Calhoun Beach Club may keep affordable apartments for five more years

Low-income housing was originally promised until 2018, then changed to 2003; now may be extended to 2008

AIMCO, the company that owns the Calhoun Beach Club Apartments, announced Oct. 1 that they would sever their Section 8 affordable housing contract upon its Jan. 31, 2003 expiration date.

Section 8 is a federal program allowing low-income tenants to pay 30 percent of their income in rent, with government making up the difference to market rates (see sidebar).

However, AIMCO Vice President of Operations Development Jim Ponder told the Cedar-Isles-Dean Neighborhood Association that his company wants to keep the 16 Section 8 tenants (all of whom are elderly and/or disabled) in affordable apartments for another five years -- provided the company receives market-rate rent.

Eric Galatz, attorney for AIMCO Calhoun L.L.C., said, "If [tenants and government] pay rent, they can stay. If they don't, they can't."

Galatz said that AIMCO is seeking five-year-long "Mark to Market" subsidies from the U.S. Department of Housing and Urban Development (HUD), intended to save affordable housing where Section 8 contracts have expired.

Patricia Mack, HUD's local operation specialist, said she favors the "Mark" subsidy, but is waiting for HUD's Washington, D.C. office to accept AIMCO's application.

Susan Reyes, a Section 8 program resident of the Calhoun apartments and a leader of the Section 8 Tenants Association, said, "We are really hopeful HUD will approve it. That would be great for us."

Bob Odman, director of the Minnesota Housing Finance Agency's multifamily housing programs, in explaining the CBC Section 8 program, said for them, the market-rate rent for a Calhoun Beach Club apartment is $600 a month, high for the Section 8 program. Government subsidy for each unit varies because it is based on each renter's income.

Reyes said that if HUD denies AIMCO's application, there are options other than eviction. Those include vouchers from another program, or potential litigation to keep tenants in the building.

Section 8 history The CBC Apartments' previous owners received a loan tied to a Section 8 contract in 1978 that guaranteed affordable housing for 40 years, with automatic renewals every five years, Galatz said.

The MHFA's Odman said that the previous owners paid off the loan, so in 1993, his agency renegotiated the affordable-housing contract to expire in 2003, rather than 2018.

Reyes said a tenant's association lawyer said that the MHFA didn't have that authority to change the date in the 1978 contract.

She said AIMCO couldn't get out of the contract just because the original loan was paid off. Reyes said that the negotiated 1993 contract language specifies that AIMCO could ask to get out of the contract, but the MHFA had final discretion to say yes.

Tenant leverage Reyes said if new subsidies can't be worked out, tenants might head to court to force the MHFA's hand.

Odman said the lawsuit threat is motivating AIMCO's openness to new affordable-housing subsidies. "The tenants were going to bring a lawsuit and may still," he said.

Reyes said the tenants don't want a lawsuit and want to work with AIMCO on alternatives. She said if HUD denied AIMCO's "Mark to Market" application, the Minneapolis Public Housing Authority could issue its own vouchers to compensate AIMCO up to market rates and keep tenants in their affordable apartment.

However, Reyes said the MPHA vouchers, which depend on the city budget, are less secure than Section 8 funding.