Westgate residents vote to merge boards
Westgate Tenants Association president Julie Maloof speaks at their annual meeting on Aug. 17.

Westgate residents vote to merge boards

Merger considered the first step towards possible tenant ownership

BRATTLEBORO — Multi-colored balloons tethered to railings dance on the breeze as music blasts from speakers near the door of the Westgate Housing Community's community center in West Brattleboro on a Sunday afternoon.

Kids scale the slope behind the Community Center - here a lion, here a butterfly, here a superhero - playing games, climbing the play structure, and having their faces painted. Parents and grandparents chat at the picnic tables.

A young girl on a pink tricycle watches a visitor pull her car into the visitors' parking lot below the center. The visitor smiles. The little girl tilts her head and pedals away.

Inside the community center more residents arrange food and balloons for the lunch they'll serve after the Westgate Tenants Association Annual Meeting.

Snippets of conversation float through the meeting room: Can I get anyone something to drink while you're waiting? Let me introduce you to Paul. Make sure you eat later; there's plenty.

Voting to merge the two boards overseeing Westgate topped the agenda Aug. 17, and residents overwhelmingly approved merging the Westgate Housing Inc. board (WHI) and Westgate Tenants Association (WTA).

Of the 98 units eligible to vote, 20 households - one vote per household - approved the merger. One household voted against the proposal.

Westgate is Brattleboro's largest affordable housing complex. It is one of four large affordable housing properties built by its developer, collectively known as “The Gates.” The developer also erected Northgate in Burlington, Highgate in Barre, and Applegate in Bennington.

The Gates are among the state's largest affordable housing communities. Northgate, at 336 units, is the largest.

A developer from Connecticut began construction on Westgate in 1971. At that time, the federal government offered private developers incentives to construct affordable housing.

The U.S. Department of Housing and Urban Development (HUD) considers housing affordable if the rent, or mortgage, does not exceed 30 percent of the household's income.

HUD estimates that 12 million households pay 50 percent or more of their annual income toward housing.

By 1999, the incentive program that built Westgate was nearing its expiration date. To keep Westgate as affordable housing, several organizations formed a non-profit partnership and bought the property.

The Westgate Tenants Association, the Brattleboro Area Community Land Trust (now Windham & Windsor Housing Trust), and Burlington-based Housing Vermont, which also is involved in the financing of the future Red Clover Commons on Fairground Road, have helped manage Westgate.

Buying and rehabilitating the property totaled approximately $13 million.

Under the new ownership, Housing Vermont became the finance partner. Westgate Housing, Inc. became a managing partner or board of directors. Westgate Tenants Association remained.

The first steps toward tenant ownership

Merging the two boards represents the first step toward transitioning Westgate into a tenant-owned affordable housing organization.

That's if the tenants want sole ownership.

The topic of tenant ownership, also called buyout, filled the rest of the meeting.

The tenants have three years to decide whether to take over Westgate. They now have partial ownership responsibilities of Westgate through their tenant association.

Becoming full owners would mean owning the financial and regulatory responsibilities of Westgate - including an estimated $6 million in debt from the earlier rehab, setting rents, and meeting affordable-housing regulations.

“You're in a position where you can only make a good choice,” Amy Wright, a consultant hired to help Westgate residents navigate the potential buyout, told the small audience.

Wright said that, for 15 years, the ownership structure of Westgate has been a combination of partnerships among the two boards, WWHT, investors reaping tax benefits from the property, and Burlington-based Housing Vermont.

She characterized Westgate as on strong financial footing. This strength will give the tenants more options when they decide Westgate's new ownership structure.

Wright credited Housing Vermont's financial oversight and Stewart Property Management's day-to-day running of Westgate as strong factors in the housing community's financial well-being.

According to Wright, the property's tax benefits expire in 2017, and that's when Housing Vermont will step back and the tenants will have the option of buying Westgate out.

They'll have a variety of options: They can become tenant-owners, they can find a new organization to provide financial oversight, they can find an alternative property owner, or they can partner with another organization.

“Really, you decide who owns the property,” Wright said.

Wright advised the residents to make the most of the next three years. They should educate themselves on how to run Westgate, how to work with a property manager, and how to decipher the “crazy alphabet soup” of federal and state regulations and programs.

She explained that the next step in the buyout process would be to conduct a capital assessment, which would make clear how much money it would take to operate Westgate - key information in gauging whether tenant-ownership is the best option.

Addressing concerns, Wright said tenant ownership doesn't mean rents automatically increase; Westgate will remain under the umbrella of affordable housing.

Other speakers said tenant ownership would require the care of a strong board. They urged more tenants get involved on the board and in subcommittees.

The Westgate boards have investigated such a merger for some time. Last fall, Westgate hired consultant Greg Hessel of Regeneration Resources in Brattleboro to assess Westgate's organizational structure.

