City Releases Documents on Housing Corp $1 Million Request
By FALLS CHURCH TIMES STAFF
July 27, 2010
Today the City of Falls Church released a number of documents relating to the Falls Church Housing Corporation’s emergency request for release of $1 million of the $2 million loan the City Council agreed to in March.
Among the documents released is a draft resolution prepared by City staff for approval of the Falls Church Housing Corporation’s (FCHC) request. The resolution will be considered Thursday night when the City Council meets in special session for the sole purpose of considering the request. The draft resolution provides confirmation that the FCHC and its partner plan to use the $1 million “as a part of the funding necessary to acquire 360 S. Washington Street (360) from Mr. [Thomas] Sawner’s estate.”
The FCHC’s purchase of the property at 360 S. Washington Street would represent a significant change in its earlier plan. Under the earlier plan, “Flower Building” owner Bob Young would acquire the 360 S. Washington property and construct the “McKeever” office building and parking garage there, while FCHC and its partner would develop “The Wilden” affordable housing project at the adjacent property at 350 S. Washington Street. Young and the Wilden partners would build the two projects under a unified site plan, according to the proposal approved in March.
Another document released by the City is a letter from FCHC partner, Boston-based The Community Builders, asking the City Council “to very modestly amend City Loan Terms of Agreement . . . modifying the timing of the release of one half of the City funds, $1 million, to facilitate construction start for The Wilden, specifically related to acquisition/construction start for the project’s structured parking at the attached McKeever 360 site.”
A third document consists of talking points used by FCHC President Steve Rogers in conversations with City officials last week. Rogers’ document states that FCHC is using $2 million in existing cash to purchase the 360 S. Washington property, thereby creating a need for an additional $1 million to purchase parking spaces for The Wilden in the adjacent “McKeever” parking garage. Rogers goes on to say that FCHC will recoup its investment in the 360 S. Washington property” when the McKeever office building is fully developed and sold out.
Rogers also provides a long list of “Consequences of Saying No,” including that the 350 and 360 S. Washington properties will revert to existing use, that $8.2 million in federal monies will be returned, that FCHC likely will have to sell 350 S. Washington at a loss, and that FCHC will have to merge with a larger entity “If yet attractive enough after huge assets loss.”
None of the documents appear to answer the question of how FCHC will fully fund The Wilden project after $1 million currently dedicated for that projected is diverted for another use. [Ed. See comment below from Carol Jackson, FCHC Executive Director, on this point, stating that the use of the initial $1 million would not be a diversion of funds away from The Wilden.]
In total, the following documents have been released regarding the FCHC request.
1) Draft resolution to approve the FCHC request, to be considered by the Falls Church City Council on Thursday, July 29 – Thursday July 29 agenda, TR 10-30
2) Letter from The Community Builders to Falls Church City Council dated July 26, 2010 – Thursday July 29 agenda, TR 10-30 attachment 1
3) Previous City Council resolution from March 2010, approving $2 million City loan for The Wilden affordable housing project – Thursday July 29 agenda, TR 10-30 attachment 2
4) March 2010 pro-forma financial showing projected financial impact and community benefit of The Wilden affordable housing and The McKeever office building projects – Thursday July 29 agenda, TR 10-30 attachment 2a
5) FCHC President Steve Rogers talking points presented to City officials last week – document appears below.
6) An undated FCHC financial statement presented to public officials last week showing The Wilden TW Total Development Sources and Assets: Wilden Assets
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FCHC Chairman Steve Rogers talking points presented to Falls Church City Officials July 21-23, 2010
7-21-10: Critical Path Background and Issues for 350-360 Deals:
1. All Sources for The Wilden (TW) and McKeever (360) groundbreaking are at the ready; including financing for constructing the McKeever garage
2. Cash flow timing for both projects is critical to accomplish 350-360 intertwined demolition and construction phases
3. Mr. Sawner’s widow has made it clear from her accountant and attorney that she is interested and will do all possible to complete the sale of 360 property on timetable suitable for TW settlement on all sources of funding
4. The McKeever garage has commitment for commercial bank construction loan. Subsequently the bank requires that 360 land be free and clear to be used as collateral for the construction financing the City requires as a condition of its $2 mil Loan Signing Settlement
5. FCHC cash has been used for costly Wilden pre-development, @$1.2 mil
6. the remainder of all FCHC cash assets now must be used to invest, @$2 mil, in 360 land purchase. There is no other way to get 360 garage financed.
