Salt Lake officials say progress is being made toward a plan to erase $2.3 million in red ink in the city's Housing Development Corp. books without using city taxpayers' money.
The corporation was set up with a $14.9 million bond as a separate entity from the city to develop low-income housing but officials discovered in 1987 that bad management led to the deficit.The corporation is independent from the city, but the city loaned its triple-A bond rating to secure the $14.9 million bond and is obligated to see its debt is corrected in order to retain the city's good credit rating.
Now, the corporation hopes to erase the debt by using $2.8 million in federal grant money and $900,000 in liquidated corporation property to buy two apartment buildings that will generate revenue and offset liabilities in the corporation.
City Development Services Director Craig Peterson told the City Council Thursday the U.S. Department of Housing and Urban Development approved a $500,000 grant to go toward purchasing the Ben Albert Apartments, 130 S. Fifth East.
Additionally, Peterson said the corporation has identified the Canterbury Apartments, 1357 N. Morton Drive, as another asset to be purchased to help offset the organization's deficit.
The council already approved $300,000 in federal Community Block Grant money toward the Ben Albert Apartments. The two grants, plus $864,000 in Housing Development Corp. money, for a total of $1,664,000, would pay for the complex, valued four years ago at $1.45 million.
If the city succeeds in winning another Housing and Urban Development loan for $1.5 million it will purchase the Canterbury Apartments. The loan would be repaid with $300,000 in yearly payments in other federal grant money, corporation officials said.
Before the corporation purchases the Canterbury Apartments, city officials must first meet with tenants and then hold a public hearing before the City Council on Oct. 17, Peterson said.
Residents of the apartment building would not be displaced and would have control over how the complex is managed, Peterson said.