A company that wants to buy the Fireside Park Apartments in Rockville says it can offer the city a better deal than Rockville Housing Enterprises.
David Khoury, a co-founder and principal of Priderock, said his company would keep rents below those of new apartments in the area.
“There’s no chance we‘re going to knock down the building and build some kind of tower,” he said, explaining that replacing the apartments with high-rise, luxury apartments is not financially feasible.
Priderock Capital Partners began trying to purchase the apartments in April, but the Mayor and Council approved a request for RHE to buy the apartments under Montgomery County’s right of first refusal law, which gives the housing agency the option to purchase the apartments before someone else can buy them. RHE has also requested $2 million in loans and a grant to help it fund the purchase.
Khoury told Rockville’s Mayor and Council that RHE’s plan to refinance the project in seven years is risky.
“It’s not realistic, it’s not in the markets and it’s unfortunate,” he said.
Khoury spoke during the public comment portion of the Mayor and Council meeting Monday night.
Khoury was not the only person to speak about the Fireside Park Apartments at the Mayor and Council meeting Monday. Cathy Berman, who lives near the apartments, said she is concerned that RHE will not be able to refinance in seven years.
Cynthia Cotte Griffiths, chair of the city’s Human Services Advisory Commission, read a statement from the commission supporting RHE’s purchase. The statement referenced a $980,000 grant the city has agreed give Duball LLC to build a mixed-use development in Rockville’s Town Center.
“If the City of Rockville can afford to give away this much of our money to a corporation, we ought to be able to loan an established government entity with a board under the control of the Mayor and Council a bit more than this amount to serve the public good,” the statement said.
Khoury said his company would improve the property more than RHE would, in part by adding a clubhouse.
If Priderock purchased the property, Khoury said it could get subsidies to rent 15 to 20 percent of the apartments below market rates. RHE plans to rent 40 percent of the apartments at rents affordable to households making 60 percent or less than the median income.
“The whole discussion is about whether or not we can assure affordable housing in Rockville,” Mayor Phyllis Marcuccio said. “... What can you do to assure that kind of dedicated, affordable housing?”
Khoury said in addition to capping the rents on some units, rents in the rest of the complex would still be lower than those in new developments nearby.
“There’s only so much you can charge for 1960s garden-style apartments,” he said.
RHE, a City of Rockville public housing agency, wants to buy the Fireside Park Apartments at 735 Monroe St. to ensure that a private company can not buy the property and raise rents.
Ruth O’Sullivan, RHE’s executive director, told The Gazette she met with Priderock representatives Friday.
RHE had earlier asked the city to waive its taxes on the property if the purchase goes through, but O’Sullivan said they have decided not to request a waiver. The city taxes for next year will be about $57,000, she said.
Khoury said the city would not get enough in return for giving RHE a loan. The housing agency has proposed paying the city 3 percent interest on a $1.8 million loan over a period of seven years.
Councilmember Tom Moore said he would be delighted with Priderock’s proposal if RHE was not interested in Fireside as well.
“We’re not in the business of making loans for profit,” he said. “... We’re making an investment in the community.”
Priderock is a real estate asset management company that specializes in apartment communities. The company is based in West Palm Beach, Fla., with offices in Virginia.
Rockville’s Mayor and Council are scheduled to discuss whether to support RHE’s purchase at their meeting on Monday.