Committee Report CR-5
The Housing Committee held a public meeting on June 23, 2004 beginning at three o’clock and fifty minutes P.M. in the Ackermann Room for the purpose of discussing the condition of the Cambridge Housing Authority’s (CHA) state-funded units and whether the City can assist the CHA in any way to obtain the funds necessary for repair.
Present at the hearing were Councillor Anthony D. Galluccio, Chair of the Committee, D. Margaret Drury, City Manager Robert W. Healy, Acting Director of the Cambridge Housing Authority (CHA) Terry Lurie, and Assistant City Manager for Community Development Beth Rubenstein. Also present were Chris Cotter, Housing Director, CDD, Cassandra Armand, Housing Division, CDD, Robert Vining, Housing Division, CDD, Michael Johnston, CHA, James Stockard, CHA Board and Affordable Housing Trust, Michael Haran, Affordable Housing Trust, Gwen Rono, Affordable Housing Trust, John Graham, CHA Tenant, 1000 Jackson Place, Cheryl Pizza-Zeoli, 1221 Cambridge Street, CEOC Board, Francis Leo Killin, Co-President of Tenant Council, 1000 Jackson Place, Jefferson Park, Marie Denise Joseph, 6 Jefferson Park, Lee Pedro, Co-President, Tenants Council, 103 Jackson Circle, Jefferson Park, Paulette Tippitt, 10 Jefferson Park, Kettely Civil, 12 Jefferson Park, Laura Booth, CEOC, Joan Marie Coughlin, 1 Jefferson Park.
Councillor Galluccio convened the meeting and explained the purpose. He described the ongoing issue of state disinvestment in state-funded units at the Cambridge Housing Authority. He acknowledged that there is no simple solution, and urged those present to engage in problem solving.
Councillor Galluccio invited Ms. Lurie to begin with a presentation. Ms. Lurie said that early on, federal and state programs were very similar. Over the last 10-15 years, there has been a huge disparity. State modernization money is less than one-half the amount allocated to federal units. The federal units receive twice as much in operating funds per unit as the state-funded units. Ms. Lurie said the family housing units regulated under Massachusetts General Law Chapter 200 are the oldest units. Cambridge has 359 Chapter 200 units, which came on line from 1949-1951, 69 at Woodrow Wilson, 109 at Jefferson Park, 60 at Lincoln Way, 46 at Jackson Gardens, 75 in an eight story mid-rise building at Roosevelt Towers. She added that the Roosevelt Tower building was redeveloped and is not in bad condition. It does have Section 8 subsidies, which help keep up with operating expenses. Woodrow Wilson Court is now under construction and will be for the next two years through specific awards of Modernization Funds from the State. Federal funds for capital improvement are awarded according to a formula that usually results in the CHA receiving about $3.5 million per year. On the state side, there is no predictable award. Applications must be submitted. In 2001, Lincoln Way was approved to get construction funds for kitchens and bathrooms but the amount awarded, $1.8 million, is not enough for the kitchens and bathrooms and Lincoln Way needs much more work, which would cost approximately $6.5 million in all.
Councillor Galluccio noted that the state units are small, with low ceilings, Ms. Lurie agreed. She said that at Jefferson Park, the average size of the state units is 800 square feet, and tenants pay 32 percent of their income for rent. The average size of the federal units is 900-1100 square feet, and the tenants pay 30 percent of their income for rent. Ms Lurie said that Lincoln Way is probably in the worst shape of all. It has been at the top of CHA list for rehabilitation since 1984. In addition the units are very small.
Councillor Galluccio asked what amount of money would be needed for rehabilitation of all of the state-funded units. Ms. Lurie said that for Jefferson Park, $8.2 million construction plus soft costs is needed, for a total of $10 million for 109 units. At Jefferson Park, on the federal side, the CHA is on the second round of kitchen replacement while the state funded units at Jefferson Park have never had replacements of the original kitchens and baths. Ms. Lurie said that at Lincoln Way rehabilitation would cost $110,000/unit because of underground construction issues. The Jackson Gardens units need all systems replaced and new kitchens and baths. The CHA estimates the cost at about $100,000/unit.
Councillor Galluccio asked where the most complaints come from. Ms. Lurie responded that they come from Jefferson Park and Lincoln Way, the projects with the most active tenant councils. She added that Manning Apartments is right on the heels of these units and will need serious work in the next 3-8 years.
Ms. Lurie then discussed the CHA strategy at the state. Cambridge has 2,000 federal and 700 state units, so in many ways, Cambridge is in better shape than other cities, such as Winchester and Fall River, where there is a higher ration of state units. Mr. Stockard added that of the 250 housing authorities in the state, only 50 have any federally funded units.