7. The other source of cash for 360 property purchase is TW Parking Spaces purchase, $1 mil
8. The only eligible Sources (according to federal govt regs) for TW Parking Purchase are FCHC and City Loan $$.
9. Since FCHC’s cash is NOW going to 360 property purchase instead of TW parking, City must release one half of the City’s loan at closing, $1 mil
10. If release occurs all will proceed as planned to break ground on both 350 and 360 properties in early September.
11. FCHC will recoup its investment in 360 property when McKeever Office is fully developed and sold out
Needed from Council Leadership by July 23
1. Agree $1 million of Council-approved Loan funds can be used for TW Parking purchase available at settlement August 2010 to get 360 garage construction underway
2. Stated and demonstrated support to City Manager and Staff to finish all legal and permitting work timely to meet The Wilden Settlement and construction deadlines.
Consequences of Saying No
- Contract Developers of both properties will stop and let go their land purchase deals; 350 and 360 will revert to existing use (both now vacant office needing investment to attract tenants). Existing Site Plans and boundaries in conflict with denser redevelopment by any single owner of each property.
- Wilden partners will return to VHDA $4 mil Federal Tax Credit Assistance Program (TCAP) “Stimulus” funding and $4.2 tax credit investments
- Partners will lose unrecoverable fees, $750,000 pre-development expenses currently advanced 100% by FCHC + addt’l $400,000 in 350 carrying costs/legal fees which will be permanently written off on FCHC balance sheet
- VHDA will write off City of Falls Church for all future deals and potentially for soft funds for homeowner programs
- 350 Short Term Note Payoff, $2.7 mil, is due August 5. FCHC will need to sell 350, very likely at a loss, to pay off debt
- Tom Sawner’s estate will probably do the same
- City’s reputation will be harmed, making it politically more difficult to get favorable hearings for City issues. Congressman Moran will be incensed by our failure to perform. Regardless of who is responsible the City will face the consequences
- Opportunities for the addition and possibly preservation of affordable housing units will be lost for foreseeable future
- If yet attractive enough after huge assets loss, FCHC will merge with a larger entity
- After 10 years of failure to provide additional affordable housing, and faced with the loss of existing affordable housing stock, the City’s Vision will need to be truthfully amended to remove diversity as a stated priority
By Falls Church Times Staff
July 27, 2010
How in the world did we get into this mess?
I’ll be honest, several of Dr. Rogers’ final bullets really irritate me. TFC’s comment above gets at the problem. Dr. Rogers seems to be saying that we dug ourselves a big hole and if we stick to the agreement (that was supposed to keep us out of a big hole) then we’ll be in a bigger hole. Maybe this is why some people were so reluctant to go down this crazy path in the first place.
Actually, some of the bullets seem like potential good things. People have talked a lot about economies of scale when it comes to GEORGE, the Sheriff’s office, the schools, and everything else – well why not the affordable housing efforts? It seems like combining the FCHC with a larger entity might be a great idea that could lead to better results.
And if FCHC and Mr. Sawner’s estate sell those buildings (and doesn’t Mr. Sawner’s estate own other buildings on that block?) we’d have a shot at lot consolidation and maybe some more significant commercial development in the area.
But my real question is what has changed from when the original plan was agreed to and now? I don’t remember the need for the FCHC to buy parking spaces from The McKeever – it was always discussed as something that Bob Young was going to effectively donate. In fact, I asked at an EDA meeting what would happen if/when Mr. Young sold the McKeever – would future owners be obligated to continue providing parking. The answer wasn’t, “of course, because FCHC will own the spots” it was more like a condition that would be placed on ownership.
