MPHA has posted a video on their website titled “Pathways to Preservation” that attempts to mislead MPHA residents and the broader public about their plans for the future of public housing in Minneapolis. Defend Glendale & Public Housing Coalition (DG&PHC) has analyzed the video in order to demonstrate the ways MPHA lies, distorts, and omits the truth in order to push their privatization agenda. We have identified and documented 18 of the biggest lies and misleading statements presented in the short video. We encourage all residents and allies to use this document we have created to push back on the PR spin MPHA uses in their conversations with residents and the public.

Lie #1 – “We can’t rely anymore only on the federal government [for funding].” (1:20)

Reality – MPHA’s video is deceptive from the start. To begin with, the graph they use to illustrate this point about federal funding is misleading. It shows how funding from the federal government for MPHA’s public housing capital needs (i.e. construction and repairs) decreased between 2009 and 2016, from around $14 million to a little over $10 million. Yet they choose to start the scale of the graph at the $8 million mark, making it look like MPHA lost over half its funding when in fact it was a much smaller drop relative to their total funding. If they had started the graph at $0, the visual effect would have been very different, and more accurate.

Secondly, while it’s true that federal funding for capital improvements has decreased in recent years, there’s no reason to assume that will continue forever. In fact, the most recent omnibus spending bill signed into law on March 23, 2018 actually increased funding for the nation’s public housing capital needs by 42% over 2017 levels! This proves that MPHA’s claim – that the US government won’t continue to fund public housing – is completely false.

Whether or not public housing receives adequate federal funding is a question of political will. As a nationwide movement for housing justice grows, our elected officials will feel more pressure to fund public housing. Housing authorities like MPHA could choose to be part of that movement, but instead they’ve preemptively decided that the very thing they’re tasked with protecting is a lost cause. And while they want the public to agree with them, we don’t. 

Lie #2 – “City and state governments can help … but we don’t realistically believe the city and the state will have the money to solve our [funding] problem entirely.” (1:23)

Reality – As demonstrated above, the city and the state don’t need to solve the problem entirely – there is still plenty of money to be fought for from the federal government. That said, the city and the state could and should do more. Until recently, Minneapolis had a levy that contributed millions of dollars in funding for MPHA each year. The city should bring that back – on the condition that the money goes toward publicly owned housing, not the privatized housing that MPHA wants to create.

The state of Minnesota could similarly contribute more to public housing by diverting funding away from private sector “affordable” housing – housing that doesn’t meet the needs of the state’s poorest residents the way public housing does. For example, the 2017 Minnesota state budget included $77 million in bonding for housing, yet all but $10 million of this was earmarked for privately-owned housing only. In other words, state funding for housing already exists but is largely being used to line the pockets of private developers rather than maintain public housing for the common good. Unfortunately, for the 2018 state budget, MPHA has endorsed the so-called “Homes for All” agenda, largely a front for private housing developer lobbying, which would direct 80% of the state housing budget to private rather than publicly owned affordable housing. Once again, it’s a question of political will. MPHA should join with residents advocating for city and state funding that keeps public housing public, rather than helps to privatize it.

Lie # 3 – “We work hard to take care of all of our properties.” (1:46)

Reality – MPHA cannot make this statement credibly. It has neglected several of its properties for years. Take Glendale Townhomes, for example. This is the public housing development, home to many immigrant and refugee families, that MPHA has been targeting for privatization since 2010 or earlier, when construction of the Green Line light rail began nearby. With that investment came intensive plans to gentrify Glendale, which sits adjacent to the already expensive (and white-dominated) Prospect Park neighborhood. MPHA even enlisted Sherman Associates, a private development firm, to draw up plans for a whole new private development on the property.

A major way that public housing authorities work toward eliminating public housing is by neglecting it, so that after enough time has passed they can claim that the buildings are beyond repair and need to be torn down. MPHA tried that tactic at Glendale Townhomes. Between 2009 and 2012 Glendale received less than 1% of the capital improvement budget that MPHA allocated for all of their properties, and from 2013 to 2018 Glendale received $0 for repairs. But despite MPHA’s effort, the tactic didn’t work. In fact, it’s a testament to the quality of construction of these homes that HUD still rates their condition as 98/100.

