Wage requirements put Clarendon public housing project in jeopardy

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Developers must come up with a new financial plan by Sept. 30.

On July 31, the Massachusetts Legislature authorized a plan to redevelop the Clarendon Hill public housing site to move forward. The future of the project, however, is uncertain.

The Legislature passed two home rule petitions submitted by the city of Somerville, which legally authorized the Somerville Housing Authority to move forward with redevelopment. But an amendment, added to one of the petitions, requires workers on the project to be paid at the higher rates required for all public projects.

Without the money in their budget for the higher rates, developers must find a way to close this financial gap before Sept. 30.

Built around 70 years ago, the Clarendon Hill site, which provides public housing to low-income residents, is badly in need of redevelopment.

In the summer of 2016, the Somerville Housing Authority agreed to partner with Redgate, a real estate investment firm, in the redevelopment of Clarendon Hill. Redgate was joined by two non-profit groups, the Somerville Community Corporation (SCC) and the Preservation of Affordable Housing (POAH), to further the development process.

The two years following have seen deliberation between the development team and Clarendon Residents United (CRU), the housing site’s tenant union. The redevelopment would be funded in part by the construction of several hundred market-rate units, and negotiations between CRU and the developers have resulted in Clarendon residents guaranteeing that the 216 affordable housing unity which currently comprise Clarendon Hill will also be included in redevelopment.

In considering the redevelopment process itself, more concerns were raised concerning the wages that workers on the redevelopment would be paid.

Under Massachusetts law, public projects are required to pay workers at an hourly wage known as “prevailing wage.” As a public-private partnership, the Clarendon project planned to pay its workers prevailing wage on the public portion — the portion overseen by SCC and POAH — but not the private portion, overseen by Redgate.

Local labor unions opposed this original plan, arguing that workers should be paid prevailing wage rates on the entire project. The amendment added to the home rule petitions and passed by the Legislature on July 31 is in response to these concerns.

Developers now estimate that they will need between $15 and $20 million in order to meet the prevailing wage requirement.

“We’re certainly worried,” said Greg Bialecki, of Redgate. “We think we knew how to put all the pieces together the old way. We don’t know how to put the project together this way.

“It’s certainly a time of uncertainty, but the development team does not want to give up on the project,” he said. “We’ve committed to the city and the state that we’re going to keep trying at it.”

Next steps

Originally, the state government had set July 31 as the deadline for the development team to submit a finalized financial plan. That deadline has been extended to the end of September in order to give the team time to close the financial gap. If they are not able to do so by then, the project will be scrapped.

The development team is now working out different strategies for closing the financial gap. “There’s probably no one thing that’s going to fill the gap,” explained Bialecki. One option was to look for various ways to minimize additional construction costs.

Another option is to look for new investors who understand the importance of the project.

“The thought is that there may be, for mission-related reasons, investors that are willing to make investments at a lower rate of return than is normally expected,” said Danny LeBlanc, CEO of the Somerville Community Corporation.

Additionally, the development team will likely be seeking additional money from the city and state. “Our effort with investors is to see if we can lessen the gap from the current $20 million,” said LeBlanc, “before asking for the state and city to fill the remaining gap.”

Penelope Jennewein, speaking on behalf of the community and labor coalition Somerville Stands Together, was optimistic about the future of the project. “We are confident that the Clarendon Hill development will move forward, providing the much-needed renovated public housing, additional workforce and new market-rate housing,” she said in a statement.

Residents of Clarendon, however, are worried about the future of their project. “There really isn’t much else that we can do from this point on but pray that our city and state leaders will step up for us and make sure that it goes forward,” said Jessica Turner, co-president of CRU.

“I think the community has a general idea of how bad it is living at Clarendon, but they will never truly know from an individual experience what an additional burden it is to be forced to live like we do,” she added. “We hope that someone will step in and help provide the additional funding now needed and give our families and children the opportunity to live normally in a healthy home.”