P.O. Box 3436 Phoenix, Az. 85030
March 13, 1995
Representative Christopher Shays Chair, Human Resources and Inter-
Governmental Relations Subcommittee B-372 Rayburn House Office Building Washington D.C. 20515 Attn: Demi Greatorex
R£: V&M Management Dear
I am writing as a result of an article in the Boston Globe which indicated that your subcommittee may be conducting hearings concerning the operation of the HUD low-income housing program
I represent V&M Management, the owner of a 275 unit low income apartment complex in Boston known as the Mandela Apartments. This complex constructed in a City of Boston urban renewal area in the early 1970's. Unlike many low income developments, this complex is privately owned and financed, and is not HUD insured. It is one hundred per cent subsidized under the Section 8 program.
My client purchased the complex in 1981. At the time of the purchase, the budget for the fifteen years of the Section 8 contract was set at $19,000,000, but the rent structure was set at levels substantially below comparable rents. The rents have remained below fair market since that time, and at present, according to the rent schedule published at 59 Fed. Reg. 4949 (September 28, 1994), my client is receiving approximately $27,000 a month less than it should be.
As a result of these years of shortages, my client has had to go into substantial debt beyond its private mortgage, and is now paying some loans with interest rates in excess of 20%. In order to alleviate the situation, my client has been requesting upward rent adjustments from the Boston HUD office for years, and has always been refused.
Two years ago, my client found a private commercial lender who would lend sufficient funds to restructure the entire debt on the condition that HUD would agree to
underwrite the loan through the 223 (f) program. This lender has made many such loans in the past, and assured my client that the loan was viable and financially sound. HUD denied the 223 (f) application on the grounds that the indebtedness was too high and the income too low to support the loan. We have now discovered that because of the years of underpayment of the rent, my client will have a projected $2.2 million budget surplus when the Section 8 contract expires in November, 1996. Nonetheless, Boston HUD still refuses to raise the rent to fair market value, or to commit a portion of this surplus to reduce the indebtedness or to make major capital repairs.
At the same time, my client, through its president, Alphonse Mourad, has been making major contributions to the well-being of the residents of that area of Boston. He pursued a petition with the Public Utilities Commission which eventually resulted in the reduction of interest and penalties on late payment charges. He provides space for and subsidizes a drop-in health screening and treatment center which receives no federal or state funding, but which has diagnosed and referred thousands of people with serious heart, lung, and diabetic disorders. He has sponsored a championship rowing crew for young black men, many of whom were unaware that there was a river two miles from where they lived. I cite these examples only to show that despite the severe financial problems faced by my client, it has provided important services to the community.
My client believes that it has been subjected to politically motivated discriminatory conduct on the part of HUD and the Boston-based Democratic Party, which has had a grip on the urban renewal process in Boston for years. I am sure that you receive many letters claiming that HUD is part of a conspiracy of one kind or another, but my investigation of this case over the years leads me to believe that the claims of V&M Management and its president are firmly grounded in reality. Should you decide that the operation of the Boston HUD office needs to be part of a broader review of HUD procedure, I and my client would be more than pleased to send you any substantiating documentation you might want, or to come to Washington to speak with one of your staff members.
Thank you for your attention to this matter, and if you have any questions, please do not hesitate to contact me.