By Kim Siebert MacPhail
The inter-municipal Regional Housing Service Office(RHSO) consortium that Bedford entered into last year with Acton, Concord, Lexington, Lincoln, Sudbury and Weston has discovered an anomaly in how The Village at Taylor Pond has been calculating its affordable unit rent for the past four years. Monitoring compliance with the complex formula used to calculate affordable housing rent includes a broad array of charges assigned to the RHSO,including tracking subsidized housing inventory and usage of block grant funds; fielding questions and concerns about affordable units; working with entities such as Habitat for Humanity; and submitting documentation to state and federal governments.
At the Selectmen’s October 15 meeting, Beth Rust, Community Housing Coordinator at the RHSO, presented an overview of her office’s work. She alsoannounced the discovery of Taylor Pond’s rent miscalculation. Taylor Pond came online at a time when the numbers used for affordable rent calculation changed, making the formula more difficult to understand and track. It is by no means the only property to run afoul of this and other compliance issues: Avalon Bay in Lexington had similar problems and other Bedford developments at Patriot Place and the Village at Concord Road have been found to be out of compliance in both similar and differentways.
With Andrew Kaye of Criterion Development/Taylor Pond supplementingRust’s analysis of the situation with further details, a proposal was put forward to the Selectmen that would correct the overcharges on the 37 non-Section 8 affordable units by rolling back the rent for the apartments as each lease is renewed. Rollback to lower rent means that Taylor Pond over the next year would collect a total of $31,800 less in rent for the property than it would have under the incorrect formula.
Further complicating the issue is that The Village at Taylor Pond is under contract to be sold to Cornerstone Real Estate Advisors.Not knowing that their affordable rent calculations were faulty, Criterion used the higher rent numbers as part of the prospectus forthe anticipated sale. Before sale can be finalized, Criterion mustgain the approval of the Selectmen for the rollback plan, as well as permission to sell the property.
About the rent formula, Kaye said, “This has a significant impact to the property’s value and cash flow.”
Mike Rosenberg responded, “It looks to me like Taylor Pond acted in good faith in providing reports as scheduled and following the guidelines as they were understood. Then it was discovered that it was an overcharge. But the tenants paid in good faith, too. Do I understand that recompense to those tenants is built into the [lease] renewal for the coming year?”
“There is no provision to [reimburse overpayment] at this time,” said Kaye. “Obviously that’s a very substantial penalty for a circumstance where we thought we were doing the right thing. We approach [the affordable rent calculation and reporting] in good faith every year, in a timely way every October. . . We haven’t contemplated back charge reimbursement.”
“So, again, not pointing any fingers,” responded Rosenberg, “with the excess $85,000 through 2011 in overcharges, that means that each [of the 37] tenants paid [over $150] a month that they didn’t have. That’s a lot of money for anybody. I’m sure it’s an awful lot of money for people who qualify for this housing. What should we tell them?‘Sorry?’ Someone has to stand up for them.”
“I would tell them,” said Kaye, “that, to the best of our knowledge and to the best of the Town’s knowledge, everyone was trying to charge a rent that complied with the regulatory agreement and we’re now at this circumstance—through a host of complications—that [has resulted] in the rent changing going forward. . . .We have a 28 person waiting list [for affordable apartments] currently. It’s really moderate income rent relief. These are $1,100 one bedroom units, $1,300 two-bedroom units. In all earnestness, I think everyone tried to do the right thing.”
“No question,” said Rosenberg. “But the people who suffered are the ones who are out the $85,000.”
Selectman Moonan added, “Mr. Rosenberg raises some very valid issues.There’s a lot of information here to swallow. . . .We Selectmen need to be careful, not only about this but I’m worried about a future initiative that may come down the pike and our ability to hold [that one] to a higher standard going forward. Even though the other [developments that are out of compliance] haven’t come forward to ask about this [yet], they’re all mixed together.”
Town Manager Reed pointed out that the Housing Partnership met last week and received the same information about the overcharges. He prompted Christina Wilgren, a Housing Partnership member who was also present at the Selectmen’s meeting, to speak about thecommittee’s conclusions.
“The Housing Partnership is naturally oriented more toward the plight of the people who need affordable housing and I’m not a business person so I can’t say I understand all of that [side of things]. I think some of us [on the committee] were thinking, ‘Well, shouldn’t there be some retroactive compensation given[for] the windfall profit?’ Secondly, if a change was going to be made going forward, shouldn’t [it] be done the next time rents are due, not waiting until June or July or whenever their leases are going to renew.”
Wilgren added that the Committee felt that the new formula should be consistent with requirements of the Department of Housing and Community Development so that everything is consistent. “There are two others [Patriot Place and the Village at Concord Road] that are going to want to make changes, and they are closely watching this change, as would any other development owner in town—and in the Commonwealth, for that matter. . . .In terms of ratios, $150 to someone at a lower income is a bigger proportion of their income than even $85,000 is to [Criterion’s]ongoing corporate interest.”
To move forward, Rust said that the Selectmen need to decide whether to agree with Taylor Pond’s proposal and new rental schedule which, in turn, would require an amendment to the property’s regulatory agreement with the town. Additionally, the Selectmen must give their consent for Taylor Pond to be sold.
The Selectmen will funnel questions to Rust’s office at the RHSO prior to continuing the discussion and making a determination, probably at their next meeting on October 29th.
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