Future of Low-Income Cruz Bay Apartments in Question

Cruz Bay Apartments, above, is the only low-income housing available on St. John.


The future of Cruz Bay’s only low-income housing might be in jeopardy.

A number of residents at Cruz Bay Apartments, located behind the V.I. National Park’s Visitors Center, are scratching their heads over a letter they received last month by the U.S. Department of Agriculture, Rural Development.

The owners of the apartment building are requesting permission to pay off their USDA loan ahead of schedule, according to the vague formal letter which was sent on November 13.

Owned by stateside-based Cruz Bay Apartments Company Limited Partnership, the low-income housing was originally developed with a loan from USDA Rural Development.

Numerous Possibilities
If allowed to repay their loan, there are a number  of possible outcomes for the apartment complex.

The owner can continue to operate the apartments as affordable housing; sell or operate the apartments as conventional, market rate apartments; prepay their USDA loan and then either sell or operate the apartments as conventional, market rate apartments; or sell the property to a new owner who is willing to continue to operate the apartments as affordable rental housing.

So far the USDA is unclear about the owners’ intentions, according to the letter.

“Our number one desire is to continue to provide affordable housing,” said Gregory Caruthers, Florida/Virgin Islands area director for the USDA RD. “Our desire is to keep the housing the way it is now. Of course, the owners have other things they would like to do.”

First, USDA officials will offer the owners financial incentives to keep their loan active, according to Caruthers.

Financial Incentives
“Basically, if the owner agrees to re-up with the restrictive use clauses, we would make a loan to the owner for some of the equity,” said Caruthers. “If the owner says ‘no, we don’t want to do that,’ the apartment must be marketed to a non-profit for six months.”

Currently, USDA officials are waiting to hear from the owners about their intentions, Caruthers added.

“We are waiting for the owners to indicate to us what direction they want to go in,” said Caruthers. “Depending on what direction they go in, we either issue the financial incentives or we contract an appraiser.”

Appraisal Process
If the Cruz Bay Apartments owners decide to prepay their loan and sell, the first issue is appraisals. First USDA officials would contract an appraiser and that appraisal would be sent to the owners, who then have the option to agree or to conduct their own appraisal.

If the owners conduct their own appraisal, it is sent to the USDA who then have to agree to that appraisal.
“There can be up to three appraisals and at that point a price tag is reached,” said Caruthers. “Then the owners market the property to a non-profit for six months and if no one buys it, the owners are allowed to prepay and the living assistance is gone and the owners are removed from any restrictions.”

This last scenario has never occurred, Caruthers added.

The appraisal process itself can easily take longer than a year and that is even before the project is put out for sale.

As of now no decisions have been made, although USDA RD officials are dedicated to ensuring that the Cruz Bay Apartments continue to function as affordable housing, according to Caruthers.

Reliance Housing Foundation, the affordable housing providers behind Bellevue Village, were rumored to be connected to the Cruz Bay Apartments, but that is not the case, according to Reliance President Bob Jackson.

Reliance Not “In the Loop”
“The Virgin Islands doesn’t have any additional tax credits available now and that is the only feasible way for us to buy the apartments,” Jackson said. “I’d say we’re definitely interested in purchasing it, but it has to be at an available price. We’re sort of out of the loop on it right now.”

In the meantime, Cruz Bay Apartments residents should write letters to USDA RD outlining how they feel about the possible sale of the buildings, Caruthers added.

Determining Need
“One thing we need to determine is the need for low-income housing in the area,” said Caruthers. “If you have a complex that is filled with low-income eligible tenants and need is being demonstrated, that is awfully important.”

Residents should write to Caruthers at the USDA RD’s West Palm Beach Area Office at 750 S. Military Trail, Suite J, West Palm Beach, FL, 33415.