Recently there were some improvements made at Glendale Townhomes, but not thanks to MPHA. MPHA had made residents’ lives miserable by reducing the heat in their units without providing proper insulation and weatherization. Resident leaders from DG&PHC organized and fought back, and eventually pressured MPHA to accept help from the Sustainable Resource Center. SRC rehabbed the homes at no cost, with updated weatherization in each unit to insulate the homes so residents don’t freeze during the winter.

Lie #4 – “In 2017, our public housing would need $127 million to make all the improvements we believe we should make … In 20 years, if we don’t find new sources of money, it will be more than $500 million dollars.” (2:12)

Reality – MPHA repeats these figures over and over again – $127 million and $500 million – but they won’t reveal how they came up with them. If their public housing properties were assessed by a third party, who was that third party? When was this assessment completed? Where is their data? How many properties did they inspect, and what did that inspection entail? What are MPHA’s criteria for “improvements we believe we should make”?

Through public records requests, DG&PHC has learned that the $127 million figure includes the cost of unnecessary redevelopment of non-housing properties owned by MPHA, such as their administrative offices, as part of their capital “needs.” According to internal MPHA emails, it also includes the cost of capital needs that have already been addressed in 2017.

Clearly, MPHA is painting an exaggerated picture of its immediate capital needs in order to convince the public that it needs more money than it could ever possibly get from public sources – and that it’s therefore necessary to privatize its buildings. Once again, they imply that there will be inadequate funding coming from various levels of government when we know that is not true. They also fail to mention that, per public documents obtained by DG&PHC, MPHA is sitting on $23 million in reserves that could go towards capital improvements of public housing! That would make quite a dent, especially if they focused their repairs on truly immediate and important housing needs.

Meanwhile, while they complain about not having enough money for repairs and upkeep, MPHA wastes our tax dollars by hiring privatization consultants. In 2017 they reached into their reserves to pay $1 million to eight private companies to come up with privatization plans to dismantle all our city’s public housing properties (42 high rises, Glendale Townhomes, and at least 732 family homes).

MPHA’s lack of transparency has made it impossible to know what Minneapolis public housing’s real needs are, but it’s certainly less than $127 million. For this reason, we demand that MPHA undergo an independent government financial and capital needs audit, because we believe they are using this false narrative to destroy public housing.

Lie #5 – “We promise that no resident will lose housing because of renovations or redevelopment.” (3:01)

Reality – In this section of the video, MPHA begins laying out its “promises” to residents, which we know are worthless because they won’t commit to them in any binding legal way. MPHA also uses vague language and omits key facts in order to present a misleading picture of what their privatization plans will do.

The first statement of this section is misleading because it sounds like MPHA is saying that no one will have to move. But that’s not true. MPHA could still force residents to move out for renovations. What they really mean is that residents who are forced to move out of their homes will be given vouchers for other housing. Since it can be hard to find housing that accepts these vouchers, residents will be forced to move out of their neighborhoods or possibly even out of the city entirely. The communities and support networks that residents of public housing have built up over decades will be destroyed.

Lie #6 – “Your rent will not increase because of this process.” (3:07)

Reality – This is also misleading because, as we’ll see later on, MPHA is proposing a privatization plan that would hand its properties over to private developers who will change the rent structure. In public housing, residents pay 30% of their income on rent. Private “affordable” housing, on the other hand, uses a percentage of Area Median Income (AMI) to determine rents. Some so-called “affordable” housing built by private developers bases its rent on 80% of AMI – meaning that their housing is only affordable to families making $68,000 a year. Even housing that’s based on 30% of AMI – which is typically as low as it gets – would be too expensive for most current public housing residents, because the average resident earns well below 30% of AMI. For more information on this, see our fact sheet on AMI vs public housing.

Residents could also see their rents increase if they are displaced by renovations or redevelopment and are unable to find private rental housing that accepts the section 8 vouchers MPHA offers them as a replacement. Without vouchers to subsidize their rent on the expensive private market, residents will be forced to pay more than they can afford.

