New Haven Independent

Posted by: concerned in ct | May 23, 2007 8:42 AM

Can someone explain the concept of "affordable" housing to me? It doesn't seem all that affordable if we the tax payers are paying over $200,000 per year per unit, which we do not own.

Posted by: Bruce | May 23, 2007 9:56 AM

I think there must be some confusion about the math here. There is no way that $200,000 per year could be considered anywhere close to fair market -- that's almost $17,000 per month. My guess is that it is a TOTAL of 200,000 per unit spread out over 10 years which means $20,000 per year or $1700/month. Not "affordable" by any means but at least ballpark for luxury apartment rentals.

Posted by: Gary Doyens | May 23, 2007 10:32 AM

For a $4 million investment -- the units should be permenantly allocacated to HANH, especially when combined with a rent subsidy that goes to the developer. The $200,000 a unit subsidy doesn't sound accurate.

Posted by: Ned | May 23, 2007 10:36 AM

Actually the cost is well over $200,000/unit/year as the cost of the public housing bureaucracy, and all of the bureacratic social support systems that the Section 8 tenants will be entitled to, are not factored into the cost. In addition there are the inevitable "hidden" costs of corruption and mismanagement that are seemingly always present in, apparently, all government programs.
http://www.usdoj.gov/usao/ct/Press2006/20060504-1.html

Check out Realtor.com; http://homes.realtor.com/search/searchresults.aspx?ctid=739&mnp=20&mxp=19&typ=3 there are almost eight hundred condos for sale, in Las Vegas, within the price range of $150K - $175K. New Haven housing authority could purchase 50 of these units and give the recipients $50K - $25K and still come out ahead. The housing authority could then fund junkets to Las Vegas to check on how the families with children were faring with their issues regarding elevator usage (can you believe it?).

Posted by: da hill | May 23, 2007 11:20 AM

How did Kelly Murphy become the Economic Development Administrator? Through the entire meeting all she said was "Well, pretty fast."???? Come on, please tell me this article was not comprehensive of the entire discussion...she is pathetic.

Posted by: charlie | May 23, 2007 11:28 AM

I think there is a serious problem with the math here. Also, there should not be any more subsidized units in New Haven. The city already has 10x more than its fair share. There should be a moritorium on subsidized units and the existing number of units should be cut by half.

Posted by: ninth square | May 23, 2007 12:12 PM

Sorry, but somebody needs to look at housing in the Ninth Square development, many are rented to subsidized tenants. Get a report onm how many units are rented to subsidized tenants and you will be surprised. I agree with Charlie, stop the subsidized housing in New Haven. I know I have no intention of staying in this city, and by loking at the for sale signs many others are feed up as well. There is tons of money in special agreements that the city never collects because they can't even find the agreements. The administartion is very poor. Ms. Murphy had no knowledge of New Haven prior to getting the job, and hasn't learned much either, but she does whatever the mayor wants. That's all you have to do to work as a head of any department. Sacrifice your morals and do whatever the king wants. If you don't follow orders, even if it means breaking the law, you might as well say good bye unless you have the union.

Posted by: Esbe | May 23, 2007 1:18 PM

I wonder if anyone from HANH or the city is reading, because the math really can't be right.

First, they are looking for $4,000,000 upfront. Now $4mil. invested at 5% would throw off $200,000k per year *forever*, enough to give 25 families an 8k per year rent subsidy *forever*. And on top of that there is *annual* section 8 subsidy to be paid on each apartment? I presume that feds pay a (big?) share of that, but still ....

Posted by: cedarhillresident | May 23, 2007 3:07 PM

What the hey are they talking about, maybe we are missing something??

5 mill a year??? $1666. per unit (ohh scarey number) any who...... whos family or friend do you have to be in to get one of these units.

Sooo 1666.00 per unit that is a morgage hmmm pre-fab dublexes with land you can build 50 townhouses a year for that and give these section 8 people there own homes! That would add up to 500 families.

Ok that is in my own little wonderful world of feed a man or teach him to fish therory.