The original plan was that the McKeever would get financing and then the City would release the $2M loan. Now we seem to have a chicken and egg situation. The bank won’t loan the money to make the McKeever happen until the City puts up $1M. The original agreement says the City won’t put up the money until a bank agrees to finance the project. So, what to do? It’s easy for the FCHC to say that changing things around doesn’t change the City’s risk – but that doesn’t make sense. If there’s no change in risk then why won’t the bank just do the deal?
It seems to me that if the City puts up $1M before the whole project is bulletproof we run a very high risk of not getting an office building, a decently high risk of not getting an affordable housing apartment building, and a good risk of never seeing that $1M again. It sounds to me like if this deal falls through there’s a good chance the FCHC would go bankrupt which means any money they owe the City would be gone.
Thursday should be interesting.
Thank you FC Times. Now that we have answered your question about there being no diversion of funds, I expect you will print that clarification. Nothing about The Wilden pro forma has changed except the timing of eligible sources to purchase the parking spaces planned for The Wilden total development budget since February when the decision was made to purchase parking at 360 building instead of build it underneath The Wilden.
Basically The Wilden partners are asking for an early release of 50% of the City’s loan 3 or 4 months ahead of when the current March 22, 2010 Loan Terms allow the release of the full $2 mil loan. Carol Jackson, FCHC
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Ed. – Below is the email response of Carol Jackson, FCHC Executive Director, to the issue of whether the $1 million requested as an early payment from the City would result in a diversion of money from The Wilden for other purposes:
Jackson: It’s not being diverted from The Wilden, it is part of The Wilden pro forma as the price for parking. It was always to go to 360 construction control, in exchange for a condominium deed for part ownership of The Wilden % of the 360 garage (39 spaces) on the 2 lower levels. That’s why we think this a reasonable request. We truly just need the funds a few months earlier than we would have requested them within the current set of 12A Loan Terms approved on March 22. What we are asking for now is just the first rung in the necessary 360 construction plan ladder. You can’t begin construction until the land changes hands, so The Wilden parking purchase budget item is to be used for that part of the garage construction instead of a slightly later part of the construction work plan. It’s a timing to the City’s funds to solidify the 360 property to begin building the necessary garage that will support the office development to follow.
It is interesting, or I guess actually it is quite boring, that the same people who have opposed or supported this project all along are going to align right where they were before. Has anybody changed their opinion or position?
The City intends to borrow $2M to loan to the FCHC to build the project, which would be paid back over 15 years or so, with the City probably paying back the money several years in advance of the repayments from the project. There is $500k in the Affordable Housing Trust Fund which would be used to pay back the borrowed funds prior to any General Fund obligation. The Council spent numerous meetings trying to get consensus around the conditions designed to provide assurance that the commercial development on the 360 parcel would take place. The FCHC and TCB have gone to great lengths to secure the requisite financing and apparently this request to change the terms is based on the requirements of the commercial lender. There has always been a hard deadline for closing of the tax credits the end of this month, so if this is the sum total of the changed conditions this hardly seems to merit the drama in this story.
Kudos to the FCHC and TCB (& YDG) for sticking with this and for presenting a clear and simple choice to the City. Personally I am ecstatic to live in a place where something like this is a community priority and where our fellow citizens are willing to pour so much of their hearts and souls into the effort.
Do we have a sense for what percentage of current City residents support (a) the affordable housing initiative in general, and (b) this specific project as it has turned out?
Carol, could you please clarify something. The original plan was Bob Young would buy the 360 Property and FCHC would pay $2M for the parking spaces.
Now “FCHC” is buying the 360 property (and using the $1M advance for this) and I presume FCHC will still owe Mr. Young $2M for the parking spaces per your agreement with him.
