Residents of the Safe Harbor Subdivision are once again complaining their rent is far from affordable, which they claim is a volition of the Bayou la Batre Housing Authority’s charter as an affordable housing development.
More than a dozen residents showed up to voice their concerns with the current rent prices at a meeting of the Bayou la Batre City Council last month. They were joined by local and state representatives from the National Association for the Advancement of Colored People.
Bernard Simelton, president of Alabama’s NAACP chapter, spoke to Lagniappe and said the unilateral rent increases since August of 2011 appear to be a violation of fair housing practices.
According to Darryl Wilson, a former board member who is now a maintenance employee, funds from the Department of Housing and Urban Development paid to construct Safe Harbor and $15.7 million in FEMA funds help subsidize rent as a part of a three-year transitional grant for those affected by Hurricane Katrina.
“As of Aug. 1, 2011, the housing authority lost all government monies, and at that point the board voted to move forward as a conventional housing development,” he said. “We still took into consideration that we wanted to provide affordable housing for low-to-moderate-income families.”
When the government money dried up, rents did increase. For example, the rent on a three-bedroom house went up from $180 month to $460 a month.
Since the decision to charge a flat rate was made in 2011, rent has increased two additional times. The most recent was a 20-percent increase for all residents approved by the board last summer.
The current rental rates at Safe Harbor are:
2 bedroom 1 bath: $382
2 bedroom 2 bath: $431
3 bedroom 2 bath: $565
4 bedroom 2 bath: $665
Shanahan said those rates are still significantly less than other conventional rental rates and less than what most HUD-financed housing authorities usually charge for similar properties.
Still, the NAACP and other organizers consider these rent prices to be unacceptable because federal monies were used to create the facility.
“The City Council can resolve this in favor of the residents there,” Simelton said. “The board out there is out of control. They don’t adhere to their own lease agreement, when it says to provide affordable homes.”
Zack Carter, a member of the Alabama Fisheries Cooperative, has been working with Safe Harbor residents and has encouraged the City Council to appoint new board members to the BLBHA to address the problem.
“Even the mayor has said he’s not getting basic information from the Housing Authority, such as the rent hikes or how much they’re paying their management,” he said. “We know based on the budget they provided us in 2012 that they’re paying $129,000 for one full-time staff member and one part-time staff member.”
Virginia Shanahan, executive director of the BLBHA, said there are only three employees on the payroll and the authority’s only sources of revenue are application fees and rent collection.
According to a working budget provided by the housing board’s attorney John Lee, the housing authority collected $281,242 in rent from October of 2013 through April of 2014 and spent $82,047.92 on employee compensation.
That cost comprises Shanahan’s $69,000 salary, facilities manger Russell Floyd’s $30,000 salary and Wilson’s compensation, which is an hourly wage of $20. The total cost also includes taxes paid in by the three employees as well as other payroll fees. However, none of the BLBHA employees receive any benefits or insurance coverage.
City councilmember Annette Johnson, who served on the housing board when it was created, said the salary of the executive director was always in line with the parameters set by FEMA when she served on the board.
HUD recently released its list of executive salaries for the 3,900 housing authorities that receive public subsidizes, which does not include Bayou la Batre.
However, the rate of executive compensation for comparable housing authorities — those that manage around 100 housing units — is in line with what Shanahan is being paid.
The executive director of the city of Attalla’s housing authority, who oversees 108 units, receives $70,475 a year, and the director in Georgiana, who manages 100 units, receives $43,750 annually.
“We’ve been very open about our salaries,” Shanahan said. “When the mayor was first elected we provided him with a large packet of information that included our rental income, our rental income capabilities and the last finical audits performed.”
After the BLBHA was implicated in the corruption investigation of former Mayor Stan Wright, its financial records were seized, which is why Shanahan says an audit hasn’t been performed since FY 2010.
Shanahan said the absence of those audits has led to the perception the board hasn’t cooperated with city officials, despite the fact it wasn’t in possession of the documents it would need for annual audits to be performed.
Those records were recently returned to the housing authority and an audit of financial information from 2011-2013 is currently underway at a cost of $7,000. Shanahan said she’s hopeful the audit will be completed and made available to the public within the next month.
The cornerstone in the Safe Harbor residents’ grievance is a line in the lease agreement between the BLBHA and City of Bayou la Batre, which still owns the property.
It reads, “The tenant shall use the leased premises for the purpose of operating an affordable housing development.”
Right now, Carter and Simelton said they’re focusing on community agreements, which the NACCP is well known for.
“The NAACP has a housing program and an economic development program,” Simelton said addressing the council. “If you want us to help find ways to keep funding in that place, we’ll work with you.”
Simelton said The NAACP is hoping to see the issue resolved without taking legal action, but said he wouldn’t rule out that option. Nine residents have already filed a suit against the housing authority and the city, which resulted in Bayou la Batre paying $41,000 in an out-of-court settlement in April.
Two former residents, who didn’t wish to be identified, said they turned down cash settlements of $1,500 and $2,800, respectively.
Part of accepting those payments meant the tenants couldn’t file a separate lawsuit against Wright or the city’s former grant manager Janey Galbraith.
The housing authority would not disclose its contribution because of confidentially agreement, but Lee did say the case has since been dismissed.
“If you take a look at the cost of insurance, upkeep and payroll — they aren’t making a profit,” Lee said. “The rent is less than the fair market value in this situation because there’s no mortgage and no taxes on the property. It’s affordable from that standpoint.”
There’s no mortgage because federal funding paid for the facility’s construction and no taxes because it’s housed on city property. Despite the lack of those costs, the BLBHA still had $260,566 in total expenses from October of 2013 through April of 2014, which left them profiting only $23,951 during the seven-month period.
Lee said the rent at Safe Harbor was raised to make sure it remained operational and to ensure the properties were kept in habitable conditions. He said the cost to maintain electrical, plumbing, heating and cooling devices increases every year as Safe Harbor ages.
“These properties have market rents that are calculated pursuant to HUD guidelines,” Lee said. “It’s the board’s understanding that there is no HUD funding for any of this. The city could transfer the property, but then it would owe property taxes, which would increase rental rates further.”
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