The Needham partnership agreement with Cambridge Housing, as co-developer, is over.

NEEDHAM, MA  -  On Tuesday April 2, 2024 the Needham Housing Authority (NHA) adjourned to Executive Session, twenty minutes into the Special Meeting, which was scheduled to start at 4PM.  It took the whole twenty minutes to get the zoom-only meeting up and running.   It made you wonder if anything was going to be easy for the NHA. 

By 5PM the NHA Board had emerged from the cloak of darkness to make a joint announcement with the Cambridge Housing Authority (CHA) that the engagement was over.  We are NOT getting married.   The parties are going their separate ways.  The search for a development partner in Cambridge is suspended.

NHA wanted to try to work with CHA as co-developer, because NHA needed a developer, and, instead of interviewing new and other prospects, NHA wanted to try to construct an agreeable partnership and formalize it.    So, why is this agreement now dissolving?   Or, as we are wanting to say, pivoting.

Since the NHA needed CHA to carry out the proposed MRI/PRI projects.  And NHA needed CHA more than CHA needed NHA, except for the vital Housing Authority status, there was the notion that NHA was too dependent on Cambridge.  That Cambridge was steering the ship - calling the tune - requiring more market rate density than is appropriate or needed.   Needham, a small Housing Authority, has had spotty success in demonstrating the capacity to handle capital projects, working with anybody but Cambridge over the decades.  

There was a difference of opinion, as to whether or not CHA was in a position to take advantage of Needham.  In the end, "in the best interests of the Town," the NHA Board agreed with the CHA consultants and the lawyers, to use a competitive 30B process, whereby NHA could procure the services of CHA, but not as a partner.  Cambridge would bid on the work, like anyone else.

Cambridge cannot continue to bill for more new pre-development consulting work.   NHA was discouraged in the past from begging for more funds, not having spent, nor billed out entirely, for the CPC grants approved by Town Meeting in 2022.   The expectation is that there must be modernization, upgrading, or other real improvements to show, for all the support.  Cambridge is not opposed to the new arrangement.  When an RFP goes out, CHA's familiarity with the site will make them the leading candidate in bidding for the construction. 

There were other complications.  For instance, as someone said, there are often "internal" and intergovernmental arrangements with this type of housing that could later turn off "external" and private investors, who might not have confidence in how the project was developed.

The realignment was worked out by a negotiating committee consisting of Eleanor Evans, NHA member, Cheryl Gosman, NHA Executive Director, Jonathan Driscoll, att. for NHA, and Teresa Santalucia, att. specialist. 

It was acknowledged, this "is a different project now than six months ago."  One change is the size.   The Linden/Chambers Redevelopment with 152 units on eleven acres (or seven acres excluding wetlands) has been downsized to the Linden (only) Redevelopment of 72 existing units on less than four acres.  NHA will still be asking CPC for over $6 million at Town Meeting.

Coincidentally, Margaret Moran from CHA noted that recent changes at HUD will allow Housing Authorities with small projects of less than 250 tenants to use Section 22 rules instead of the Section 18.  The Section 22 program allows smaller projects to be "streamlined" with less documentation, market studies, and so on.   

The concerning aspects of these changes include reduced technical consultation, and the possibility of reduced quality workmanship, a concern of an NHA Board member.  Matt Zajac of CHA, said that with less complexity and fewer sequenced events, required with Section 22, that NHA "could manage a project like this from beginning to end."  He said, "our thing is that it (be) manageable for Needham."   However, Needham has acknowledged that there is insufficient in-house capacity to oversee a larger project.

Mr. Zajac also referred to procedures in Section 22 that offer ways to finance smaller projects, such as, the latest version of a Linden cluster housing makeover, or enable them to proceed with the overall master plan, which is "the close out of public housing."  At the same time, in this mix, Matt suggested that NHA could spend the operating reserves and cash reserves held for the High Rock buildings and use that money on the other projects.  He also talked about looking at the cash flow at the Seabeds/Captain Cook developments in order to cross subsidize Linden/Chambers.   This is dangerous talk, especially since the March NHA Board packet included an accountant's report (from Markum, no less!) scolding the NHA because one of the third-party property managers had been spending money from the tenant's escrow accounts to cover operating expenses.  

The change in the relationship between Needham and Cambridge Housing could change everything.