Posted by: Edsicle | May 23, 2007 11:50 PM

Let's explain Sect. 8, if HANH is limited to 120% of Fair Market Rent, and a 2 bedroom Fair Market Rent according to HUD is say $1500 per month, times 120% equals $1,800. per month. If a family of four earning under 50% of Median Income, say $25,000 per year, they would pay 30% of their income towards the rent, so $25,000 times 30% equals $7,500 per year, divided by 12 equals $600. per month (rounded down for ease), if the apartment rent is $1,800, deduct $600 for the tenant share and the subsidy is $1,200 per month or $14,400 per year, for 25 units that would be $360,000 per year. Over ten years it would equal $3,600,000 not including any rent increases granted annually. So, that is the cost of having 25 Section 8 units in the building. Federal funds are put into the building, why can't HANH ask for some equity in the project that could be used for future housing needs in the downtown?

Posted by: Ben | May 24, 2007 7:43 AM

Good to ask for some explanation. New Haven Independent Please help break down the figures and the thinking behind them. Our town government is too slick .....How would it be if the rents were reasonable and no subsides were given.Give aways promote a feeling of entitlement ( rich or poor).. not earned confidence. Do the lux apt make New Haven a better place to live? Have they been a good investment, ..how do they help people that have been here? please interview some people able (and willing ) to answer these questions.

Posted by: Bob Solomon | May 24, 2007 4:10 PM

The 200k figure includes the value over 10 years of the Section 8 voucher. If you put that aside, the cash subsidy is roughly $4 million for 25 units, or 160k per unit. If we were developing these unuits ourselves, we could not do it for 160k plus a voucher, but we would own the units. So, it would be a good deal if we owned the units. Of course, then we would also have to maintain the units, plus there is a virtue in that these units will be on the tax rolls, so the City will recoup some of the money. That leaves the question of "how many years are we buying for $160k?"10 is too short; anything over 15 is a worthwhile use of Housing authority dollars.

Posted by: cedarhillresident | May 24, 2007 4:40 PM

Bob 10 years is not worth it at all not even 15 it would have to be a min. of 20 to be worth it. But thank you for the explination

Posted by: Gary Doyens | May 24, 2007 5:11 PM

The question that remains is what are the market rents in Shartenberg Place for the units not part of HANH funded package?

Under this current plan, HANH would front load $4 million in cash; and pay the developer $500,000 a year in rent subsidies through Section 8 for a period of 10 years -- or $5 million more across 10 years. Normally, those subsidies are supposed to pay fair market rent to landlords who accept Section 8.

If the HANH Section 8 certificates for Shartenberg are paying market rent, then why pay the developer of these units any cash up front? As a condition of development and making tons of money on this venture, he is required to reserve just 5% of his units -- 25 units -- for affordable housing for tenants with Section 8.

Under this scenario, we save $4million; the comittment is for only 10 years.

Posted by: concerned in ct | May 24, 2007 11:36 PM

Bob,

Why don't HANH buys the units, sell them to the residents, which would put them on the tax rolls, or give the money to the residents through an IDA program or some other way.

Posted by: Ben | May 25, 2007 5:51 AM

I would think challenging (contest, winner get a small prize) some local college (HS) students to breakdown spending on affordable housing and suggest a plan the city... could save money and make the entire 'livable city' more pedestrian friendly,lower the % for outside (parricidic, cut and run) developers, and ownership for long paying tenants. Leasing properties using leverage inherent to the cities position should look more like 25 years of longer. Why settle for less, who is served?

Posted by: Esbe | May 25, 2007 5:54 PM

I think I now understand the answer to a few of the questions here. First, I am sure that family-sized condos in this project are going for way more than 160k, so I doubt that HANH could just buy them and rent them out. Second, I presume that the section 8 vouchers aren't sufficient to cover the full cost either. Note that Solomon said that aside from this deal, HANH itself can't produce a family-sized unit for 160k + the voucher.

