- Written by Administrator
- Published: 11 September 2013
Federal, state and local officials met with Island Creek Village West residents Monday evening in an effort to brainstorm solutions to assist residents with impending rent increases due to the denial of enhanced vouchers by the federal government.
Mark Epker, president of Beacon Communities Investment LLC, the company that manages Island Creek Village, said he was taken off guard by the U.S. Department of Housing and Urban Development’s denial of formal applications for tenant protection vouchers this year.
“Leading up until the issues that have arisen here, HUD had provided enhanced vouchers, or tenant protection vouchers, until those were denied for Island Creek Village West,” Epker said. “So when we had meetings over last few years and made statements about the availability of Section 8 vouchers or vouchers for the residents here, everything that was said was factual at the time.”
Epker said the immediate concern is to work to find a solution to help the residents at Island Creek remain in their units.
“Our goal in coming together is to continue to try to work together to address this issue,” Epker said. “We’ve got 48 households here that are of immediate concern and those who are listening from the state side are also interested in the program and how we can work together on a solution.”
David Keene, chief preservation officer at MassHousing, walked through the 13A program with residents in order to help them better understand their situation. The 13A program is similar to a federal program called Section 236, which pays roughly two- thirds of the debt service. Section 13A is a mortgage inter- est subsidy that reduced rents for about 6,000 apartments in Massachusetts. The number of 13A apartments has decreased in recent years because some owners have chosen to pre-pay their 30- to 40-year mortgages after 20 years, effectively end- ing the subsidy and the restric- tions that keep units afford- able.
“That has been fairly successful over the years,” Keene said. “However, that period of time has ended for Island Creek West and as a result we are not officially involved in keeping the rents low.”
Keene said MassHousing is no longer the lender or the supervisor for regulations under the state Section 40T. Section 40T applies to housing receiving a wide range of federal and state government subsidies including Section 8 project-based rental assistance, federal or state low- income housing tax credits, mortgage insurance, interest rate reduction payments, state project-based rental vouchers and alternative tax arrangements. Under 40T, an owner of publicly assisted housing must deliver two notices to tenants before the termination of the affordability restriction affect- ing the housing.
Keene said the state is currently working on a solution for the 4,700 households in Massachusetts that are affected by HUD’s decision.
“HUD unexpectedly decided to terminate the funding, so your development and two others, one in Braintree and one in Lynn, are the first three developments that have come up that have not been funded by HUD,” Keene said. “We received a legal opinion from HUD about two weeks ago. They made a claim that while projects are eligible for the vouchers, there wasn’t funding language in the appropriations bill to allow them to pay for the vouchers. It ultimately is a funding problem with HUD.”
Keene said without the vouchers that help fund the difference between the current rents and market rent, there is a huge gap that needs to be filled. Over the years, the resi- dents’ rents have been based on expenses, so they have been cost-based rents that are below market rate.
Under 40T, residents will be protected from rent increases for three years under a certain formula. The process includes looking at the consumer price index for the last 12 months in the surrounding area, which is a published number, and add- ing 3 percent to it. For Island Creek Village West effective Aug. 1, the increase was 5.182 percent. The consumer price index was 2.182 percent, plus 3 percent. The same process will occur for Aug. 1, 2014 and Aug. 1, 2015.
Howard Cohen, CEO of Beacon Communities, has worked in affordable housing for several decades in various capacities and tried to address some concerns at the meeting. Cohen said from 1988 until 2013, there has never been a problem of this sort with re- gards to affordable housing developments like Island Creek.
“We are entering into unknown territory,” Cohen said. “We were confident that with our case we would get some sort of compromise from HUD. We have not been able to get HUD to budge.”
Mike Jackman, from Congressman Bill Keating’s office, said it is an issue for the entire state and legislators are look- ing at legislative action as a solution.
“The justification that HUD used is, for lack of a bet- ter explanation, a smokescreen for the budget issue,” he said. “We are still working to try to convince HUD to change their decision. We are more than happy to talk to people; it’s good to hear from people.”
Tensions rose as residents expressed concern with the lack of information given to them as the Aug. 1 deadline approached and a collective feeling of not being properly protected by the management company.
Lisa Bacewicz was asked by her mother, Antonina DiPaolo, a tenant at Island Creek Village West, to attend the meeting in order to help her better understand the issue. Bacewicz said she could recognize three major issues with the situation: an unfavorable decision by HUD, a breakdown in communication between the residents and the management, and a lack of respect for the residents.
“It’s one thing for you to be going behind the scenes and getting attorneys and fighting for legislation, but if your residents don’t know that is happening, what good is it?” she said. “These are your residents, these are your family, and they should be respected. To assume an 86-year-old knows what the next steps are is absurd. The residents will work with you but only if you respect them.”
Going forward, residents decided to form a housing association in order to develop representation for the residents. In addition, state and federal officials will continue working on legislation to find a solution.