“We want people to be shocked,” he adds—and we should be.

The ten-year capital spending plan of the Cambridge Housing Authority (CHA) is not the sort of reading you will find in the doctor’s waiting room. Few people even know it exists.

Not that the CHA is trying to hide this document. They call plenty of meetings to discuss it, where they distribute stacks of copies to the tenants who attend. Some residents and housing professionals have responded with comments and suggestions. The plan, with its stark pictures and rows of numbers, looks imposing and forbidding to the average person.

So far no one has denied its main argument:

• $228 million must be spent in the next ten years to preserve the city’s existing public housing stock

• The Federal and State governments may provide only $50 million of this

• The $178 million difference must be made up by bringing in private investors or selling off some of the housing.

That’s $17.8 million per year. Now let’s put that in perspective. One hour of the wars in Iraq and Afghanistan costs way more. Our friends in the U.S. Senate always vote unanimously to fund those wars. But why would private investors put money into public housing? If residents can’t afford to pay enough rent to maintain the buildings, how can investors turn any profit on them?

There’s money to be made

One answer is through tax credits. Some very rich people avoid federal or state taxes by investing in approved housing deals.

For this to work, CHA will turn some of its properties over to specially-created bodies such as Limited Liability Companies (LLC). CHA has done this already at Essex and Lancaster Streets.

In January, the Somerville Housing Authority (SHA) set up an LLC to operate Capen Court, an older development that is being demolished to be replaced by a larger one.

But tax credits alone won’t do the trick. More cash has to be generated from rents to ensure fiscal viability. CHA’s key idea is to move voucher subsidies out of the larger community and into some existing public housing complexes.

Under this plan, the total number of subsidized households will almost certainly shrink. CHA says “it may not be possible to keep all current units affordable.”

Voucher subsidies like Section 8s are money the government pays to private landlords. The government gives much more to private landlords than it spends to maintain its own housing.

In Cambridge a third of public housing is funded by the State and two-thirds by the Federal government. That proportion is reversed in Somerville, where one-third of public housing is Federal. CHA and SHA together “own” something over 4000 units of State and Federal public housing.

But between them the two cities have more than 5000 vouchers.

This year the Federal government is granting $354 per month toward the operating expense of an average public housing apartment in Cambridge. The State figure is only $182. The rest of CHA’s income comes from rents, which vary with tenant incomes.

The average Section 8 voucher brings in around $500 per month from the Federal government—much more than the amounts received for “the projects.”

On top of that, voucher tenants often pay much more of their own income toward rent. Public housing tenants pay 30 percent of gross income. Voucher tenants often pay 40 percent.

Susan Hegel, an attorney with Cambridge and Somerville Legal Services (CASLS), says that today “it’s probably rare that people are paying just 30 percent of income in section 8.” She adds that it’s only in the first year of tenancy that a voucher household is limited to paying 40 percent of their income—it can actually go even higher.

The underlying reason for this is the state of the market. Already eight years ago, CHA estimated that market rents in Cambridge were 55 percent higher than the highest rent the Feds were willing to subsidize. To get around this, tenants are “allowed” to contribute more than 30 percent of their income toward the rent.

CHA’s annual plan for the 2009 fiscal year states, “the Cambridge [private rental] market has now started another upturn… a recent survey by CHA staff showed that while there was an ample supply of available apartments in Cambridge, only two percent were available to families holding subsidies, a fact that resulted in CHA’s decision to increase payment standards above HUD’s Fair Market Rents.”

So here’s the deal. In order to get more cash into their properties, CHA might transform some of their public housing into private “non-profit” apartments. It will then take some of the vouchers away from the for-profit landlords and attach them to those former public housing apartments.

As Russ says, “We’ll have to project-base some of our units; this allows the property to run in the black, and makes it more attractive to tax-credit investors.” “If we’re going to do project-based vouchers does that mean we lose the tenant-based?” Much will depend on State and Federal funding decisions. “If one of these pieces falls out, it stresses everything.” “We may have hard choices,” says Russ.

The absence of rent regulation thus directly impacts the cost of subsidized housing. Subsidies raise the floor price in an unregulated market. The already inflated market sucks in more tax money, and forces tenants ultimately to pay a higher portion of their incomes for rents.

Moving To Work—and to organizing

There is much more to CHA’s ten-year plan than we can develop in this article. But in order to carry out the plan at all, CHA is counting on the U.S. Congress extending the life of a pilot program called “Moving To Work” (MTW). CHA’s chief of planning, Terry Dumas says, “if we get the 10-year extension for MTW we will be able to plan accordingly.”

MTW comes on like “welfare reform,” bringing to mind the myth that most public housing residents are able-bodied welfare recipients. The concept is to target these folks with programs to move them into jobs, leading to higher rents, and then maybe to homeownership.

Only around six percent of Cambridge public housing residents fit this target category. The vast majority either work but don’t earn a living wage, are disabled, or retired. However, CHA became one of around two dozen agencies in the country to participate in the pilot MTW program.

Under MTW Cambridge does have job training and incentives for residents to raise their incomes. But Somerville does this too, without MTW. More importantly, MTW’s fiscal flexibility allowed CHA to add 300 new affordable units over the past decade .

Dangers ahead

Attorney Hegel is concerned that the CHA plan to convert state public housing to other forms of subsidized housing could erode rights of existing and future tenants.

“One of the biggest changes is if they take State housing and bring it into another [Federal] framework.” State public housing rules allow people without Federal HUD immigration status to find decent affordable housing. This issue here is not just “illegals” or the “undocumented.” Federal rules exclude many legal immigrants as well.

Not only immigrants would be affected, Hegel warns. “In State public housing, a whole legal framework spells out people’s rights. If you get out of that framework you may lose [legal] requirements for tenant participation. Tenant selection rules are up for grabs, and so on.”

Jack Cooper, of the Mass. Union of Public Housing Tenants, says “one of the key things is going to be the rent structure.” He sees project-based Section 8 tenants now paying up to 42 percent of their gross income for rents.

A group of Cambridge tenant council leaders is now meeting with Cooper. They feel that a citywide organization needs to be set up with its own paid staff. CHA agrees and has offered MTW funds. The group will soon propose a budget to CHA.

“Residents should have their own citywide technical committee,” says Cooper. He plans to set up training sessions soon on how to negotiate and hold development managers accountable to their tenants.