Title
Housing Authority of the City of Annapolis Receivership - For the purpose of the City Council supporting the U.S. Department of Housing and Urban Development appointment of an administrative receiver, a seasoned professional with extensive expertise in public housing management, to take over the administration and operations of the Housing Authority of the City of Annapolis; and allowing the receiver to have the authority to make necessary changes and improvements to ensure the quality management of low- and moderate-income housing in the City.
Body
CITY COUNCIL OF THE
City of Annapolis
Resolution 33-24
Introduced by: Alderwoman Tierney
Co-sponsored by: Alds. Savidge, O'Neill
A RESOLUTION concerning
Housing Authority of the City of Annapolis Receivership
FOR the purpose of the City Council supporting the U.S. Department of Housing and Urban Development appointment of an administrative receiver, a professional with expertise in public housing management, to take over the administration and operations of the Housing Authority of the City of Annapolis; and allowing the receiver to have the authority to make necessary changes and improvements to ensure the quality management of low- and moderate-income housing in the City.
HACA AND ITS RELATIONSHIP TO THE CITY
WHEREAS, The Housing Authority of the City of Annapolis ("HACA" or "the Authority") is a board-managed non-profit, and a legal entity separate from the City of Annapolis, established to provide safe and affordable housing for low- and moderate-income residents of Annapolis; and
WHEREAS, HACA was established by state law (Housing and Community Development Article § 13-101 through § 13-112 of the Maryland Code). The state gave HACA's independent Board of Commissioners responsibility for the Authority's facilities and operations, leaving the City of Annapolis responsible for appointing HACA commissioners and conducting building inspections; and
WHEREAS, HACA currently owns and operates five low-income housing developments in Annapolis through participation in federal Department of Housing and Urban Development (HUD) programs. The Authority's offices are separate from those of the City of Annapolis, and HACA employees are not included in or entitled to benefit programs of the City. Separate accounting records are maintained, and HACA debts are not obligations of the City; and
HACA'S FINANCIAL SITUATION
WHEREAS, HACA Executive Director and CEO Melissa Maddox-Evans urgently informed City officials that the Authority is facing a critical financial situation. Funds are projected to run out on August 1, 2024, which is the last day that HACA will be solvent until the new federal fiscal year begins in October; and
WHEREAS, HACA receives its funding for Public Housing from HUD in the form of Section 8 housing assistance, Public Housing subsidies, and grants. According to HACA's fiscal year 2022 Operating Budget, the last publicly available budget, the authority projected a $36,881 loss in its public housing operations during FY22; and
WHEREAS, In the most recent publicly available HACA audit (fiscal year 2019) HACA incurred an overall loss of $1,773,989. While the authority's total revenues increased by $490,634 in FY19, expenses increased by $858,332, primarily due to rises in administrative, tenant services, and general expenses, as outlined in the HACA Independent Auditor's Report dated March 31, 2020; and
WHEREAS, HACA's financial difficulties stem from financing and management decisions. HUD sets rents at HACA Public Housing at $980/month per unit, with residents required to pay 30% of their available income toward rent. However, the average renter payment is approximately $300, leaving HUD to cover the difference while Congress slashed HUD funding for Public Housing units by 17% between 2001 and 2019 and shifted federal funding to different low-income housing programs, such as housing vouchers, according to the Center on Budget and Policy Priorities; and
WHEREAS, HACA is participating in the HUD's new housing program called the Rental Assistance Demonstration Program (RAD), which converts conventional Public Housing units into a Section 8 voucher platform. Under this program started in 2012, a public housing project can use RAD's funding structure to pay for building repairs and rehabilitation. HACA, however, did not begin converting its Public Housing units to the RAD program until 2017 and won't be able to reposition its remaining public housing stock into RAD units until the end of 2026.
HACA MANAGEMENT AND OVERSIGHT
WHEREAS, HUD's first evaluation of HACA's Public Housing units since the COVID-19 pandemic gave the Authority a score of 43 out of 100, well below the passing score of 70, and classified HACA in the Public Housing Assessment Systems (PHAS) 2023 report as a 'troubled' performer; and
WHEREAS, The scores of the Public Housing properties that HACA owned in 2019 before the pandemic include:
• Harbor House Apartments (357 units / 631 residents)
ž Failed in 2019 with a score of 48
ž Had at least five physical inspections between 2013 and 2019, failing three of them;
• Robinwood (149 units / 421 residents)
ž Failed in 2019 with a score of 47
ž 34 points worse than the average for Maryland;
• Newtowne 20 (77 units / 148 residents)
ž Failed in 2019 with a score of 22
ž Failed four times between 2013 and 2019 with scores of 40, 34 and 39.
