Council Defers Vote on Affordable Housing Project Financing
By GEORGE BROMLEY
Falls Church Times Staff
July 30, 2010
Thursday evening the Falls Church City Council voted 4-3 to defer a final decision on a resolution which would change the terms of the City’s financial commitment to the Wilden affordable housing project. Vice Mayor Dave Snyder, former mayor Robin Gardner and councilmen Ron Peppe and Lawrence Webb voted in favor of the motion to postpone a vote until August 9. Mayor Nader Baroukh and new Council members Johannah Barry and Ira Kaylin were opposed.
The vote came after over four hours of debate and discussion during which City Manager Wyatt Shields and City Attorney John Foster both recommended against the proposal to immediately loan $1 million to the Falls Church Housing Corporation (FCHC) and its partner in the project, The Community Builders (TCB). These entities, collectively now part of what FCHC representative Carol Jackson referred to as the Wilden Partnership, have requested that half of the previously approved $2 million City loan be extended now, lest essential tax credits from the Virginia Housing Development Authority (VHDA) be lost.
Prior to the vote to postpone, the Council voted down a motion by Mr. Kaylin to deny the resolution to accelerate the payment. Here the mayor, Ms. Barry, and Mr. Kaylin approved, but the other four members were opposed.
After that vote, Mr. Webb stated that although he had not supported Mr. Kaylin’s motion, he would not vote for the resolution to approve the revised financing. He then moved to postpone the vote on the measure to the Council’s next scheduled meeting. This motion was seconded by Ms. Gardner and subsequently approved.
DECIDING NOT TO DECIDE: Councilman Ira Kaylin, right, argues against early funding of $1 million for the housing project. Councilman Lawrence Webb, third from left, provided the evening's drama, twice announcing his support for Kaylin's motion, then visibly wavering, then, after a long pause, voting against it. Holding the decisive vote, Webb sponsored a motion to delay the Council decision to August 9. Webb's motion passed 4-3.
The final effect of the deliberations is that the loan agreement originally approved by the Council on March 22 remains in place, but the City has not consented to the quick release of the funds as requested by FCHC and TCB. Between now and August 9 those parties will endeavor to obtain additional financing for the complex project, which involves both construction of the 66 unit senior affordable housing project (The Wilden at 350 S. Washington) and an adjacent office building (The McKeever at 360 S. Washington), which will provide garage parking for residents of the apartments.
TCB vice president Rob Fossey began the meeting with a presentation which argued that the requested revisions to the loan agreement were minor and represented only a limited risk to the City. The funds are needed to allow purchase of the building currently at 360 S. Washington from the estate of Thomas Sawner. The Wilden partners must close on this purchase in order to assure receipt of the VHDA tax credits.
Mr. Shields stated that when the project was approved he believed that FCHC and TCB would be able to obtain the necessary private financing to allow this transaction. The anticipation then was that Falls Church would not have to release any funds until after the start of construction.
He expressed concern that the City might have to reduce its fund balance at a time when it is under significant financial stress. He noted that if the Virginia Supreme Court turns down Falls Church’s appeal of the water litigation decision it will have three days to move $2.2 million from its general fund to the water fund. [Note: Mr. Shields informed us subsequently that he meant to say 30 days, not three days.] Mr. Shields warned that if this were to happen when the fund balance is already low the City will have a cashflow problem.
Mr. Foster did not detail his reasons for recommending against passage of the resolution but noted he had submitted a memo to the Council Wednesday which set forth his reasoning.
Following extensive comments from City residents and a brief recess, Mr. Snyder suggested that the Council go into a closed session to discuss “financially sensitive information” and “contract negotiations” withFCHC, but Mr. Foster advised against the move on FOIA grounds. Ms. Gardner suggested members meet with Ms. Jackson and Mr. Fossey “two by two”, but the mayor vetoed the idea.
Council recessed again to enable Ms. Jackson and Mr. Fossey to briefly explain their interests to Mr. Foster, but he concluded there were insufficient grounds under Virginia code to allow a closed session. The Council then engaged in questions and debate.
