Shifting focus threatens Villages of Delray project

By David Sedore Palm Beach Business.com

Artist's conception of the Villages of Delray

DELRAY BEACH — The long-planned massive redevelopment of the city’s Southwest Neighborhood could be in trouble.

The original concept for the project, called the Villages of Delray, was to socially integrate the area by mixing different income levels. Some of the 1,000 or so homes would be sold or rented at market rates, seamlessly mixed with others, identical in appearance that would be sold or rented at subsidized prices for lower income residents. As envisioned, the mix would create a vibrant neighborhood of professionals and blue-collar workers living side by side.

But the financial crisis that nearly crippled Freddie Mac and Fannie Mae and made “bailout” a regular part of a banker’s lexicon is making that vision impractical, according to Auburn Development, the firm that’s been working with the city to redevelop 50-plus acres in the city’s Southwest.

Basically, the money is there for pure subsidized housing projects, but not for the mix of subsidized and market rate project the city wants.

“Right now, nationwide, it is extraordinarily difficult to sell any deal contemplating anything other than 100 percent affordable units,” said Orlando Cabrera, an attorney and housing expert. “Can that change? Sure. Is that likely to change any time soon? No.

”Very good deals, excellent deals, are dying on the vine.”

Cabrera, a former Housing and Urban Development assistant secretary, was one of the experts who appeared on behalf of Auburn during a city commission workshop Tuesday evening.

The problem is that these types of deals rely on corporate income tax credits for their financing. They’re also attractive to big banks seeking to meet Community Reinvestment Act requirements.

However, tax credits are basically worthless to banks that are losing money. And during the past year or so, most big banks have been churning red ink by the barrel.

Auburn’s solution is to build subsidized apartments on 11 acres, while putting single family homes and town houses on the remaining 40 or so acres. Those homes would be both market-priced and subsidized, meeting the original concept of an income-mixed neighborhood.

“Subsidized” housing primarily means units rented to families making between $28,000 and $52,000 a year, depending on familiy size. About 260 rentals are planned for the 11 acres.

Commissioners’ views on the proposal was at best mixed. Commissioners Gary Eliopoulos and Fred Fetzer favored sticking with the original idea of mixing incomes.

“The dynamics have changed,” Eliopoulos said. “We all realize that. But at the end of the day you don’t change the vision. I can’t back off of that. That neighborhood had a vision and we have a promise.”

Said Fetzer: “I still feel we need to stand by our original vision. It’s not clear to me that we need to change … at this time.”

The fear is that by building rentals restricted to low income families, the city would be recreating Carver Estates, the infamous housing project in the Southwest destroyed by Hurricane Wilma four years ago.

Auburn Executive Vice President Cito Beguiristain argued that moving ahead with subsidized apartments on a limited slice of land would act as a catalyst for the rest of the project.

“If you give us this opportunity, we’re not going to squander the vision and the intent,” Beguiristain said.

The need for affordable housing in Palm Beach County is real. One estimate given Tuesday: 14,000 units are needed. Construction of the apartments also would create jobs at a time when the county unemployment rate is approaching 10 percent, and the construction trades are particularly hard hit.

Delray’s Community Redevelopment Agency already has pulled the plug on a $3.5 million loan it promised Auburn for the project because of the change in plans.

The project is under threat from another direction. Auburn is the midst of a dispute with the city’s Housing Authority, a partner in the Villages project. The two sides have attempted to mediate the dispute without success.

Members of the Housing Authority attended Tuesday’s meeting. Mayor Woodie McDuffie said the people assembled in the room had the power to resolve the project’s problems and get it out of the ground.

“We need to swallow some egos and figure this thing out,” McDuffie said. “There is middle ground. We just need to find it.”