Sunday, March 17, 2013

Harvard’s Disappearing Elderly Housing - Why? Tax credit expired?

1. Introductory.
2. Good point.
3. Response.

1. Introductory.

I left the topic of Harvard’s disappearing elderly housing with the intention of doing some more research.

Doing my research caused me to be down for a few days.

I have gotten the following well thought out opinion on the reason for the maneuvering.

It is a good point and helps me get back in without the need for finishing the extensive research I was in the middle of. The only reason I am not identifying the source is that I have had people send me suggestions who then would be downright shocked if I printed the idea with their name attached, thinking they were sending just a friendly idea.

I have suggested to the author that I would be pleased to identify the author should the author so wish. In the meantime, it is a good point.

2. Good point.

Tax credits were available 20 or so years ago to developers of new low-rent buildings. I think the 20-yr life of that tax break is ending. Expiring-use is the term used to describe the situation. Benefits of owning such a building disappear and uncertainty about the future is created for the tenants. Although Harvard is nonprofit they may have been able to sell the annual tax credits to others.

This is my unverified guess about the situation...

3. Response.

There could very possibly be some tax angles of this sort maneuvered into the transaction.

The variance was granted on October 5, 1970. It was a modification to a prior variance.

The entity receiving the variance was identified as “Putnam Square Apartments, Inc., by Thomas W. Cornu, Treasurer.”

Under the variance, this building was allowed to have about 50% more floor space than it would have been allowed in Harvard Square, a few blocks away. The zoning was the same as Harvard Square proper until we changed it to neighborhood zoning in the 1989 Natalie Ward (East Harvard Square) petition.

My first exposure to the nuances of this property came few years after the 1970 variance when everybody in the room seemed to agree that this was the typical disappearing affordable housing allowed under the various games in style that week.

The neighbors were insistent that the construction was by a straw and that Harvard was the real owner. The owners insisted they were owners in reality.

A few years later, Harvard suddenly became the owner.

My informed estimate is that this was a con by which Harvard was creating housing for people affiliated with the school and that Harvard did not then need the housing. So Harvard played the games and got a massive building and an arrangement by which Harvard would eventually have housing for affiliates at no real cost to Harvard.

My opinion is that Harvard’s purchase of the I90 (Mass. Pike) exit to Cambridge / Brighton provided Harvard with such a massive area for future development that Harvard figured this property was worth more to it selling the property than as future affiliate housing. In the past decade or so, fine print in parking requirements of the zoning have been changed by Decker and company to ease conversion to affiliate housing rather than continued use as elderly housing.