Is this incorrect? Has Bob agreed to reduce the price for the parking by $1M? If not, where will the additional $1M come from? (ie. $1M advance for property purchase + $2M for parking = $3M in total costs.)
By the way, I hope I haven’t distracted from Brian’s question, it’s an important one.
Mike,
Clarification: City is lending $2 mil to The Wilden Partnership, in Sources cost support of the whole Wilden project (pro forma). $1 mil–always The Wilden price for the 39 spaces in 360 garage–will be used to buy The Wilden parking condo as an eligible source. The City’s Loan (50%) is needed now because there are strict compliance regs for the federal sources and Construction loan funds restricting their sole uses to other parts of the costs–see the Sources/Uses chart we have now provided to FC Times, identified above).
FCHC is dedicating long-promised equity funds to The Wilden, also identified on the S&U list.
FCHC is using the rest of its own project development funds to be a short term silent investor in 360 McKeever LLC, the new owner entity Bob Young has established to own 360 property, build 360 development and sell to the various condo office owners. One perm condo owner at 360 will be The Wilden parking condo. That has been the parking plan for The Wilden since January when the concept dev plan changed at Council request to the 2-parcel housing and office structures combined site dev.
FCHC will not be a long term owner of any part of 360–we are choosing to invest in the 360 land purchase in order to assist the time sensitive start of the 360 development by bringing the 360 land free and clear to the bank so McKeever LLC can get the necessary construction loan to begin building early this fall.
Nothing has changed about the combined 2 parcel development plan, except the lending market has squeezed the need to bring land debt free and clear to the 360 construction loan table and FCHC is a willing source for that short term investment to get the job done we promised the Council in March. FCHC is investing funds in addition to its promised equity contribution to The Wilden. Those are 2 separate transactions decided by FCHC Board of Directors.
That’s all there is to this. It’s a wide open community and people can begin the dialogue at any point they choose, but I am gratefully associating myself with Dan Maller’s comments that this relatively benign request to release 50% of the City’s now fully approved Loan fund just 3 or 4 months ahead of currently approved release schedule is a reasonable request in an unyielding commercial lending environment.
I’m personally sorry that we have to take this much time from our new Council who truly has more important items on their work plan agenda. Mr. Young tried hard to fund the 360 construction loan without the minor change to timing of City funds, but it is just not possible if The Wilden is to keep going to settlement on all the other layered Sources awaiting the Council’s decision.
Yes, if you want to stop The Wilden, this is the place to do so. That’s why we put on paper the Consequences of a No Vote. We don’t think a majority of our current Council will say no as they are being informed about this small change to the Loan Agreement.
We are focusing on the timing of monies decision we are putting in front of our elected officials and trusting they will make a reasonable decision to accomodate our request to simply allow release of 50% of the funds a few months ahead of currently approved schedule. The use of the funds has not and will not change.
We have our 100% completed and approved construction plans, reviewed by City staff and ready to issue for building permit. We’ve done more than basic below ground geotech borings to determine the budget for each building’s foundations and the rebuild of the new Fairfax Street. With all construction docs and due diligence, we have far fewer unknowns than was true when the Council gave their 6-1 approval vote in March. The unknown risk is much smaller now than 4 months ago. There is a large contingency reserve in The Wilden budget to cover any overruns and our senior partner, The Community Builders will be the backstop to cover any costs that would go worst case beyond the known and large contingency plan expenses of the budget.
We have had our general contractor, Hamel Builders, with the project providing construction technology and cost guidance the entire process. They have been out to subs for bidding prices twice and will do so a final time as we sign the best and final GC contract with their experienced and well respected team.
TCB are professionals and FCHC has given them 100% control over the project developer and management role. Their track record is exemplary. Now it’s time for the community to allow the plan to go forward as long planned, with only this minor change in monies timing decision holding the key to settlement on all other Sources.
