All candidates in Baltimore running for city council or mayor are all shouting again----JOBS, JOBS, JOBS, AFFORDABLE HOUSING AFFORDABLE HOUSING AFFORDABLE HOUSING.
The referenda items I described yesterday are written to kill just that and they were passed by our current Baltimore City Council. They are tying future affordable housing funding to Wall Street debt-----which will end in global investment firms controlling that money----and they are making charter changes that will create yet another authority' type committee to decide how affordable housing money is spent. Same will come to our public transportation in Baltimore.
DO YOU HEAR THOSE POLS ALL SAYING THEY ARE FOR STRONG PUBLIC TRANSPORTATION AND AFFORDABLE HOUSING? DO YOU HEAR THOSE CANDIDATES SHOUTING VOTE NO ON ALL ELECTION REFERENDA IN BALTIMORE?
'Baltimore Is Our Country'
Martin O'Malley's record as Baltimore mayor is key to his 2016 bid.
By Jamie Stiehm | Contributor June 2, 2015, at 10:35 a.m.
'Baltimore Is Our Country'
MORE In for 2016. (AP Photo/Evan Vucci)
BALTIMORE – Under full sun, Martin O'Malley launched his presidential campaign on Federal Hill, a tony waterfront neighborhood that calls up Baltimore's unlikely victory over a British bombardment in 1814. O'Malley just finished two terms as a liberal governor of Maryland and told upbeat stories about the state.
Yet all that seemed secondary standing on the ground of his own troubled city, recently racked by riots, curfews and the National Guard. The contradiction was on display Saturday when O'Malley lifted his voice over a chorus of protesters without skipping a beat. He did not speak the name of Freddie Gray, the young black man whose death in police custody provoked furious outcries here and across the nation. But it may follow wherever the trail takes him.
O'Malley made his name as an energetic young mayor who enlivened the city of rowhouses and drove down Baltimore's murder rate. That was the short story of his political life for seven years, before becoming governor in 2007. Then in April, riots in West Baltimore over Gray's death forced a racial reckoning. The national conversation in its wake tarnished O'Malley's luster as a leader of both Baltimores – black and white. The Democrat's rising arc met a storm about his record as mayor, his most prized political asset.
Few candidates have faced such rough sea changes upon entering the race to the White House. In an irony befitting his mercurial wit, O'Malley's vaunted mayorship may now be his biggest burden. On the stump, he'll be pressed to explain urban street scenes he found "heartbreaking" as he defines his place between mainstream Hillary Clinton and Sen. Bernie Sanders, a socialist.
As a city desk reporter at the Baltimore Sun when O'Malley ran for and served as mayor, I felt the sense of siege within the city walls. The murder rate felt like a medieval plague. Not even his wife Katie (now a judge) thought he should seek the highest office in a predominantly African-American city. But he had political dreams inspired by Jack Kennedy, who died the year he was born, 1963. Covering black voting precincts on Election Day, I phoned in reports they were voting for O'Malley to succeed Kurt Schmoke in an open seat. And this is why: O'Malley grasped the Baltimore's murder rate was killing, literally, black communities far more than white communities. Young black men were victimized most of all. He vowed to fight the dizzying number of 300 murders a year with New York's "zero tolerance" police model. In a city of contrasts, he came across as pretty colorblind. He also took things personally. Early on, he held a citizen referendum on the colors of the dilapidated Howard Street Bridge.
O'Malley was a natural at city hall, his restless impatience awakening a city Southern in history and character. He imposed his system on agencies, CitiStat, that measured what they got done in open session. If city workers weren't thrilled, most people of Baltimore were grateful for a sense of urgency. Most accepted that cracking down on small crimes and stepping up arrests was the new way forward. Whether it was aggression or vigilance by city police officers, the crime-fighting strategy worked. As O'Malley relentlessly rode police leaders, the murder rate went south over time. The human cost came back to haunt years later.
Gray's sadsack neighborhood, Sandtown, was a lively place when Thurgood Marshall, the late Supreme Court Justice, grew up there during the old Jim Crow days. Gray seemed to represent inescapable woes of his social class, afflicted with lead poisoning and a drug-addicted mother as a child. With his death, by spinal injury, came news hard for the nation to believe: Toward the end of O'Malley's watch, in a single year, the Baltimore police department arrested 100,000 people in a city of about 640,000. By the mayor's lights, a ridiculous homicide rate led to a staggering number of arrests.
In 2006, O'Malley's last year in office, the American Civil Liberties Union sued the city of Baltimore for massive arrests, often with no probable cause. Brutality on the police force was a further instigating factor. The suit was settled in a court agreement with the city paying a sum close to $1 million. Thanks to the Dickensien vision of television writer David Simon, a former Sun crime reporter who dramatized the city in television dramas – notably, HBO's "The Wire" – Baltimore's grim homicide scene was already fast becoming lore.
So despite the shining scene, the telegenic family of four children, the outlook is cloudy for the 52-year-old candidate past his wunderkind days.
But he loves a good fight. More to his credit, O'Malley has kept a keen sense of fun. He'll tell the story of the Battle of Baltimore, which he has re-enacted in period soldier dress, if you ask. It was the city's first date with civic glory, and its last for quite a while. "The Star-Spangled Banner" lyrics were written there by a wealthy lawyer and slaveowner, Francis Scott Key, who witnessed the battle smoke clear in the crepuscular sky.
To build school spirit in a troubled city, O'Malley splashed "The Greatest City in America" on bus stop benches. He spent money to light up church spires at night and visited the famed block of Jewish delis in East Baltimore. CitiStat couldn't measure morale, but it was moving in the right direction. Sheer joy marched on the streets of West Baltimore when O'Malley founded a birthday parade for Martin Luther King Jr.
I witnessed O'Malley's ups and downs, from the command bunker bracing for a hurricane to his penchant for Irish history and song. Amid Baltimore's sea of marble steps, he shed tears of rage at a vigil for the Dawson family that lost their lives to arson. Once we spoke about Celtic emancipation and Frederick Douglass at City Hall. He loves Douglass, who worked on the Fells Point waterfront as a slave, as much as anybody I know.
The crowd-pleasing Irish rock band, O'Malley's March, showcases another O'Malley gift. The lead singer on guitar, he has performed all over Baltimore's taverns, art festivals and at the White House. He cuts a figure, not unlike the fiddle-playing politicians of old Appalachia. I remember city council members advising him not to give up singing and songwriting when he ascended to Annapolis. At his inaugural as governor, after defeating Republican incumbent Robert L. Ehrlich Jr., the band played Bob Dylan's messaging classic, "The Times They Are a-Changin."
The folk anthem accents that O'Malley is not a child of the '60s, like Hillary Clinton's Baby Boomer set, but rather a child in the '60s, (like President Barack Obama). His presidential announcement stressed the generational theme and saving the American dream. The two Democrats in the 2016 cycle are from different generations. O'Malley can claim he endorsed Clinton in 2008, as other Democratic men deserted her in droves, to underline how long she's been around while he governed Maryland. She is 67.
