Closure endangers HUD funds

Spokane County could be on the hook for repaying $500,000 in federal money if it cannot replace 23 affordable housing units lost when the Martindale Apartment building in Hillyard closed Friday because its former management company hadn’t paid utility bills.

“If that building were sold, we would look to the county to assure (that) the new owner would take things over for affordable purposes,” said Jack Peters, community planning and development director for the U.S. Department of Housing and Urban Development for Washington state. “If it weren’t, that would be an issue we would have to take up with the county. If they couldn’t establish continued affordability, we would have to request repayment of the funds. That would be one of the options.”

The county received $500,000 through HUD’s HOME program in 2003 to help house the chronically homeless, Peters said. That money was used to help acquire and renovate the Martindale building, at 5313 N. Regal St., said Tim Crowley, who oversees housing and community development for Spokane County.

The city of Spokane and Avista Utilities shut off the power and water at the building Friday afternoon. Locks were changed and building residents – many of whom are mentally ill – were instructed to work with management to pick up their remaining belongings, said Bob Peeler of Spokane Neighborhood Action Programs, which has been working for weeks with other nonprofit agencies to relocate residents. By late Friday, all but one resident had found at least a temporary place to live. Some 14 people went to motels for lack of more permanent housing, Peeler said.

Christine Barada, Spokane County’s director of community services, housing and community development, said the county is not concerned about repayment of funds. The county has months to work with HUD and talk to the agency about what’s possible before the situation would come to that, she said.

“We have heard there are many, many options, and that HUD works very hard to make this work for the community,” Barada said. “HUD is very used to working with communities. We’re certainly not the first community that has had a foreclosure of a HOME property.”

HUD is reviewing the Spokane County HOME program to discover the root cause of any noncompliance and determine what action might be necessary to bring the program back into compliance with federal standards, Peters said. That review will take at least 45 days.

A 2006 HUD review of the city of Spokane’s use of Shelter Plus Care funds found that the Martindale was charging more for apartments occupied by families receiving government subsidies than for those rented by people not receiving public assistance, according to previous news reports. Federal guidelines prohibit the city from using grant money to pay more than fair market value. The building’s former manager, Jim Delegans, has said the resulting reduction in rental payments left the project unable to pay its bills.

Mayor Mary Verner asked SNAP to help relocate the building’s 45 residents – a challenge in a city with a rental vacancy rate below 2 percent for one-bedroom and studio apartments. Complicating matters is the fact that more than 200 other low-income residents have been displaced within the past year.

“The team of people working on this have put their heart and soul into this and been miracle workers,” said Ron Hardin, development coordinator for SNAP. “This really has been a collaborative effort by the nonprofit community in Spokane.”

Peeler said many former Martindale residents will struggle to pay rent in their new homes because most live primarily on Social Security or disability payments averaging about $637 per month. The average rent they’ll be paying for the new apartments is $420 per month, Peeler said, as opposed to the significantly subsidized units they were renting at the Martindale.

The details of the Martindale’s operations were brought to the attention of the Spokane Police Department, which declined to investigate, citing actions being taken by HUD, a spokeswoman said.

“Due to the details of the case, the HUD people are going ahead and taking over the investigation,” said Police Department spokeswoman Jennifer DeRuwe. However, Martha Dilts, deputy regional director for HUD, said the federal agency does not comment on investigations, including whether one exists at all.