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By Robert O'Malley
W hen the Woonsocket Neighbor- hood Development Corporation (WNDC)
developed the Constitution Hill project in Woonsocket, Rhode Island,
it made a special effort to design apartments that would work well
for families.
Families, says Joseph Garlick, WNDC's executive director, would
make up a considerable percentage of the development's tenants,
and designing buildings with their needs in mind would make management
of the properties that much easier and reduce turnover and expense.
"We've spent a lot of time in the design phase, which has
made it easier for us to manage the properties," says Mr. Garlick.
"In some ways, the early design phase - and being attentive
to housing development 101 issues - dictates your management later
on."
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The
AHP-funded Haynes House in Boston.
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The recipient of several awards from the Federal Home Loan Bank
of Boston's (the Bank) Affordable Housing Program (AHP), Constitution
Hill involved the phased renovation of about 35 dilapidated and
abandoned houses scattered across one of Woonsocket's oldest neighborhoods.
While the development of a large affordable-housing initiative can
be stressful for a small community development corporation, the
hard work that goes into the development phase can be compromised
quickly if adequate attention isn't paid early on to the management
issues that either make or break a development, says Mr. Garlick.
Designing spaces that don't work for tenants, structures that
can't be easily maintained, entrances and exits that aren't conducive
to security, and ineffective strategies for addressing tenant issues,
all have the potential to distress a development in the management
phase.
The design of historic buildings can be especially challenging
for building managers once a development has moved into the operational
phase, notes Larry Kluetsch, executive director of the Mutual Housing
Association of Southwestern Connecticut, the developer and manager
of the AHP-funded Maplewood School Mutual Housing initiative in
Bridgeport.
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Quality
Management is Key
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By John Eller
Developing good affordable housing includes managing it well
over the long run.
The eventual manager of an affordable-housing development
belongs at the table during the design phase to ensure that
the end product will be accessible, comfortable, and safe.
The manager knows what construction features will keep down
costs for residents and make the property easier to maintain
over the long haul. The manager is often responsible for the
compliance and reporting duties that keep funders informed
of whether the developer's promises are being fulfilled. If
a manager isn't well informed, a developer can easily lose
the confidence of funding sources when seeking support for
new developments.
Empowering residents to be engaged in the management of their
homes has been a long-standing commitment of the Federal Home
Loan Bank of Boston's Affordable Housing Program. Some developers
are committed to ensuring that residents participate in management
policies and activities, but most leave it to the manager
to facilitate resident empowerment. Empowered residents vote,
take part in Parent Teacher Organizations, make use of job-training
programs, and participate in neighborhood-safety programs.
They are a funder's best ally in ensuring the long-term viability
of affordable housing.
Affordable housing involves reporting to many funders on the
use of specialized grants, subsidized loans, and tax credits.
Managers are required to fill out numerous reporting forms
at different times of the year. Reporting is a significant
obligation given the complex quilt of funding programs required
to build today's affordable housing. Created by different
state and federal laws, these programs have their own regulations
and reporting requirements. Funders need to find new ways
to obtain information and meet their regulatory requirements
without driving up housing-management costs and diverting
mangers from other important tasks.
John Eller is senior vice president / housing and community
investment at the Federal Home Loan Bank of Boston.
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In recent months, the association has been struggling with a rise
in vandalism at the Maplewood development, which involved the renovation
of two historic school buildings into 34 units of housing. Keeping
the site secure has been difficult because the school buildings
were designed with multiple entrances and exits, says Mr. Kluetsch.
To remedy the problem, managers have been using various strategies
to limit points of entry and are relying on tenants to help them
identify the perpetrators of the vandalism. Developing long-term
relationships with tenants is critical to any effective management
policy, says Mr. Kluetsch. "Getting people involved is often
the most difficult part of managing
a property."