In retrospect, O'Malley's police policies clearly ran amok by the time he left city government. Yet he surmounted bringing the homicide rate down, which is a way of saying that black lives matter. Police brutality and profound poverty remain on burning Baltimore's divided streets, which he must acknowledge. Whether he will take his share of the blame is doubtful. On his first official day as a presidential hopeful, he was elliptical. "Baltimore is our country," he declared on the hill. "From extreme poverty comes extreme violence."
As a reporter who witnessed O'Malley in that checkered country, it's fair to say he got stuff done.
Here is the Wall Street global investment firm attached to our Baltimore Housing Authority and being touted as building affordable housing in the Hollins UMMS district. Here we see some seniors and disabled. This global investment firm owns the real estate and manages it. UMMS is slated to be that same East Baltimore Johns Hopkins campus that will displace all citizens and take communities to being that UMMS global corporate campus. This private development is now taking place of our public senior retirement centers and public housing. All public housing highrises were privatize to these same global investment firms---one could think that Community Preservation is one of those PROPRIETARY partners in our public housing privatization and then surfaces as a private owner of affordable housing. Know how quickly that can and will be resourced as UMMS global corporate campus mirrors Hopkins?
THIS IS NOT REAL AFFORDABLE HOUSING----CITIZENS ALLOWED TO LIVE THERE HAVE NO RIGHTS OR GUARANTEES TO HOUSING STABILITY.
This happens to be to where our Green Party candidate Joshua Harris is tied------I think he is employed by this global Wall Street firm trying to pretend to replace existing senior housing. The East Baltimore Hopkins campus displaced thousands of citizens many seniors in exchange for senior facilities for a few hundred citizens. This is how our citizens are held captive in voting---so few housing options make pay-to-play easy.
Community Preservation and Development Corporation Housing Development, Construction And Management Organization
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In Care of: The Corporation
5513 Connecticut Avenue NW
Washington, DC 20015-2647
Community Preservation and Development Corporation is a Housing Development, Construction And Management Organization in Washington, District of Columbia. In 1990, it received its exempt organization status from the IRS and now brings in $2.98M in annual income, primarily through program revenue.
- With $2.98M in income, Community Preservation and Development Corporation is larger than the average Housing Development, Construction And Management Organization in the United States (where median income is $336,890).
- The average Housing Development, Construction And Management Organization brought in 1.54% more income in 2014 than they did in 2013. This organization, similarly, saw a 14.12% increase in income in 2014.
Creating affordable housing for seniors, the disabled can help transform Baltimore neighborhoods
May 2, 2016, 6:52am EDT Updated May 2, 2016, 11:07am EDT
J. Michael Pitchford Contributing ColumnistBizspace Spotlight
Two years ago, when Baltimore announced it was partnering with private developers like Community Preservation and Development Corp. to revitalize the city’s stock of public housing, many residents living in the poorest sections of Baltimore were rightfully skeptical that it would improve their lives.
Residents like Velveeta Jones and Timothy Prunty feared that the new Rental Assistance Demonstration program was a bad deal that would push them out of their homes and leave them behind.
Today, as we break ground to redevelop Hollins House in Baltimore, those residents have become highly engaged community members who are proud to live here. Amid a frenzy of revitalization in the city, Hollins House offers affordable rental units to seniors and people with disabilities in the historic neighborhood of Hollins Market. It is one of the first housing redevelopments to take place via the rental assistance program with the Housing Authority of Baltimore.
And because of the way we’re redeveloping this property, not only do longtime residents like Jones and Prunty no longer have to worry about being displaced, they now have a say in what “home” looks like.
In addition to Community Preservation and Development Corp.’s $10 million investment to renovate Hollins House, we are asking residents what services they need to be successful and lead healthier lives; and we’re helping connect them to resources and empower them with knowledge to make that happen. Given the positive reactions from residents, we believe our approach could serve as an example for Baltimore on how to revitalize housing in a way that builds community and supports residents’ needs.
We know we have to make it easier for those with limited incomes to find a home in a safe community. But we also know that community developers must focus on much more than just housing if we are to transform communities in meaningful and enduring ways.
Affordable housing developers like the Community Preservation and Development Corp., with our ability to partner with a range of stakeholders, are well-positioned to help residents thrive by connecting them with better ways to access medical care, earn living wages, and buy and/or grow healthy foods for their families.
Baltimore has the most regressive and repressive economic structure in the nation. Every aspect of our economy is tied to Wall Street Baltimore Development/Johns Hopkins and this is what killed each communities' local economy with no way to rebuild them. Hopkins' makes sure if any economy is built it is tied to Hopkins' endowment and/or partnered with Hopkins.
For a few decades Manor Care----a major senior living facility was handed to GLOBAL HEDGE FUND CARLYLE GROUP----that is Bush/Clinton et al. This replaced a public health system of clinics, senior care, low-income clinics, and public hospitals. All were allowed to decay and fall to poor service THEN NEEDING TO BE PRIVATIZED TO OPERATE EFFICIENTLY.
That is what Community Preservation and Development Corporation is----it is funded by these same global hedge funds-----all transactions will be kept proprietary and the real estate privatized while it offers what looks to be addressing needs of poor, seniors, and disabled.
Know who works as ground keepers at UMMS? A disabled group of citizens no doubt living in these facilities---GLOBAL CORPORATE CAMPUS LIVING, EATING, WORKING, BE SCHOOLED---UMMS will not be a state university system for long---it will become enfolded into a global Johns Hopkins and this is what will become that worker housing.
Community Preservation and Development Corp.
Income YoY % Change
Asset YoY % Change
-3.21%Percent changes shown are from 2013 to 2014.
- With $2.98M in income, Community Preservation and Development Corporation is larger than the average Housing Development, Construction And Management Organization in the United States (where median income is $336,890).
- The average Housing Development, Construction And Management Organization brought in 1.54% more income in 2014 than they did in 2013. This organization, similarly, saw a 14.12% increase in income in 2014.
- Community Preservation and Development Corporation is a registered tax-exempt organization with the IRS.
- The organization was required to file a Form 990 or 990EZ with the IRS for the most recent tax year.
Income & Expenses
In 2013, this organization filed a Form 990 with the IRS, reporting $2,609,135 in income. See below for more information on the organization's funding sources.
Income Breakdown Over Time
Income Growth Driven by Increase in Program RevenueIn 2013, Community Preservation and Development Corporation reported $2.61M in income, up 32% from the previous year. This growth can primarily be attributed to an increase in program revenue, which jumped $497,815 from 2012 to 2013. Over the same time period, the organization also saw a notable 196% increase in investment income.
