The Day Avenue deal
The man who sold 17 houses to the city says it’s time for Roanoke to live up to a promise it made to him, to build 50 low-income apartments scattered around town.
KYLE GREEN | The Roanoke Times
Neighbors said they remember a shooting taking place at this house, (far left) on Day Avenue Southwest, in the early 1990s. The house has since been fully renovated and has new owners.
KYLE GREEN | The Roanoke Times
Trudi Mardian and Michael Derr moved into their house on Day Avenue Southwest in Roanoke in 1982, and raised four children in a neighborhood known for its drug dealing and prostitution. Now Day Avenue is in the midst of a revitalization and Mardian and Derr welcome a street of homeowners.
KYLE GREEN | The Roanoke Times
"Now I have neighbors I really want to get to know," said Trudi Mardian, pictured in her dining room.
KYLE GREEN | The Roanoke Times
Trudi Mardian says she now enjoys gathering with neighbors for conversation and wine.
KYLE GREEN | The Roanoke Times
Trudi Mardian bought her Roanoke home (center) more than 30 years ago. On a block where police had 347 calls for service the year the city bought the houses, there were just 36 police calls for service last year. Trudi Mardian bought her Roanoke home (center) more than 30 years ago. On a block where police had 347 calls for service the year the city bought the houses, there were just 36 police calls for service last year.
Saturday, March 9, 2013
Trudi Mardian got the chance to buy her Day Avenue house because a water pipe that burst in the winter of 1982 was the last straw for the older woman who had been renting out her old family home.
It would take the better part of three decades, though, before Mardian had a neighborhood.
In the years between, one man would acquire most of the block, renting out 70 apartments in 17 old houses in what would become one of Roanoke's worst areas for drug dealing and prostitution. He'd end up selling the houses to the city, which converted some back to single-family houses and sold the rest to private developers with the same end in view.
Now, says Mardian, it's pleasant to gather for conversation and wine on a neighbor's front porch, or sit down for a chat after a shared hour in the community garden at Fourth Street and Day Avenue Southwest. It marks a change from the days when drug dealers would disembark from taxicabs, open up their folding chairs and operate a marketplace on that same corner.
On a block where police had 347 calls for service the year the city bought the houses, now stands a neighborhood of single-family homes. All but a handful are occupied, and the rest are under renovation. Last year, there were just 36 police calls for service. Renovation has spread west down Day Avenue to include a once-notorious apartment building at Sixth Street. So has the reduction in calls for police in the rest of Day Avenue from the 500 to the 800 block.
But now, says Dana Walker , the man who sold the 17 houses to the city, it's time for Roanoke to live up to a promise it made to him, to build 50 low-income apartments scattered around town to replace some of the apartments he used to rent out.
The failed promise
City Manager Chris Morrill and Roanoke Redevelopment and Housing Authority Director Glenda Edwards admit that the city and the housing authority haven't built all 50 units.
Still, they say they've done a lot to expand low-income housing in the city, spending a lot more than their original agreement with Walker ever contemplated. And, they add, they have proposed an approach to finish the job initially suggested by Walker: giving $750,000 to Habitat for Humanity to do the work.
Walker has rejected that. He says he will pursue other legal options to hold the city to its promise.
"They keep trying to meet this requirement with things they are already doing," Walker said. He says the federal Community Development Block Grant funds that the city would use to fund Habitat for Humanity is money the nonprofit would have received anyway.
The promise of the 50 units was meant to provide additional units, beyond what the city might have planned otherwise, Walker said.
It was a promise meant to continue what Walker said was the mission of the Christian Housing Fellowship , the for-profit company that formally owned the Day Avenue apartments. Court records show that Walker was the sole member in the enterprise.
The fellowship aimed to rent inexpensive housing to people who could not get federal rent subsidies, Walker said.
Walker sold the fellowship's Day Avenue buildings to the city for $344,000 - basically what he said was the debt owed on the buildings. In return, the city promised to "construct or cause to be constructed 50 new rental units over the next seven years," renting them to people who did not get federal housing subsidies, but at rates equal to what the federal program required beneficiaries to pay.
Court records show the fellowship acquired nine of the buildings in 1999, for just under $290,000. It acquired the remaining eight in 2003 from a partnership in which Walker participated, basically as a distribution from that partnership. That partnership had acquired the other buildings, along with others it didn't sell to the city, in four separate deals in the 1980s. The partners sold two houses from those deals at prices that more than covered the cost of the Day Avenue properties, court records show.
Still, by the time Walker's fellowship sold the 17 buildings on Day Avenue to the city, their property tax assessment totaled $1.15 million. That assessment is based on what other rental houses in the Old Southwest area were selling for.
Walker said that means he basically gave the city a gift worth $806,000 to help finance the 50 low-income units.
