To the editor:
Jesse Mandel’s letter to the editor in last week’s Downtown Express (“short on accuracy” ) was woefully short on facts – facts which should call into question the financial wisdom of privatizing Southbridge.
The truth:
1. We would have to pay full annual real estate taxes of $8,119,200 an increase of $7,204,200 over our current shelter rent of $915,000. And the real estate tax would increase every year.
2. We would need to take out another mortgage to immediately pay the $28,000,000 plus real estate property tax to the city and state. A 30-year 5% mortgage for $28,000,000 would cost us $1,803,704 every year for 30 years.
3. These two figures together ($7,204,200 and $1,803,704) would mean that a privatized Southbridge would cost us more than an additional $9,000,000 every year.
4. Privatizers like Mr. Mandel claim that the $9,000,000 plus would be made up by annual ( and speculative ) flip taxes – but we, the shareholders, would have to make up the difference in each and every year in which the amount of flip taxes fell short of $9,000,000.
5. There are only two ways to do this – by a maintenance increase or by a special assessment for that year.
6. Given the downturn in the real estate market – and the fact that our apartment assessments were made at the peak of the housing bubble – it would be foolhardy to assume that we would not have to pay large maintenance increases far beyond anything we’ve seen or would see if we stay in the Mitchell-Lama program. We should brace our-selves for these increases, which most of us would not be able to afford, if we are foolish enough to vote to privatize Southbridge.
Mike Altman