Funded Primarily by Program RevenueLike most Housing Development, Construction And Management Organizations in its peer group, Community Preservation and Development Corporation is funded primarily through program revenue. The organization is highly dependent on this type of funding, as it accounts for 74% of total income.
In 2013, this organization filed a Form 990 with the IRS, reporting $3,071,200 in total expenses. See below for more information on expense breakdown.
- In 2013, Community Preservation and Development Corporation's expenses grew more slowly than income: expenses increased by only 17%, while income increased by 32%.
- The organization's primary cost driver is personnel, which accounted for 49% of total expenses in 2013. This is fairly atypical for a Housing Development, Construction And Management Organization of this size: other organizations in this peer group spent most of their budget on unclassified expenses.
- The organization did not report any grant expenses to the IRS in 2013. This indicates that the organization provides help through direct services rather than grants.
Compensation costs include salaries of officers, directors, and employees from this organization's Form 990 filed in 2013. Personnel costs include compensation costs plus pension plan contributions and other employee benefits.
Median Personnel Cost Ratio
Personnel Cost Ratio
Total Personnel Costs
Personnel Cost Ratio
49.1%Community Preservation and Development Corporation spent 49.10% of its expenses on personnel costs in 2013. This is:
- In line with other nonprofits in Silver Spring, Maryland (where the typical organization spends 38.60% of its total expenses on personnel)
- Significantly more than similarly sized Housing Development, Construction And Management Organizations nationwide (where the typical organization spends 25.70% of its total expenses on personnel)
Financial health metrics are calculated using financial data from this organization's Form 990.
Asset BreakdownAnalysis of asset mix can help to identify the resources available to deliver future services.
2013 Asset Breakdown
LiquidityLiquidity refers to the ability of a nonprofit to pay its obligations on time.
OrganizationPeer Group Median% DifferenceCurrent Ratio58.297.88639.72%
Days Cash on Hand278101175.25%
- Current Ratio: Community Preservation and Development Corporation has a current ratio of 58.29. A ratio above 1 suggests that the organization would be able to pay off its obligations if they became due immediately.
- Days Cash on Hand: If they were to stop receiving revenue, the organization could continue to pay the bills for around 9 months. Generally at least three months of cash on hand is desirable.
Leverage measures how much of a nonprofit's assets are funded by other people's money. It is calculated by dividing liabilities by assets.
Peer Group Median% DifferenceLeverage0.220.46-52.17%
- Leverage: Community Preservation and Development Corporation is not as highly levered as other similarly sized Housing Development, Construction And Management Organizations. This is a positive indicator of financial health.
Profitability & Moneymaking Activities
Functional Revenues vs. Expenses
With a $462,065 loss and a -17.7% profit margin in 2013, Community Preservation and Development Corporation was not profitable.
While nonprofit performance is not measured by profitability as it is in the private sector, a low margin could indicate financial distress or vulnerability.
Total Functional Revenue
Total Functional Expenses
I like to include articles like this to remind citizens from where all that private equity corporation is getting the revenue it is now installing in our US cities deemed Foreign Economic Zones.
Here we have the Carlyle Group owning our Manor Care senior care------these private equity firms now being called AFFORDABLE HOUSING NON-PROFITS-----are not building for WE THE PEOPLE-----we are more likely to be in that workers' dormitory or sharing space with 3-4 other families-----that's what ONE WORLD FOREIGN ECONOMIC ZONES DO.
This is long so please glance through to the next article:
Behind Private Equity’s Curtain
By GRETCHEN MORGENSONOCT. 18, 2014
Credit Minh Uong/The New York Times
From New York to California, Wisconsin to Texas, hundreds of thousands of teachers, firefighters, police officers and other public employees are relying on their pensions for financial security.
Private equity firms are relying on their pensions, too. Over the last 10 years, pension funds have piled into private equity buyout funds. But in exchange for what they hope will be hefty returns, many pension funds have signed onto a kind of omerta, or code of silence, about the terms of the funds’ investments.
Consider a recent legal battle involving the Carlyle Group.
In August, Carlyle settled a lawsuit contending that it and other large buyout firms had colluded to suppress the share prices of companies they were acquiring. The lawsuit ensnared some big names in private equity — Bain Capital, Kohlberg Kravis Roberts and TPG, as well as Carlyle — but one by one the firms settled, without admitting wrongdoing. Carlyle agreed to pay $115 million in the settlement. But the firm didn’t shoulder those costs. Nor did Carlyle executives or shareholders.
Instead, investors in Carlyle Partners IV, a $7.8 billion buyout fund started in 2004, will bear the settlement costs that are not covered by insurance. Those investors include retired state and city employees in California, Illinois, Louisiana, Ohio, Texas and 10 other states. Five New York City and state pensions are among them.
Continue reading the main story
The retirees — and people who are currently working but have accrued benefits in those pension funds -- probably don’t know that they are responsible for these costs. It would be very hard for them to find out: Their legal obligations are detailed in private equity documents that are confidential and off limits to pensioners and others interested in seeing them.
Maintaining confidentiality in private equity agreements is imperative, said Christopher W. Ullman, a Carlyle spokesman. In a statement, he said disclosure “would cause substantial competitive harm.” He added: “These are voluntarily negotiated agreements between sophisticated investors advised by skilled legal counsel. The agreements and other relevant information about the funds are available to federal regulators and auditors.”
Mr. Ullman declined to discuss why Carlyle’s fund investors were being charged for the settlement. But at least one pension fund supervisor is unhappy about the requirement that municipal employees and retirees pay part of that settlement cost.
“This is an overreach on Carlyle’s part, and frankly it violates the spirit of the indemnification clause of our contract,” said Scott M. Stringer, the New York City comptroller, who oversees the three city pension funds involved in the Carlyle deal. Mr. Stringer was not comptroller when the Carlyle investment was made.
Private equity firms now manage $3.5 trillion in assets. The firms overseeing these funds borrow money or raise it from investors to buy troubled or inefficient companies. Then they try to turn the companies around and sell at a profit.
For much of the last decade, private equity funds have been a great investment. For the 10 years ended in March 2014, private equity generated returns of 17.3 percent, annualized, according to Preqin, an alternative-investment research firm. That compares with 7.4 percent for the Standard & Poor’s 500-stock index.
More recently, however, a simple investment in the broad stock market trounced private equity. For the five years through March, for example, private equity funds returned 14.7 percent, annualized, compared with 21.2 percent for the S.&.P. 500. One-year and three-year returns in private equity have also lagged.
Nonetheless, pension funds have jumped into these investments. Last year, 10 percent of public pension fund assets, or $260 billion, was invested in private equity, according to Cliffwater, a research firm. That was up from $241 billion in 2012.
But the terms of these deals — including what investors pay to participate in them — are hidden from view despite open-records laws requiring transparency from state governments, including the agencies that supervise public pensions.