Posted by: bob solomon | May 26, 2007 8:45 AM

A couple of points in response to comments and questions -

1. There are three broad parts of owning housing - construction, maintenance, and modernization (major repairs as things break down). One of the reasons (not the only reason) that the Housing Authority has a history of poor maintenance is that HuD, which is the sole funder of public housing authorities) has chronically underfunded operations. HUD estimates this shortfall to be over $22 billion. Private management also has ups and downs. When rentals are strong, the private owner has a great incentive to maintain the property. On the other hand, there are plenty of properties in which the bottom fell out and the private owner walked away. All long-term decisions are based on a combination of information and leaps of faith. Here, the expectation is that the mixed-income combination will work, giving the developer a strong financial interest in preserving the investment.
2. While the Housing Authority has sites on which it can develop new housing, all of those sites are removed from downtown. This is a rare opportunity to include low-income people in a new downtown development. We think that is worth the investment.
3. For those who argue that this is a deep subsidy, I agree. In theory, the Section 8 subsidy should be enough. It rarely is and, in almost every case, there is one or more other subsidies. Multi-layered subsidies has become a well-known phrase in the housing trade, to the extent that if you say "multi-layering," everyone knows you are talking about money. This is not a good thing, but we are trying to play the cards we were dealt.
4. By subsidizing these units, with private ownership, the units will be taxable. This is a long-term benefit, recouping some of the subsidy.
5. There is a difference between Section 8 dollars (which are provided to a landlord by the federal government)and Housing Authority dollars
(which the Housing Authority gets from the feds, but applies locally). Usually, the tenant chooses the landlord. By project-basing (applying the vouchers to a particular site), the Housing Authority has the opportunity to provide an incentive to develop houaing in an area where there would otherwise be a shortage for low-income people.
There's a lot more, and it is an important discussion.

Posted by: Bruce | May 26, 2007 3:28 PM

The article still says that the rent subsidy portion would add up to $5 million per year. I think that is incorrect. Mr. Solomon said "The 200k figure includes the value over 10 years of the Section 8 voucher" which would be $20,000 per year per apartment. That is one tenth of the $5 million noted in the article ($20,000 X 25 apartments = $500,000 per year).

Posted by: Wjay | May 27, 2007 12:34 PM

What Solomon is failing to mention is the fact that Section 8 vouchers belong to the certified tenant. Should the tenant decide to move his/her vocher will not remain in the development, tenant vouchers are portable and therefore move with the tenant any where in the U.S.A. Therefore in order to maintain the committment to the developer the HANH would have to encourage another vocher holder to move in or face default. At this rate the building becomes another tax free rental unit for tax payers to subsidize.Is there any wonder why Murphy did not participate.
Knock it off Soloman.

Posted by: TrueBlueCT | May 27, 2007 10:09 PM

How about this as a solution? As part of the Land Disposition Agreement, the Board of Aldermen simply requires the developer to include the 25 Section 8 units for 20 years. Period.

Why on earth should the Housing Authority subsidizes the developer to the tune of $4,000,000? Through the Section 8 program, they are guaranteeing the developer a market rent.

Maybe I'm wrong and Becker & Becker is paying a fair price for the land. But that's not my understanding. If, in exchange for the free land, B & B doesn't want to make a good faith effort towards including affordable housing in this project, forget them.

I'd also like to hear from Ms. Kelly or Mr. Solomon where the other 25 units of affordable housing are coming from.

Posted by: cedarhillresident | May 29, 2007 3:08 PM

First fair market for downtown is not the same as Fair Haven . Does Section 8 allow the vouchers to be used in that high of a market??
I though they promised 50 units why are we talking 25 for just 10 years???

I just am sorry I think it is great to try to intergraded the low income within this building for 10 years at the cost of 5,000,000. for what is now being said just 25 units not 50. but this is not an investment like bob says it is lining someone's pocket, it is baloney. Tell the people we are helping the poor and they will line up to give you money..or in this case they will love this newest city project!! Something for nothing. Wake up!!

Is this site encoruaging small buiness??? Or is it just 1 or to corporation???

Posted by: Esbe | May 29, 2007 4:45 PM

I think it is great that Bob Solomon takes part in these discussions and I am learning a lot.

Solomon thinks it is worthwhile to spend extra $$$s to ensure that there is low-income housing right downtown. I think I disagree -- there is a lot of low income housing already that is in easy walking distance of downtown. Spending a lot of money to put new low income housing exactly inside the original Nine Squares doesn't seem necessary. For the same bucks, more housing could be subsidized elsewhere in town.

