January 22, 2009

Kudos to Nick K

Story in the newspaper today, click here.

In the private world if a developer goes into default trying top build a project, the bank forecloses and we might read a headline in the newspaper. The problems are between the developer and his creditors.

In the world of affordable housing development, as I have said many times on this blog (patting myself on the back), there is another entity involved--the underlying municipality. Typically the underlying municipality provides grants (Federal sometimes State HOME Funds) that do not have to be paid back by the developer as long as affordability time periods are honored; for example the developer has to sell or rent to low to mod income people for a stipulated period of time. In the event there is a violation, the municipality (HUD calls it the presiding jurisdiction) has to pay back the grant monies not the developer!!

In Main South, it is a little different but the same premise. The City of Worcester takes out a HUD guaranteed loan in the amount of 5,800,000 for to demolish and prepare a 7.5 acre parcel for the Gardner Kilby Hammond Initiative. If everything goes right and the houses are sold, the City (I assume) would have gotten money back and have been able to pay down the note. What happens if the Gardner Kilby Hammond Initiative stumbles?

The City of Worcester (you and I), the PJ (presiding jurisdiction), is left holding the bag. Now we need to take monies from our CDBG account and make a payment of $132,939 on top off another payment this past August. It does not get better, we have another payment due of $232,061 due in August.

Was this George Bush's fault? No it was not it was the City of Worcester fault to be a partner in all of these projects without much reward, but tons of risk that is coming back on us in a big way right now. Do you think this will stop the parade of low income housing development projects in the City of Worcester?

I doubt it.

4 comments:

Anonymous said...

My only hope is that this add'l burden on the city will slow the growth of Pajama people Housing

Hey what ever happen to the idea of an Arts District in Worc. it was supposed to go at Main and Madison st or thereabouts when more pajama people housing is being built.

Gimme a Leftie Lucky Tokin' artist over a pajama person any day.....geeeeeeesh

Bill Randell said...

I think the City Manager has done a very good job but his answer today blaming George Bush for this was not one of his finer moments.

Anonymous said...

This is what we are going to hear now "george Bush's fault. I agree with you old pal maybe if we can get the council to read their ole report stating that we do not need more LIH we would be better off. You other property should we not mention that there was a bid for $50,00.00 that they did not take over the $1.00 offer??

Anonymous said...

So what kind of juice does this Pharasphere have. They got to be plugged in somewhere. Anyone know?

I wonder if the 50K bidder thought of taking the city to court. I'll tell you the criteria by which the city determines who is awarded the winning bid (the lowest bid in this case) is nebulous at best and 99.99% subjective. Maybe Pharasphere agreed to side their building with Hardi-board or Use Main South CDC as their general contractor.........++++'ing Joke !!!!!