Ms. Gardner suggested two changes to the resolution, but Ms. Barry was opposed “to anything written on the dias.” Mr. Webb stated the decision was one of the most difficult he had faced and expressed concern about the possible impact on the fund balance.
Mr. Peppe, recalling his experience as a bond lawyer, saw the arrangement as “pretty clean as these deals go” and considered the proposal ‘the best chance we have to get the commercial development we need and affordable housing.” Vice Mayor Snyder, who spoke most passionately in support of the resolution, felt that the proposal still served the long-term best interests of the City.
Mr. Kaylin saw the City “in very dire financial condition” and not in a position to assume the additional risk. Mayor Baroukh regarded dipping into the fund balance as “imprudent financial management.”
Prior to the debate nineteen people addressed the Council. Eleven spoke against the resolution and eight in favor. A number of past and present City officials expressed their views, the active members stressing they were speaking as private citizens, not as representatives of their commissions or boards.
Planning Commission chairman John Lawrence stated that he was shocked that the request had been made and saw no reason to believe that other outside financing would be forthcoming. Richard Sommerfield, a member of the Long Range Financial Working Group, reiterated comments published in the Falls Church Times and questioned FCHC’s solvency. Former Economic Development Authority member Bruce Swenson saw approval as an abandonment of the Council’s fiduciary responsibility.
Eric Hoffman, a former chairman of the Falls Church Housing Commission felt that the request to advance the funds was not significant and only reflected a change in timing. Former mayor Dan Gardner saw the project as a unique opportunity and argued that “community values” were at risk if it were not approved. Former councilman Dan Maller, calling some of the recent rhetoric “overheated”, urged the Council to take a long term view and support a “reasonable risk.” Bob Loftus-Thun, chairman of the Environmental Services Council called the project “a defining moment for our community and a good investment.” School Board member Kieran Sharpe stated that the City’s record of supporting affordable housing was not as good as Fairfax’s or Arlington’s and that the financial commitment to the project would not jeopardize local schools.
The Council will hold a work session next Monday, August 2. The August 9th meeting is the Council’s last scheduled session until September. The fate of the GEORGE bus system is among the items scheduled for a discussion and vote that evening.
By George Bromley
July 30, 2010
I watched until 10:20p, what an event. If someone could clarify: I thought I heard that the State had a hard deadline on the approval. I thought I heard if Council did not approve the new request to advance the million last night the grant funding ball would bounce out of the court today (Fri). This would mean the partners would have to make up the grant funding lost with alternate funding in order for the project to continue under the current terms. Am I correct?
I had hoped to see a final decision reported this morning. The Mayor stated many times he wanted to get the decision made last night, yes or no. Seems it turns out..defer. Arghhh.
I finished watching the webcast from last night. Another thought arises in my brain. If, somehow, FCHC manages to find a lender for the million dollars they need right now…will this reduce by a million the commitment of the City?? Would this result in substantive changes to the current agreement? Would the Wilden proposal then need to repeat the path of review and approval…again? Smoke really is coming out my ears.
TFC, I *think* if they managed to find a lender (and I think it would be Mr. Young’s group actually looking for the loan, not the FCHC) for the $1M what would happen is that they project would start and once construction of the parking structure had started the FCHC would be able to draw the $2M loan from the City and then use $1M to buy 39 parking spaces from Mr. Young’s group (at which time he could pay off the $1M loan he got to make this deal happen). At least I think that’s what the FCHC would say.
If you go with what the FCHC and the City Manager said last night, which seemed to be relaying what the VHDA guy said, the whole thing is moot right now. It seemed clear last night that if the Council didn’t approve the FCHC’s request the VHDA would yank their tax credits, today. I don’t know how the VHDA works in why their process allows one guy to just yank credits (as opposed to having to wait for some specified deadline… which might be today anyway for all I know) – but that’s what it sounded like last night.
I think the hope of people like Mr. Webb is that the VHDA would be willing to wait a little longer and in the meantime the FCHC, TCB, and Mr. Young would be able to find the money they need for the project to proceed as planned by Council last March. I wonder if TCB would consider putting in the $1M, especially since it seems like they would be able to get it back in a month or two (after ground is broken).
