Alexandria finds itself paying a hefty price for the mistakes of a nonprofit housing organization whose director was accused of fraud. The city council voted this week to transfer property away from RPJ Housing, which Fairfax barred from doing business within its boundaries last year after its director allegedly forged documents to acquire more than $700,000 in government loans.
The Alexandria council also voted to set aside $574,000 to help the new partner, Alexandria Development Housing Corporation, cover costs for the three apartment buildings intended to provide affordable housing for low-income families.
Council members said these were necessary steps because the city stood to lose a $14 million investment if RPJ defaulted on its loans, which was likely.
“Our main concern as city council is we need to protect the city’s money,” Councilman Frank Fannon IV said.
RPJ can’t pay its July 5 bill and was unable to refinance its loan for the properties, which the city had helped fund, because of financial setbacks related to the scandal in Fairfax.
“The reason the city was involved in the action is because we have loans on the property, and we wanted to preserve the affordable housing,” said Deputy City Manager Mark Jinks.
Vice Mayor Kerry Donley said the funding was to protect the city, not AHDC.
“We’re not bailing them out. We’re just sort of saying, ‘Here, AHDC, you’re now going to be the responsible party, and this protects our interests — our financial and housing interests,'” he said.
Jinks said he expects AHDC to use only about two-thirds of the $574,000, for transactional costs and development of a future financing plan, among other things. The remaining money would be set aside for an emergency, he said.
The transfer will also allow AHDC to come up with a long-term plan for the properties’ financial stability, council members said.
“We now have the ability to take some time out, get a plan for permanent financing in place — and this is what RPJ was not capable of doing,” Donley said. “I think this is a sound plan, one that brings in a new, more responsible player to the table in AHDC.”
RPJ Executive Director Eric Bonetti said the nonprofit would have preferred to continue managing the properties but that the sale makes sense for the organization long-term.
