FHC Director Responds to Questions on Public Housing and RAD Conversion

FHC Director Responds to Questions on Public Housing and RAD Conversion

(Crystal A. Proxmire, Nov. 8, 2019)

Ferndale, MI – The Ferndale Housing Commission is in the midst of change as they work though a HUD program that will enable them to improve and reconfigure their housing stock to give their low income, elderly and disabled residents an updated place to call home and add more affordable housing in the community through their affiliated nonprofit.

A lot of misinformation has been spread about the RAD conversion program over the past few months, and FHC Director Heather VanPoucker has been assuring residents and educating the public about the process.

She appeared before City Council in September to give an update and answer questions.  There have also been monthly Ferndale Housing Commission meetings which are open to the public, as well as several meetings about the project specifically, and even a field trip for residents to see successful RAD programs in person.

Brian Stawowy, who was running for mayor, emailed the City a list of questions on November 4th, which was forwarded to FHC along with all candidates. VanPoucker responded to the questions. Oakland County Times requested the document as well, so we could share the Q & A with our readers.

VanPoucker’s responses are in italics:

On behalf of the Ferndale Housing Commission (FHC) Board of Commissioners, cc’d here, I’ve addressed each question below, original question in bold, my response in italics.  Attached are referenced informational materials.  FHC is committed to vastly improving the quality of our properties to offer our residents an uplifting home environment that enables them to fully immerse within the community and benefit from an enriched quality of life.  We are determined to provide housing that people feel proud to call “home.”  Some overarching absolutes that guide us in this endeavor:

  1. We have 166 units now, and will have 166 units after transition.
  2. We will retain ownership and management control to preserve affordable housing in perpetuity.
  3. Minimal disruption to residents through the remodeling process.
  4. Maximum benefits to the residents: residents pay the same rent (capped at 30%) for vastly improved properties; residents have the option to move if they choose in the future (“choice mobility” is a key feature of Section 8 while public housing ties assistance to the physical unit); residents retain robust legal protections and rights.

Please also understand, it is very frightening to our residents to hear misinformation or sensationalized versions of our goals and this process.  We are not privatizing. We will not displace residents. Residents will not lose their assistance. Resident rents will not increase.  These actions are prohibited by HUD, prohibited by law, and prohibited by our personal ethics and commitment to our residents and this community.  Thanks to all of you for communicating factually correct information in this regard.

What is the current status? When is HUD expected to approve the application?

The RAD Application was accepted and a CHAP was issued.  However, FHC has not taken the next step of accepting the CHAP and taking units “offline” to begin the conversion process.  The original application envisioned project phasing that has since changed.  FHC now intends to address its scattered site homes first, hopefully through a combination of a homeownership program and partnership with a non-profit to maintain those homes not converted through homeownership as low-income affordable rentals.  HUD requires by law that this type of partnership ensure at least 30 years of operation as low-income affordable housing.  FHC intends to seek a longer-term, with automatic renewal. FHC will only enter into contract(s) with language that ensures ownership and operation as affordable housing in perpetuity.

 

Will the public be able to view the contract terms between FHC, FHD Corp, and Brinshore Development LLC?

FHC is subject to OMA & FOIA and is committed to a collaborative, transparent process.  No contracts or master development agreements are in place. The FHC Board will consider those in public meetings when the time comes.

Will the FHC have oversight of the RAD converted housing?

Yes.

What is the ownership structure? Who will own the land and buildings?

No contracts have been executed.  Contract language will likely be 99-year land leases with required renewals. FHC will only enter into contract(s) with language that ensures the ownership and operation as affordable housing in perpetuity.

Will FHD Corp be subject to FOIA and open meetings?

The Ferndale Housing Development Corporation is a private non-profit and is not subject to FOIA or OMA.  However, its sole member is the Ferndale Housing Commission, which is subject to FOIA and OMA.  As the sole member, the Ferndale Housing Commission retains significant powers including determining the mission of the FHDC, establishing FDHC Articles of Incorporation and By-Laws, determining the size and membership of the FHCD Board of Directors, approval over actions pertaining to buildings/assets, and others as detailed in the FHDC Articles of Incorporation and By-Laws.  The non-profit has capacity that a public housing authority does not, for example taking on debt. This is the structure commonly used for this type of conversion (for example, this is how Ann Arbor Housing Commission accomplished its complete conversion.)

Will the buildings be demolished or renovated?

The process requires a comprehensive capital needs/engineering study of each property.  We have not yet completed that.  However, based on a physical needs assessment completed a few years ago, and the age/condition of the buildings, FHC anticipates 415 Withington (37+ years old) will undergo a moderate to major rehabilitation and the 500 East Nine Mile (45+ years old) will require either major rehab or reconstruction.

 

Will some portion of the 43 scattered single family homes be sold or transferred to a developer or private owner? If so, When and to whom?

The operation of individual scattered site homes is not sustainable.  FHC hopes to transition some of its homes through a homeownership program for current residents. This would entail private ownership for those families.  Proceeds from sales are required by law to be used only for development or reinvestment in low-income affordable housing.  We intend that many of the homes that are not acquired by our current families living in them, will continue as low-income affordable rentals.  We hope to create a partnership with a non-profit entity to continue to operate many FHC scattered-site homes as low-income affordable rentals. Lastly, through this process, some properties may be sold at market rate in the private market to fund development of new low-income affordable housing, with a more sustainable operational model (like townhomes) to replace the lost units.  Our vision for the families now living in our scattered sites homes is that some will become homeowners, many will remain in the same home they are in now but with fantastic new renovations to the property (their rent will not change, they will simply make their payment to a partner non-profit), and some will move into a beautiful new construction here in the City of Ferndale (with moving costs covered by FHC.) We hope to convert our scattered site homes in the next 1-3 years, but it may take longer because we are committed to no displacement and minimizing impact on families during renovation. 