Even if MPHA converts some public housing units to voucher-based subsidized units and allows some residents to return and live in them after redevelopment, those units will disappear in as little as 15 years, when private developers take over the property after their agreement with MPHA ends. The private developers will then be able to raise rents as much as they want.

MPHA’s plans also include the immediate addition of non-subsidized units to former public housing properties. In other words, public housing will become private, “mixed-income housing,” which will add expensive, unaffordable rental units to buildings and neighborhoods that are currently affordable. This will lead to the gentrification of low-income communities, particularly communities of color, by driving up rents and property values in areas around the former public housing properties. Low-income families in the area who are not fortunate enough to live in public or subsidized housing would be hit hard by this.

MPHA’s gentrification plans affect more than just their current residents. They impact the whole city.

Lie #7 – “If there are changes to your building at some point, you will have a guaranteed right to return when the work is finished.” (3:14)

Reality – First off, let’s note that MPHA is confirming what we said about lie #5 – that residents actually will have to move out of their current housing. Now they’re saying that residents will have a “right to return” after they’ve been displaced. What does this look like in practice? If your family has already gone through the expensive and difficult process of moving, how likely are you to want to repeat it? We know from research done by CURA at the U of M that only 1 out of 5 tenants may come back, and the higher one’s income, the higher the chances that one can return.  This proves that MPHA’s “promises” mean nothing, and that their privatization plans will displace their poorest and most vulnerable residents.

Lie #8 – “We promise to share information with residents often, and talk with residents throughout the process. In fact, residents will help us design how the buildings will be improved.” (3:31)

Reality – This might be the biggest lie presented in the entire video. MPHA has not been sharing information with residents. Rather, they have been keeping their plans secret and keeping residents in the dark. They have been spreading rumors and disinformation, causing confusion and frustration to the point that residents of Elliott Twins apartments recently wrote a letter to MPHA demanding a more transparent process. Residents also demanded that MPHA stop using its tiny, hand-picked resident councils as a front for their secretive plans. MPHA shares certain information with these resident councils, who keep it secret from other residents and don’t represent all resident’s voices and opinions, and then MPHA claims that they’ve fulfilled their promise of “talking with residents.” We can’t let them get away with that!

In fact, DG&PHC only learned about MPHA’s privatization plans after making official government data requests for information, which uncovered numerous documents and emails detailing their plans and contracts with privatization consultants. As a government agency, MPHA is required to comply with our requests for data, but after we started to use their own documents to expose them, MPHA began sending residents and allies a bill for this information – sometimes hundreds of dollars per request! They are actively trying to prevent residents and allies from finding out what they’re up to.

Lie #9 – “We currently have about 9,000 people in public housing, and our goal is to preserve housing for all of them.” (3:40)

Reality – By even listing that as a “goal,” MPHA is conceding that it might not happen. That is unacceptable. MPHA’s only job is to maintain housing for its residents; it must do that, or else it is failing the public. By presenting that as a “goal,” they are intentionally lowering the public’s expectations.

In addition, the population figures MPHA  gives us are not consistent. In an April 2017 powerpoint presentation, MPHA stated that they serve 26,000 people, including 5000 vouchers. That didn’t include the people on their waiting lists, which in 2016 numbered 4,091 for Section 8; 6,296 for high-rise public housing; and 6,405 for family public housing. Then in an October 2017 email to DG&PHC, MPHA’s Communications Director, Jeff Horwich, stated that the current population in Minneapolis public housing was 10,447. Now they say it is around 9,000. So unless MPHA displaced over 1,447 people in one year and pushed them out of the city, there is no way they would have just 9,000 people in public housing. This could be tactic to hide the real numbers of residents at risk of displacement.

It’s also important to note their use of the phrase “preserve housing” in this sentence as opposed to “preserve public housing.” MPHA uses this trick a lot – omitting an important word or phrase to make it sound like they’re saying one thing, when they’re really saying the opposite. This sentence is MPHA’s sneaky way of making it seem like they’re doing their job of preserving public housing for their residents, when in fact they’re planning to radically transform it into privately owned housing. Once the privatization is complete, MPHA can claim that they met their goal as long as their former residents have housing of some kind, but they’re making no promises as to what kind of housing it will be, or where, or how expensive. One thing is certain, though – it won’t be true public housing anymore.