Private equity giants like the Blackstone Group, TPG and Carlyle say that divulging the details of their agreements with investors would reveal trade secrets. Pension funds also refuse to disclose these documents, saying that if they were to release them, private equity firms would bar them from future investment opportunities.
The California Public Employees’ Retirement System, known as Calpers, is the nation’s largest pension fund, with $300 billion in assets. In a statement, Calpers said it “accepts the confidentiality requirements of limited partnership agreements to facilitate investments with private equity general partners, who otherwise may not be willing to do business with Calpers.”
But critics say that without full disclosure, it’s impossible to know the true costs and risks of the investments.
“Hundreds of billions of public pension dollars have essentially been moved into secrecy accounts,” said Edward A.H. Siedle, a former lawyer for the Securities and Exchange Commission who, through his Benchmark Financial Services firm in Ocean Ridge, Fla., investigates money managers. “These documents are basically legal boilerplate, but it’s very damning legal boilerplate that sums up the fact that they are the highest-risk, highest-fee products ever devised by Wall Street.”
Scott M. Stringer, the New York City comptroller, is unhappy that city pension funds are obligated to pay part of a recent legal settlement reached by Carlyle. Credit Ashley Gilbertson for The New York Times
Retirees whose pension funds invest in private equity funds are being harmed by this secrecy, Mr. Siedle said. By keeping these agreements under wraps, pensioners cannot know some important facts — for example, that a private equity firm may not always operate as a fiduciary on their behalf. Also hidden is the full panoply of fees that investors are actually paying as well as the terms dictating how much they are to receive after a fund closes down.
A full airing of private equity agreements and their effects on pensioners is past due, some state officials contend. The urgency increased this year, these officials say, after the S.E.C. began speaking out about improper practices and fees it had uncovered at many private equity firms.
One state official who has called for more transparency in private equity arrangements is Nathan A. Baskerville, a Democratic state representative from Vance County, N.C., in the north-central part of the state. In the spring, he supported a bipartisan bill that would have required Janet Cowell, the North Carolina state treasurer, to disclose all fees and relevant documents involving the state’s private equity investments. The $90 billion Teachers’ and State Employees’ Retirement System pension has almost 6 percent of its funds in private equity deals.
The transparency bill did not pass the General Assembly before it adjourned for the summer. Mr. Baskerville says he intends to revive the bill early next year.
“Fees are not trade secrets,” he said. “It’s entirely reasonable for us to know what we’re paying.”
Reams of Redactions
It might help investors to know the fees they are paying, but when it comes to private equity, it’s hard to find out.
Consider the Teachers’ Retirement System of Louisiana, which holds the retirement savings of 160,000 teachers and retirees. It invested in a buyout fund called Carlyle Partners V, which was Carlyle’s biggest domestic offering ever, raising $13.7 billion in 2007. Companies acquired by its managers included HCR ManorCare, a nursing home operator; Beats Electronics, the headphone maker that was recently sold to Apple for $3 billion; and Getty Images, a photo and video archive.
Earlier this year, The New York Times made an open-records request to that pension system for a copy of the limited partnership agreement with the Carlyle fund. In response, the pension sent a heavily redacted document — 108 of its 141 pages were either entirely or mostly blacked out. Carlyle ordered the redactions, according to Lisa Honore, the pension’s public information director.
The Times also obtained an unredacted version of the Carlyle V partnership agreement. Comparing the two documents brings into focus what private equity firms are keeping from public view.
Many of the blacked-out sections cover banalities that could hardly be considered trade secrets. The document redacted the dates of the fund’s fiscal year (the calendar year starting when the deal closed), when investors must pay the management fee to the fund’s operators (each Jan. 1 and July 1), and the name of the fund’s counsel (Simpson Thacher & Bartlett).
But other redactions go to the heart of the fund’s economics. They include all the fees investors pay to participate in the fund, as well as how much they will receive over all from the investment. The terms of that second provision, known as a clawback, determine how much money investors will get after the fund is wound down.
In the Louisiana pension fund’s version of the partnership agreement, that section was blacked out. But the clean copy discloses an important provision reducing the amount to be paid to investors.
In order to calculate their total investment returns generated by private equity deals, outside investors must wait until all the companies held in these portfolios have been sold. Any profits above and beyond the 20 percent taken by the general partners overseeing the private equity firms are considered excess gains and are supposed to be returned to investors.
But the Carlyle agreement includes language stating that general partners must return to investors only the after-tax amount of any excess gains. Assuming a 40 percent tax rate, this means that if general partners in the fund each received $2 million in excess distributions, they would have to repay the investors only $1.2 million each. That’s bad news for the funds’ investors: They would lose out on $800,000 in repayments for each partner.
Mr. Ullman of Carlyle declined to comment on this provision.
Also blacked out in the Carlyle V agreement is a section on who will pay legal costs associated with fund operations. First on the hook are companies bought by the fund and held in its portfolio, the unredacted agreement says. That essentially makes investors pay, because money taken from portfolio companies is ultimately extracted from the funds’ investors.
But if for some reason those portfolio companies cannot pay, the Carlyle V document says, investors will be asked to cover the remaining expenses. This may require an investor to return money already received — such as excess returns — after a fund has closed, the agreement explains. One way or another, the general partners are protected — and the fund investors, who included tens of thousands of retirees, are responsible for paying the bill. (By contrast, in mutual funds, which are required to make public disclosures and have independent directors, investors are far less likely to be stuck with such costs.)
The Ohio Public Employees Retirement System holds $150 million in investments in each of the Carlyle IV and V funds. Asked about the requirement to pay the legal settlement costs, a spokesman, Michael Pramik, said he understood why such a question would be raised, but declined to comment.
Document Redacted Carlyle Partners Limited Partnership Agreement
Private equity firms demand strict confidentiality from investors regarding fund documents, contending that they would reveal trade secrets if disclosed. Investors in private equity deals agree to these requests by heavily redacting broad sections of fund documents. An example of how extensive these redactions can be is apparent in this Carlyle Partners V limited partnership agreement.
OPEN Document Another blacked-out section in the Carlyle V agreement dictates how an investor, like a pension fund, also known as a limited partner, should respond to open-records requests about the fund. The clean version of the agreement strongly encourages fund investors to oppose such requests unless approved by the general partner.
Some pension funds have followed these instructions from private equity funds, even in states like Texas, which have sunshine laws that say “all government information is presumed to be available to the public.”
In mid-September, after receiving an information request about a private equity investment, the Fort Worth Employees’ Retirement Fund denied the request. Doreen McGookey, its general counsel, also sent a letter to the buyout firm, Wynnchurch Capital, based near Chicago, notifying it of the request and instructing Wynnchurch how to deny it by writing to the Texas attorney general, according to a document obtained by The Times.
“If you wish to claim that the requested information is protected proprietary or trade secret information, then your private equity fund must send a brief to the A.G. explaining why the information constitutes proprietary information,” Ms. McGookey’s letter states, adding that the pension “cannot argue this exception on your behalf.” Then the letter warned the private equity firm that if it decided not to submit a brief to the attorney general, that office “will presume that you have no proprietary interest or trade secret information” at stake.