Thanks for asking. Have a good day. Carol J
I have two questions:
1) What happens if the City Council agrees to provide $1M now to help get the 360 land free and clear and then for some reason Mr. Young isn’t able to get the construction loan?
2) When we talk about the FCHC funds, where do those funds originate? Are those contributions by builders over the years from the mixed-use developments or do those funds come from somewhere else?
My point on #2 is that some people talk about FCHC putting up it’s own money to achieve certain things – but if the source of that money is proffers from developers that, in theory, could have been put to other things (libraries, schools, public transportation, integrated ADUs, whatever) then I think it’s helpful to understand how FCHC came to have the money.
As to Dan’s point – it’s interesting. I was pretty much against the Wilden as a stand alone entity located at 350 because I felt it would make it almost impossible to ever redevelop 360 and 370 into anything attractive. When the McKeever was thrown into the mix I basically changed my mind – figuring that although it’s not the most effective use of the land it was a lot better than locking out 360 and 370. From my perspective this “minor change” increases the risk that 360 won’t be redeveloped as an office building (maybe we’ll get just a parking garage or even just surface parking). The current agreement pretty much prevents the Wilden without assurances of there also being a McKeever (not just McKeever parking). So yeah, I feel like various changes to the plan have changed whether I support it or not. Maybe I’m the only one?
I had the opportunity to vote on this project when it came before the planning commission. I am not in favor of the project or against it. But, I had enormous concern about the risk involved both to the City and to the Falls Church Housing Corporation. After reading the “Consequences of saying no” it is abundantly clear that this is a risky deal.
At this moment, our community has invested an incredible amount of time into this project, but no money. It is clear to me that there were some well intentioned members of our community who felt that this project was worth the gamble. But, read Mr. Rogers carefully, this was a gamble, and it turns out for pretty high stakes.
Carol, I’m sorry but I did not follow your answer. The issue is you were previously relying on $2M from the City to pay for some project costs, and now you have added a “new” cost by purchasing the 360 property. I get the “timing” aspect of this. My question is…if you are taking half of your money now to help purchase the property, which is a new cost, who is paying that same amount later for the other project costs that money was supposed to go to? I don’t care about proformas per se, I’m asking how are you replacing that $1M that is now going to something new?
Said differently, Bob Young was going to get a loan to buy the 360 property, so the money in question was coming from a Bank. Now we find the Bank is not going to pay that portion so you’re asking the City. So who or what is going to replace that $1M that the Bank did not contribute to the deal?
Thanks,
Mike
In order to understand the actual risks associated with the Falls Church Housing Corporation project, the Council must bring forward those individuals who can authoritatively answer key questions about the latest proposal and the fiscal status of Falls Church Housing Corporation—before a vote. Objective answers to central questions will not come from the Executive Director of the FCHC or those of us who busy our day hitting the BLOG trail. In that regard, the City’s Financial Advisor and Bond Counsel, as well as our City Attorney—and there may be others who have actual knowledge and experience in such matters—should face a number of questions before a vote. The tax payers are entitled to hear from them. It has been said that the “devil is in the details.” In this case, I wonder if he is not just standing there looking us in the eye. For example:
• Does the current proposal bail out the FCHC because it is or is nearly insolvent?
• If it is nearly insolvent due to management lapses, inexperience or ineptness, what contingencies will Council insist on to insure the protection of the taxpayers’ investment if it approves the project
• Is the proposed City funding being “round-tripped”—is fiscal gimmickry at foot? That is, in some fashion will tax dollars flow from the city and then back and forth between the FCHC and the landowner, with a portion of the funding ultimately returning to the city hall in some guise to make it appear this is nothing more than a usual and customary fiscal arrangement?
• Just what is the amount of financial liability to the city under the current proposal should the project fail?
On the National level we seemingly have accepted new economic concept: Something can be too big to fail. It would appear that Ms. Jackson, Dr. Rogers, Council Members Snyder, Peppe and Gardner would have us believe that this project is too important to fail regardless of the fiscal exposure to the city. Accordingly, given the 16% tax increase this year, eliminating about 7-9% of a homeowners’ disposable income—with probably more to come—we are witnessing a classic case of the power of special interest trumpeting the common needs of our community.