Tenant Relations
Hiring the right people to manage a property on a day-to-day basis
is critical for any well-managed affordable development. "We
try to hire people within the community who best reflect the diversity
of the site," says Janet Frazier, president and CEO of Maloney
Properties, Inc., a respected manager of affordable developments
in the Boston area. "We don't want to set up barriers between
the residents and us. We really try to manage within the communities
and be a part of the communities."
Maloney Properties, which manages numerous AHP-funded properties,
including Madison Park Development Corporation's Haynes House in
the Roxbury section of Boston, takes a holistic approach to managing
affordable properties. "We look at the needs of the residents
and the needs of the properties," says Ms. Frazier. "We
set up the financial and physical systems to deal with the maintenance
issues because the two go hand in hand."
Ms. Frazier says many nonprofit developers prefer to hire an outside
firm to manage a property because they want to put all of their
energy into developing more housing.
In contrast to Madison Park, which outsources the management of
Haynes House, the Mutual Housing Association has been managing its
own developments. Mr. Kluetsch says his organization began managing
its properties out of necessity because it couldn't find a management
firm that could carry out the monitoring requirements of a Low Income
Housing Tax Credit property.
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Maritza
DeCampos and Mark Kelly of Maloney Properties at Haynes House.
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But he also believes there are benefits to having developers managing
their own properties. For one, they will be more likely to take
long-term considerations into account during the design phase if
they know they will be responsible for maintaining and leasing the
property. Moreover, he adds, day-to-day involvement in the management
of a property makes sense for an organization like his that operates
under a mutual housing model.
A cross between condominium ownership and rental housing, mutual
housing emphasizes tenant participation in the operation of properties.
When tenants move into a mutual development, they pay a membership
fee that accrues interest over time. The goal is for tenants to
use the fee and interest to eventually purchase a home of their
own. In the meantime, the association uses the membership funds
to finance other affordable developments, says Mr. Kluetsch.
Although WNDC outsources management of Constitution Hill to Dimeo
Properties Inc., the management firm and the developer work closely
together and have their offices in the same building. "Working
out of the same office makes us much more aware of what is happening,"
says Mr. Garlick. "I don't think the management company would
do as good a job if we weren't so involved."
Effective management of affordable housing also depends on the
level of funding available to operate a development. While the mutual
housing association has worked hard over the years to keep down
rents, it finds that raising rents may sometimes be the best strategy
for ensuring the well-being and survival of an affordable development.
"If we've erred in the past, it's that we were focused too
much on keeping our rents and our housing charges down," says
Mr. Kleutsch. "We used to pat ourselves on the back for averaging
maybe 1.5 percent a year in rent increases. But that is not always
a good thing. I think we've learned that through NeighborWorks of
America's Multifamily Initiative. Having access to that type of
support is pretty critical for us."
The Multifamily Initiative brings together owner-managers of multifamily
housing to talk about property management, asset management, and
insurance issues. "Our Multifamily Initiative experiences have
taught us to keep an eye on the numbers," adds Mr. Garlick.
"You can learn a lot from the numbers to help you manage better.
If we're going to do this, we've got to have operating budgets that
cover costs. I can't say enough about the Multifamily Initiative
and how it has trained us to make our developments financially sustainable."
Often complicating the efficient management of affordable developments
is the time and expense of carrying out the monitoring required
by funding agencies. Many affordable developments have multiple
funders, and most of them require some level of monitoring.
"Oftentimes we have three, four, five regulators who want
to inspect the property on a regular basis, and they all want information
in a slightly different form," says Ms. Frazier. "So meeting
those needs has become a tremendous part of the job, more a chunk
of the job than it should be."
Low Income Housing Tax Credits are especially burdensome for developers
and managers of affordable properties. Keeping up with the bureaucratic
workload eats up time and money that could be better spent maintaining
the properties and working with tenants. "I think all of us
in the industry will say it would be really nice if there were one
agency that the state and the feds would look at and say, 'You do
it,'" says Ms. Frazier.
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