Berkeley City Council Moves to Privatize Public Housing

“The city and BHA promised to keep its public housing permanent to receive special funding from HUD to build housing for the poor. Now they are breaking their promise to current and future generations of the poor, who desperately need low-income housing to remain in their communities.” – James Vann

by Lynda Carson

 

On Tuesday evening, April 3, the Berkeley Housing Authority (BHA) asked Berkeley’s City Council for $400,000 in what are being called “predevelopment costs” to privatize and sell Berkeley’s 75 public housing townhouses to billionaires Jorge M. Perez and Stephen M. Ross, of the Related Companies of California, LLC, (a.k.a. Berkeley 75 Housing Partners, L.P.).

Expenses include $97,000 for relocation consulting fees (in other words, a scheme to displace public housing tenants); plus $100,000 for the relocation costs of the tenants; and $38,000 in HUD disposition consulting fees; plus $60,000 in legal consulting fees.

Additionally, according to the BHA, $42,000 is needed for enhanced security costs of the public housing units after they become vacant, and to ensure the safety of the remaining residents and surrounding neighborhoods. The BHA also needs $10,000 for construction consultant fees, and $50,000 for a contingency plan. All told, a total of $400,000 in what are being called predevelopment costs to privatize and sell Berkeley’s public housing units to out-of-state billionaires.

At the Berkeley City Council meeting, Item 34c was adopted by the council to loan $300,000 to the BHA from Berkeley’s Housing Trust Fund (HTF), but no action was taken by the City Council on Item 34a, for an additional loan of $100,000 that the BHA had sought for relocation expenses to displace the tenants from their public housing units.

At a recent meeting of the Housing Advisory Commission (HAC) on March 1, 2012, HAC shot down the request of the BHA for a loan of $400,000. At that meeting, HAC recommended that the Berkeley City Council should only loan $100,000 to the BHA, because the BHA was being too vague regarding how the full $400,000 they were requesting would be spent, and HAC was concerned by the huge amount of money the BHA was spending on consultants.

However, Berkeley’s current Interim City Manager did not agree with HAC’s recommendation to loan only $100,000 to the BHA, and overrode HAC’s decision by deciding to loan the BHA $300,000 to cover the costs associated with privatizing Berkeley’s 75 public housing units.

The City Council is officially on spring break after last night’s council meeting, and no one could be found available for comment regarding last night’s vote to loan the BHA hundreds of thousands of dollars to transfer Berkeley’s 75 public housing units to some out-of-state billionaires.

The BHA also expects to receive an additional $100,000 in the deal to privatize Berkeley’s public housing units from the Related Companies of California, LLC, after all the public housing residents have been forced to execute relocation agreements, and 75 percent of the residents who will permanently have to relocate have done so.

According to public records, the BHA is willing to advance its own funds to start the relocation work (displacement of tenants), but needs a reimbursement from the City’s loan funds to operate its Section 8 Housing Choice Voucher program, in the meantime.

Berkeley’s “good cause eviction protections” state that landlords are not allowed to evict or displace tenants in residential buildings when a residential building is being sold, but that has not deterred the BHA deal with Related from moving forward with the plans to force the low-income renters to relocate from their longtime public housing.

On March 18, several public housing tenants expressed alarm at the prospect of being forced out of their longtime housing. Terry Pete has been a public housing tenant in Berkeley since 1988, and said, “It is not fair that they are selling Berkeley’s public housing, and I am very concerned about what is going on. I have lived in Berkeley all of my life, and I do not fully understand what is happening to my housing at this time.”

Public housing tenant Rhonda Rodgers said, “We have received notices lately stating that the BHA wants us to move. There were two meetings last week to tell us about the plan to sell Berkeley’s 75 public housing units and how they want us to move, but hardly anyone showed up at the meetings.

“It’s really crazy what they are trying to do to us, and we cannot believe what they are telling us anymore. They want us to move out of our homes by next August. I have been a resident here for 13 years, and I do not want to move. I am a fighter and want to stay where I am at.”

James Vann, who was the architect for Berkeley’s public housing units back in the early 1980s, said he is shocked by the plan to sell the city’s valuable public housing.

Vann said, “The city and BHA promised to keep its public housing permanent (in perpetuity) to receive a special Title 1 Grant of funding from HUD to build that housing for the poor. And now they are breaking their promise to current and future generations of the poor, who desperately need low-income housing to remain in their communities.”

During July of 2009, against the best interests of Berkeley’s families living in public housing, the BHA adopted the recommendation of its consultant, EJP Consultant Group, to embark on a project to privatize and sell Berkeley’s 75 public housing units.

“It is not fair that they are selling Berkeley’s public housing, and I am very concerned about what is going on.” Art by Christa Occhiogrosso

 

In September 2011, the BHA announced that it was planning to sell Berkeley’s 75 public housing units to The Related Companies of California, LLC, and announced that the BHA has entered into an exclusive negotiating rights agreement with The Related Companies of California, LLC, that will last 90 days, with a possible 30-day extension to negotiate the full terms of the deal.

On March 8, 2012, BHA board members voted to authorize the executive director, Tia Ingram, to execute the Disposition Development and Loan Agreement (DDLA), as part of the ongoing process to sell the BHA’s 75 public housing units to billionaires Jorge M. Perez and Stephen M. Ross, of The Related Companies (a.k.a. Berkeley 75 Housing Partners, L.P.).

According to the DDLA, the BHA has agreed to pay for the permanent relocation of Berkeley’s public housing families (28 families or more) prior to the transfer of the public housing units to Related, and it was agreed that Related will not submit funding applications for the project until all residents have executed relocation agreements, and 75 percent of the residents who will permanently relocate have done so. Other public housing residents are being told that they only have to temporarily move from their longtime housing, provided that they can somehow manage to qualify to move back in, at an unannounced later date. As of Feb. 1, 2012, the BHA had 63 occupied public housing units, out of 75 units.

Once the deal takes place and Related is renting out the privatized former public housing units, the BHA will receive 60 percent of residual cash flow (kick backs) coming into the project after a number of fee payments, and a residual cash flow after four years to the BHA is estimated at $171,915.

The cost of rehabilitating the 75 units, according to the DDLA, is $8,310,774, or $110,810 per unit. The appraised value of the improvements to the units is $15,546,000, and Related will make an acquisition payment for building improvements of $4,100,000 or $5,543,000.

In addition, the BHA has authorized Overland, Pacific and Cutler to begin engaging families that are to be displaced from their public housing, and as a further means of intimidation, the BHA plans to embark on recertifying all current households in Berkeley’s public housing to verify their income and assets, and to verify which families are eligible for continued rental assistance and Section 8 vouchers. That tactic could be used to force the families from their public housing units, before their homes are sold to the out-of-state billionaires of Related.

Additionally, as of March 8, the BHA will immediately suspend processing all applications for low-income tenants in the Section 8 waiting lists that have applied for Section 8 housing vouchers, until September of 2012, to avoid increasing competition for Section 8 vouchers that are needed by the many families that are being displaced from their public housing units, prior to the public housing units being sold to billionaires Perez and Ross.

Berkeley’s poor and low-income families needing assistance through the Section 8 housing program have unfairly become hostage in the scheme to privatize and sell Berkeley’s public housing units, and are being unfairly bumped out line for Section 8 housing vouchers, as part of the corrupt deal to sell Berkeley’s public housing units.

Indeed, it was also mentioned in a BHA memo dated March 8, that the BHA has received official notice that its public housing program is designated as “troubled” for FY 2012, and that it has 30 days to appeal the troubled status.

Lynda Carson may be reached at tenantsrule@yahoo.com 

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