Reservoir Hill project draws HUD rebuke

Lots given to city in 1998 for affordable rentals only

May 05, 2007|By Eric Siegel | Eric Siegel,Sun reporter

Plans to put $300,000 condominiums on two key parcels in Reservoir Hill are on hold after the city received a stern reminder from the U.S. Department of Housing and Urban Development about building restrictions imposed when the properties were transferred from the federal government to the city nearly a decade ago.

Once the sites of low-income apartments, the vacant parcels across from Druid Lake may be used only for affordable rental units for 20 years from the date of the transfer, according to an April 16 letter to city housing Commissioner Paul T. Graziano from Mary Ann Henderson, HUD's Baltimore director of multifamily housing.

"I am taking this opportunity to reiterate several of the most significant terms and conditions of the transfer of ownership of the Lakeside Apartments site that will continue to govern the relationship between HUD and the City of Baltimore vis-a-vis the redevelopment of that site," Henderson wrote.

The city made no mention of those conditions when it put the properties out for bid in July 2004 -- part of one of the city's most important neighborhood revitalization efforts. Nor did the city mention them when it selected CIMG (Consolidated Investment and Management Group) to construct two mid-rise buildings with 20 percent affordable units and the rest market-rate condos.

Graziano provided copies of e-mails from another local HUD official, sent a year ago to city housing officials, saying that the restrictions applied only to a nearby apartment building and not to the two vacant sites. But the commissioner said he has since been told by HUD that the April 16 letter supersedes that e-mail.

"It would appear that there was certainly some confusion about the terms," he said Thursday.

Graziano said he first learned of the conditions in a meeting with local HUD officials last month on a separate issue involving the appraised value of the properties. He discussed the restrictions Wednesday at a closed meeting of the board of the Reservoir Hill Improvement Council, whose members regard the development of the parcels with condos as a signature undertaking that could boost home ownership in the neighborhood and spur additional investment.

Remington Stone, president of the neighborhood group, described the reaction of board members as "kind of a gentle, quiet amazement."

"We tried to listen and be respectful," he said. "It looks like it was a pretty big screw-up on [the city's] part. ... Three years have gone by, and what do we have?"

Others say the situation highlights problems of high-level housing personnel departures in recent years and diligence within the department.

"Housing has had a huge brain drain -- a lot of people have left," said City Councilman and mayoral candidate Keiffer J. Mitchell Jr., whose district includes Reservoir Hill. "They're in such a rush to put out RFPs [requests for proposals], the i's and t's aren't dotted and crossed. The problem is the community is left holding the bag."

A. Rod Womack, the CEO of developer CIMG, did not respond to a phone call seeking comment about the disclosure of the redevelopment conditions.

But in an earlier interview, Womack also cited staff changes within the city housing department as part of the problem for the project's delays. "Things get caught up and lost and fall between the cracks," he said. "Every time there's turnover, the process almost starts all over again."

At issue are two non-adjacent parcels in the 700 and 800 blocks of Druid Park Lake Drive, totaling about 1.65 acres.

HUD acquired the properties in 1997, demolishing the decrepit low-income apartments that were there and entering into an agreement to sell the lots to the city for $10 in September 1998.

As part of the agreement, HUD stipulated that for 20 years, 85 percent of the units of any redeveloped property must be rented to families making between 30 and 80 percent of the regional median income. The other 15 percent were to be made affordable to families with incomes of between 80 and 115 percent of the regional median income.

The agreement also stipulated that HUD receive 100 percent of the proceeds of any resale of the property that occurred within the first 15 years; 75 percent of the proceeds between 15 and 20 years; 50 percent of the proceeds between 20 and 30 years; and 25 percent after 30 years.

City officials and neighborhood leaders now fear that the "equity participation" provision could be construed as applying not only to the sale of the entire parcel, but to any individual condominium units, which they said would vastly diminish their desirability.

Reservoir Hill, developed in the late 1800s with spacious rowhouses and apartment buildings, was for decades a prime residential area. It began to deteriorate in the 1960s, with many rowhouses divided into apartments and others vacant. A mid-1970s attempt at revitalization made only limited progress.

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