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HANH chief Karen DuBois-Walton: Finding new ways to pay the bills.
Well aware that the Trump administration isn’t likely to boost funding for public housing, the Housing Authority of New Haven (HANH) is pursuing other income sources to diversify its revenue, including property management fees.
The authority has set up several not-forprofit affiliates to generate more cash. The first, the decade-old Glendower Group, redevelops obsolete units into desirable affordable housing, for both public and private entities. Now, a new spin-off, 360 Management, will keep those properties and other privately owned complexes in good shape.
Karen DuBois-Walton, HANH’s executive director,previewed the idea for 360 Management this February. The details of the operation took shape on Tuesday, as the Board of Commissioners approved a budget for the next fiscal year.
“The genesis of this is that the public housing program, which has been the heart and soul of the housing authority, has over time been defunded. The federal government has really moved away from its commitment to the public housing program, and it’s just not feasible to maintain the properties on the small amount of rent that people people pay and the subsidy,” DuBois-Walton explained.
Most of the new funding will come as HANH converts its strictly publicly owned housing over to federally subsidized units. That’s done through the Rental Assistance Demonstration program, or RAD, a U.S. Department of Housing and Urban Development (HUD) effort created by the Obama administration. RAD allows authorities like HANH to obtain Section 8 “project-based” subsidies (tied to a housing complex, not a roving tenant) not just for facilities owned by private, for-profit developers, but also for its own not-for-profit entities, like Glendower. In flipping the properties, HANH can also obtain enough money from tax credits and investors for upkeep.
“Our choice, at that point, is to put out solicitations for someone to come in and manage those properties or we could build our own company for management,” DuBois-Walton explained.
She chose the latter for a couple reasons.
“We feel like we have mastered a way of management that respects our residents. … We weren’t sure that we could solicit and get that same management model out on the private market. And secondly, we had a desire, as we move and reduce the workforce on the housing authority side, to preserve jobs. We have a tremendous workforce. On the private market, I could make some asks, but I couldn’t guarantee [work for] our employees. Here, in the affiliate, I have control of that,” DuBois-Walton explained. “We’re preserving what we want to do for our residents and for the folks that are subject to reorganization here. 360 seems to be the best way to do that.”
If it establishes a strong track record, the not-for-profit could win it business from other developers. Property management is “quite a growing field,” she added.
The not-for-profit, which is still waiting on its official certification from the Internal Revenue Service, will have a staff of about 40 employees, including a yet-to-be-hired vice president. Rather than duplicate HANH’s existing operations, 360 Management will purchase services from the authority, particularly accountants to manage its finances.
HANH approved a $2 million loan, which will be repaid over five years, to get the affiliate going. “That will provide the initial cash flow before rents and subsidies start flowing,” DuBois-Walton explained.
The not-for-profit’s first project, expected to begin in early 2018, will involve taking over maintenance of four HANH properties that house seniors only: Constance B. Motley, Katherine Harvey Terrace, Newhall Gardens and Prescott Bush Mall. Those were selected first because the upkeep there needed is minor, compared to some HANH properties that are slated for demolition.
By the fiscal year’s end, 360 Management is expected to have 800 units under its purview. Eventually, they will need to manage 1,700 units to break even, said Diana Smith, HANH’s chief financial officer.
No good can come of this.