Round One Goes to ARHA

Round One Goes to ARHA

ARC ponders appeal of judge's ruling

Alexandria City and the Alexandria Redevelopment and Housing Authority may have won a major victory on Tuesday, but it may not have won the war.

After an hour of testimony, U.S. District Judge Thomas Penfield Jackson ruled in favor of the U.S.Department of Housing and Urban Development not to grant a preliminary injunction to stop the redevelopment of Samuel Madden Homes (Downtown), known locally as The Berg.

The action arose from a suit filed by the Alexandria Residents Council against HUD alleging they "violated federal law by denying public housing residents the opportunity to purchase ... the public housing project." The complaint detailed "how ARHA, and now HUD, have stood in the way of ARC's opportunity to purchase and have also prevented the residents' involvement in the redevelopment of their homes."

Filed in Federal District Court in Washington, D.C., on November 25, ARC has been represented by the Lawyers' Committee for Civil rights Under Law (LCCRUL) and local attorney Paul Fiscella, who has a long history as ARC's legal representative. At the time of the filing, Fiscella accused the city and ARHA of "dramatically improving the terms of the sale... for a private buyer."

Judge Jackson's decision paves the way for HUD to move ahead on Monday to approve demolition, replacement plans, and the plan to seek tax credits tied to the financing of the project, ARHA vice chairman, Carlyle C. Ring, Jr., clarified at Tuesday night's ARHA meeting.

UNDER A STIPULATION prior to the court appearance, "HUD attorneys had agreed to take no action until March 3. I would assume they will now move ahead," Ring speculated.

Following the Jackson ruling, ARC attorneys indicated they would file an appeal with the Circuit Court of Appeals to overrule the District Court. "However, when a District Court hears arguments it's rare that a Circuit Court will overrule the decision of that judge," in Ring's opinion.

ARC now has 30 days to make a decision to appeal Jackson's decision or not. But, "since they were basing their case on irreparable harm to their clients [public housing tenants] it is in their best interest to move quickly," according to Ring.

HUD had also sought to have the entire matter dismissed. "This was not heard," Ring said. "But, he did indicate from the bench that he did not feel the plaintiffs [ARC] had a good case on the merits. But, he could reverse his opinion after further review," Ring explained.

"If Jackson also dismisses the entire matter as HUD has requested, ARC has another 30 days to appeal to the Circuit Court," Ring explained. "But, the more the present plans [for The Berg] solidify, the harder it becomes for the court to undue," he theorized. "It's like trying to unscramble eggs."

ALTHOUGH ARHA was not a party to the original suit, both they and the city decided to take a proactive stance when it became apparent that should ARC be successful it would stop ARHA from applying for the necessary tax credits on the project and halt the project for at least a year and perhaps indefinitely.

In order to prevent this, ARHA, at their January 27 meeting, approved the hiring of the law firm, Beveridge & Diamond, to argue their case before Jackson. The action was taken in collaboration with City Council. They were chosen because, "We were looking for a firm that had done a lot of work in the District and had experience with this type of situation," according to ARHA chairman, A. Melvin Miller.

Driving the timetable is the necessity for ARHA to file for tax credits as part of the financing package for The Berg. The deadline to do so is March 14. There are two applications that need to be filed, one for The Berg and another for the three off-site locations which are part of the total plan.

However, if ARC's attorneys carry through with their threat to appeal Jackson's decision and perhaps subsequent appeals it could cloud the title situation and, thereby, adversely impact Alexandria's standing in the tax credit competition, according to Ring.

"Every Public Housing Authority and every investor is vying for these tax credits. We are in a competition," Ring emphasized. "Each application is graded on a point system. It is good to score high because that makes you more competitive for the tax credits."

BUT, IF LITIGATION is pending this puts a cloud over the application and makes it less desirable to be awarded the tax credit, Ring explained. The absolute necessity for the tax credits was spelled out to the ARHA Board in a memo from ARHA Executive Director William M. Dearman, in January.

"Competitive low income housing tax credits are a significant source of funds planned to be used for development of the 52 on-site and 48 scattered site replacement housing units ... they are anticipated to contribute approximately $10,000,000 for both projects."

Dearman further warned, "Since competitive tax credits are awarded by Virginia only once a year, if the application or award of LIHTC are not possible due to complication related to the litigation, the ... projects could be delayed at least another year."

THE OTHER WILD CARD is the patience of the chosen developer, Eakin/Youngentab Associates. Miller has expressed the concern, "They may become frustrated with the delay and withdraw." Thus far there has been no indication of this. Ring indicated Tuesday night that EYA was pleased with Jackson's decision.

The next steps are for Jackson to rule on the HUD motion to dismiss and for ARC, and their attorneys, to decide on whether to appeal Jackson's Tuesday ruling to the Circuit Court. Whatever those decisions, HUD is free to move ahead with its approvals on Monday.

According to Karen Daly, an attorney with Wilmer, Cutler & Pickering, one of the three legal firms representing ARC, "We have not made a decision of whether to appeal or not. That won't be done until after we meet with our client. We are disappointed with the decision and we are considering all the options."

She further stated that if an appeal is made, "It will be within a week. We don't intend to delay that action." Daly also pointed out that Jackson was "holding in abeyance" action of the basic request from HUD that the entire matter be dismissed. "That is the underlying action," she explained.

In the final analysis, the cloud, as Ring termed it, could remain, adversely impacting ARHA's standing in the competition for tax credits. But, this opinion too, is disputed by the ARC lawyers.