In an email, Ms. McGookey said Texas law required her to notify the private equity firm of the information request.
The Fort Worth pension is not alone in opposing open-records requests for private equity documents. Calpers has also done so. A big investor in private equity, with more than 10 percent of its assets held in such deals, it has put $300 million into the Carlyle IV fund — the fund that is levying investors for the $115 million legal settlement reached by Carlyle executives.
Earlier this year, Susan Webber, who publishes the Naked Capitalism financial website under the pseudonym Yves Smith, asked Calpers for data on the fund’s private equity returns. After a legal skirmish, Calpers said last week that it had fulfilled her request. But on Friday, Ms. Webber said Calpers had provided only a small fraction of the data.
Karl Olson is a partner at Ram Olson Cereghino & Kopczynski and the leading lawyer handling Freedom of Information Act litigation in California. He has sued Calpers several times, including a successful suit for the California First Amendment Coalition, in 2009, forcing Calpers to disclose fees paid to hedge fund, venture capital and private equity managers.
“I think it is unseemly and counterintuitive that these state officials who have billions of dollars to invest don’t drive a harder bargain with the private equity folks,” he said. “A lot of pension funds have the attitude that they are lucky to be able to give their money to these folks, which strikes me as bizarre and certainly not acting as prudent stewards of the public’s money.”
‘Not Open and Transparent’
Regulations require that registered investment advisers put their clients’ interests ahead of their own and that they operate under what is also known as a fiduciary duty. This protects investors from potential conflicts of interest and self-dealing by those managers. This is true of mutual funds, which are also required to make public disclosures detailing their practices.
But, as a lawsuit against Kohlberg Kravis Roberts shows, private equity managers can try to exempt themselves from operating as a fiduciary.
The case involves Christ Church Cathedral of Indianapolis, which contends that it lost $13 million, or 37 percent, of its endowment because of inappropriate and risky investments, including holdings in hedge funds and private equity deals. The church sued JPMorgan Chase, its former financial adviser, for recommending those investments.
JPMorgan Chase said in a statement that despite market turmoil, “Christ Church’s overall portfolio had a positive return for 2008-2013, the time period covered by the complaint.”
Christ Church’s private equity foray included a small interest in K.K.R. North America Fund XI, a 2012 offering that raised around $6 billion. K.K.R., the fund’s general partner, can “reduce or eliminate the duties, including fiduciary duties to the fund and the limited partners to which the general partner would otherwise be subject,” the fund’s limited partnership agreement says. Eliminating the general partner’s fiduciary duty to investors in the private equity fund limits remedies available to the church if a breach of fiduciary duty should occur, the church’s lawsuit said.
Kristi Huller, a spokeswoman for K.K.R., initially denied that it could reduce or eliminate its fiduciary duties. But after being presented with an excerpt from the agreement, she acknowledged that its language allowed “a modification of our fiduciary duties.”
Linda L. Pence, a partner at Pence Hensel, a law firm in Indianapolis, represents the church’s endowment in the suit. She said she had been shocked by the secrecy surrounding some of her clients’ investments. “On one hand they say they don’t owe you the duty,” she said, “but everything is so confidential with these investments that without a court order, you don’t have any idea what they’re doing. It’s not open and transparent, and that’s the kind of structure to me that’s ripe for abuse.”
Some investors who are privy to the confidential agreements have walked away from these deals. A recent survey of institutional investors by Preqin, the research firm, found that 61 percent indicated that they had turned down a private equity investment because of unfavorable terms.
“It is apparent that private equity fund managers are not doing enough to appease their institutional backers with regards to the fees they charge,” Preqin said.
Maryland BioPark at UMMS is the same East Baltimore development for Hopkins and we are hearing the same activism around fair housing here as twenty years ago. When we see a private equity firm handed public housing in that area and we see these protests----we already know the only affordable housing again will be student housing attached to that UMMS campus and those students will be part of a year's long apprenticeship program tied to free labor for these global corporations. Remember, some K-12 will be apprenticed at 6th grade----some 8th grade----and then they will enter that vocational tracking certification process called COMMUNITY COLLEGE replacing high school. Those students who are advanced placement and are admitted to these IVY LEAGUE university complexes competing against global student applicants will then fall into that dormatory,eat, live, work, get schooled platform that will continue through their adulthood.
All of these communities surrounding UMMS will fall into this global corporate campus. Not many residents stay----and since there is no longer any public housing structure----when this private equity group finishes using Federal, state, and local funding to rebuild these once public structures they will go luxury.
No Trivia: Residents, activists, and Joshua Harris bang the drum for Poe Homes
Credit: J.M. Giordano
Brandon SoderbergContact Reporter
In Baltimore, a curious kind of apartheid city, the haves and have-nots are often neighbors. And sometimes, those neighbors air their grievances on each other's doorsteps and bring a drumline along to ensure they're heard.
Consider the frequently ignored Poe Homes community, just a short walk from the University of Maryland BioPark, whose developer, Wexford Science and Technology, was recently given $17.5 million in tax increment financing (TIF) by the City Council.
The walk from the Poppleton housing project to the BioPark is so short that on Tuesday afternoon, a group of Poe Homes residents, along with local activists and, eventually, a robust drumline, gathered down the street and marched to the front door of one of the BioPark's buildings, in protest of developers getting more money while Poe Homes is continually divested.
Before the march, around 3 p.m., residents and activists convened at the Poe Homes Community Center where, among others, Joshua Harris, a community activist and Green Party candidate for mayor spoke.
"We sit here just one block away from massive amounts of wealth. Last spring, our city experienced unrest that was heard around the world," Harris said. "And I believe that unrest was caused by juxtapositions between massive amounts of wealth and massive amounts of poverty."
Around 3:30 p.m., the group of about 40 left the Poe Homes Community Center and marched to the BioPark building at 801 W. Baltimore Street with signs that read "We demand fair & inclusive development," "We don't have millions but our voices matter," and "Enough with corporate welfare, it ends now." Leo Burroughs, chairman of the Committee of Concerned Citizens, led the group up and down a small section of West Baltimore Street near the building's entrance. There were chants invoking Jim Crow and frustrated shouts about the millions of dollars out of the neighborhood's reach.
Activists say the BioPark, Wexford, and the City Council excluded representatives of Poe Homes, who had requested a "community benefits agreement" that would have solidified investment in Poe Homes. And according to a Change.org petition tied to the protest, the UMD BioPark has not followed through on "promises to create jobs and help to address issues of poverty."
Harris, who lives near Hollins Market, has been working on the TIF issue for the last year or so. He has had meeting with residents, the City Council, and those connected to the BioPark, arguing that the commmunity needed to be involved. He told City Paper: "Why after months of meeting with Poe community members and making verbal commitments were the requests not included?"
