Agency plans third try at saving public housing with HUD money
The Cambridge Housing Authority has failed so far to win federal approval for its plan to get much-needed aid for major repairs by transferring about 1,000 public housing units to private ownership.
Federal officials have twice rejected its application to “dispose” of the apartments, which would leave the units under CHA control but technically owned by a nonprofit affiliate. After the paper transfer, the apartments would qualify for new federal subsidies enabling the authority to pay for almost $100 million in repairs, according to the CHA plan.
The authority will try again to get approval, but now, for the first time, the agency is looking at alternatives, said Gregory Russ, its executive director.
The city’s aging public housing developments serve extremely low-income families and seniors; almost two-thirds of public housing tenants have incomes below 30 percent of the area median, or less than $28,900 for a family of four. The authority, estimating it needed $228 million to renovate all its developments that need work, applied to repair five of the largest and most dilapidated. Without the repairs, the housing units could eventually become uninhabitable, officials have said — unwelcome news as commercial developments and expiring affordable-housing units around the city are raising concerns about a dwindling supply of homes for those who can’t afford market-rate rents.
A closing loophole
Facing sharply reduced federal aid for operations and repairs, officials devised a complicated plan to tap into a federal loophole that would make units transferred to private ownership eligible for new federal rent subsidies.
Those subsidies would bring in more than twice the federal aid CHA now gets for public housing. The increased income would also allow the authority to attract private investment.
But as the authority prepared its application to the U.S. Department of Housing and Urban Development, the feds moved to close the loophole. The agency issued a notice in February warning it would no longer approve such dispositions if they were done to increase federal aid. With scores of housing authorities across the country contemplating using the same loophole, the federal government apparently feared a sharp increase in its obligations.
Nonetheless, authority officials said they were confident they could convince HUD to approve its plan, and the authority submitted its application in March. Because of a technical glitch, much of the paperwork didn’t go through, and HUD rejected it.
The authority resubmitted the application, and this time HUD officials turned it down for substantive reasons, including the new policy. Russ and other authority officials met in Chicago with HUD bureaucrats last month to look for a solution.
“That meeting, while not providing any breakthroughs, was useful in understanding HUD’s position,” Russ told a meeting of authority commissioners last month.
“HUD’s arguments are very challenging,” he said.
Looking at reality
In an interview this week, Russ said: “I think HUD is making it harder not only for Cambridge but for anybody.” He said he knows of only one housing authority that’s close to reaching an agreement with HUD since the February notice — and for only half the rent subsidies it needed.
Still, Cambridge will make one more try at filing an application, Russ said.
So far the authority estimates it has spent about $50,000 on its effort, about 70 percent for attorneys and other consultants and 30 percent staff time. “I would consider this an estimate only, not an exact accounting, and we are still working on this effort, so this number will change,” Russ said in an e-mail.
Any expenses should be weighed against the value of preserving low-income housing for decades, he said.
In light of HUD’s stance, Russ has asked his staff to examine possible cuts and revenue increases “and then try to figure out if we did various combinations of those things what’s the value of the debt we could raise” to finance redevelopment under a variety of scenarios, including no new federal rent subsidies, he said.
“We have to look at the reality of how HUD is behaving,” he said.
The authority might also use existing Section 8 rent subsidies in place of the new HUD subsidies it expected, he said. That could preserve authority housing but would reduce the total number of subsidies available to poor families and individuals.
Authority officials have assured public housing tenants that they won’t lose protections, have to move or be forced to pay more rent because of the financing plan. At public meetings in developments around the city, they also said the authority won’t dispose of any public housing units unless it gets adequate subsidies from HUD.
Asked about that commitment now that the authority is considering alternatives to the HUD subsidies, officials said they promised to present any substantial changes in its plan to tenants, and will.
“I believe we’ll prevail,” Russ said. “I really truly believe that — either with something from HUD or a combination that will let us redevelop this package.”