Thursday, May 23, 2024

Rented solar-panel space atop the LBJ Apartments on Erie Street provide electricity to the building at a set price for 20 years — a hedge against increasing energy prices. (Photo: Cambridge Housing Authority)

Tenants at Jackson Gardens, the public housing project on Harvard and Prospect streets, once paid their rent to the Cambridge Housing Authority. Now they send their payments to Cambridge Affordable Presidential Apartments, a private company.

CHA has already transferred four of its developments to private ownership: Kennedy Apartments on Essex Street; Jackson Gardens; Lincoln Way on Walden Street; and LBJ Apartments on Erie Street. The transactions in 2003 and last year don’t include all the same elements the authority is proposing in its plan to privatize its entire portfolio, but the deals give hints of how the bigger strategy might work.

First, the private companies: Cambridge Affordable Presidential Apartments uses CHA’s address. Its officers, through a subsidiary, are the members of the CHA board of commissioners plus the authority’s executive director, Gregory Russ. Other companies that took over projects followed the pattern.

Then, the authority retained the land where the four projects sit. The authority gave a 99-year ground lease to the new owners, with restrictions guaranteeing affordable housing and providing that after the lease expires the property reverts to the authority. Affiliated owners also agreed to affordable housing restrictions.

The authority, through the private owners, also sold low-income tax credits, giving private investors more than 99 percent ownership. The investors have no voting rights, although the financing triggers some requirements that differ from traditional public housing. When the tax credits expire in 15 years, the CHA affiliates will probably take over 100 percent ownership, authority Planning and Development Director Terry Dumas said.

Each deal was done to finance big modernization projects. The largest, $30.2 million at LBJ Apartments, will convert half the studio apartments to more desirable one-bedroom units, increase energy efficiency and fix serious deficiencies. Lincoln Way and Jackson Gardens projects added 10 units and energy-saving improvements.

One example of the authority’s ability to squeeze out dollars through complex financing schemes involves new solar photovoltaic cells on the roof of LBJ Apartments.

The building rents space on the roof to a private company that provides and installs the equipment. In return, LBJ gets electricity at a set price for 20 years, authority energy consultant Tina Miller said, as “a hedge against increasing energy prices.” After 20 years, the CHA-affiliated owner of the building takes over ownership of the solar cells.

In another money and energy-saving scheme, the authority is installing an elevator at the Manning Apartments in Central Square that produces electricity as it descends. The authority gets a credit on its electric bill for the power it produces.