Lie #10 – “We will protect the many vulnerable populations we serve. These include the elderly, the disabled, and immigrants.” (3:46)

Reality – Another worthless “promise”. How can MPHA claim to protect the vulnerable populations they serve when their plans threaten to force these residents out of their homes? Many residents are physically unable to move, or would have a very difficult time doing so. They may end up having to move to a new area and lose access to social services, transportation, and the community they are a part of and depend on.

Lie #11 – “The ‘Guiding Principles’ are protections for residents.” (3:52)

Reality – The “Guiding Principles” document, which MPHA’s Board of Commissioners approved in May 2017, is not a legally binding document. It is another empty promise, filled with the same kinds of lies and misleading information that MPHA included in this video. Residents cannot depend on it for protection, which is why they rejected it back in June of 2017.

Lie #12 – [The “Guiding Principles”] do not contain a plan to do anything with your building or any other building.” (3:55)

Reality – MPHA is using a semantic argument here – they’re defining “plan” in an incredibly narrow way in order to say that the “Guiding Principles” is not one. They use this trick a lot, because they have to: In 2015, City Council passed a resolution requiring “a separate, open, transparent public process” for any “plan” for redevelopment of public housing (specifically regarding the Glendale Townhomes). MPHA is in violation of this resolution, even if they refuse to admit it. The very existence of the “Guiding Principles” indicates that there is a plan to privatize public housing. Documents that DG&PHC obtained through public records requests confirms this, showing that MPHA hired contractors as early as the spring of 2017 to come up with privatization proposals for its various properties.

In fact, MPHA even admitted in a recent email from March 16, 2018 that they have “been involved in a planning process to determine how to make capital improvements to all of [MPHA’s] properties.” Up until that point they’d always claimed publicly that there was “no plan,” but that lie has been exposed enough times that they are no longer even bothering to keep it up…except in this video.

Lie #13 – “We think that borrowing and bonding could play some role in meeting our goals, but they probably cannot be the entire solution.” (3:34)

Reality – In this section of the video, MPHA attempts to show how privatization is the best and only option available to them. But as we noted numerous times already, MPHA has more resources and opportunities for public funding than it’s letting on. Whether it comes from the federal government, the state, the city, or its own millions of dollars in reserves, there are many ways that MPHA can fund repairs and new construction without resorting to privatizing public housing. No one ever tried to claim that they should borrow it all from banks, or even necessarily increase state spending. The funding already exists – but it’s lining the pockets of private sector developers instead of maintaining public housing in the public interest.

Lie #14 – “Here’s the basic way [Low Income Housing Tax Credits] work: an outside   entity forms a partnership with MPHA to own the property with us for a limited period      of time. Under current regulations, that’s 15 years. The investor gets a break on its   taxes. MPHA and public housing residents get lots of money in return from that   investor to upgrade and improve the building. This is money that we do not have to pay back.” (4:49)

Reality – This is the part of the video where MPHA lays out its plan for using Low Income Housing Tax Credits (LIHTC) to raise funds for rehabbing public housing. Only it wouldn’t be public housing anymore, because using LIHTC requires privatization – something which MPHA leaves out of its explanation. The LIHTC program is confusing and complicated, which is what MPHA is counting on. They know that most residents and allies aren’t familiar with affordable housing finance, so they can lie about it as much as they want.

So for example, MPHA is lying right off the bat when it says that “an outside entity forms a partnership with MPHA to own the property with us.” Since public housing agencies themselves cannot access LIHTC funds, MPHA would first need to create a spin off company (which they refer to as an “MPHA nonprofit” on one of their slides) and transfer ownership of their building to that company. That company – not MPHA – would enter into a partnership with an outside entity (meaning a private investor or a bank). Even if the company they transfer their ownership to is a nonprofit, and even if it’s affiliated with MPHA, it is not, technically, MPHA. MPHA would technically own 0% of the building under this scheme.