ž Newtowne was demolished in 2020 due to unrepairable conditions caused by a gas leak;
• Glenwood Highrise (154 units / 153 residents)
ž Failed in 2019 with a score of 49 and scores ranging between 46 and 87 between 2013 and 2019.;
• New Bloomsbury Square (51 units / 96 residents)
ž Passed with a score of 83 in 2018; most recent year found
• New Obery Court (40 units / 29 residents)
ž Passed with a score of 82 in 2018, most recent year found;
• Annapolis Gardens-Bowman Court (75 units / 159 residents)
ž Passed with 90 in 2017, most recent year found; and
WHEREAS, Despite complaints that the City's inspections are overburdensome, HACA failed to abide by its agreement to inspect the Authority's units:
• In 1965, at HACA's request, the City agreed to exempt HACA properties from City Code inspection requirements with the Authority agreeing to conduct inspections on behalf of the City, but HACA failed to do that, and
• In 2016, the City conducted general inspections of all HACA properties and found at least 2,498 specific Code violations across the 790 individual units; and
• In 2019, after numerous and ongoing complaints made by the Authority's residents that health and safety concerns having not been addressed, the City resumed rental operating license inspections under R-26-19, adopted on June 10, 2019; and
• City inspectors found rental units that were unfit for human habitation and required HACA to move residents out at the Authority's expense and remedy the Code violations; and
• In 2020, the Maryland General Assembly passed, and the Governor signed, a new law (Housing and Community Development Article § 13-112 of the Maryland Code) prohibiting Annapolis from exempting HACA from property inspections; and
• Each year the City has inspected HACA, the City has provided a $80,000 subsidy for the Authority’s rental licensing and permitting even though it is the sole responsibility of the HACA Board of Commissioners; and
• In 2023, the City urgently requested that HUD place HACA into administrative receivership, a last resort solution to long-standing, severe, and persistent management problems that have led to the deterioration of the housing stock, and allow a HUD contractor or employee to take over HACA's management and operations; and
REQUESTS FOR SOLUTIONS
WHEREAS, The Annapolis Human Relations Commission, at its June 3, 2024 meeting, unanimously voted to request the City to lead the way in partnering with HACA, HUD, and other entities "to identify short- and long-term solutions to ensure that all residents are living in safe and healthy conditions."; and
WHEREAS, Melissa Maddox-Evans, executive director/CEO of the Housing Authority of the City of Annapolis, explained HACA's position in an opinion piece published in The Capital Gazette newspaper on April 10, 2024:
• HACA's "predicament (of financial instability) is brought on by a combination of factors: the city's overly burdensome inspection processes and a subset of residents' lack of financial accountability";
• "we've implemented various administrative and operational strategies, such as selling assets, adjusting our workforce, imposing spending limits and freezing salaries. Despite these measures, they fail to adequately address our financial deficit, emphasizing the critical need for additional support.";
• "Regrettably, a significant portion of tenants are exploiting federal protections meant to assist them during the pandemic. They are betting on HACA's inability to take action against them amid a backlog of eviction cases flooding the judicial system. The burdens of forfeited subsidies and outstanding rent are driving HACA toward a financial cliff."; and
WHEREAS, The City has conducted a comprehensive review of HACA's situation, but unfortunately, our efforts to collaborate with the Authority, HUD, and other stakeholders have not been successful. This is despite entering into a recovery agreement with HACA and HUD in 2017 to ensure safe and affordable housing for all Annapolis residents.
WHEREAS, In 2022, HACA received a $450,000 HUD Choice Neighborhood Initiative (CNI) planning grant to develop a comprehensive plan to totally redesign Eastport Terrace and Harbour House. The City contributed another $1,000,000 in FY 2025 for the next step and has included the Eastport CNI Transformation Plan into its comprehensive plan. Both HACA and Eastport residents deserve the change that CNI promises. However, the City must ensure a financially sustainable path for HACA in order to bring the vision of the CNI Grant to fruition.
RESOLVED
NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL believes that further public investment by City, State and Federal governments in this failing business model would be imprudent and supports the appointment of a receiver for the Housing Authority of the City of Annapolis (HACA).
BE IT FURTHER RESOLVED that we believe a receiver with expertise in public housing management with access to all available federal and state financial resources is necessary to achieve the following objectives:
1. Restore HACA's financial stability,
2. Improve the condition of public housing properties,
3. Ensure the safety and well-being of residents and
4. Develop a plan for the long-term sustainability of HACA.
BE IT FURTHER RESOLVED that we urge the U.S. Department of Housing and Urban Development to take all necessary steps to appoint a qualified receiver as expeditiously as possible. This is crucial for the public interest to ensure the required changes and improvements can be implemented immediately.
BE IT FURTHER RESOLVED that the City Council renew its commitment to working collaboratively with the receiver to ensure a smooth transition and HACA's successful turnaround.
AND BE IT FINALLY RESOLVED BY THE ANNAPOLIS CITY COUNCIL that this resolution shall take effect upon passage.