How long will the tenants in Autumn House and Withington West be displaced? Will displacement be concurrent or staggered?

We will not displace any residents. We may need to temporarily relocate residents while repairs/rehab/construction is underway.  We will have more specific information on temporary relocation arrangements when the actual rehab/construction needs are better defined. Residents will have a lead role in developing their temporary relocation plan. We are required by law to cover all the costs, and we are committed beyond our basic legal requirements to minimize disruption to residents to every extent possible. Our preference will be to “hotel” residents on site by completing construction one floor at a time, with residents staying on the vacant “hotel” floor during their renovation. Other options include residents staying at vacant units at other FHC properties in Ferndale, or solutions to be determined through the collaborative planning process with residents. 

Do tenants have guaranteed right to return written in an enforceable contract?

Tenants have a guaranteed right to return written in law.  The attached documents affirm that.

How much debt is the FHD Corp expecting to acquire to modify the buildings? How will this be funded to pay off?

We will have that information when the actual rehab/construction needs are better defined. We expect a big price tag because we have big dreams for our buildings: we will incorporate green building principles to honor our commitment to the environmental health of this community and to ensure efficiencies that minimize our cost to operate and residents’ cost to reside; and we will incorporate universal design that provides accessibility for all ages, stages and abilities. We expect to use either or both 4% and 9% LIHTC programs, loans, grants and any other funding sources we can pull together.  Debt service will be paid by revenue sources which will include HUD Housing Assistance Payments (HAP) and tenant rents.

If more than 166 units are available after the RAD conversion, will they also be affordable, defined by HUD as 30% of tenant’s income, or are they allowed to be some form of “market rate” or “mixed income”?

Our goal is not only “affordability” (30% or less of income for housing expenses) but affordability to those with low-income.  Low-income in our program is defined as 80% or less AMI. In reality, the vast majority of those we serve have incomes under 30% AMI.  We will consider mixed-income options for new units beyond 166 if necessary, however our first and primary mission is serving families with low-income.

Will FHD Corp own these units, or will the co-developer, currently Brinshore, be able to buy or have them transferred to their private ownership?

We envision Brinshore’s involvement to be limited to the buildings. Consistent with the answer about ownership structure, FHC will retain ownership interest and will structure contracts accordingly. Brinshore is not interested in long-term ownership interest in our property. We expect to have contract language that assures 100% ownership returns to FDHC/FHC at the end of the life of the tax credits.

I am concerned that our RAD conversion will end up like so many other around the country and the state of MI, with broken promises.

Locally, both Ann Arbor and Ypsilanti have successfully completed conversions of their public housing portfolios, as have numerous others throughout the state.  In both of those examples, the communities had strong commitment to preserving and improving low-income affordable housing in a high-pressure real estate market with strong growth and high costs.  Similarly, on a national level, the San Francisco conversion is a good example of utilizing the RAD process within the context of high community expectations for inclusion and justice.  The Ferndale Housing Commission will keep its promises to our residents and to the Ferndale community at large.

I want to ensure that we have guarantees written in an enforceable contract BEFORE we get too far to turn back.

FHC will only enter into enforceable contracts that advance achievement of our long-term mission: to preserve, improve and expand low-income affordable housing, and ensure the ongoing public stewardship of these assets, in line with the objectives of the Ferndale community.

Tenants and housing advocates are very concerned with this RAD conversion, and even more so finding it so difficult to view the process and details. 

FHC has met continuously with residents at general resident meetings (monthly) as well as with a Resident Advisory Board, which was established as the “deeper dive” resident group for this process. We also have monthly public FHC Board Meetings, and FHC has made several public presentations and updates at City Council Meetings.  Since FHC decided to pursue a different phasing plan for its conversion process (scattered sites first), there have not been new developments or information to report.  When there is new information/updates, FHC will communicate that to residents through the Resident Advisory Board, resident monthly meetings, FHC Board Meetings, City of Ferndale Council Meetings, and using our communication platform which includes direct mailings to residents, website, Facebook, lobby digital displays, text alerts, and quarterly resident newsletters.  When we complete the engineering/capital needs assessment and begin to contemplate specific plans for the properties, FHC is committed to a broad, inclusive community charette process that engages our neighbors as well as the community at large.

Attached is the written notice that was hand-delivered to all residents in advance of our very first meeting with them about this.  This notice is a HUD required template.  Also attached are FAQs that have been distributed to residents.  We have spent many hours in various meetings over many months with residents talking through all of this information, and we will continue to do so.  You’ll see answers to most of the questions asked in this email in the attached information that has been in residents’ hands since the first meeting about conversion.  It is an overwhelming amount of information about an extremely complex and sensitive subject.  We continuously reassure residents that their assistance is not in danger, they are not being displaced, their rents are not increasing.  We also brought a Social Worker on board at the onset of this process to ensure residents have access to supportive resources throughout this process.  We will continue to provide information to residents and the community as it becomes available. 

Previous Stories:

Ferndale Housing Director Gives Updates on Plans for Public and Affordable Housing (Sept. 16, 2019)

Ferndale Housing Gets Approval to Continue with RAD Process (Dec. 6, 2018)

Ferndale Housing Residents Tour Properties to See RAD Program Results (Oct. 23, 2018)

Ferndale Housing Commission Aiming for Grand Upgrades (July 23, 2018)

More info:

www.ferndalehousing.com

https://www.hud.gov/RAD

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