Thanks Andy. I hope we can find out about the VHDA decision soon.
I am going to treat myself to a Starbucks to dampen the smoke.
A little off topic, but does anyone know what the plan is for the 370 South Washington Street building? The current office complex is 3 buildings 350, 360, and 370, but I only see plans discussed for 350 (to be the Wilden) and 360 (to be the McKeever). (370 is home to the Planned Parenthood abortion clinic, part of the abortion chain that performed over 300K abortions nationally in 2007.)
John, I think 370 is owned by Homestretch and I’ve been told that they have no interest in redeveloping that lot. If 350 and 360 are redeveloped it will be very difficult to ever redevelop 370 into anything significant.
Last nights debacle of city governance was an embarrassing spectacle that will send most investors and developers scurrying as far from the Little City as possible. Without getting into the rights and wrongs of the affordable housing debate there is one message that was sent from this council …if you want to develop in FCC: gather your resources, pack your lunch, wear your pajamas, and prepare to go through the ringer of long and drawn out nonsense to reach inconclusive non-decisions.
This does not suggest that the council should have approved the accelerated funding request, but it does demand that a decision be made whether everyone liked it or not. Personally, there was enough information on the table that any reasonable person could have justified a yes or no vote.
The City of Falls Church is not in a position to jerk around investors, developers, city staff, and most importantly the community. Like it or not that’s exactly what was accomplished last night. Shame on you.
I have a question: In the previous story “City Releases Documents on Housing Corp $1 Million Request”, one of the points made was:
“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”
Since August 9th (when the decision was deferred to) is after August 5th, does that mean that FCHC will have to sell off 350 in the meantime and the whole process is moot?
It is also very concerning to me that both our City Manager and City Attorney recommend against this proposal. I hope the Council takes their advice seriously as they likely have the best grasp on all the details.
The $2.2 million situation with the general fund should probably also be already earmarked for the water fund to prepare for that worst case scenario. That upcoming court decision affects our city’s current finances and future budgets. This decision and future decisions should definitely be weighed in that context.
Luis, if I understood Ms. Jackson correctly I think if the project looks likely to go forward the FCHC would be able to get an extension from the bank. Once they get the federal funds (or one of the various sources of funds) they would use that to pay the short term note on 350.
The bigger issue is whether or not the VHDA are already off the table. Since we haven’t heard anything yet I’m guessing the VHDA guy has been convinced to wait a little longer before moving those credits on to another project.
If the VHDA credits are now gone then it seems like the whole project would have to shut down. If they can’t get the $1M financing they need right now then how would they replace the VHDA credits (which I think are for a few million bucks)?
Based on what the FCHC and TCB were saying before and during the meeting last night it just doesn’t seem possible that the project will survive this delay to August 9th.
Thanks, Andy, for the information on the 370 building. I would certainly not want to live or have my business in such close proximity to a Planned Parenthood abortion clinic.
Editors:
Please note JAC’s post. He/she refers to the Council meeting as a “debacle of city governance” and an “embarrassing spectacle,” and concludes with “Shame on you.” I thought your policy is to hold anonymous comments to higher standards of civility. I’m inclined to agree with the thrust of the comment, but that’s irrelevant. In my opinion such language is harshly critical and the post should not have been allowed for that reason. If people want to lob such bombs they should not be allowed to hide behind anonymity.
EDITORS’ RESPONSE: You can read our comment policy here The JAC comment is a tough call. It indeed hides behind anonymity, and it is very critical. However, it does not make any personal reference. If it had, it would be long gone.
So far I feel like this council is shaping up to be a dismal disappointment. As outsiders of the system, they seemed to indicate they would roll in and “fix things”. However, they have demonstrated an apparent unwillingness to make any difficult decisions.
In their first night, two voted “present” with regard to the vice-mayor position, rahter than voice their obvious displeasure with the events occuring around them. Now, after specifically calling a meeting to deal with the Wilden “crisis”, they debate for FOUR HOURS….then they table it!!!! WHAT???!!! They table it knowingly past the deadline that we have been hearing about for so long.
