Elizabeth Milias: The Mulcahy meter runneth
The Red Ant
The strange case of Lee Mulcahy’s impending eviction continues to plague the Aspen-Pitkin County Housing Authority. Despite the APCHA board recently voting unanimously to proceed without an earlier-considered bribe to leave peacefully, housing dollars will still be expended to bring this sorry chapter to its fiscal close.
Mulcahy’s residence has a maximum sales price of $995,000; however, there is a lien on the property for $850,000 plus interest, filed by Mulcahy’s mother, which, at 5% over 84 months is over $350,000. Apparently Mulcahy has never paid a dime toward the loan. That’s $1.2 million owed to mama. And to clear the title for resale, someone has to pay her.
In all subsidized-housing transactions, the chain of title always reverts to APCHA before a property can be resold. The condition of Mulcahy’s property is unknown, but $200,000 has been put aside to bring the place up to snuff. Add in the legal fees due APCHA and new ones to clear the title, plus a contingency (normally 10% of the total project cost), and the potential cost to APCHA quickly grows to over $1.5 million. APCHA’s policies dictate that the maximum sales price for this home, when relisted, is only $1.06 million, therefore the prospective $500,000 difference must be made up to APCHA somehow.
Three options were initially discussed that would clear the title and make APCHA financially whole, including initiating collections against Mulcahy, increasing the maximum sales price of the house, or lifting the deed restriction entirely and selling Mulcahy’s house as a free-market unit to repay APCHA and develop other new units elsewhere.
Support Local Journalism
The housing board had no appetite for these choices. Instead, they requested money from the city’s housing development fund that primarily comes from the 1% real estate transfer tax. But the city declined, eyeing APCHA’s proprietary 632 Fund, created through an endowment from Fabienne Benedict in 1993. Never mind that the 632 Fund is legally restricted to “the sole and exclusive development of affordable housing in Pitkin County,” not to mention that APCHA is not a department of or under the purview of either the city or the county, our local electeds intended for APCHA alone to absorb all the extraneous Mulcahy costs.
In the end, the APCHA board declined to press the local governments further to make up the shortfall, but elected to approve a three-year loan, at market rate interest, from the Benedict Fund to another fund dedicated to the purchase and sale of foreclosures in the APCHA portfolio. Funded annually by government subsidies, user fees and development services, these monies will enable APCHA’s purchase of Mulcahy’s home, be reimbursed when the house is resold, and will absorb the additional unfunded costs.
Another less-known-but-related case came up at the recent housing meeting. A young woman named Snow Sims won the lottery for an APCHA unit over a year ago. As the title work for the transaction was underway, it became clear that the property was encumbered with debt exceeding the unit’s maximum sale price. While Sims patiently waited, the lienholder obtained the unit in foreclosure and immediately sold the unit back to APCHA. A second lottery was held and this time someone else won. In what appeared to be a terrible injustice, the housing guidelines clearly stipulate that a property sale triggers a new lottery, and the foreclosure sale to the lienholder did just this. It was heartbreaking to hear Sims’ story, and easy to assume that the solution would be to look at such cases on an individual basis in the future. But this really raises a much larger issue — what can be done to prevent the encumbrance of an APCHA property above its maximum sale price, as with Mulcahy’s?
Currently, every new owner of an APCHA property must agree not to “encumber the property or unit with debt in any form which exceeds, at any time, the maximum resale price of the property or unit.” The problem is, the agreement has no teeth. Until an owner tries to sell and a title commitment is received, APCHA is unaware of the total amount of debt on the property. This loophole must become a prioritized change in the housing guidelines, to include stiff penalties, and can surely become part of the required reporting. APCHA cannot continue to spend its valuable resources remedying the fiscal mismanagement of property owners when its fiduciary responsibility to the community is to responsibly manage the 3,000-unit housing portfolio.
Meanwhile, our predatory municipal government continually signals its belief that APCHA’s money is the city’s own to direct and spend. However, in recent weeks, particularly pertaining to Mulcahy, the APCHA board has stood up to the bureaucrats. This is encouraging, despite the new governance structure that includes a conflicted elected official and an alternate from both City Council and the county commission on the housing board. The new structure threatens APCHA’s autonomy at a time when serious efforts to regain and maintain the public trust through critical strategic guideline changes are on the horizon. None of this can happen with the meddling of elected officials whose responsibilities and priorities lie elsewhere.
APCHA’s independence from our local governments is paramount to objectively ensuring compliance and rules enforcement.
Email at TheRedAntEM@comcast.net
Support Local Journalism
Readers around Aspen and Snowmass Village make the Aspen Times’ work possible. Your financial contribution supports our efforts to deliver quality, locally relevant journalism.
Now more than ever, your support is critical to help us keep our community informed about the evolving coronavirus pandemic and the impact it is having locally. Every contribution, however large or small, will make a difference.
Each donation will be used exclusively for the development and creation of increased news coverage.
Start a dialogue, stay on topic and be civil.
If you don't follow the rules, your comment may be deleted.
User Legend: Moderator Trusted User