in the Arlandria properties, particularly if tax-exempt bond financing is available from the Alexandria Housing and Redevelopment Authority.
Current law allows local housing finance agencies to issue tax-exempt bonds to finance construction or rehabilitation of apartments if the developer promises to set aside 20 percent of the units for low- and moderate-income people. The developer, in exchange, gets lower interest rates than market-rate financing would provide.
Critics of the program say, however, that because of the way the Internal Revenue Service has defined low and moderate income, the subsidy generally benefits higher-income, single renters.
A study by the General Accounting Office done for Congress this year found that there has been more than a 100 percent jump in the volume of low-income housing bonds in 1985 compared with last year. In response to concerns that tax-exempt bond financing is draining off too much federal revenue, the House Ways and Means Committee has adopted a proposal to limit the amount each state could issue in bonds each year.
Under the cap set by the committee, the Alexandria housing authority has estimated it would be limited to raising between $5 million and $8 million a year in tax-exempt bond financing for housing. Purchasing and renovating the Layton properties alone would cost an estimated $40 million.
Of the 1,000 units still for sale in Arlandria, Dekker said that AUTO is primarily interested in the Layton properties and has talked with Stanley Layton, trustee of the estate, about signing a contract to purchase the units. The plan, according to Dekker, would be to have the developer-partner puchase 350 of the units, mostly one-bedroom apartments, to rehabilitate and sell as condominiums, or to "do whatever they want with."
The partnership would then rehabilitate another 200 units and offer them at market-rate rentals. Another 500 units also would be rehabilitated, but kept at current rental rates and made available on a priority basis to the families living there. The cost of the plan is estimated at about $24 million to purchase and rehabilitate the units that would remain rental, plus an additional $15 million the developer would have to provide for the 350 units to be sold.
"Mr. Layton has a genuine interest in working with the tenants, and we are hoping that he will sign a contract with us," Dekker said. "If given enough time, we think we can work something out." Layton could not be reached for comment.
Time, however, may be a problem for AUTO. The Alexandria housing authority, concerned that the limits on tax-exempt financing might be passed by the full Congress later this fall, has set a Nov. 13 submission deadline for proposals on projects seeking tax-exempt bond financing.
The Alexandria City Council is scheduled to vote Nov. 12 on whether to award AUTO a $15,000 community development block grant to do a feasibility study and tenant survey to fine-tune its proposal. Dekker said, however, that if AUTO needs to have its proposal ready by Nov. 13, it may not have time to do the study even if the city council awards the money.
Dekker, who declined to say which developers AUTO was working with, said that it is "hard to tell" if the developers are serious about entering a partnership with the tenants.
"They want to take Arlandria and make it for all the rich people, just like Old Town," said Louise Arnold, one of the board members of AUTO. "We're just asking the officials not to take our homes."