The approval of this TIF, and rejection of the involvement of Poe Homes community leaders in the decisions surrounding it, is further evidence of how one-sided the relationship between the BioPark and its nearest neighbors remains, he says.
"Wexford Science and Technology, the developer for the BioPark, is owned by Blackstone, who generated $7.5 billion in revenue in 2014 and has $31.5 billion in total assets. They did not need our tax dollars to complete the project," Harris says. "The project also did not meet the City's 'But For' policy, which says that if a project can be financed without the city then a TIF will not be granted. So again, our schools do not have heat and our roads need repair, so why is our council so swift to give our tax dollars to billionaires?"
This is the kind of toxic neoliberal logic that dominates Baltimore policy, by the way: Generous tax breaks to, say, Hollywood so it shoots its television shows here (often using Baltimore as a stand-in for D.C.) and most absurdly, far too kind tax breaks for downtown developers, which last year resulted in a loss of school aid for the city (the Sun's Luke Broadwater has been all over this topic for awhile now). On Monday, there was the City Council's brisk, preliminary approval of tax breaks for artists performing at Royal Farms Arena (one of the most profitable arena of its size in the United States)—though yesterday this vote was delayed after a flurry of outrage.
Around 4:10 p.m., Tuesday's protest got livelier. A few members of the Baltimore Christian Warriors Marching Band, led by a young girl holding a sign that read "The Bio Park was built on the backs of Poe Homes," marched toward the BioPark. This mini drumline's appearance perked up the protest—one activist excitedly danced and even put his hands up Ozzy-style and headbanged to the performance—and got the attention of passersby, police observing the protest, and even an HBO documentary crew who briefly swung through the protest and swiped some shots for their seemingly imminent Baltimore post-Uprising protest film.
A drum line performs at a protest outside the University of Maryland BioPark.
Diane Smith, who was part of the protest and was petitioning for more jobs in the area, admired the drumline and bemoaned the lack of options for children in the area.
"The young kids have nothing to do, they have no recs to go to, they have no jobs," she said. "They have all this free time, so they sell drugs or kill one another."
Paula Colgate, a Pikesville resident who brings her kids back into the city "twice a week to march," praised the Baltimore Christian Warriors Marching Band as an example of the kind of investment the city needs to make.
"They need some funds down here—new uniforms. Fix some of the playgrounds for the little kids." she said. "[A lack of investment is why] these kids get into that street life."
Harris could not attend the actual protest—he had to briefly bounce back to his day job and then head over to Mount Vernon to for a 6 p.m. mayoral forum at MedChi, The Maryland State Medical Society.
Amid a dreadfully boring and boilerplate forum Tuesday, Harris mentioned the protest and highlighted his work along with the Poe Homes community in challenging this TIF—just one example of the uneven "distribution of capital" plaguing Baltimore, he explained.
"$17.5 million gifted to wealthy developers," Harris scoffed, though he kept a mayoral smile on his face the whole time.
'Shantress Wise is pictured in her apartment in Belair-Edison. She made the living room into a bedroom for herself, so three people can live in the apartment and share the rent payment'.
Here we see yet more Wall Street Baltimore Development 'labor and justice' organizations speaking for our citizens. These are the groups sending affordable housing out to other counties to move low-income citizens out of the city. Now, it is not a bad thing to want to reduce concentrations of poverty. Baltimore has these high numbers of poor because unlike the other cities listed in this article-----Baltimore chose to allow housing conditions, the local economy to deteriorate creating the large numbers of poor in the city----we never needed to have these high poverty figures---they are deliberately created.
We look at how this trust is justified by a Montgomery County policy for goodness sake. Montgomery County has had an affordable housing crisis for a decade or more because it is creating the same wealth dynamics as NYC and San Fran. So, where did that Montgomery County Trust send its revenue?
WE KNOW THESE REFERENDA CREATE IN BALTIMORE A CAPTURED PRIVATE, APPOINTED COMMITTEE STRUCTURE JUST LIKE BALTIMORE DEVELOPMENT THAT WILL HAVE THE SAME GLOBAL INVESTMENT FIRMS DECIDE HOW, WHEN, WHERE, AND WHAT AFFORDABLE HOUSING LOOKS LIKE.
We want REAL affordable housing in REAL numbers in each community including city center. These groups know that is not the goal and are actively working for Wall Street Baltimore Development's goal
Although Montgomery County served as a regional
model for affordable housing policy for many years, the
County has failed to keep pace with demand for affordable
units in recent years. Montgomery County’s primary
affordable housing challenges include: (1) missteps in the
management of the County’s inclusionary zoning program;
(2) lack of land available for new housing developments;
(3) an unwieldy network of affordable housing programs;
and (4) housing programs that exist in theory but that
provide no assistance to new applicants.
While the County’s inclusionary zoning program (the
“Moderately Priced Dwelling Unit” or “MPDU” program)
served as a nationwide model of its kind and enjoyed
considerable success, failure to retain the units it created
as affordable housing stock resulted in the program’s
near-demise.54 Today, with few large tracts of
undeveloped land available, the County can no longer
rely on the MPDU program to produce significant
numbers of new affordable units.55
Montgomery County operates public housing and rental
voucher programs, but these programs have lengthy
waiting lists, both of which are currently closed to new
applicants.56 Although these programs do provide some
affordable housing in the County, they currently provide
no assistance to new tenants and are unlikely to be
expanded in the future.
Despite the County’s history with the MPDU program,
local opposition to affordable housing continues to serve
as a barrier across the County. For example, the city of
Gaithersburg recently blocked the construction of
affordable housing in its downtown area by refusing
to support the developer’s request for Low Income
Housing Tax Credits.57 Although the City of Gaithersburg
provided various reasons for its decision to block the
developer’s tax credit request, its use of this tactic raises
concerns about possible civil rights implications. Other
towns in Maryland have similarly prevented affordable
housing developments from being built when faced
with opposition from neighbors of the proposed
development. In 2014, the Maryland legislature finally
passed a bill repealing the requirement that a developer
secure local approval to be eligible for Low Income
Housing Tax Credits.
Montgomery County’s inclusionary zoning
program served as a nationwide model,
but failure to retain the units it created as
affordable housing stock resulted in the
I spoke of the new corporation that makes HOSTELS of once rental housing in our city center......there we have as many as 6 college students in a one bedroom doing the same this citizen is being made to do to afford living in what is third world community decay
'Shantress Wise is pictured in her apartment in Belair-Edison. She made the living room into a bedroom for herself, so three people can live in the apartment and share the rent payment'.
WALL STREET THINKS IT FUNNY HAVING THE MIDDLE-CLASS LIVING IN A CLOSET SPACE-----that is to where this is going.
