February 8, 2018 – Two weeks ago, the Defend Glendale & Public Housing Coalition (DG&PHC) sent a letter to Minneapolis City Council members, recommending the Council immediately review the activities of the Minneapolis Public Housing Authority (MPHA). We included documents DG&PHC has obtained through public records requests – including contracts, invoices, and work products – proving that MPHA and its contractors have quietly undertaken extensive privatization planning for Minneapolis public housing over the past year. We called particular attention to MPHA’s request to the Department of Housing and Urban Development (HUD) for the authority to release two properties from legal protections known as Declarations of Trust (DOTs). DOTs are the foundation for public ownership of public housing, and releasing them opens the door to privatization.

Within a few days, MPHA published a response to our letter on its Facebook page. In its statement, MPHA failed to address any of the documents that show, among other things, recommendations to cut security and tenant services, transfer ownership of much of its housing stock into private hands, and demolish several of its properties. Unable to refute any of the evidence presented by DG&PHC, MPHA executive director Gregory Russ and PR flack Jeff Horwich instead honed in on just one sentence of DG&PHC’s letter, using it to smear public housing residents who are fighting back against privatization.

MPHA tried to discredit our letter based on our estimation that it would be “a good bet” that the Glendale neighborhood would be included in the two properties released from DOT protections and privatized in 2018. It’s true – the long-running battle over the future of the Glendale community, coupled with the many references to redevelopment plans for Glendale in the documents, led us to this conclusion. MPHA responded:

“What we actually might hope to pursue are pilot projects to implement energy-efficient, passive-design upgrades to two of our buildings. This is still at a highly conceptual stage, but the most likely candidates would be one of our 740 scattered-site homes in the city and (a larger lift, but a very exciting prospect) one of our mid-rise buildings. […] And despite the belief by some that every move we make must be about Glendale, this has nothing to do with Glendale.”

We hope MPHA can find it in their hearts to forgive the vigilance of Glendale residents who have endured years of cat-and-mouse games with an agency hell-bent on destroying their community! MPHA wants to discredit us based on this minor point alone. Yet they continue to hide the identity of the “mid-rise building” slated to be released from DOT protections this year. MPHA claims to have disclosed this in some nonspecific “on-the-record” setting; however, no transcripts of these conversations appear to be publicly accessible. If Russ and Horwich had nothing to hide, they wouldn’t keep residents and the public playing guessing games.

In any case, MPHA’s response does nothing to alleviate DG&PHC’s concerns. Privatization of any Minneapolis public housing, Glendale or otherwise, is unacceptable. While releasing Glendale from DOT protections might not be on this year’s docket, MPHA conveniently omitted that its request to HUD potentially would allow it to do so in later years without explicit HUD approval. If these DOT releases are granted by HUD, any and all MPHA properties could be privatized in the years to come.

MPHA’s claim that its request for DOT releases is just to make its buildings more “energy-efficient” and to “help meet the city’s climate change goals” is undercut by the fact that it has already made numerous eco-friendly upgrades to properties with DOT protections still in place. For example, it was pressure from Glendale residents, not MPHA, that led to recent energy-efficiency and insulation upgrades made in partnership with the SRC (Sustainable Resources Center). MPHA hardly paid for it – it was state and federal funding that covered the costs. MPHA director Gregory Russ’s real intentions are clear: for him, eco-friendly retrofits are only desirable when they are a Trojan Horse for privatization and weaker protections for residents. But there’s nothing ‘sustainable’ about the destruction and displacement of working-class, Black, and immigrant communities!

MPHA writes: “No one loses housing; no private investor would gain control; the mission of the properties would not change in any way.” The documents show these claims are seriously misleading. Under the privatized ownership model MPHA is likely to pursue, private investors would control the vast majority of ‘ownership interests’ of the property in question–as much as 99.99%–and be entitled to profits while having “veto power over major decisions.” While a subsidiary company created by MPHA theoretically would be granted certain powers for its tiny 0.01% ownership share, its real authority would be ambiguous at best. Any affordability requirements under this structure would either rely on a temporary land use restriction agreement, or change to a program where subsidies are paid directly by the federal HUD under a Trump administration eager to impose drastic cuts. No matter how you slice it, privatization would open properties to rent hikes and resident displacement in the future.

That’s why it’s astonishing to see MPHA claim that “This has nothing to do with ‘selling off’ or otherwise using our properties for any purpose other than the one they serve now: housing extremely low-income people.” The facts show MPHA plans to transfer building ownership into private hands in exchange for funding, which clearly constitutes “selling”, after which MPHA can offer only empty “guiding principles” instead of enforceable guarantees for residents.

In fact, a recent strategy document from an MPHA contractor lists upcoming “challenges” for MPHA that include “Revise charter to allow MPHA to own, develop and manage non-public housing apartments”; “revising MPHA’s bylaws to allow the agency to own and manage units that are not subsidized”; and “Garner buy-in from local community and residents as MPHA defines its new role.” While MPHA likely would continue to pay lip-service to public housing residents , its “new role” would allow ‘affordability’ to function as a moveable goalpost, concealing private investors eager to exercise their ownership powers for profit. Essentially, MPHA would become a quasi-private entity, funneling public money into private hands, which would be the end of public housing.

Most astonishing of all is MPHA’s characterization of its plans as “adapting the antiquated ownership structure around the buildings so that we can take out loans and/or attract other funding.” 

First off, MPHA repeatedly has indicated–notably in its misleadingly-titled “Pathways to Preservation” slideshow–that its preference is not merely to take out loans, but to pursue the privatized ownership structure described above, under the auspices of Low-Income Housing Tax Credits.  Secondly, on the topic of “other funding,” similar to other public housing agencies, MPHA should be accessing funding at the state and local levels to keep public housing public, not pushing for a pathway to private ownership! Lastly, the “antiquated ownership structure” MPHA refers to is the Declarations of Trust, which protect public ownership of public housing.  MPHA’s request to HUD is not to “adapt” DOT protections, but to be released from them entirely, which would be the end of public housing.

For MPHA to call DOT protections “antiquated” means MPHA thinks public ownership itself is antiquated. It is apparent MPHA leadership has already abandoned its mission of providing public housing. We at the Defend Glendale & Public Housing Coalition renew our call for the City Council to intervene to prevent these privatization plans from being carried out, and to remove the appointed officials responsible.

References:

➢     MPHA’s Facebook post of January 25, 2018: https://www.facebook.com/mplspublichousing/posts/2359285080763999

➢     Examples of invoices from MPHA-contracted privatization consultants, documenting extensive work from as early as May 2017: https://tinyurl.com/CSG-Ameresco-Invoices

➢     Memo detailing the proposed privatized ownership structure under Low-Income Housing Tax Credits (for-profit partnership where private investors own 99.99% of properties, with veto powers): https://tinyurl.com/MPHA-LIHTC-Ownership-Structure

➢     Screenshot of an earlier version of MPHA’s “Pathways to Preservation” slideshow, showing MPHA’s intent to sell 99.99% of building ownership to private investors as early as April 2017: https://tinyurl.com/MPHA-s-Pathways-to-Destruction

➢     CSG Advisors Portfolio Strategy for MPHA, “draft for discussion” dated December 8, 2017, including detailed recommendations for redeveloping Glendale Townhomes into privatized mixed-income housing, rankings of which public housing high-rises to privatize, as proposals to cut security and tenant services from MPHA properties: https://tinyurl.com/Portfolio-Strategy