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The Chairman's Challenge

Richard Henken is co-chairman of the Rental Housing Association MassHousing Chairman's Challenge Committee.

MassHousing’s ambitious effort to overhaul its rental housing division is winding up, but deputy director Bob Ruzzo hopes the agency’s collaboration with RHA will continue long after the reorganization is finished.

“I would argue we should keep working together forever,” Ruzzo said. “We will continue to work with RHA for as long as they want to work with us. I can’t think of anything more important.” The collaboration between the two groups has resulted in substantial improvements to the way the quasi governmental agency funds and oversees the state’s affordable housing stock. MassHousing’s reorganization began in April 2008, when chairman Mike Dirrane challenged the agency to streamline and improve its rental housing division. The “Chairman’s Challenge” as it became known, follows on the heels of a similar effort to overhaul MassHousing’s single-family division. That effort was so successful, the agency decided to take aim at its much larger rental housing division.

The Chairman’s Challenge identified six broad areas for improvement, listing them under the headings Streamline, Simplify, Engage, Partner, Innovate and Preserve. No one could argue with those goals. Identifying the specifics of how to achieve each of those goals is where RHA came in. “Since many of our members represent the majority of MassHousing’s clients, the agency was very eager to have RHA involved in this process,” said Richard J. Henken, co-chair of the RHA Chairman’s Challenge Committee. “Everybody thought it would be great to get customers involved in helping brainstorm and develop new policies and procedures. It was very positive on every level.”

From those six broad goals, RHA members met monthly with MassHousing staff to help the agency “drill down” to specific improvements. For example, under the heading “Streamline,” RHA and MassHousing took aim at the agency’s underwriting procedures.

“Over time, two different groups at the agency did underwriting, operating under slightly different sets of rules,” Ruzzo said. “We streamlined that process, putting the two groups together and all the underwriting functions under one roof with the same tools and the same rules. The idea is that we would be a lean, mean lending machine.” In addition to this new streamlined lending unit, the agency created a separate Rental Operations Division to house related functions, such as architects, loan servicing, etc. “We didn’t add or subtract people, we just redeployed people where we thought they were most needed,” Ruzzo said.

Part of this redeployment involved creating a new ombudsman’s position to help owners who encounter problems navigating the MassHousing system.

“This person reports directly to me,” Ruzzo said. “We want people to know we are taking complaints or problems or red tape kinds of issues very seriously.” RHA was also heavily involved with MassHousing’s review of the rent increase process, lumped under the heading “Simplify.”

“The rent review process was fairly involved,” Ruzzo admitted. “There were a lot of complaints about the peer review process we used. RHA members didn’t know when peer review happened, they didn’t know why all these people needed to be involved, they felt that strange things happened in peer review. They wanted the process opened to owners and managers.”

As a result of RHA’s criticisms and involvement, MassHousing eliminated the peer review process for examining rent increases. Keeping the same time frame, MassHousing now provides owners two opportunities to review the agency’s rent increase analysis.

“It doesn’t mean rent increase requests won’t get changed,” Ruzzo said. “But the owner will know the increase going in and the increase coming out, and will be able to register compliments or complaints. We couldn’t have gotten this change without RHA input.”

Henken was equally upbeat: “The agency agreed to make some changes we suggested to make the rent increase process more transparent and timely. It was a very positive outcome. It makes both sides feel like we’re making progress.”

Irma Schretter, president of S-C Management Corp. in Brookline, who helped negotiate the new rent increase process, concurred. “We’ve had a very open dialogue with the agency,” she said. “The new rent increase process will be a lot more transparent and will work better for the industry and for the agency. We’ve had very positive feedback on it from our members.”

Other changes and improvements to come out of the Chairman’s Challenge include: Under the heading “Innovate,” MassHousing will now use its soft loan program for preservation of rental housing as well as new development. Under “Preservation,” MassHousing applied for a waiver from the federal government to allow owners of Section 8 properties within five years of their mortgage expiration to take out equity. Owners must agree to keep the properties Section 8 for another 15 years after the mortgage expires.

“We wanted to give owners an incentive to stay in Section 8 housing,” Ruzzo said. “We’re going to be facing a real wave of preservation issues coming at us. A lot of developments are coming to the end of their mortgages. We’re trying to be proactive about that by offering equity takeouts before those loans expire and solve that problem for another 20 years so we can focus on other properties in need of preservation.”

Under the heading “Engage,” MassHousing revived its dormant advisory group to meet regularly and advise the agency on its procedures. Under “Partner,” MassHousing is actively reaching out to work with the many housing agencies in the Commonwealth and has become the largest funder of the Mel King Institute, which trains and builds capacity for nonprofits, particularly those involved in housing issues.

“MassHousing could have done this reorganization in a vacuum,” noted Henken, adding that the agency chose not to do so. “I’m very happy they were willing to invite us to the table and listen to us. Because of this effort, we have a new and enhanced partnership between the industry and agency in realizing our shared objective of developing, managing and preserving high quality affordable housing in Massachusetts.”

“The Chairman’s Challenge has opened up a line of communication between MassHousing and our members that has been significant in my opinion,” said RHA president Gordon Pulsifer. “We have a better understanding of what agency staff is going through and they have an understanding of what our members encounter on a daily basis on the ground. It’s been a great experience, one that I hope will continue into the future.”

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