They table the decision, almost as if hoping the Virginia HDA decides not to extend a clearly identified deadline, thus abdicating them of their responsibility to MAKE A DECISION…..
I say this: Support it, kill it, but DO SOMETHING…..TAKE A STAND!!! I can respect that. This constant aversion and wrangling without taking any stand is very disappointing.
I suffered throughthe entirety of the latest city council meeting, which was perhaps the most ridiculous spectacle of a city council meeting ever held in the city — an emergency-must-do-it-now-to-save-the-Wilden Council meeting called by 2 members to consider the FCHC’s latest gimme. The matter rapidly got less urgent and resulted in a postponement of action for 2 weeks after the 3 Council members who continue to push for a project that the majority of people in the city don’t want and can’t afford couldn’t manage to get the 4th vote to fund the FCHC gimme . That’s a huge win for hypocrisy, even if it was only a draw for the Wilden-at-any-costers.
There was the tired, old, beside-the-point argument that that its really not much money and so very economical per public housing unit — the relevant point is that we can’t afford the risk or the cost, of this increasingly unwise project, especially at the expense of critical government programs like schools.
In view of the widespread rumors that we taxpayers are going to be hit with yet another 4-center tax increase on the half-year tax bills — on top of the already assessed astronomical increase — it’s just plain unfathomable that the die-hard at-any-costers jare so determined to proceed. These rumors are likely true, given the recent news from city hall that tax receipts in the first half of the year are substantially down from last year.
There was also braying and bullying, there was rudeness, there was self-absorption and an utter lack of dignity on the part of some at-any-costers. When one highly respected citizen-financial expert accurately pointed the fiscal folly of pouring taxpayer funds into the project on an escalated timeframe, and in violation of the terms of the Wilden financing agreement at that, the scoffing retort by one apparent at-any-coster was to the effect that “people can interpret numbers to mean anything they want.” The irony of this position by this speaker was apparently lost on him.
Then there was the spectacle of the assistant city manager opposing the recommendations of the city manager and the city attorney to disapprove the FCHC’s gimme because it is too risky and fiscally unsupportable and, as noted, not in compliance with the conditions in the Wilden financing agreement, itself a model failure of governmental fiduciary responsibility. She apparently sees her duty as running to the FCHC rather than to those of us who are asked to take unreasonable risk and foot the bill. Is that in her job description? Even if she was appearing on her own behalf (she wasn’t, as it turns out) rather than in her official capacity, isn’t she still compromised by conflict of interest, given that she was heavily involved in the development of the Wilden financing agreement?
But watching the Council circus for hours wasn’t a complete waste of time. As I listened to the impassioned pleas of the Wilden-at-any-costers, an obvious solution to this entire matter presented itself. The Council Gang of Three and the FCHC Special Interest Group clearly are of the firm conviction that the financial risk is worth taking and the price is worth paying. They should put their money where their loyalties are by ponying up the needed funding from own personal pocketbooks. Mere money appears to mean nothing to them — they must have a lot more money than the rest of us, and nothing better to spend it on, to have developed such strong convictions about the value of the Wilden. And there appears to be a large enough number of at-any-costers so that their per capita share of the cost might be as little as a quarter-million dollars apiece.
Thanks go out to Mayor Baroukh and Council members Kaylin and Barry for your good common sense and commitment to the best interests of the families and taxpayers of Falls Church. And may the gods and goddesses gather poor, conflicted Council member Webb into their loving arms and give him peace and an extra dose of courage. His discomfort was palpable; his obvious instinct to do right by us shows promise.
The mayor and Council members who pointed out that a vote against the FCHC’s latest escalation of the Wilden mess is NOT a stance against assisted housing got it very right. The arrogance of those who equated a vote against the Wilden Gang’s latest gimme with outright hostility to housing assistance was regrettable. Can we expect anything better during the next round on August 9? Dare to hope, but don’t hold your breath.