Affordable housing advocates push for trust fund, money to fill it
Shantress Wise, a renter who shares an apartment with two other renters, talks about the proposed charter amendment to create an affordable housing trust fund to help supplement the creation of more affordable housing units in Baltimore. (Algerina Perna, Baltimore Sun video)
Yvonne WengerContact ReporterThe Baltimore Sun
Advocates ask voters to sign off on an account to create affordable housing. Funding it is another matter.Baltimore voters will be asked in November to approve the creation of a trust fund to develop and maintain housing that extremely low-income residents can afford. But that is only a first step. If the fund were approved, advocates still would have to persuade city officials to put money in it.
A coalition of affordable-housing activists is looking for potential sources of revenue. As they work to persuade voters to approve the trust fund, they are also floating ideas such as a new tax on vacation rentals and dedicating public bonds to fill it.
Odette Ramos, a chief backer of the proposed charter amendment, says the point of the fund would be to reduce the number of homeless people in Baltimore and to help more families become self-sufficient.
"There is a housing crisis in Baltimore," said Ramos, director of the Community Development Network of Maryland. "Doing nothing is not an option."
Shantress Wise, 42, lives on disability benefits. She stayed in shelters, family members' homes and halfway houses for years until she found two roommates to split the $750 rent for a two-bedroom apartment above a barbershop in the Belair-Edison neighborhood.
Baltimore will vote on affordable housing trust fund in November Wise said her bedroom — the apartment's living room — is cozy. But she dreams of a larger space where her four grandchildren could visit and have an area to play.
"I have struggled with housing," Wise said. She is a member of an advocacy group, United Workers, that helped gather the 10,000 signatures needed to get the ballot question before voters.
"An affordable housing trust fund would help everybody. It would help me a lot."
The charter amendment is written to be broad: Voters will be asked to sign off on an account that would pay for rental and owner-occupied housing created through new development, rehabilitation and land trusts.
Ramos said spending from the account would target some of Baltimore's poorest residents, such as renters who earn 30 percent or less of the median area income ($26,000 for a family of four) or homeowners who make 50 percent or less of the area median ($43,350 for a family of four).
Money could go to any of several endeavors, including offering credit counseling and homeownership workshops, and helping developers and nonprofits build houses, renovate homes or rehabilitate vacant ones. It also could support land trusts that can keep mortgages and rents low.
The city housing department would manage the fund in conjunction with a 12-member commission that would include a mayoral appointee, a lender, a social services provider, an advocate for the homeless, private and nonprofit developers, and low-income residents.
Shantress Wise is pictured in her apartment in Belair-Edison. She made the living room into a bedroom for herself, so three people can live in the apartment and share the rent payment.
(Algerina Perna / Baltimore Sun)The timeline for distributing money would depend on when funding is identified, Ramos said. One proposal is to tax short-term home rentals used for vacations, similar to the tax on hotel rooms, she said.
Legislation now before the City Council would require developers who receive public financing to include in their projects a certain amount of affordable housing. The bill is intended to replace the existing law, which requires the city to compensate developers forced to build affordable housing, and is universally regarded as ineffective.
Councilwoman Mary Pat Clarke said she supports both the legislation and the charter amendment. She said Baltimore must take steps to address the need, including considering floating city bonds to pay for more affordable housing.
If voters approve the charter amendment, Clarke said, she expects the council will be open to finding ways to fund it.
"This is one of those big items that we need to address to move past the 'Two Baltimores' problem," she said. "We've been stuck for a while."
A new council and mayor will take control after the November election. About half the current council members are retiring, sought other office or lost in the April Democratic primary for mayor.
Clarke, who is up for re-election, said she expects the next council to be more resolved to address the city's lack of affordable housing. Several of the Democratic nominees have actively supported efforts to increase affordable housing in Baltimore.
Todd Cherkis, leadership organizer for the anti-poverty group United Workers, said advocates are meeting with council members and candidates to explain the proposed charter amendment and how the city could pay for more affordable housing.
The group sent dozens of volunteers across the city over six weeks to collect enough signatures to enable the question to appear on the ballot. Cherkis said the volunteers — including some of the Democratic nominees for council — gathered 18,100 signatures in support of the measure, well exceeding the 10,000 needed.
The coalition, known as Housing for All, includes the ACLU of Maryland, the Public Justice Center and the Community Law Center.
"A lot of renters are really struggling, and a lot of people are living in substandard conditions or living on the street," Cherkis said. "We have to make sure this is a priority."
Philip Garboden, an academic with the Poverty and Inequality Research Lab at the Johns Hopkins University, said Baltimore has an "enormous affordability gap."
Unlike in cities such as Boston, San Francisco or Washington, he said, Baltimore's biggest affordable housing challenge is its extremely low-income population — not rapidly rising housing costs or a shortage of available units.
"Our rents aren't on the extreme end," Garboden said. "But that doesn't mean our affordability is any better because we have such poverty."
The trust fund idea is not novel. The state of Maryland and Montgomery County are among 750 jurisdictions nationwide that have established such accounts.
Shantress Wise is pictured in her apartment in Belair-Edison. She lives with two roommates in an apartment above a barber shop. She made the living room into a bedroom for herself, so three people can live in the apartment and share the rent.
(Algerina Perna / Baltimore Sun)Maryland's Affordable Housing Trust, created in 1992, has received about $45 million through interest generated by title company escrows.
The account, which is managed by the state Department of Housing and Community Development, promotes housing for very low-income Marylanders by providing funding for construction, assistance for nonprofit developers, support services and operating costs for some developments.
Montgomery County's Housing Initiative Fund, created in 1988, is funded by a combination of sources, including property tax revenue and loan repayments. The account has a balance of about $44 million. The amount available for loans, grants and subsidies varies year by year.
Mary Brooks, who runs the housing trust fund project for the Washington-based Center for Community Change, said the trusts provide flexibility and local control, in contrast to funding provided by highly regulated federal programs.
"We know how to provide affordable housing," she said. "We are just not committing the resources to make it happen. The private market isn't addressing this at all. If it was, we wouldn't be in the mess we're in. And federal funding, of course, is dwindling."
Antonia K. Fasanelli, director of the Homeless Persons Representation Project, said Baltimore is behind other cities in making sure people at all income levels have safe, quality and affordable places to live.
"This is critically needed," she said. "This is a way for Baltimore to step into the current urban thinking."
I don't want our Baltimore City election referenda talk to be about the privatization of all that is public----but it is. From Charter Amendments to loans for affordable housing, from creating a Trust for affordable housing to creating a quasi-governmental corporation handling all activity on affordable housing----THAT IS WHAT BALTIMORE'S REFERENDA DO.
Obama started his term in 2009 by making clear---he was following the CLINTON/BUSH dismantling of our Federal Housing Agency and our HUD tied to funding these. Obama was the source of sending Federal funds to tie private equity firms to our public housing as the step to privatize them away. Obama then created these housing authority guidelines to promote partnerships like this in ENTERPRISE ZONES----calling them social benefit non-profits.
