Will Burlington's Affordable Housing Sell to the Highest Bidder?
Dozens of Burlington’s poorest renters could get the boot from subsidized housing if their landlord — Pizzagalli Properties — sells a 37-unit apartment building to Champlain College to house students.
Wharf Lane apartments, on lower Maple Street, is home to 44 people with annual incomes in the $12,000 range. Many are elderly or people with disabilities.
Wharf Lane is one of thousands of affordable housing complexes built 30 years ago by the private sector using subsidized mortgages and rental subsidies provided by the U.S. Department of Housing and Urban Development. At the end of the mortgage, developers have the option to sell the publicly subsidized housing to the highest bidder on the private market.
Because the Vermont Housing Finance Agency is HUD’s designee in the state, it holds the mortgages, and the right of first refusal, on every one of the properties.
VHFA is currently negotiating with the Pizzagallis to purchase Wharf Lane. The next step is an appraisal, after which the VHFA has 90 days to act on its option to buy. It gets another 90 days to pull financing together and get approval from HUD.
But that still might not be enough time to seal the deal. The combination of a short time frame, less federal financing for affordable housing and the presence of a motivated buyer is likely to complicate things for the VHFA.
“It’s going to be resource-intensive and we’re going into the next fiscal year with a lot of projects already spoken for in the budget pipeline,” said Sarah Carpenter, VHFA’s executive director. “That said, we’re committed to make this work because this is too important a housing resource to lose.” Carpenter says she thinks VHFA can make it happen, but that for the next six months, residents are likely to be living in limbo.
The VHFA is hoping to partner with Burlington Housing Authority, which acts as the on-site property manager for the building’s owners, Angelo, Remo and Jim Pizzagalli of Pizzagalli Properties. “This is something we try to avoid — losing units to the market at a time like this when it’s hard for people to find housing,” said BHA’s Paul Dettman. If residents have to move, he notes, they might be forced outside of Burlington.
Next to go could be the Bobbin Mill apartments, a 57-unit complex sandwiched between South Champlain and Pine streets. The mortgage on that property runs out in 2012, Dettman observed.
Burlington city officials acknowledge Champlain College’s student housing needs. And they’re willing to work with the college, according to Brian Pine, assistant director for housing in Burlington’s Community and Economic Development Office, as long as it doesn’t displace existing low-income renters.
“Our support for both Eagles and Ethan Allen Club is a clear sign that we will support proposals that create more student housing without harming existing residents,” Pine wrote. He told Seven Days he hopes the city can work with VHFA and BHA to keep Wharf Lane perpetually affordable.
In a reply to Pine, Champlain College Vice President David Provost said the college is open to talking about what the city might consider “off limits,” but he added that the college would continue to pursue a purchase of Wharf Lane. The Pizzagallis gave Champlain College officials an extensive tour of the building last month, he said.
“We look at properties all the time,” Provost said, noting Champlain reduced an on-campus housing project by 50 units in response to neighbors’ concerns. Wharf Lane could house up to 70 students, and it is a quick walk or shuttle ride from the main campus.
“Because this property is outside our campus zone, if we did decide to pursue this property it would require us to go before the city council for approval, and of course we would do so,” Provost said.
That Champlain College is viewed as a motivated buyer would put the Pizzagallis in a strong negotiating position with VHFA as it aims to get the best price it can for the building.
The city assessor’s office values Wharf Lane at $1,586,900 — far below market value because it’s subsidized housing.
Mike Tomkowicz, treasurer of Pizzagalli Properties, declined to comment on the pending deal. “It’s a business deal, and that’s about all I can say,” said Tomkowicz. “We had a 30-year mortgage with HUD and that ends next year.”
Nonprofit housing officials fear that Wharf Lane could go the same route as the Eagles Club. The city had an interest in buying it, but they were outbid by Champlain College. The appraised value of the building came in around $1.1 million. Champlain College paid $1.5 million.