April 21, 2014

State’s subsidized housing preps for $700M facelift

Photo | Pablo Robles
Photo | Pablo Robles
State Housing Department Commissioner Evonne Klein, her deputy, Nick Lundgren, and staff will have their hands full with the makeover of hundreds of dwellings.
Photo | Contributed
Connecticut Housing Finance Authority President Eric Chatman

Connecticut landlords and their neediest, frailest residents are preparing for the biggest overhaul of the state's sponsored-housing portfolio ever which, when taxpayers' financial contribution is leveraged, will approach $700 million.

With a freshly prepared capital-spending blueprint in hand, staff from the state Department of Housing and the quasi-public Connecticut Housing Financing Authority (CHFA) will begin meeting in coming weeks with dozens of public housing authorities and private landlords statewide, officials say.

They will explain, authorities say, how and where the state will begin allocating proceeds from its initial batch of issued bonds, the sale of housing tax credits and its offering of technical expertise, starting with the neediest operators and their properties.

When completed early next decade, state finance and housing policymakers say, Connecticut's inventory of subsidized dwellings will be vastly different than it is now: All or parts of some apartments may be razed; others, if they have acreage, may add living units to accommodate more households; and rent hikes and rent and operating subsidies will put their owners/operators on a more solid financial footing. The bulk of the housing in the state's portfolio is owned and run by local housing authorities.

This is the state's biggest investment in its subsidized-housing portfolio since the state in the late '60s embraced safe, stable, affordable housing as a priority, authorities say. The investment also will prove beneficial to building contractors and subcontractors, materials and furniture suppliers, architects, engineers and other land-use professionals. It, too, may generate more tax revenue in some communities.

"Historically, there's never been anything like this in Connecticut for revitalizing these properties,'' housing agency Deputy Commissioner Nick Lundgren said. "We're at the starting gates. We'll be running pretty fast from now to the end of this initiative.''

The capital blueprint, prepared with help from a Boston subsidized housing specialist, stems from Gov. Dannel P. Malloy's August 2012 declaration for a $300 million investment — allocated at $30 million annually over 10 years — to repair or upgrade most of the 14,046 units of housing in 343 properties where residents receive state and federal rental assistance.

While new roofs, energy-saving upgrades and fresh paint may do wonders for many of the oldest properties, the state's investment won't fully address the need for even more subsidized housing, experts say. It also provides a mechanism for many financially subsidized landlords who are struggling financially, to incrementally raise their rents in coming years, which could impact the entire rental-housing market.

The state will add $1.5 million to its rental-assistance program for extra subsidies to help tenants cope with higher rents.

"Clearly, it's a delicate balancing act,'' state Housing Commission Evonne Klein said.

Connecticut manifested its involvement with subsidized housing by sponsoring municipalities and other nonprofit-housing developers/operators, as well as private landlords, with loans, grants and tax credits to develop and operate subsidized housing. The federal Section 8 housing-voucher program is perhaps the most visible tenant-subsidy.

In 2003, the state cemented its commitment by aggregating all the subsidized housing in Connecticut for which it holds mortgages into what today is known as the "state-sponsored housing portfolio.''

The housing department monitors their operations, while CHFA also has some operational oversight and sees to their funding needs either with mortgages and refinancing, or, in this case, by issuing bonds.

A 350-page "capital-needs assessment," issued in March from Boston's Recap Real Estate Advisors, serves as the rehabilitation blueprint. It identifies which of the 343 portfolio properties are in greatest need of capital assistance and operating subsidies. Of those, more than 100 are in Greater Hartford — 24 in the city limits alone.

In CHFA's portfolio are 340 subsidized-housing properties for which it holds the mortgage or is linked to agency-issued bonds.

The state's $300-million allocation is meant as a starting point, said Eric Chatman, a former Iowa state housing and Federal Home Loan Bank Board official, who is CHFA's president and executive director.

CHFA aims to leverage those funds to net another $400 million in private capital to complete the upgrades the state has identified so far. The first $30 million tranche of bonds was sold last year, with proceeds going to housing upgrades to which the state had committed in 2012, officials said.

In Hartford's Asylum Hill neighborhood, the historic, 28-unit Townley Apartments is using funds for new roofing, insulation, boilers/hot water systems, windows, kitchen and bath upgrades and security improvements, CHFA spokesman Lisa Kidder said.

In Bristol, 84-unit Dutton Heights is about two-thirds finished with similar upgrades for which it got $15 million in state funding, Kidder said. Some units also are being modified for handicap accessibility and nine others are set aside as supportive housing for veterans.

The $700 million or so is necessary, Chatman said, because of forestalled investment over the years in maintaining the portfolio's housing assets, many of them a half-century-old or older.

Connecticut, Massachusetts, New York and Hawaii are the only ones with state-sponsored housing portfolios, officials say.

"The money wasn't there for these properties to be managed the way they ought to,'' Chatman said.

Betsy Crum, who runs the Connecticut Housing Coalition, an affordable-housing advocate whose members include landlords and tenants, said rent subsidies were never enough to achieve an ideal mix of low- and moderate-income residents in many of the properties.

"Most of these properties have reached the end of their useful life,'' Crum said, adding she and her members welcome the fresh investment. "Because housing authorities didn't have the income to replace them over time, they're having to replace them all at once.''

Thomas R. Davis, Recap senior vice president, said his team started in the fourth quarter of 2012 and finished work last fall on the capital-spending blueprint, including surveying as many municipal housing authorities and other landlords as possible.

Their feedback, plus that from CHFA and DOH, are reflected in that report — its first ever for the state, Davis said. Recap won a $1.3 million contract to do its work.

Connecticut's key challenge in recapitalizing and updating its subsidized housing portfolio will be "stretching its financial commitment as far as it can,'' Davis said. He credits the state for going beyond identifying only the neediest properties and their operators.

"Connecticut was forward-thinking enough to want to look at its entire portfolio,'' he said.n

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