This Old Housing Project

Page 8 of 11

The DHA went to Denver City Council for funds to acquire East Village, and on May 16, the council passed a $2.5 million appropriation for the housing authority. With the council money, the housing authority made an offer for $6.05 million. Casden said no, and the city filed a motion to condemn the property under eminent domain, which allows the city to take control of properties if it can prove it is in the public interest to do so. In this case, the public interest is preserving low-income housing.

Post, meanwhile, finally made its own bid to Casden. "Post doesn't have experience developing mixed income," admits spokeswoman C.L. Harmer, although the company does manage some apartment complexes that accept Section 8 vouchers. "But building is building, development is development. The key to a low-income facility is good management. And Post has that on their resumé. Post just wants to be a part of redeveloping the site. I don't think its agenda is much more specific than that."

Neither is the DHA's. "We're asking for immediate possession," says Carpio. But even if the DHA wins its condemnation hearing, it still must purchase the property at market value, and market value will have to be determined by a three-member commission appointed by Denver District Judge Warren Martin. "If we were to be successful in the condemnation part, I doubt that the price would be set right away," he adds.

There is some debate as to what constitutes market value. Carpio says its based on a property appraisal that follows guidelines set by condemnation law. But if market value is near the $14 million that Post had offered -- more than double the city's offer -- then that changes everything.

At the June hearing, Casden announced it had a letter of intent from Post to buy East Village. Judge Martin told DHA attorneys that when the hearing resumed, the DHA had better have an equal amount of money ready to deposit in escrow.

While the city moved ahead with condemnation, Denver City Councilwoman Elbra Wedgeworth released her own proposal on June 12. Under her plan, Casden would sell East Village to Post, which would agree to maintain all 249 subsidized units for fifteen years.

(That obviously counts the housing-authority units, though there's no mention of how they would be transferred if the DHA remains determined to hold on to them.) The housing authority would be responsible for relocating tenants from East Village and giving them first crack at the new units when they are finished. Wedgeworth's plan also called for the housing authority and Post to enter into a joint venture to redevelop the DHA units.

Wedgeworth viewed the proposal as "a discussion point" at the very least, but she says that became impossible after Carpio and the DHA backed out of any discussions with anyone, citing the advice of the housing authority's attorneys. She followed up by introducing a resolution at a city council meeting to preserve subsidized housing at East Village; the resolution passed July 10. "Investing millions to only rehabilitate the deteriorating units at East Village will not address the economic segregation and isolation of this development from the rest of the City," it stated.

Wedgeworth initially supported the condemnation, but now she believes that the city's adversarial stance is not worth the risk. "The city doesn't have the money," she says. "Here's a $2 billion corporation that wants to buy the land and says they'll work with you. And the housing authority won't speak to anybody."

Carpio brushes Wedgeworth's comments aside. "She wants us to get involved with Post. They may be the owner, but we're in a legal proceeding. Anything you say may be held against you. Based on the advice of our attorney, we shouldn't talk to anybody about the redevelopment potential of East Village, especially with people who don't own it. Our purpose in condemning is to make sure 600 people don't get thrown out, not to cut a deal with Post."

Wedgeworth's proposal wasn't very practical, he adds. The DHA can only issue vouchers to people in the DHA system, and they cannot issue vouchers for the fifteen-year time frame that Wedgeworth suggested. In addition, the housing authority can only relocate people on property it owns.

Denver City Councilwoman Susan Barnes-Gelt calls DHA's handling of East Village "extremely myopic and almost naive, and that's kind, in thinking they would redevelop this project without a private-sector developer."

When Wedgeworth tried to bring Post and the city together during the summer, the city resisted. "Very early on, there were meetings with Post, and we asked them to put something in writing about their plan, and we never received anything from them," says Myrna Hipp, executive director of the city's Community Planning and Development Agency. "Until we were willing to see what Post was planning, there was no point in meeting."

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T.R. Witcher