Oh, and WJAY -- I think your point about Section 8 vouchers moving with the tenant is typically correct, but I think that Solomon's post above implies that it is different for "project based" section 8 funding like this.

Posted by: bob solomon | May 29, 2007 10:01 PM

Just a clarification. WJAY is referring to "tenant-based" vouchers, which follow the tenant. These are "project-based" vouchers, which are attached to the apartment, through a contract with the landlord. While the HA is awarding 25 vouchers, the developer is still proving 50 affordable units. As for the point that this is too much of a subsidy to give to a private developer, I have no easy answer. It is in fact a very deep subsidy and those of us who support it, as I do, do so with the knowledge that this is far from a perfect solution, but is a way to produce some low-income housing in a difficult environment and in a difficult location.

Posted by: cedarhillresident | May 30, 2007 7:46 PM

bob first thank you for taken the time to give us some insight and understanding.

But i agree with Esbe " For the same bucks, more housing could be subsidized elsewhere in town." With that amount of money you can provide alot more units in general. And as you explained in the above comment that the managment of said property it would or at least may not be cost effective, but I have a guestion. If said property was built it would be city owned and there for an asset no??? Where renting units within this space the city after ten years has nothing to show for that 5 million?? Maybe I am wrong you tell me.

Posted by: Gary Doyens | May 30, 2007 9:45 PM

Kudos to Solomon. I don't agree with layering subsidies, but understand your rationale, and even better, appreciate your honesty in addressing the questions fully and completely in a straight forward manner. Others in city government should follow your example. Thank you.

Posted by: Wjay | May 31, 2007 10:39 PM

OK Solomon,
Here's the true grit, .. what say you now...

Project-Based Voucher Program; Final rule
Forms and guidance
PIH Notices

What are project-based vouchers?
Project-based vouchers are a component of a public housing agencies (PHAs) housing choice voucher program. A PHA can attach up to 20 percent of its voucher assistance to specific housing units if the owner agrees to either rehabilitate or construct the units, or the owner agrees to set-aside a portion of the units in an existing development. Rehabilitated units must require at least $1,000 of rehabilitation per unit to be subsidized, and all units must meet HUD housing quality standards.

What organizations are eligible to apply for project-based voucher funding from HUD?
There are no appropriations for this program and HUD does not allocate funding for project-based voucher assistance. Instead, funding for project-based vouchers comes from funds already obligated by HUD to a PHA under its annual contributions contract (ACC). The PHA can use up to 20 percent of its housing choice vouchers for project based vouchers.

What families are eligible to obtain project-based vouchers?
Any eligible family on a PHA's housing choice voucher waiting list that is interested in moving into the specific project. Owners select families for occupancy of a particular unit after screening each family.

How do families obtain project-based vouchers?
PHAs refer families, who have already applied to a PHA for housing choice vouchers and are on the PHA's waiting list, to properties that have project-based voucher assistance when units become vacant.

How much rent do vouchers cover?
The PHA pays the owner the difference between 30 percent of family income and the gross rent for the unit.

How are project-based vouchers different from tenant-based vouchers?
Under the tenant-based housing choice voucher program, the PHA issues an eligible family a voucher and the family selects a unit of its choice. If the family moves out of the unit, the contract with the owner ends and the family can move with continued assistance to another unit.
Under the project-based voucher program, a PHA enters into an assistance contract with the owner for specified units and for a specified term. The PHA refers families from its waiting list to the project owner to fill vacancies. Because the assistance is tied to the unit, a family who moves from the project-based unit does not have any right to continued housing assistance. However, they may be eligible for a tenant based voucher when one becomes available.

What type of contracts do PHAs sign with property owners under this program?
The PHA and the owner execute an agreement to enter into housing assistance payments (HAP) contract. Under this contract the owner agrees to construct or rehabilitate the units, and the PHA agrees to subsidize the units upon satisfactory completion of the rehabilitation or construction.

Upon satisfactory completion of the rehabilitation or construction and for existing development, the PHA and the owner execute a HAP contract for a ten-year term that is dependent on availability of funding under the PHA's ACC with HUD. The HAP contract establishes the initial rents for the units and the contract term, and describes the responsibilities of the PHA and the owner. HAP contracts can be renewed subject to availability of funding.

