By Josh Rogers
Residents at Southbridge Towers will vote next week on whether they want to begin a comprehensive study to leave the Mitchell-Lama middle class housing program.
Each of the 1,651 apartments in the Seaport complex represents one share, and if half the shareholders vote to proceed with the “Black Book” study, which will take at least a year to complete, it will set up a final vote to leave Mitchell-Lama. Residents currently own the complex, but individuals cannot sell their apartments on the open market.
Southbridge apartments range in value between $300,000 and $1 million, according to a 2006 study commissioned by residents — which represented the first step to leaving the housing program.
Wally Dimson, president of Southbridge Towers, said he is certain that many more people will vote with him to proceed with the study, but he pointed out that even if the vote is 799 – 0, it will not be enough to proceed because it will mean the majority of shareholders didn’t vote.
“I don’t doubt the margin will be 2 to 1,” Dimson said. “[But] I hear people say ‘I want to wait and see how the vote goes,’ but I say you gotta make a choice now.”
Victor Papa, a Southbridge board member who opposes leaving Mitchell-Lama, said “it will be very difficult” for the privatization side to get a majority to vote yes, which means the study is not likely to occur. He and many other opponents think the study will be too costly and they favor staying in Mitchell-Lama as the best way to keep monthly maintenance costs for residents from rising too fast.
Under the privatization plan, any resident who sold an apartment would have to pay a 20 percent “flip tax,” more than enough to cover added real estate taxes, capital needs, and to keep maintenance charges reasonable, Dimson and other proponents argue. Last year’s study by attorney Stuart Saft concluded that if four percent of the apartments continue to be vacated a year, Southbridge will have more than enough to cover the expenses.
Saft argues it is likely the apartments will turn over even faster under privatization because residents will have an incentive to move.
Opponents have challenged Saft’s assumptions. The Black Book study would be more extensive and would have to be certified by the state attorney general before Southbridge could take a final vote. If two thirds of the shareholders voted to leave Mitchell-Lama, they would then take full ownership of their apartments at no cost. Proponents plan to include an op-out provision whereby tenants could forgo full ownership and pay monthly rent with increases tied to something like Rent Stabilization or cost of living increases.
The study may cost as much as $300,000, Dimson said. He said most, if not all, of the study’s costs could come from Verizon, which has agreed to pay Southbridge $200,000 to rewire the buildings, although the final contract has not been signed.
He said residents who do not sell their apartments would also benefit from acquiring a valuable asset.
“You would have equity that will build over time that you could use to start a business or finance your children’s education – that money is tax deductible,” Dimson said. “It’s the miracle of American home ownership, and we’re going to give you that money without any mortgage attached.”
Papa said the privatizers’ predictions are wrong and many residents will not be able to afford the large maintenance increases that will result from leaving Mitchell-Lama.
Dimson said Southbridge is talking with the state Division of Housing and Community Renewal to determine the total number of eligible shareholders, since some apartments are in the names of dead people or have other eligibility questions. Papa said his side will challenge any move to block a resident’s estate from voting.
“They cannot eliminate shareholders that are in estate,” he said. “If they say ‘deceased shareholders,’ we have a problem with it.”
Dimson said he is still waiting for a final decision from D.H.C.R., but he hopes there will be enough votes for privatization to avoid a dispute.
The vote will be Oct. 22 and 23.
Josh@DowntownExpress.com