The recent recession has caused all of us to tighten our belts. The banks have responded by not being so liberal on loans. Mr. Young can’t get the loan he needs, yet, maybe never.
Is the City being asked to be the once-liberal bank by providing this $1M?
Why can’t FCHC get their own $1M loan to purchase the Sawner lot?
Why does the City have to be the only option for the $1M?
If the provisions of the agreement struck in March was to protect the City, how will the City be protected now from Andy Rankin’s scenarios of no office building, or no garage?
What does Mr. Young have to say about this, and why isn’t he talking?
If the Council feels protected and decides to break the agreement and give the $1M early, and everything goes well, what will be the next exception or special request brought forward by FCHC in three months?
Mr. Rankin- The FCHC in 2007 had firm site control of 3 properties and owner engagement in a comprehensive concept development assemblage of all 5 parcels you mention and offered them to the EDA but were turned away.
I spent 4 years on Council trying to bring development to Falls Church and another 4 working on the Chamber Board. You just have to look at the effort to build in City Center to see that our process is broken.
I know of no other jurisdiction that would require a comercial office building be built on the back of affordable housing.
Dr. Rogers, thanks for the comment. I’m a relative newcomer to the City and have a great appreciation for the efforts made by people long before I got here. I don’t know anything about the 2007 situation but it does sound like a missed opportunity. I agree with you that the process is broken – and I’m hoping the combination of increased burden on the residential tax base and changing attitudes in the City will allow us to fix the process in the near future.
There are many issues to debate when it comes to affordable housing and it’s hard to do in the format of these comments. At this point I’m really eager to just have one question answered: what happens if the City makes the $1M available tomorrow but then Mr. Young is still unable to secure a construction loan? Even if people think this scenario is unlikely I’d like to hear what the possible outcome of that situation would be.
Mr. Rankin,
One answer to your one question. If Mr. Young can not secure a construction loan then the City will not ever sign their Loan Agreement so there will be no release of funds to The Wilden. That is the original condition of the City loan close. That condition does not change with the request The Wilden partners are making to Council tomorrow night.
Mr. Novotny,
This is not a different nor additional use of the City’s Loan. The City’s Loan is unrestricted to The Wilden total development cost. Purchasing parking at 360 garage has been part of The Wilden total cost budget since January when the decision was made to buy parking for The Wilden instead of build it underground. The parking purchase $1 mil will remain in the 360 deal in exchange for a deeded condo interest providing 39 spaces in perpetuity.
FCHC’s additional $2 mil investment in 360 land purchase will be short term and will be cashed out when 360 McKeever, LLC sells out the office condominiums and has the revenues to pay back its investor partner, FCHC. That is one of the changes since March, FCHC is using its own cash, not obligated to The Wilden to invest in 360 in order to get the original job done that was promised to Council in March. P.S. Mr. Rankin, FCHC’s cash is proceeds from its own investments and savings over its 30 years in business. We have never received any proffer receipts from other developers and/or the City.
There is no major change in the commercial lending industry since March, but originally Mr. Young was not planning to have to obtain a commercial construction loan for the reasons he touched on in his comments to this site earlier today. To meet The Wilden funding and construction timeline, he has no choice but to get a commercial loan in place to begin 360 construction. If he were building this building solo, he would be waiting for more office pre-sales before applying for the loan. The only reason JIG is undertaking this commercial development is to be a partner to The Wilden in its promise to Council to deliver 30,000 sf office on the combined site. JIG is pricing its office space to break even, not make any profit at all.