How do PHA's select units for inclusion in this program?
The PHA must adopt a written policy for selection of units to which assistance will be attached and must publicly advertise that it will accept owner proposals for the project-based voucher program. Generally, rents are set based upon market comparables and may not exceed 110% of the published existing housing fair market rents. Substandard rental housing is eligible if rehabilitation costs are at least $1,000 per unit.

New construction of rental units is also eligible as well as standard existing housing. Rental units assisted under certain other Federal housing programs (e.g., rental rehabilitation, public housing) cannot be assisted with project-based voucher assistance.

How should interested owners or prospective owners of rental property apply for this program?
Contact the local PHA to determine whether the PHA administers a project-based voucher program and to obtain information.

What type of funding is available under the project-based voucher program?
No specific funding is provided by HUD. PHAs may use up to 20% of the funds in its housing choice voucher program to provide project-based assistance.

What regulations cover this program?
Regulations are found at 24 CFR 983.



Content updated March 16, 2006

Posted by: bob solomon | June 3, 2007 6:56 PM

To WJAY -

I don't know what the question is. Everything you posted about project-baed and tenant-based vouchers is correct. As the regulation notes, housing authorities can "project-base" up to 20% of its vouchers. New Haven has about 3500 vouchers, which would allow 700 project-baed units. In the past, HANH has awarded project-based vouchers on several occasions. when I was executive director, we started a program to prode pbv's to non-profit orgs developing supportive housing units. That program worked reasonably well, but, did not result in many supportive housing units. Since I believe that supportive housing is our best answer to homelessness, I wish that the program had created more units. That said, if the Shartenburg units are in fact created, HANH could consider offering deeper subsidies to other developers, particularly working with agencies seeking to eliminate homelessness. This is not a new idea - I raised it in the past on many occasions, but I saw the housing authority's subsidy as being limited to the voucher. Maybe it's time to look at the problem more broadly.

Posted by: Wjay | June 4, 2007 12:50 PM

Bob Solomon:
your most recent comment above flies in the face of what you said earlier in the article, and deviates from HUD policy (10 yrs not 20 yrs.), as stated in my comment above (2nd). In addition, the real issue is that the tenant looses his/her voucher upon moving, and then would have to reapply and go to the bottom of the wait list for a tenant based voucher.

When a vacancy occurs, the PHA continues to pay the rent, until the unit is re-occupyed. HUD supported Vouchers do not pay for vacancy
down time or damages to the apartment. Nor does HUD or the PHA pay taxes, therefore the number of supported units(25) will be picked up by the tax payer of New Haven.

Solomon: That's a lot of money for only a ten-year commitment
Miller: Well, that is true, the vouchers add up to another $5 million if we estimate $200,000 per unit. We could try to get more time on the contract.
Solomon: What's the maximum?
Miller: I think it's twenty years.
Alvarado: Can we clarify 'project base'?
Miller: If a tenant leaves, the voucher does not go with him or her, it stays at the development.
Alvarado: The developer wants that. That stability attracts their participation.
Miller: Still, after a ten-year period, the developer could opt out, and we'd be out $4 million.
Solomon: Kelly, what's your time pressure on this?
Murphy: Well, pretty fast.
Alvarado: What's the largest you think Becker and Becker can give us timewise?
Solomon: Yes, how can we spend $200,000 a year per unit for ten years. That's crazy. Ten years is a problem. Fifteen years would be better.
Alvarado: In my experience, for these types of dollars, fifteen years is more typical.
Solomon: Okay, I'm asking for the resolution to have one more "bullet point" requirement of approval before authorization attached to it. (Editor: the four other HUD-mandated bullet points requiring approval were the usual: an environmental review, that the rents not exceed 120 percent of the fair market rent; and that there be a review to make sure overall public subsidies were not in excess; and that issues of families with children living in high-rise elevator buildings be addressed). I think what we have to add is that the authorization be subject to sufficient duration of time to meet the needs for HANH's involvement.

Then Solomon asked Murphy if this was all right with her. "I'll pass it along," she said.
"Look, we can meet within 48 or 72 hours notice, and the commissioners can approve, but do look into that language. Please."

The resolution, thus amended, passed.