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Newtowne 20 redevelopment delayed after application error by developer

Chase Cook
Contact Reporterccook@capgaznews.com
A large-scale public housing redevelopment was delayed after an application error.

One of the most troubled properties managed by the Housing Authority of the City of Annapolis will have to wait even longer for much needed repairs after a developer's application error resulted in the state rejecting a request for tax credits.

Newtowne 20, a 78-unit property, has been slated for a $56.6 million redevelopment. The Hampstead Companies, a San Diego based developer, was awarded the contract for the project.

The private real estate company focuses on affordable housing and it planned to connect Newtowne 20 with Woodside Gardens, which it owns and is adjacent. Both would have been torn down and rebuilt.

Funding for the project would come from housing tax credits and Hampstead taking on long-term debt.

But those tax credits are no longer available after the Maryland Department of Housing and Community Development rejected Hampstead's application.

Hampstead requested a boost in the credits, which the state allows, but didn't alert the state to that request in writing 30 days ahead of time, as is required.

Hampstead President Chris Foster admitted it was a mistake.

"It was a technical error on our part," he said. "In all candor, the state's tax credit allocation is highly oversubscribed ... throwing out projects that don't cross every 'T' and dot every 'I'."

But the late request for extra funding wasn't the only reason the state rejected the application.

A letter to Hampstead from the state also noted the "builder's overhead exceeds allowable limit."

Hampstead appealed, but it was denied. The state's decision came earlier this month.

The 44-year-old Newtowne 20 complex has 18 units vacant largely due to maintenance issues.

HACA officials opted to leave those units vacant as they didn't see the point in spending money to fix them only to have them torn down later.

Hampstead can reapply for the tax credit again next year, but there no guarantee that even if the application is filed correctly, they will be awarded.

The larger tax credits, which different developers compete for, can fund up to 75 or 80 percent of part of a project, Foster said.

The Newtowne 20 redevelopment was planned in four phases that required three awards of tax credits.

Another alternative is scaling back the project. The developer would apply for smaller tax credits that aren't competitive.

Instead of tearing everything down, the developer would heavily rehabilitate the property, said Paul Rowe, a Washington D.C. planning and development consultant hired by HACA.

"We always lay out the best plans, right, but things typically don't shake out the way you plan," he said.

HACA and development officials said the project's future hadn't been decided yet.

At Tuesday's monthly meeting, HACA commissioners expressed frustration and bewilderment about the delay.

Commissioner Sandra Chapman pressed Rowe on how a company has a technical oversight that results in the rejection of the application.

"I have a problem with this," Chapman said. "I don't understand how this was overlooked."

HACA Chairman Jeffrey Henderson said the agency "has its work cut out for it" moving forward. The board and new executive director — Sharon Land, who starts on Nov. 30 — will have to decide on how to proceed with Newtowne while coping with dwindling federal funds.

On top of those troubles, HACA is recovering from five high-level resignations over a two-month period. Two board members resigned and those positions have yet to be filled by Mayor Mike Pantelides.

Henderson put out a call for help near the end of the meeting for the residents of Newtowne 20.

"We need help here. We need money. We need to get this thing going."

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