He is one of The Wilden project heroes and I salute him for this act of sacrifice to his valuable time and reputation. Thank you, Carol Jackson, FCHC
Now I’m a little bit confused. The first $1M wouldn’t be released until Mr. Young gets a construction loan secured for the parking deck – but he can’t get that loan until he has the land free and clear – but he can’t get the land free and clear without the $1M from the City? I must not be understanding this properly because that doesn’t make any sense. I can see that on some level the change being requested is that the FCHC get $1M before construction of the parking has started (which is a current condition) – but I still don’t see how Mr. Young will be able to secure the construction loan until after the $1M is used to help buy the property.
I looked at the new language more carefully and it says that prior to loan closing “sufficient other source(s) of financing for 360 S. Washington St. … must be committed and acceptable to the City Manager…” – which is different from before when it said, “prior to loan closing, the financing for 360 S. Washington St. … must be secured and acceptable to the City Manager…” I’m not sure what the difference is between “the financing” and “sufficient other sources of financing” or the difference between “secured” and “committed” – but there must be a difference because the FCHC is requesting the change.
Does this new language allow the FCHC to say that the bank has “committed” to the construction loan for Mr. Young based on a commitment from the City of $1M to help with the land purchase?
If the change to the agreement doesn’t release the $1M until Mr. Young has a construction loan secured to at least build the parking deck then it’s less of a change than I thought. It certainly doesn’t bode well for ever getting an office building built – but at least the Wilden wouldn’t have surface parking. I’m not sure what the long term prospects are if the office building isn’t built (and therefore the FCHC’s “investment” in 360 doesn’t earn a return) but I assume someone if factoring in that risk.
Thanks for the P.S. about the original source of the FCHC funds. I can appreciate earning from investments and savings over 30 years – but where did the initial funds originally come from? You have to start with something. Did the City seed the FCHC at some point? Private donations? State funds?
I certainly appreciate the difficulties in what Mr. Young is undertaking, which is why I was skeptical at the EDA meeting where you and Mr. Young described this plan to us. It doesn’t sound like you guys (or anyone else) is surprised that he wasn’t able to pre-lease or pre-sell the office building so quickly – so this last minute need for a change in how the City’s funds are provided seems like something we all should have anticipated (and dealt with) back in March.
I definitely agree that what Mr. Young is trying to do is impressive and I also commend him for his efforts on this project. I’m just not sure it’s going to work.
Finally, everyone is welcome to call me Andy instead of Mr. Rankin.
One of the Consequences of No:
“Congressman Moran will be incensed by our failure to perform.”
Thanks for the great belly laugh!!!
While I cant claim to understand the increasingly complicated finances of this project, I still feel the need to point out that it will be a HUGE shame and waste to give up a chance to use the federal and state funding that was awarded to this project — millions and millions of dollars… The next time the City wants to create affordable housing, we will get far fewer units for our efforts without that kind of assistance. (Also painful to learn that FCHC will have spent a lot of money for nothing — another incredible waste if we stop this project)
If I understand what the FCHC people are saying, the City is still just in for a $2 million loan — not a very large piece of the cost of this project. Ive heard that the loan is a “bad deal” b/c the terms arent favorable, but shouldn’t governments spend some money to help the needy? Has the risk of project failure really increased or are people just looking for a way to stop spending any money on this?
Suzanne, I think it’s valid to consider the federal and state funding but it is still a complex issue. It seems like there’s still a reasonable chance, even with the City’s money, that the project could fail. The result would be the loss of the federal and state funding as well as any funds the City puts in and funds put in by other entities (like the FCHC). So it’s a bit of a gamble and obviously everyone has their own opinion about how much of a chance we should take.
I’d also like to point out that if we “lose” the federal and state funding it’s not like that money disappears. It would get used to provide affordable housing somewhere else, potentially in a less risky situation. Probably not within the 2.2 square miles of Falls Church but maybe somewhere else in Northern Virginia or maybe Southern Virginia.
The FCHC talks about the strict rules surrounding the release of the tax credits. They talk about the difficulty in getting bank loans. All of these processes are in place to mitigate risks and at some point if it becomes too difficult to get around these requirements it might be an indication that the risk is too high.