City, bidder owe community a deal

The benefits from the sale of the city-run affordable housing complexes are clear: It would maintain a critical stock of housing units for low-income renters for the long term, while ending the city’s deficit from running them. And it would provide additional funds for homeless housing support and other city needs.

So there’s some measure of hope in the fact that the deal with the prospective buyer, Affordable Housing Partners LLC, is still alive despite predictions of doom, and that the administration of Mayor Kirk Caldwell might achieve those gains in the end.

But there’s also ample cause for apprehension in the current state of the complex negotiations. At issue are 12 subsidized housing complexes the city government runs at a loss and now wants to privatize. In recent weeks it’s become apparent that the only way to close the sale would be with some "seller financing" — meaning, essentially, that the city will have to wait longer for its proceeds.

No city funds will be paid out, but the arrangement will function like an IOU, keeping the deal alive while the buyers secure private financing. Until then, various projects, including the city initiative to house some of the city’s most chronically homeless people, would be postponed.

Over the next few months the administration has the responsibility of safeguarding city taxpayer interests in the event of failure, while working hard to nail down a final contract on the $142 million sale.

The ground beneath the deal feels unsteady, to say the least. Ember Shinn, the city’s managing director speaking last week, described it herself as "a collapsing deal" and the efforts required to salvage it as "extraordinary."

Disturbingly, Affordable Housing Partners has already shown skittishness, seeking to recoup $4 million in its expenses to date, as well as at least $2 million in damages, because the process had hit a political snag. Principals for the partnership charged that City Council Chairman Ernie Martin had shaken up investors by introducing two resolutions that raised doubts about the deal.

Administration officials said they checked with their own sources among the investors and were satisfied the Council proposal indeed had unsettled things, and that with a deal of this complexity, recapturing the buyer’s lost financing "momentum" may take some time.

However, it’s worrisome to hear the partnership sounding alarm bells at this point. This is a deal with city government and involving political entities, and the occasional critique from the elected representatives should be considered par for the course.

All told, this doesn’t leave anyone brimming with confidence. Reversing that situation will take a great deal of collaborative effort. City officials have said they will now work out terms of the financing, with the central question being: How long can the city afford to wait for the money? Considering that the city budget is far from flush, that’s hard to answer.

Still, this marriage will be worth saving if it can be done, as city attorneys believe it can, without excessive risk exposure — as long as the March 31 closing date is met. We hope they are right about that assessment. After that date, the bidding process certainly would have to restart, which would prolong the city’s unsustainable management of the properties.

Affordable Housing Partners made the bid that offered the best prospects for preserving the affordable units long term, with a commitment to keep all existing tenants. There was also private money for renovations at the apartment complexes, fixes that are greatly needed.

The administration owes it to the community to work toward realizing those benefits, providing assurances it will do so with all due caution.