I whole heartedly hear your point, and it is well taken, However, I must add that someone, ANYONE on council should have demanded a vote! It is ONE council, not a “gang of three” and the others “good ones”. everyone who has an opinion must speak. The time for the vote was last Thursday, and every single councilmember on the bench allowed that opportunity to pass….They are all equally culpible in that respect.
With regard to the asssistant city manager, it definately appears to be a case of government and industry (private/not-for-profit, whatever), getting too cosy. And speaking in her official capacity in support of a program that completely alters the orginially agreed upon paramters is improper! Especially when her boss, and the person who’s job it is to look at the numbers say it shouldn’t be.
Its as if Mr. Biden were to speak out against a stance of President Obama. The leadership may disagree in private, but in front of the camera’s, the leadership should speak with one voice.
Richard, I agree with you. I wasn’t necessarily positing good-guys and bad-guys, although I think my personal opinion of which was which is clear. I do think that this was a very important emergency meeting called on unconscionably short notice to consider a new, substantial change in the Wilden financing agreement — and in spite of the fact that the city manager was very clear that he had not had sufficient time to fully respond to outstanding questions about the FCHC request.
There were votes taken, however unsatisfactorily. Six council members’s votes resulted in a tie vote on each side of the issue; the seventh member voted against both approval of the FCHC request and its rejection. Consistent with a hail-mary, last minute request by FCHC, that member moved to delay the decision, thus giving the FCHC more time to succeed. The rest of the council, otherwise facing a tie vote, then agreed to the delay. Unless something changes, it is now up to the FCHC to obtain the necessary funds from some other source than city taxpayers, or up to Mr. Webb to break the tie. And so, unbelievably, the fight goes on. It’s democracy in action, but it’s not much to admire and it ain’t pretty.
I thought there were just two votes. The first vote was on Mr. Kaylan’s proposal that the FCHC’s request be denied. My understanding is that had that proposal passed the FCHC would have had to make do with the agreement reached with City Council back in March.
The second vote was on Mr. Webb’s proposal to not decide on the FCHC’s request until March 9th. Had that proposal failed it looked like they would have had a third vote – on Ms. Gardner’s proposal to accept the FCHC’s request (with a couple of last minute tweaks). Mr. Webb suggested that if his proposal failed he would have voted against Ms. Gardner’s proposal – which it seems would have had the same result as passing Mr. Kaylan’s original proposal.
It all seemed very confusing to me.
I agree that I wish the Council had just made a decision. It did seem like three were prepared to make one decision and three were prepared to make the other – leaving Mr. Webb as the only one unsure of how to vote. I give him credit for being willing to consider both options (I’m not sure any of the other three ever really considered other options – although Mr. Peppe suggested that he came to the meeting thinking him might go one way but then decided not to… at least I think that’s what he suggested). But I really wish Ms. Gardner, Mr. Snyder, or Mr. Peppe had voted against Mr. Webb’s proposal to delay – thus forcing Mr. Webb to make his decision that night (when Ms. Gardner’s proposal would have gone up to vote).
Of course the strange thing about all of this was that almost everyone at the meeting felt very sure that if the Council did anything other than approve the FCHC’s request the VHDA would yank the tax credits the next day. I assume that didn’t happen (or we would have heard about it). Does anyone know what the next “deadline” is for any of this stuff to get decided? Can we really go two more weeks from the drop dead deadline before making a decision without any consequences?
Editors:
Thank you for your explanation concerning JAC’s comment. I need to point out, however, that item 4 of your policy, which addresses anonymous comments, does not distinguish between offensive anonymous comments that are personal in nature and those that are not personal. The fact that an anonymous comment is non-personal should not save it from removal if it otherwise contravenes the higher standards by which your policy measures anonymous comments.
I understand and appreciate that implementing your editorial policy can involve “tough calls.” I urge you to keep in mind, however, that you are a newspaper and not a blog, and that anonymous comments should accordingly be strongly discouraged in general and specifically by strict enforcement of the policy standards that apply to them.
Thanks again.