WE THE PEOPLE need to think about what these safety nets have done for citizens. I understand that Clinton/Bush/Obama deliberately created high unemployment leading to too many people being on public housing. That was never what this agency was for. The alternative is THE POOR FARM----which is right wing and it is to where 1% Wall Street is going. Once global corporate campuses and global factories are built ----then that POOR FARM will be on that corporate plantation. If we are going to rebuild a middle-class we need to protect those SAFETY NET PROGRAMS----what we see in Baltimore is the opposite and refuses to address the need for mixed-income housing in city center----we know REAL affordable housing when we see it!
HUD’s privatization scheme may herald end of public housing
New national experiment could eradicate affordable housing and displace millions of low-income tenants
November 13, 2014 2:00AM ET
by Rebecca Burns @rejburns
At a time when a shortage of affordable housing is devastating low-income families, U.S. policymakers appear to have all but given up on the idea of a state-managed public housing system. The U.S. Department of Housing and Urban Development (HUD) says more than $26 billion (PDF) is needed to repair the nation’s aging public housing, a backlog that has left many residents in deteriorating living conditions.
Yet the notion that the solution lies in improved public funding and support — or that public housing should be publicly owned at all — has become a political nonstarter. Instead HUD is embarking on a sweeping privatization program in the name of renovation. After decades of demolitions and decay of public housing units, the Rental Assistance Demonstration (RAD), a pilot program that purports to preserve existing housings units by providing access to more stable funding, could eradicate public housing as we know it within the next three decades.
Launched in 2013, the RAD will hand over 60,000 units of public housing to private management by 2015. While that’s only a fraction of the nearly 1.2 million public housing units nationwide, RAD’s reach could soon expand: HUD Secretary Julián Castro and participating developers are lobbying Congress to lift the cap set during the program’s initial phase and allow more conversions to private ownership, and HUD is requesting $10 million toward the expansion of the RAD.
In a recent editorial for USA Today, Castro called for a “new approach” to affordable housing. Among other things, he proposed overhauling our public-housing system in order to “tap into the power of the marketplace.” But the agency doesn’t seem able or willing to say what will happen in the long term to public housing units outsourced to private developers.
To be sure, the U.S. model of public housing is flawed. Since its inception in the 1930s, public housing has been constructed primarily in poor, minority neighborhoods, reinforcing racial segregation and the marginalization of low-income residents. But in a time of deep economic pain, public housing continues to provide a crucial safety net for more than 2 million people.
Market-based solutions are hardly a new approach to the United States’ affordable-housing woes. The RAD is but the latest in a series of initiatives to propose a rescue by private capital as the solution to a free fall in public housing funding. In 1992, for example, HUD launched HOPE VI, a federal program that issued grants to developers to tear down distressed public housing units and construct mixed-income communities in their place. Though the program was ostensibly intended to decrease concentrated poverty, for many public-housing residents, HOPE VI brought displacement and a string of broken promises. To date, as many as 250,000 units have been lost to demolition or sale as the result of HOPE VI and subsequent initiatives. Residents of distressed buildings targeted for demolition were often told that they would be relocated. However, there was no firm requirement that demolished housing had to be replaced at a 1:1 ratio, and only a third of the housing torn down through HOPE VI was ever rebuilt.
For many public-housing residents, RAD’s arrival evokes an eerie sense of déjà vu. Some who were forced out of their homes by HOPE VI demolitions now live in buildings designated for RAD conversions and fear that they could soon suffer a similar fate. While HUD touts long-term preservation of affordable rental housing as RAD’s primary goal, tenants remain wary, given housing authorities’ repeated failures to back up sanguine pronouncements with any real oversight.
In addition to its potentially harmful effect on tenants and workers, the RAD could serve as a vehicle to help investors acquire prime real estate and gentrify cities on the taxpayer’s dime. Most developers who rehab housing through RAD will receive low-income housing tax credits, which come with requirements regarding continued affordability. But at the end of a RAD contract — typically 15 to 20 years, with one renewal — developers are free to do as they wish with buildings, including turning them into market-rate apartments. As public-housing residents brace for another wave of displacement, many of the contracts between local housing authorities and developers are being negotiated in secret. Residents and housing advocates are pressing for more information about these contracts.
In Baltimore, where nearly 40 percent of the city’s public-housing units are slated to undergo RAD conversions during the program’s first round, Housing Authority Commissioner Paul Graziano says RAD will be “a shot in the arm” for public-housing communities. But residents here are far more concerned about being shot in the back.
On Oct. 22, Baltimore public-housing residents held a renters’ rights rally outside a Housing Board of Commissioners meeting to protest what they say has been a lack of transparency about the potential impact of the RAD. In addition to the apparent absence of protections to ensure buildings’ long-term affordability, residents emphasize the uncertainty over how their existing tenant rights will be preserved under the program. Those who are organizing against RAD in Baltimore say they have already begun receiving eviction notices, even after they paid their rent — a move they suspect may be an attempt to force the tenants out of their buildings or silence them from causing troubles for the new owners.
Tenants are not the only ones opposing the RAD. The program’s proponents boast that it will create at least 120,000 jobs nationwide. But in Baltimore and San Francisco, unions representing security and maintenance workers in public-housing buildings say as many as 200 of their members in each city could be laid off as a result of RAD implementation. There are questions over the quality of jobs that would be created. A host of developers and real estate associations undertaking RAD conversions recently wrote to HUD seeking to ensure that Davis Bacon — a law requiring that federal contractors performing work on public buildings pay their laborers no less than local prevailing wages — would not apply to their projects.
In addition to its potentially harmful effect on tenants and workers, RAD could serve as a vehicle to help investors acquire prime real estate and gentrify cities on the taxpayer’s dime. Critics note that some of the public-housing properties chosen for RAD conversions are those that would be most attractive to investors rather than those most in need of repairs. Several buildings in Baltimore included in the program, for example, are located across the street from John Hopkins hospital or in the gentrifying neighborhood of Mid-Town Belvedere.
Thus far, the HUD push to lift the cap on RAD conversions has been unsuccessful. Earlier this year, Congress maintained the cap in the 2015 spending bill after House Financial Services Committee Chairwoman Maxine Waters, D-Calif., wrote to HUD expressing concern about the program and insufficient evidence of positive outcomes. But a group of developers known as Lift the RAD Cap Coalition is lobbying Congress to expand the RAD to 185,000 units in the final 2015 budget.
If altered substantially to engage tenants in the process, the RAD could provide an opportunity to rethink the U.S. model of public housing. Some housing advocates are looking into acquiring public-housing buildings through community land trusts that could be managed by tenants and current building workers and into assisting tenant organizations in buying back buildings after RAD contracts expire. By forcing such organizations to compete with deep-pocketed investors and disregarding or punishing tenants who speak out, housing authorities are closing off alternatives that could truly begin to improve a troubled but vital institution.