Spokane County anticipating $1.14 million loss due to affordable housing debts

(The Center Square) – Spokane County might adjust three affordable housing loans for a combined loss of $1.14 million due to the providers’ inability to make payments.

The Board of County Commissioners returned to the conversation with more data after a prior meeting that left some feeling like they were throwing money out the door. While the three adjustments would contribute to a noteworthy loss, three others are making a profit.

Pavel Parfilo, the county’s affordable housing program manager, recommended Tuesday that the commissioners approve two loan amendments for the Aspen Grove and Highland Village 1 projects while writing off Rockwell Apartments’ debt.

“Just before we jump into a couple of these, some of them will be technically bad deals for the county,” Parfilo said, “but if we look at the entire [portfolio], we’re essentially on top if we do all these.”

Adjusting the first two project’s 2% interest rates to 0% would mean a loss of future revenue amounting to roughly $425,000 over 25 years. The providers would still have to pay off their debts but without the added weight of interest.

Parfilo said the county still anticipates making a 48% return on value with Aspen Grove, which he says is a “good deal,” but a -6% return on Highland Village 1.

Aspen Grove is profitable, adding around $315,000 in value to the county; however, Highland Village 1 and the 2009 Rockwell Apartments projects combine for a loss of $1.15 million.

Rockwell wants its loan forgiven altogether. The county expected to make a 46% return on value, but if it forgives the loan, it would mean a -66% return.

Still, Parfilo said the county has also invested in other affordable housing projects, which provide a net value of around $3.3 million even after the loss.

While the loans themselves are much larger than the loss that Parfilo noted, all the projects combined provide enough value to keep the portfolio profitable. However, that could change if Aspen Grove and Highland Village 1 are unable to make payments even without interest.

Jim Emacio, a special deputy prosecutor with the county, told the commissioners that they could modify the agreements as long as they’re not gifting the funds. Instead, he said they could follow a statute that allows them to forgive debts if it’s in the county’s best interest.

“Certainly, we can come up with the appropriate language to support that,” Emacio said.

The commissioners will vote on whether to adjust the loans during a future meeting after consulting with the county’s legal team.