The City of Columbia Heights is considering selling its two public housing buildings, Parkview Villa North and Parkview Villa South, at 965 40th Ave. NE. The property has a willing buyer, but both buyer and seller agree that the sale will be a long, involved process that’s likely to take many months to complete.
Parkview Villa South has 39 one-bedroom units, two one-bedroom units that are handicapped-accessible, and four two-bedroom units. It’s for people 55 and older, with rents ranging from $562 to $712 per month. Parkview Villa North has 94 one-bedroom units and six one-bedroom handicapped-accessible units. It’s for households with one member 62 or over, or with a handicap or disability. The building receives a subsidy from the federal Housing and Urban Development Department (HUD), and rents are based on 30 percent of the renter’s income. Both buildings give preference to Columbia Heights residents.
The buyer is Aeon, which used to be called Central Community Housing Trust. It’s a 25-year-old nonprofit organization that owns and manages 2,000 affordable housing units in the Twin Cities area.
While a sale of this magnitude would be complicated in any case, Columbia Heights Community Development Director Scott Clark says this one is particularly so because of the HUD subsidy. HUD must “sign off” on the deal, and no one is exactly certain what sorts of conditions might have to be met to gain HUD approval.
Clark said city officials have discussed selling the buildings for “a number of years,” based on the idea of the “city doing what the city does best,” such as providing street maintenance and police and fire protection, and “trying to turn this [Parkview Villa] over to a company that does that [providing and maintaining housing] for their business.”
Clark said the buildings are free of any financial encumbrances, they have “no negative cash flow,” and “both have a strong capital fund balance.”
He said Aeon has completed its “initial due diligence,” which includes items such as determining short-term capital needs and an energy audit, and is now “meeting with all local agencies” that might have a hand in financing the Parkview Villa operation.
Parkview Villa’s contract with HUD brings in about $300,000 per year in rent subsidies, and in order to sell the building to a non-government concern, Clark said, the city is “negotiating with HUD to dissolve that contract.”
To accomplish that, and to meet city officials concerns, they will need to “bring in some different type of financing to keep [rents] affordable,” and to be able to sell the buildings at “an acceptable price.”
Clark would not speculate on what the price might be, because, he said, there are many financial issues that need to be resolved before Aeon officials know the short- and long-term financial picture well enough to know what price range would make the project work.
According to Anoka County property records, the estimated market value of the property for tax year 2010 was $10,265,600, for 2011 $9,441,100 and for 2012 $9,191,600.
Clark said he is not aware of any similar situations, in which a city has sold large multi-family residential buildings to a non-government concern.
“We’ve been very excited about Aeon,” he said. It’s an “amazingly great organization.” Aeon’s people, he said, have been working with a “110 percent energy level” on the project, with “incredible focus.”
“They’re fabulous to work with,” he said. “It’s a great fit.”
Aeon’s Vice President of Housing Development Gina Ciganik said Aeon is working hard on feasibility studies such as environmental reviews, surveys and appraisals. Particularly with HUD involved, “Before you can have any discussions, you need a stack of information.”
They’re trying to “remove it from the PHA (Public Housing Agency) inventory and keep it in the affordable housing inventory,” she said. And that’s a time-consuming, complicated process.
“There’s a very specific way it has to be worked through,” she said. “We will learn over the next three to six months.”
“We always wish things were faster and simpler, but that’s not the way it works,” she said.
“We’re aiming toward sometime in 2012” to finalize the sale, she said. “It wouldn’t be in the first quarter. My sense is that it will be in the second half of 2012.”
The sale is not a typical real estate transaction, she said. “This is a joint effort with the city,” and will be sensitive to “the values and visions of the [city] and the residents.
“It’s not about a property,” she said. “We are part of the community…we’re a good, experienced group that loves to be part of the community. [Our job is to] carry on and improve things where we can.”
She said Central Community Housing Trust (CCHT) was formed 25 years ago when the City of Minneapolis demolished a lot of low-income housing to make room for the Minneapolis Convention Center. Politically, officials did what was needed to require that the low-income housing be replaced, but they soon realized that they didn’t know how to make it happen.
CCHT, now called Aeon, has since acquired, and continues to manage, more than 2,000 housing units, she said. Aeon means forever, she said, and signifies the organization’s commitment to keep and manage any housing units it acquires.