At the time he sold, Walker said that rents, ranging from $195 to $300 a month, weren't enough to cover the fellowship's costs, with 38 percent of revenue going for repairs. During the three years before selling the buildings, the fellowship took out four building permits, one for a privacy fence and three for electrical work, including a project that took a year to be completed satisfactorily, city records show. The fellowship also addressed five notices of unspecified building code violations.
City records show that in one building, in 2004, city inspectors had to condemn one apartment as unfit to live in because it had no heat. That same year, officials pushed for repairs in another apartment in the same building where a tenant complained of a half-inch gap between the floor and walls, holes that rats used to enter the unit and windows that weren't weatherproofed. Three months after the tenant's complaint, a city inspector's note reported: "Owner has put a hold on repairs, currently working deal with Housing development to purchase house." The agreement to sell the 17 Day Avenue houses was announced three months after that.
To meet its promise to Walker, the city says it spent $715,000 to build six single-family units. It has an application pending before the federal Department of Housing and Urban Development for funding to build 11 more units, at a cost of $1.4 million.
To settle with Walker, the city last summer offered to provide $750,000 to Habitat for Humanity. That's an approach Walker had suggested in 2009.
Walker rejected that offer last month.
"You simply continue to offer alternative projects that you would have built anyway or money to Habitat [for Humanity] that you would have given anyway as a means to fulfill your commitment without actually incurring an additional financial requirement," Walker wrote to Morrill and Edwards on Feb. 11.
In that note, he said he would pursue other legal options to get the city to meet its commitment on the 50 units. Walker said he was not seeking anything for himself in any such action.
Edwards said the $750,000 is not money the city would have paid for affordable housing anyway.
It would come from federal Community Development Block Grant funds, a source that Walker says and Habitat confirms has helped fund $2.4 million of work over the past five years, including an expected $765,000 in the current fiscal year.
But the funds Habitat has received are funds it competes for with other community groups. Edwards said the $750,000 in the promise, to be spread out over three years, would be carved out from the block grant total and reserved for Habitat, specifically for low-income housing to meet the promise to Walker.
Morrill says that while the city hasn't built all 50 units by the 2012 deadline set in its agreement with Walker, it is trying its best to build as many as possible.
The city has built 89 units using low-income housing tax credits, at a cost of more than $15 million, as well as 22 lease-purchase public housing units, at a cost of more than $2 million, although these were not part of the agreement reached with Walker, because they serve people who can get housing subsidies.
Meanwhile, the idea that the $806,000 equity in the 17 houses that the city bought might stretch to cover building 50 units - at an average cost of $16,120 - may have been a stretch.
"It is fair to say that to build units for $16,120 each might have been unrealistic," Edwards said .
Walker, for his part, says he never expected the $806,000 would finance 50 units, though he was the one who suggested that paying a fraction of that total, based on the 44 units the city never built, plus interest would be a fair way of settling the dispute.
"I think they were so eager to get their hands on the block that they weren't thinking about how much it would cost" to build the 50 units, Walker said. He said the 50 units were a compromise between the 25 the city proposed to build and the 70 he wanted them to build.
The housing authority last month sold the last of the 17 homes it bought from Walker. It has received more than $2.8 million for them, for a net gain of $2.5 million, court and tax records show.
But the city paid $2.6 million to a contractor to renovate the homes by the time the contractor hauled it into court seeking an unpaid balance of $432,000. It eventually sold a half-dozen houses as completely renovated homes, but in 2009 decided it would sell the rest, not yet completed, to investors who would take on the cost and risk of getting them in shape to sell. Another half-dozen have been completed and sold.
All in all, the 17 houses are assessed at $3.25 million, an increase in value of more than $1 million. But the nearly $14,000-a-year gain in city tax revenue isn't the big payoff from the revitalization, city officials say.
"There'd be eight, nine, 10 units in some of those buildings. You'd see weird stuff, like a toilet in the attic," said Chief of Police Chris Perkins, who worked the area as a narcotics and vice detective in the 1990s.
"It was unsettling, because the layouts made no sense. You'd go around a corner and see a wall that shouldn't be there, a door where you weren't expecting one," he said.
The hookers and dealers were bold, setting up shop right in the street. Perkins said he remembers serving a search warrant once to a Day Avenue resident who told him to get out of his place, before socking him.
That has changed.
"We were on a community walk back in 2010. It was the first time there were more people from the community than police officers," Perkins said. "As we were walking down on the 500 block, a couple of people in the back of the group were threatened by people hanging around down there."
But, where a few years back that might have been intimidating, the threatened walkers spoke out. After a police officer told the threat-makers that behavior wouldn't be tolerated, they moved on. No one has reported any problems there since.
"It's not as simple as saying renters are a problem," Perkins said. "It's about a neighborhood taking pride in itself."
The pride is spreading up and down Day Avenue, with people fixing up houses and apartment buildings. It has encouraged others to invest nearby, including The Cotton Mill lofts, the apartments at Sixth and Day and the nearby Fork in the City restaurant, neighbors say.
"It's a wonderful success," longtime resident Mardian said. "Now I have neighbors I really want to get to know."
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