To make matters worse, the agreement between the MPHA-affiliated company and the outside entity would be extremely lopsided, to the tune of the private investor receiving 99.99% of ownership interests in the building. MPHA’s affiliated company would rely on its tiny remaining 0.01% ownership to enforce its many promises to residents, who would no longer be “public housing residents,” as MPHA implies, but residents of private housing, receiving federal subsidies. MPHA actually told us they would do this in an April 2017 PowerPoint presentation that is no longer public. Check out page 10 where they lay out the lopsided privatized ownership structure.

The most misleading part of this statement, however, is MPHA’s claim that it wouldn’t have to pay back the private tax credit investors. There is no guarantee that the housing will revert back to being owned by MPHA after the tax credit period expires in as little as 15 years (what MPHA vaguely refers to as “a limited time”). In previous tax credit deals such as the Heritage Park development in North Minneapolis, at the end of the 15-year period, if MPHA or their affiliated company wants to be able to prevent the private owners from raising rents, it will have to buy back the 99.99% ownership interests from the private investors at the assessed market rates for each building.

Just to give some historical background on how Heritage Park came about: in the 1990’s this was a thriving, close knit, intergenerational public housing community of families and seniors. MPHA, with the approval of the City of Minneapolis destroyed all 700 public units and leased the land to a private developer called Mccormack Baron Salazar (MBS). MBS replaced the public housing buildings with 900 new units – mostly private market-rate rentals, and only 200 public housing units (a net loss of 500 units). The project was deeply controversial at the time and today it is widely understood as a tragedy and injustice. Now MPHA is in the process of selling off these 200 subsidized units to private development through the RAD program. For more background information, see this powerpoint.

In neighborhoods with skyrocketing real estate prices (such as near Glendale, for example), the need to re-purchase buildings or lose any sort of ownership in them could require MPHA to pay far more to retain control of those properties than it received from the tax credit investors in the first place. In other words, LIHTC does not solve MPHA’s funding problem, it just kicks the can down the road. If, after 15 years, MPHA can’t find the money to purchase its building back, the properties would no longer be subject to the affordability restrictions in the original deal, and the private owners would no longer be required to offer units at comparably low rents. Plus, the ambiguous nature of these deals could result in a lengthy litigation process at the end of the tax credit period that costs MPHA – and taxpayers – lots of money.

Lie #15 – “This will not mean the investor can do whatever he wants with the building.    The investor cannot evict you. He cannot rent your unit to someone else. He can’t     raise your rent. He can’t sell the building to someone else who would do these things.    The investor spends money to fund major work on the building. The investor gets this money back from the tax credit. But residents will not lose their housing because of a tax credit deal. We promise this to you.” (5:18)

Reality – This is another big lie. The investor is also the landlord of the building, and can evict the tenant if they can’t afford the high rents that are based on the new AMI terms. It happens to any public housing properties that have been turned over to the private market through any schemes such as Rad or LIHTC, as in the case of Heritage Park. As we outlined above, MPHA’s “promises” are directed only at residents who use their right of return – which will hardly be any, because there is no legal binding contract that will bring these residents back to the same public housing units at 30% of their income. The public housing structure will be gone. MPHA offers no guarantees to residents of new “mixed-income” units, or to units where the residents did not return. In other words, there will be a net loss of units with the level of affordability currently offered by publicly-owned housing to the people of Minneapolis.

Ultimately, privatized ownership would mean MPHA hammering out the details of these promises in a behind-closed-doors dealmaking session with private investors, who will be 99.99% owners. MPHA contractor documents obtained by DG&PHC show the investors would be able to veto MPHA’s decisions and have other powers over those buildings, to be determined before any deal was closed. This means private investors will have total control of the tenants that reside in these buildings. The whole point of transferring these public housing buildings to private owners is to displace the low income residents so the rich and elite of Minneapolis can occupy these buildings and make money off of them. This is all about profit over people.

