MEMORANDUM

TO:              Bernard F. Lynch, City Manager

FROM:         Adam Baacke, Assistant City Manager/DPD Director

SUBJECT:    MOTION OF 2/26/08 BY MAYOR CAULFIELD

                   REQUEST ISSUES RELATED TO FATHER JOHN’S BUILDING AND

                   18 MERRIMACK STREET TO HOUSING SUBCOMMITTEE

DPD has made numerous contacts regarding the Lowell Sun building and Father John’s Medicine building.  APT Management Inc. (APT) manages these two properties, consisting of 84 units of elderly housing.  Ms. Carol Dempsey of APT is planning to attend the Housing Subcommittee meeting on Tuesday, March 4th.  The purpose of her attending is to explain that the letter the tenants received is only precautionary in the event that HUD does not make Section 8 subsidy available.  APT has every intention to continue the leasing “as is” for as long as possible (at least 5 years).  In the event that HUD does not continue its subsidy the current tenants are protected until they move on their own.  Their current subsidy will remain in place.

DPD has monitored all properties in the City that are subject to expiring use agreements for the past several years as many subsidized projects are coming to the end of their terms.  In a strong residential real estate market there could be concerns about an owner conversion to market rate.  In the current market, most holders of these properties will naturally seek to preserve the subsidy and extend the use.  The attached table summarizes properties in the City that are currently nearing their expiration dates.  It was prepared by using data from the Community Economic Development Assistance Corporation (CEDAC), which is based on data from HUD and MassHousing. 

This “funding” column reports the primary agency that holds or regulates the subsidized or insured mortgage on the project.  There are three options reported:

1) HUD indicates that the project has HUD mortgage insurance through the FHA,

2) MHFA indicates that the project either has a non-insured federally-assisted mortgage from MassHousing or is co-insured with HUD and MassHousing, PRIVATE indicates that the mortgage financing is provided by other financing sources.

Where noted as having a local use restriction, the project is or may be subject to local regulatory agreements, which may require continued use as affordable housing, even if the owner prepays the mortgage.  These local restrictions include zoning, a Land Disposition Agreement (LDA), tax exemptions under the Chapter 121A program or because the project is in an Urban Renewal Area (URA).  40B indicates that the project was built under the Comprehensive Permit process. 

Two projects listed have refinanced out of the contract by prepaying the mortgage or the financing has been restructured using Tax Credits or other creative financing.  The current residents of these developments are protected by individual Section 8 vouchers

SUBJECT:    MOTION OF 2/26/08 BY MAYOR CAULFIELD

                   REQUEST ISSUES RELATED TO FATHER JOHN’S BUILDING AND

                   18 MERRIMACK STREET TO HOUSING SUBCOMMITTEE

                   Page 2

that will allow them to remain in place or relocate at their discretion but maintain affordable rents regardless of which option they choose.

AB/ML/ns

Attachment

3/4/08

cc:  Anne Barton, Deputy Director

      Michael LaMotte, Director of Housing Programs