The county Housing and Community Development Board told three Columbia apartment building owners last week that to refinance their tax-free construction bonds, they must accept additional demands to providehousing for the poor.
The board said the landlords, who collectively own 1,040 apartments, must not discriminate against federally assisted (Section 8) renters and must rent one-fifth of the apartments at below-market rates for five years beyond federal requirements. Federal law requires low- or moderate-income restrictions to remain in effect for half the loan's term.
None of the three apartment buildings -- Chase Eden, Chase Glen or Sherwood Crossing -- now have Section 8 tenants. Section 8 renters,who face difficulties finding affordable housing in Howard County, receive federal certificates guaranteeing rent payments above what they can afford.
The board's decision is advisory, but chairman JamesC. Landerkin noted that the County Council has never voted against aboard recommendation.
Sherwood Crossing partner Harry W. Burrow, of Houston, said the five-year extension beyond what federal law mandates would scare off lenders. Following the board meeting, he said hewas uncertain if he would argue his case before the council.
J. Joseph Clarke, a partner in Trammel Crow, which is part owner of the Chase projects, said that the board "picked on the one issue that guarantees no refinancing. They heard us, but they did not believe us." He said it seems like "a waste of time on our part" to lobby the council because it is guided by the board's judgment.
"I hope the administration looks closely at the process" for seeking refinancing, he said. "The lack of information (on which the board made its decision) is appalling."
For three hours Thursday, the board debated what todo about
the refinancing requests. The board wanted assurance that some rental stock would continue to be available for moderate-income renters and hoped to add low-income restrictions. The owners wantedto take advantage of interest rates considerably lower than those ineffect when they were awarded tax-free financing several years ago.
Burrow told the board refinancing is necessary because his projectis in default but not bankrupt. He said the current interest rate onhis industrial revenue bonds is "a little over 7 percent" and that he has an opportunity to refinance "a low floater" at 4 1/2 percent.
As a condition of receiving the bonds in 1985, Burrow agreed to reserve 20 percent of his 634 units for persons whose incomes were 80 percent or less of the median for the Baltimore metropolitan area -- $32,400 for a family of four. Burrow said he voluntarily added five handicapped units to the 127 units he had set aside for moderate-income renters.
The board decided against adding a low-income requirementfor Burrow, since the apartment complex already is in default. Instead, the board told Burrow that as a condition of refinancing, he mustnot discriminate against federally assisted renters and continue torent 20 percent of his units at below-market rates for five years beyond the federal requirement.
The board imposed the same conditions on Trammell Crow. Clarke told the board that while neither project was in default, the 232-unit Chase Eden and the 174-unit Chase Glen had suffered a combined net loss of $20,000 over the eight-year history of Chase Eden and the five-year history of Chase Glen.
Clarke said his company would pay premiums of 2 percent on an 8 3/8 percent Chase Eden loan and 1 percent on a 10 percent Chase Glen loan. He estimated refinancing would cost 6 1/2 percent to 7 percent.
The council will conduct a hearing on the requests April 22 and vote May 6.