The "affordable" housing in my neighborhood was built under equity tax credit programs. Lenders contribute money to an affordable housing project and recieve tax credits in exchange. The properties are deed restricted for 30 years and must charge rents in accordance with Federal Median Income figures. If they don't, the loans become immediately due and payable. I am sure some sort of reporting must go to the Feds on this. Not sure though. National Equity Fund is a big participant in this financing type. There are others as well.
The problems these programs have created in Whittier is that the rents collected can't cover the debt load coupled with the operating costs of the building. There is huge deferred maintenance that continues to get pushed out because the buildings are barely covering the debt load and normal operating expense such as heat and water. My personal opinion is that it is bad philosophy to "warehouse" 15 families in a geographic space originally designed for 1 or 2 families. The maintenance costs for these buildings are expensive. There's a lot of "wear and tear" with the larger unit apartment buildings. When you have kids riding their bikes in the hallways and using windows for doors to get outside, the costs of maintaining the building are going to go up. When families are doing their laundry, cooking or just plain living in an apartment instead of singles, the shelf life for washing machines, carpets, appliances, etc. is a great deal shorter, requiring more frequent replacement. When we analyzed the Whittier properties we found the debt load was too high to allow for coverage of operating expenses and deferred maintenance items. The NRP $1.3M funds Whittier sank into the properties in 1993 lowered the debt load on some of these buildings and the remainder went to cover deferred maintenance items like boilers, insulation, structural issues, etc. Another cash infusion of $1.9M was required in 1999 to bail them out again. Some of the properties have been released from these horrid tax credit programs. All of them have been acquired by other companies. The ownership of the buildings are now shared between BDC (Brighton Development) and PPL (Project for Pride in Living). There may be other owners now as well. The Whittier Alliance is not an owner any longer and the Whittier Housing Corporation is now defunct. One thing is for sure, the Whittier Alliance never belonged in the housing development or property management business. the Whittier Housing Corp. was a mistake. I think it's safe to say we learned a very expensive lesson. A neighborhood organization just simply doesn't have the capacity or sustainability to have ownership interests in these type of projects. Moving the properties into a new corporation managed by the same people who couldn't manage them when they were in the neighborhood association didn't make it better. It just prolonged the inevitable. Some people on this list have attempted to educate us about the high cost of developing these properties in the first place. The per unit costs for these projects compared with private sector developments is astronomical. I don't pretend to know why other than there are some pretty healthy developer fees paid out on these projects. So...when you start out with a high debt load because construction costs were high and factor in larger operating and deferred maintenance expense, you have big expense that create big deficits. Deficits that can't be covered by the rent that is collected. In the past, these deficits have been covered by the taxpayer through investments made by the MCDA or other agencies. Hence, we have come of age by doing mixed income developments. In this scenario, the ability to charge market rate rent on close to 80% of the building helps to offset the deficits to operate the affordable component. Haven't seen these operated for the long run yet so not sure the scenario works. We will see because there are whole bunch of these projects in the pipeline. Barb Lickness/Whittier ===== "Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it's the only thing that ever has." -- Margaret Mead __________________________________________________ Do you Yahoo!? Yahoo! Web Hosting - Let the expert host your site http://webhosting.yahoo.com _______________________________________ Minneapolis Issues Forum - A City-focused Civic Discussion - Mn E-Democracy Post messages to: mailto:mpls@;mnforum.org Subscribe, Unsubscribe, Digest, and more: http://e-democracy.org/mpls
