Public Housing

Planned Kenilworth-Parkside Sale Raises Issues for Future Transactions Gao ID: RCED-90-26 December 1, 1989

GAO reviewed the District of Columbia's pending sale of the Kenilworth-Parkside public housing property to the Kenilworth-Parkside Resident Management Corporation, focusing on: (1) its plan to initiate resident management corporation (RMC) sales of individual units to tenants; (2) capital-producing approaches RMC could pursue after attaining ownership; and (3) the potential effects of RMC financial mismanagement.

GAO found that: (1) the District of Columbia's plan did not determine the ownership share price and tenant ownership feasibility or establish a planned cooperative for financing tenants' share purchases; (2) the Department of Housing and Urban Development (HUD) was developing evaluation guidelines for resident ownership applications; (3) legislation did not restrict RMC partnerships for generating tax credits or RMC use of the property as collateral, but did preclude subdividing and selling surrounding, undeveloped land; (4) if RMC defaulted on mortgage loans, lenders could dissolve RMC and acquire property ownership, thus changing the property's low-income status; (5) funding for any property renovations and operations after RMC acquire ownership will come from existing HUD programs; and (6) legislative policies and procedures for implementing RMC ownership programs need further development.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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