The Jefferson Park Federal public housing development has been boarded-up and empty for months. (Photo: Marc Levy)

The huge and costly project to replace the dilapidated 175-unit Jefferson Park Federal public housing development and add 103 more low-income units has won its first funding approval, elating Cambridge Housing Authority officials. But the amount of money awarded by the state’s Department of Housing and Community Development is tiny compared with what’s needed.

The state agency announced Thursday that it had approved funding for 87 units at Jefferson Park, which it called Clifton Place and described as the first phase of the project. That is about one-third the total 278 apartments planned at the Rindge Avenue site. An agency official said the award consisted of $3.5 million in direct subsidy and $3.4 million in federal tax credits that can be sold to investors to help finance low-income housing. The housing authority’s funding plan calls for much more: $83 million in tax credits for 278 units. One-third of that total would be $27.6 million in tax credits.

Housing authority executive director Michael Johnston said the state housing agency made the award for the initial phase of Jefferson Park in a “very competitive” round of funding “to indicate its strong support to the project and its commitment to see the project close this year.” The authority must resubmit an application for the remaining units by June 30, he said.

“CHA is excited to receive this support from the Healy administration and DHCD, and is looking forward to the receipt of the balance of the needed funding and the start of construction later this year,” Johnston said.

The major funding sources for Jefferson Park are about $80 million in tax-exempt state bonds that provide loans, opening the door for the authority to get the rest of the federal tax credits that are needed. Those are still under consideration by MassHousing, which is related to DHCD.

The authority’s planning and development director, Margaret Moran said “competitive funding” from that state department was always part of the financing plan, because of the plan to add 103 units. The DHCD money is in addition to the tax-exempt bonds and tax credits from MassHousing. “Jefferson Park is a very large, complex deal so it has taken longer for the various pieces to come together,” she said.

She pointed out that it took about four years of working with MassHousing to close on the redevelopment of Millers River in East Cambridge, a 300-unit building for low-income people over the age of 55 and disabled tenants.

Behind schedule

The Jefferson Park Federal closing was scheduled originally for the end of last year, but the housing authority missed a funding application deadline because of higher-than-expected bids. The project was then supposed to close by April or March. That didn’t happen because MassHousing was dealing with many projects in its pipeline, plus a backlog. A group of residents also filed a last-minute petition to stop the project on environmental grounds such as tree removal; the state rejected the petition in February. Now CHA expects to close on the project this fall.

Cost has been an issue, with estimates of more than $900,000 a unit. A substantial amount of the price, about $160,000 a unit, is for the cost of accountants, lawyers and other professionals needed to tap into private investment such as tax credits. CHA and other public housing agencies must obtain private funds because the government has sharply reduced its support for public housing.

On April 26, authority commissioners approved a separate demolition contract for $8.9 million and removed that amount from the construction contract, reducing the total cost to $213.5 million. The original development has been boarded-up and empty for months and demolition before the financial closing will give CHA a head start on construction, CHA officials have said. Moran said she and Johnston “are confident Jefferson Park will close.”