Councillor Galluccio asked if the state is willing to give more control to the cities. Ms. Lurie said that under Don Wuenschel’s leadership, the CHA has worked to make more public information on this issue available and to increase understanding that $1.47 billion is the value of the asset in which the state is refusing to invest sufficiently to preserve. Statewide the need is close to $1 billion over the next five years to fix the problem. The states should double or triple capital funding and award it on a predictable schedule, so that the housing authorities would have the flexibility to be able to plan to use the funds over time for rehabilitation. This is what CHA did for the Kennedy Building which has tax credit investors.
For the last three years the CHA has been working with CHAPA and other housing authorities to persuade DHCD to allow mixed funding. The idea would be to allow tax credit funding with assurance that full ownership comes back to the housing authority after fifteen years. Ms. Lurie discussed two kinds of tax credits - 9 percent and 4 percent. DHC is opposed to a change in the law but is now willing to work on regulations that would allow funding through the same kind of ownership by tax credit investors but with some additional controls.
Since 1998 the CHA has made four different submissions of scenarios on how to use tax credit funding and 20 percent Section 8 funding. All have been rejected. The state is very enthusiastic about income targeting and allowing the CHA to keep the additional funds. DHCD has suggested allocating 50-60 percent of units for people with 50-80 percent of revenue levels. However, that allocation does not match the demographics of the tenants, whose income are much lower.
Councillor Galluccio asked what is the best way to persuade the state. Ms. Lurie said that a proposal would have the best chance if it were packaged as necessary to address issues that are unique to the Cambridge situation. Ms. Lurie noted that there is another complication in the state-bonding cap. The federal program, with the predictable annual income stream, allows CHA to borrow and repay loans with the income stream.
Councillor Galluccio asked whether having another, separate source of loan funds would make a difference. Mr. Stockard said that the problem is really bigger that that. A recent study of the revenue and operating costs for the federally funded units shows that their operating cost are under funded by 3 percent. The state provides $100 per unit less to the state funded units than the federally funded units receive. The drastic underfunding of the state units is what leads to the extensive capital needs. To solve the problem, it is necessary to get the operating side right, get the capital side right and look at other ways to handle the need for predictable, flexible financing. A very fundamental problem is that the funding sources do not understand the real estate business.
Councillor Galluccio said that the CHA cannot count on a change in administration. It is important to try to determine what values of this administration could be used to persuade the state to support spending the funds required to preserve the asset. Ms. Rubenstein asked Ms. Lurie whether the DHCD staff is willing to talk to HUD staff about the Hope 6 federal program and other more flexible funding that the federal government has used successfully. Ms. Lurie said that this has not happened thus far.
Councillor Galluccio said that Boston must have been facing very similar problems. Perhaps a joint meeting would be useful.
Lee Pedro, Co-president of the Tenants Council, 103 Jackson Circle, Jefferson Park, stated that she lives on the federal side of the development. The units are so different from the state units. She asked whether the state officials have been to the developments.
Ms. Lurie replied that they come every two years, they do not look at the federal units, which are in much better shape, and they tell the CHA that they are lucky that the units are still online. She distributed a copy of a booklet that the CHA created with pictures of the difference in the condition of the state and federal units
Councillor Galluccio agreed that state officials needed to see the units. He suggested that the Tenant Council invite their state legislators to a meeting. He noted that Representative Anne Paulsen has just become the state representative for the ward in which Jefferson Park is located.
John Graham, 1000 Jackson Place, suggested that the City sell some property to get the $1 million for rehabilitation. Councillor Galluccio said that the state does not want to put the money back into the units.
Joan Marie Coughlin, Vice President of the Tenant Council for the state side of Jefferson Park, said that the only time the CHA renovates is when a tenant moves out. The management does not care. The units have skunks, raccoons, and mice.
Leo Killin, Co-President of the Tenant Council, 1000 Jackson Place, said that residents have suggested fixing up existing units first before creating new units.
Marie Denise Joseph, 1000 Jackson Street, asked about rent increases and transfer policy. Ms. Lurie said that DCHD has been thinking about increasing the rent this year, but decided not to. Ms. Lurie then discussed transfer policy. The federal regulations on who has priority for the subsidized housing are not the same as the state regulations, so there are significant barriers to tenants from the state units moving into vacant federal units. Councillor Galluccio said he understands the point, although this does not solve the problem.
Mike Johnston explained the different preferences in the state and federal waiting lists. The state list is a straight chronological waiting list.
Councillor Galluccio urged all those present think about possible solutions. He also suggested that the tenants contact the state legislators. He thanked all those present for their attendance. Ms. Pedro thanked Councillor Galluccio for holding the meeting.