Background: The Sudbury Housing Trust (Trust) was created in February 2007 to provide for the preservation and creation of affordable housing in the Town of Sudbury for the benefit of low and moderate income households. The principle source of funding for the Trust is an annual assignment of 10% Community Preservation Fund revenue. In 2009 the Trust purchased a parcel of land (less than one acre) at 278 Maynard Road for $310,000. The land was purchased specifically for the development of affordable housing. In May, 2009 the Trust entered an agreement with NOAH (Neighborhood Organization for Affordable Housing) to develop six units of affordable housing on the Maynard Road property. 278 Maynard Road is, financially, the largest, full scope project the Trust has managed since its’ inception in Sudbury.
Discussion: Eight months after the award of this project to NOAH, the Trust approved NOAH’s building plans and NOAH initiated proceedings for a comprehensive permit to build. An introductory meeting was held with the neighborhood on Maynard Road to familiarize the neighbors with the project. The neighbors were not happy with the project, specifically the plan for six housing units on one acre.
In fact six exceeds the Town/Trust’s own maximum guideline of 4/acre. After many discussions, plan revisions, and ZBA hearings the Trust gave-in to the neighbors’ objections and negotiated a new agreement with NOAH to reduce the development from six to three units of affordable housing in February 2011. The original Trust budget for the “hard construction costs” of six units was $1,335,000 or approximately $223,000/unit. The Trust budget for hard construction costs in the new agreement for three units of housing was $549,000 or approximately $180,000 per unit.
NOAH did not agree with this budget for construction costs and insisted on including an “amended budget clause” (Paragraph 6h of Development Services Agreement 3FEB2011) that would adjust the budget after actual contractors bid to approved plans for the project. In February 2011 six construction bids were obtained by NOAH establishing a real market cost range of $307,000 to $392,000 per unit. Actual bid costs were 71% to 118% over the Trust budget. Attempts were made to cost reduce the plans and re-bid but the lowest revised bid was still 39% over budget.
This was not affordable housing by any stretch of the imagination. From April of 2011 to February 2012 there were a great many accusations directed from the Sudbury Housing Trust (Trust counsel Pierce and Mandel, PC) toward NOAH, and from NOAH (NOAH counsel Smolak and Vaughn) back toward the Trust. Finally, in March 2012, a settlement and release was signed wherein both parties agreed not to admit any “wrong doing” and not to make any derogatory statements about the Project, the other Party, its officers, directors, trustees or employees.
So what have the residents and taxpayers of Sudbury gained from this project? And what have we learned from this project?
- The Sudbury Housing Trust has a real property asset at 278 Maynard Road purchased at a cost of $310,000. It was purchased with Community Preservation Funds and it may or may not be developable as affordable housing in the manner it was marketed to the Town.
- The Trust owns a comprehensive permit for 278 Maynard Road with an accounting value of $258,000 and a questionable real market value. This accounting value is apparently the cost to date for engineers, architects, lawyers, accountants, administrators, etc. for both the 6 and the 3 unit plans. This sunk cost of $258,000 is also Community Preservation funds.
- In Town Meeting 2012 both the Financial Committee and the Board of Selectmen recommended continuation of the 10% CPA revenue allocation to the housing Trust. There was no validation or discussion offered by FINCOM or the BOS for their recommendation. In the Housing Trust presentation there was no mention of any current project “challenges” or shortfalls in accomplishing project goals.
- The Housing Trust has issued a new RFQ for development services to determine if a different developer, different contractors and/or different specifications can salvage some portion of the sunk cost at 278 Maynard Road for affordable housing. If not, the only remaining option may be to sell the property at market value (perhaps to a real 40B developer).
Recommended Near term Action:
- The Trust prior to spending additional CPA funds, and certainly prior to next annual Town Meeting, should publicly present their analysis of the errors in the 278 Maynard Road project and propose how the Trust plans to make lemonade out of the existing lemon. If we cannot admit we make mistakes, and open them to discussion, we will never correct our processes.
- There needs to be more budget oversight in the activities of the Trust. The Sudbury Financial Committee (FINCOM) should validate and certify the Trust annual and individual project budgets as reasonable, allocable and appropriate. The Housing Trust should not be permitted to act autonomously if the Town ultimately holds responsibility for their actions. When FINCOM and the BOS report at Town Meeting they should report the basis of their recommendation for continued funding.
- The Trust needs to create a plan to better “socialize and legitimize” its proposed projects with the Town, and specifically the project neighbors, prior to spending significant dollars on its’ own concepts and construction plans.
- The downsizing negotiations with the “neighbors” and the termination negotiations with NOAH were conducted without the benefit of minutes or negotiation records. There may be a need to manage information during discussion but the goals of any negotiation, the results and the rational/concessions leading to the results should be public information. These are public funds.
- The termination negotiations with NOAH were conducted solely by Larry O’Brien, the Chairman of the BOS and the BOS representative to the Trust. In accordance with the Declaration of the Housing Trust any proposed expenditure, assignment or negotiated settlement of real or personal property by the Trust should be reviewed and approved/denied by the Board of Selectmen prior to execution on the basis of a majority vote. There is no record of the negotiated settlement being discussed or voted by the BOS. Why aren’t we in compliance with our own legal requirements?
- Significant operating expenses (Trust administrative, town staff, Town counsel, outside counsel) were incurred over the past two years. These expenses produced no measurable progress for affordable housing. It is noted the Chairman and Trustee of the Housing Trust during this project was Mike Fee. Mike Fee is also Partner in Pierce & Mandell, PC, the Trust’s legal Counsel. It would be appropriate for the Trust to confirm to Sudbury taxpayers that Pierce and Mandell’s work was pro-bono and not a part of the legal expenses. In fact, it would be appropriate for the Trust to give a complete breakdown of its’ legal expenses in the FINCOM review discussed above.
The mission of the Housing Trust is noble. We need to improve on the planning and execution. Sudbury, we can do better.