Berg Contract Approved By ARHA

Berg Contract Approved By ARHA

A contract, described as one of the "most complex in the nation," dealing with all facets of redeveloping The Berg, was unanimously approved last week at a special meeting of the Alexandria Redevelopment and Housing Authority (ARHA) Board of Commissioners.

Dealing with not only the physical redevelopment construction of Samuel Madden Homes (Downtown), known as The Berg, the document addressed the financing, ownership, and management of both the structures and land at the site. It now goes to the U.S.Department of Housing and Urban Development for their approval or changes.

"This is one of the most complicated deals we have in our office," said Sharon Wilson Geno, of Reno & Cavanaugh law firm in Washington, D.C., the attorney who has been working closing with ARHA on this project.

In addition to ARHA and the designated developer, Eakin/Youngentob, other parties to the contract are Mid City Urban and the Assisted Units Owner Equity (AUOE). The latter pertains to the low income tax credit application which is an integral part of the overall financing of the project. Mid City Urban is the Component Developer of the project and is directly linked to the tax credit provision of the overall financing package.

"We have had parts of this document before but never the total package," said ARHA chairman, A. Melvin Miller. "After it goes to HUD and they make their comments, it will come back to us and we will attempt to incorporate those into the final contract."

IT WAS ESTIMATED that this process will take between 30 and 45 days. This means groundbreaking ceremonies for the project, originally scheduled for September 9, will not take place until sometime between late September and mid-October, according to ARHA Executive Director William Dearman.

In explaining the interrelationship of all the parties, Geno made clear, "Eakin/Youngentob is the overall developer for the site. They have final responsibility for the site and the development."

Management of the public housing units will fall to ARHA. "We are going to sell the market units outright and maintain ownership of the assisted units. The land will be held under a ground lease," Geno explained.

Linda D. Cheatham, ARHA's newest Board member, attending her first official session, requested the attorney develop a chart to show the interrelations of all the parties and the timeline of actions which are scheduled to take place. "I'm new, but, I'm not sure I would follow all this even if I wasn't new," she said.

"It's complicated because we are using a very aggressive means of financing," said ARHA vice chairman Carlyle C. "Connie" Ring. "We are getting money from a variety of sources and there are substantial complications among the parties. It all fits together well, but it is very complicated."

But even Ring, who, along with Miller, ARHA staff, and the attorneys, has been intimately involved with developing the legal document, admitted to one concern. He noted, "In the construction contract there is a precedent document. If there is a problem you look back to the primary contract."

Ring suggested that the language be revised. "It should state that the purchase and sales contracts take precedent if any controversy arises," he explained.

Leslie Hagan, another recent addition to the ARHA Board, asked how long it would take for HUD approval and then ARHA final approval of any suggested changes. Geno estimated mid-October.

Connie Lennox, ARHA's administrative director of development, noted, "We are scheduled to settle in September but the pending litigation could delay this." The suit by the Alexandria Resident Council (ARC) against HUD has not been finally adjudicated due to delays in the U.S. Justice Department.

LAST WEEK, the City of Alexandria filed two motions in U.S. District Court, District of Columbia, with Judge Penfield Jackson, in an attempt to bring about a speedy resolution of the lawsuit, according to the City Manager's Office. Final disposition of the ARC suit has been pending since November, 2002.

The controversy centers around ARC's contention that they were cut out of the bidding process to become the developers of the site. The court has rejected a motion for a preliminary injunction to block the project and now is awaiting a brief from Justice to deny the basic element of ARC's case.

In this most recent legal maneuver, "The city argues that Alexandria and its residents have a direct interest in the outcome of the case and ... seeks permission from the court to participate in the lawsuit. In the second motion, the city asks the court to undertake an expedited review of the case, in the hopes of a speedy, favorable ruling that will allow the redevelopment to move forward."

"Judge Jackson agreed with our (the city's) intervention and agreed to a case conference later this month," said Mark Jinks, assistant city manager, Fiscal and Financial Affairs.

"The fact that the judge acted expeditiously on our request is a good sign and gives us a good opportunity for a face-to-face presentation of our case," he said. ARHA is not a party to the suit due to its relationship with HUD, Ring clarified at the recent meeting.

Miller point out, "A lot of things have already been done on this project by both us and the developer. It's been going on so long. Now, we have to stay on top of it."

He then jokingly added, "With all that nice grass growing on the site we don't want anybody to get any ideas about taking it for more open space in the city."

As a point of encouragement, Geno stressed, "HUD is under tremendous pressure from Congress to move HOPE VI money out the door."

As a final point of clarification, Board member Carter Flemming inquired, "Are we voting on both the construction as well as the purchase and sales agreement tonight?" Miller answered, "Yes. But the thing we are most concerned with is the Purchase/Sales Agreement."

FLEMMING ALSO ASKED three other questions prior to the vote — if Eakin/Youngentob would be building all the units, both market and assisted; if the entire project would be built to the same standards; and if the residents have been made aware of the criteria to be met to move back into the completed project.

The answer to the first two was 'yes.' Miller then explained, "The Advisory Council will develop the criteria and residents are members of that Council." He also clarified, "ARHA will be the manager of the assisted units."

There will be a total of 152 units on the redeveloped site. Of that total, 100 will be market units and 52 will be ARHA units. There are also three off-site locations in the overall redevelopment plan. Although no total price has been firmly established, Dearman estimated the final cost to be in the area of $30 million.