Lie #16 – MPHA would continue to own the land, which gives us ultimate control over any tax credit period … Binding legal documents will ensure that the property remains low-income housing for decades to come.” (5:53)

Reality – MPHA once again fails to mention that, despite owning the land itself, they will own 0% of the building. Zero. None. Their affiliated company will own 0.01% and the private investor will own 99.99% of the building, which means that MPHA will not actually have “ultimate control.” MPHA will just be leasing the land to private investors.

There is absolutely no basis to MPHA’s claim that the properties will remain affordable “for decades to come,” when the only time period during which investors have to comply with rent limits is 15 years. And even then, the rent limits contained in whatever tax credit agreement MPHA reaches with a private investor will not be as affordable as public housing currently is. As we explained earlier, private “affordable” housing charges rents based on Area Median Income – rates which almost all public housing residents can’t afford. After the tax credit period is up, rents go up. Even if MPHA and the private investor agree to extend this period, the important point is that the agreement will eventually end, and these units will not be serving public housing residents.

Finally, notice how MPHA uses the term “low-income housing” when describing their future privatized properties, because they can’t truthfully call it public housing anymore. It will not be publicly owned and it will no longer cost residents 30% of their income. The moment MPHA signs “binding legal documents” with a private investor, the public housing ceases to exist, forever.

Lie #17 – “Residents are still protected by their lease, including the same grievance process that you’re used to. MPHA would continue to manage the building with the same staff and policies you’re used to … We know that it is possible to dramatically   improve public housing while residents experience very little change.” (6:00)

Reality – This only applies to residents who are able to exercise their right of return, which will be hardly any because they can’t afford the new AMI rents which are not based on 30% of their income, and because they already moved out and settled elsewhere. This statement also obscures the fact that the renovated buildings would likely include dozens if not hundreds of new, unsubsidized units controlled by the private investor.

MPHA is doing everything it can to convince residents that things will be exactly the same after privatization, other than the buildings getting a nice facelift. But the reality is that the new developments will look and feel nothing like people’s current homes with MPHA. In places like Glendale, private developers have for years been planning to turn the quiet townhome site into a set of huge, dense apartment complexes filled with high-income renters. All current residents will be unable to return. The sense of community that residents of Glendale currently enjoy will be destroyed. The entire neighborhood will be different, as the new development spurs gentrification, creating ripples beyond the former public housing site.

MPHA also lies when it says that the new, privatized buildings will have the same staff residents are used to, when internal documents obtained by DG&PHC reveal MPHA’s intentions to cut staff as a cost-saving measure.

Lie #18  – “Here is one example from Cambridge, Massachusetts. This is where MPHA Executive Director Greg Russ worked before he moved to Minneapolis, and we believe it shows what is possible when residents and the housing authority work together.” (6:31)

Reality – From this point on, the video tells the story of the Lincoln Way apartments in Cambridge, Massachusetts.  The Cambridge Housing Authority (CHA) at the time was led by MPHA’s current executive director, Gregory Russ. MPHA includes this example in their video in an attempt to calm residents’ concerns about privatization.  They show pictures of Lincoln Way before and after renovations, and include cherry-picked quotes from some residents’ first impressions. There are some major things MPHA leaves out of this story, however.

MPHA does not mention the fact that, in order to access funds from tax credit investors, CHA under Greg Russ privatized Lincoln Way. CHA no longer owns those buildings. The buildings are no longer public housing, but instead they contain some units with project-based vouchers. That means that residents receive subsidized rent as long as they live in those units. That sounds similar to public housing, but it is different in a crucial way.  Funding for project-based vouchers is much more vulnerable to being cut by the federal government. For that reason, residents of Lincoln Way are at a higher risk of losing their subsidized housing than they were before.

The video also fails to mention that CHA’s newly-privatized developments will not be affordable forever. Using the same process that Greg Russ wants to pursue at MPHA, CHA privatized its housing in order to access tax credit investments. After a certain amount of time, the tax credit agreement period will end, and CHA will either have to come up with the money to buy its shares back or risk losing the property forever.

It all shows that what MPHA calls “pathways to preservation” are really just pathways to privatization and destruction of public housing. Unfortunately, those are the pathways MPHA has chosen. But residents are standing up and fighting back.

We say NO to privatization. Stop MPHA’s plans NOW!