Monday, March 24, 2003

Building's a drain on housing agency

Costs far exceed rental income

By Steve Kemme
The Cincinnati Enquirer

HAMILTON - A building that the Butler County Metropolitan Housing Authority bought last year from International Paper for $750,000 in hopes that it would be a revenue-producer instead has been a financial drain.

The rental fees from groups holding birthday parties, dances and dinners at the building from November through February total $2,850, according to the federal agency's records. The Hamilton Ballet Theatre began paying a $600 monthly rent in January for studio space.

That revenue doesn't cover even the $4,400 in mortgage and utility payments for just one month.

That's why the housing authority, which provides subsidized housing for low-income people, is desperate to find a major tenant for the building, which is located at International Paper's Knightsbridge complex, south of downtown Hamilton.The Knightsbridge acquisition is an example of the kind of decisions that have caused the U.S. Department of Housing and Urban Development, which oversees the authority, to criticize its management, and Butler County commissioners have also expressed concerns.

Leonard M. "Tony" Blaine, executive director of the housing authority, said he will work with a Realtor to try to market the building, which has 22,000 square feet of floor space and sits on 6.4 acres.

He said he has no particular type of anchor tenant in mind. "Right now, we just want to stop the bleeding," Blaine said.

The housing authority thought the Butler County Community Health Consortium would be the anchor tenant when it made the purchase last September. But in December the consortium, which had made no commitment to the housing authority, decided to explore other options.

The agency planned for the rest of the space to be rented for single events to community and civic organizations, church groups and businesses. The rent was to provide a steady stream of income for the housing authority, offsetting possible federal cutbacks.

HUD and local officials are worried that the housing authority has jeopardized its financial stability by buying the building without having tenants under contract.

To pay for the building, the housing authority took out a $425,000 loan from Fifth Third Bank and removed half - $375,000 - of its Section 8 housing reserve fund.

"To buy that property as an income generator made no sense at all," Butler County Commissioner Courtney Combs said. "Unless they come up with a viable tenant, they've got a white elephant."

Commissioner Mike Fox said the purchase hurts the low-income people the agency is supposed to be serving. It siphoned off Section 8 money that could have been spent to provide rent subsidies to private landlords to house low-income families, he said.

"The monies would have been better spent augmenting programs that already exist," Fox said.

The white cinderblock Knightsbridge building with a glass-and-steel front had been a training and development center for International Paper, which moved out of Hamilton two years ago. A tour inside the building never fails to impress visitors.

What had been the health and fitness center is a cavernous room. Four offices are in the room with one around the corner.

There is a large meeting room capable of holding tables seating up to 200 people. This room, which can host parties, wedding receptions and conferences, has five screens, including one large automated screen, and can be partitioned into smaller rooms. Food can be catered in to a large well-equipped kitchen.

The building has an aerobics room and carpeted locker rooms as well as an amphitheater with tiered semicircular wooden tables facing a large screen. Small conference rooms are spread throughout the building.

"It's a state-of-the-art facility," Blaine said, as he walked through the building. "We'll find somebody who needs the space."

Blaine said HUD has been encouraging housing authorities to find new ways to generate revenue to prepare for federal funding cuts.

"Acquiring buildings is something other housing authorities are doing," Blaine said. "We've had to look at doing some different things and getting different kinds of funding."

Despite the barrage of criticism the housing authority is receiving, Blaine said he believes the Knightsbridge purchase eventually will work out and benefit the community.

"We have something that in the future is going to be extremely useful," he said.

But Combs, a Realtor, takes a more pessimistic view. Even though the housing authority bought the building last September at $250,000 below its appraised value, it will be lucky to get its money back if it tries to sell the building, he said.

"That building had been on the market for an extensive period of time and had not attracted any buyers until the housing authority bought it," he said.


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