WHI at-large board member Susan Howes, a case manager for Southeastern Vermont Community Action (SEVCA), delivered Hessel's recommendations.

She reported that Westgate residents found the division of labor between the board of directors and tenants association “confusing.”

According to Howes, Hessel recommended last fall that the two boards form a committee to explore the merger with a critical eye toward tenant ownership.

Howes said that such a committee met over three months in the spring and summer and discussed the potential composition of a merged board, its bylaws, boosting tenant involvement, and laying the groundwork for tenant ownership.

In June, Howes said, the committee reported to the WHI and WTA that merging the boards, with residents' approval, would serve Westgate well.

The committee proposed a merged board composed of 15 members: 10 tenants, four community members at large, and one representative from the Windham-Windsor Housing Trust, which owns Westgate's land.

The exploratory committee also proposed, as a preliminary step, creating a nominating committee with an eye toward readying the merged board for prime time in October or November.

Financial and emotional decisions

Paul Stewart watched residents chatting and laughing in the meeting room. His company, Stewart Property Management, manages 110 affordable housing properties throughout Maine, Massachusetts, New Hampshire, and Vermont.

Most of the 25 properties it oversees in Vermont, including Westgate and Abbott Neighborhood Housing in Brattleboro, sit along the Connecticut River. It has managed Westgate for 14 years.

Federal regulations require affordable housing properties work with a property management company even when the tenants own the community. Stewart said he hopes tenants here continue to work with his company.

He said he started in affordable housing in Manchester, N.H. His first job was with HUD.

None of the properties the company manages is tenant-owned, he said.

“You only see this in Vermont,” he added, smiling.

Stewart said that approximately eight of the 10 original loans that bought and rehabilitated Westgate remain on the property.

Of Westgate's financial responsibilities, “It's a lot to come to terms with,” he said.

IRS regulations are the reason why 15 years is the magic buyout number, said Stewart.

According to Stewart, the low-income housing tax program that Westgate's investors benefit from lasts 10 years. The IRS maintains oversight of the property and its tax benefits for 15 years.

Within those 15 years, the IRS can yank the investors' benefits if the property fails to comply with affordable housing regulations, he said.

After the 15 years, however, the affordable housing regulations do not go away, Stewart added.

In a separate interview, Wright pointed to Northgate as having undergone a tenant ownership process most similar to the one under consideration at Westgate.

“It's not for the faint of heart,” said Wright.

Becoming tenant-owners represents a financial and emotional decision for the residents, she said.

Westgate has always had what Wright calls an “older brother” in the form of Housing Vermont, which has kept Westgate's books and provided financial guidance, she said.

No longer having a savvy sibling helping make money decisions is a factor for the tenants to consider, said Wright.

On the plus side, said Wright, Westgate tenants would benefit from ownership: Westgate offers some of the lowest rents, and keeps some of the best-maintained buildings, in Brattleboro.

Given the community's strong financial standing, these benefits could continue.

Connie Snow, executive director of the Windham & Windsor Housing Trust, said that the tenants already run Westgate in many respects.

“The question is,” she said, “do they want to do it solo?”

WWHT owns Westgate's land, so it will keep a seat on future boards. Snow said the housing trust acts more like a silent partner to Westgate.

Getting involved

The meeting recessed for the tenants' vote, which was by paper ballot. Lunch was served.

“Spread the word: the juggler is here,” one resident told WTA President Julie Maloof.

Maloof said she hopes more residents will volunteer on subcommittees looking at the buyout process.

Tenant involvement remained a constant theme during the day's meeting.

Resident Sandy Pechillo, 75, moved into Westgate in 1973. She and her daughter, now 51, were the first residents here.

“I had my choice of apartments,” jokes Pechillo, who still lives in the same apartment.

Over the years, Pechillo said, she's belonged to the WTA and served as president and vice-president, and on the ownership board.

The housing community has improved with age, she said. She pointed to the Community Center and playground as examples.

Residents raised funds and received grants to build the two structures, Pechillo added.

Of how the residents have strengthened Westgate, she said “it's exciting.”

Pechillo said she suspects tenant ownership could be a good outcome for the community but that “no one has all the facts yet.”

Mary Tier sat outside the meeting room. She rubbed her knees as if they bothered her. She has lived at Westgate for 19 years.

Tier worked on the merger committee, which included a visit to Northgate, where tenant ownership took root.

The people at Northgate were “exceptional,” said Tier. They advised their visitors to get involved with the property manager and to develop a strong understanding of daily operations at Westgate.

Tier speaks highly of Paul Stewart and on-site property manager Nancy Crawford, saying that Stewart explains Westgate's finances so that anyone can understand them.

She added that Crawford is tough but fair: She works to make sure that tenants can afford their housing and know which programs they qualify for.

Although Tier supports the merger her greater goal is boosting tenant involvement.

“Whatever we end up doing,” Tier said, “we need tenants to understand that they are needed. Westgate can't be run [only] by two or three people.”

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