Webb’s position was pretty clear to me – he would vote against approval but by not voting for outright denial, he allows the FCHC to find their own funding, which they should have done in the first place. How amazing is it that FCHC would wait to mention an alternative funding source until 9:30 PM. It’s almost like they were saying “it’s easier to get it from council, but if we can’t, then we’ll do the work necessary to get the funding.” Continued “the sky is falling” cries from FCHC are eventually going to me met with a deaf ear from even its most staunch supporters on Council.
It’s like the country music song about one more last chance. My sense was the Mayor was pushing to get a decision Thur night…up or down, just put a fork in it and be finished. It’s like George bus…it has one more last chance.
Linda, Thank you for the clarification, your facts help keep me honest! I appreciate the info.
I actually think each council member voted yea or nay based on sincere but differing opinions about the project itself and the proposed change.
I was lobbied for days from people in the community and heard valid points pro and con. I made up my own mind after all putting that information together with the discussion and back and forth at the meeting. As I said at the meeting, I thought I was in the minority but decided to support the request anyway because I thought it would lead to a better outcome for the city than denying the request. I understand the positions of those who don’t agree with my own assessment of the merits of the request. I was as surprised as anyone that the motion to deny the request failed, but I would not change my vote just to be in the majority.
I would have preferred a straight vote up or down either way. I know people are sick of hearing me talk about process, but I think it generally works better when you deal with things by using motions to do something rather than motions to not do something. A vote on a motion to do something passes or fails and you are done with it. You accept the decision of the majority and you move on. When you start instead with a motion to not do something, you can be left as we were here with a majority saying no to “don’t do it” and yet not willing to say “do it.”
Ron
Lou, I’m not sure how being a Newspaper vs. a Blog makes a difference when it comes to anonymous comments. The Washington Post (which I think still qualifies as a newspaper) and probably most (if not all) other online newspapers allow anonymous comments.
Charlie, it seems like Mr. Webb could have voted for Mr. Kaylan’s proposal and it would have had the same impact (the FCHC would be faced with making the project happen under the original terms). I guess the VHDA guy was bluffing a little bit, in an attempt to get the City Council to accept the FCHC’s proposal. Either that or the Council’s strong message that they can’t decide on these things convinced him to give the FCHC some more time to find some funding.
I wish I understood how the VHDA’s tax credit program worked. At the council meeting the FCHC and the City Manager made it sound like one guy at the VHDA could decide to yank the FCHC’s credits. Is that how it really works? Shouldn’t there be something more concrete when it comes to how that decision is made?
It will be pretty surprising if things are still alive come August 9th and Mr. Webb decides to vote for the FCHC’s proposal – but I suppose anything is possible.
Andy, it may be that the State guy has been sitting with funds marked “maybe for Falls Church” for some time? At some point funds have to be awarded.
Andy, I agree….It might be one guy, but I think when the entire program say “have it done by July 31st”….and we aren’t done by July 31st……that pretty much only takes one guy to say “nope, you couldn’t do it…DENIED!”
Andy, as the word implies, a newspaper’s primary job is dissemination of NEWS. Newspapers are subject to traditional and well-settled journalistic standards of accuracy, fairness, civility and objectivity. Also, there is supposed to be a clear distinction between news and opinion. Whether and how often papers meet those standards is of course debatable. But the point is that no such standards or distinctions even exist for blogs. As for anonymity, I believe you will find that most papers permit anonymous letters to the editor only rarely, and then only upon request asked for and granted, as in “name withheld by request.” I agree that the standards are looser for online newspapers but I don’t think they should be.
Lou, I should have been more clear. I wasn’t weighing in on what makes a newspaper or whether or not the FCT is a newspaper. My only point was that some (most?) newspapers, like the Washington Post, allow anonymous comments associated with news articles published on their web sites. Just click into pretty much any article from the Post’s web site and you should see a comments box buried with all the other junk on the right side of the page. I’m not sure if the Post does any moderation at all.
TFC and Richard, yeah if the tax credit deadline was Friday and the FCHC hadn’t met the requirements to get the credits then they should be gone. Or, if there’s some mechanism for applying for an extension then that’s fine. During the Council meeting on Thursday it sounded to me like there was some wiggle room related to the tax credits and one person was in control of how much wiggle room there was – and that’s what seems odd to me.