By Hiroko Sato
PEPPERELL — Ask some landlords for their secrets to surviving a tough economy, and some might tell you they keep their apartments affordable.
For Stuart Steele, strategies also include taking advantage of a federal incentive program that could provide him with the money needed to upgrade Pepperell Meadows, a senior apartment complex he owns, in exchange for keeping rents low. And that is sending a wave of relief among dozens of seniors who feared they could lose their affordable apartments.
“They are making us feel at ease,” tenant Joseph Mills said of Pepperell Meadows’ efforts to stay in the federal rent subsidy program for decades to come.
“This allows them the capital to work on,” Town Administrator John Moak said.
In a meeting with residents and town officials Monday, Eastpoint Properties announced it has asked the Department of Agriculture and Rural Development to allow the company to pay off its federal loan for Pepperell Meadows before reaching the full term. Such requests can be made when landlords want to pull out of the rent subsidy program they joined as a condition for their federal loans and start leasing their apartments at market rates.
Kenyon Salo, who represented Eastpoint at the meeting, said the company applied for the loan prepayment only to go after funding toward property improvements that the USDA often provides to encourage landlords to stay in the program when denying prepay requests.
“I’m here to tell you we are doing what’s right for the tenants” and for the property, Salo said as he spoke to about two dozen senior residents and town officials gathering outside the 40-unit complex.
The USDA organized the meeting after the agency’s letter notifying residents of Eastpoint’s application for the loan prepayment sparked concerns that the company might be trying to charge more rent. That would have been a blow to the town government, as well, because it would no longer be able to count the 40 units at Pepperell Meadows as “affordable housing” inventory. Under the state affordable-housing law, at least 10 percent of all housing units in the community must be affordable in order for the town to exercise its control over new affordable-housing projects. In Pepperell, 122 units — or 3.1 percent — of the 3,905 homes and apartments are affordable.
“We were concerned about it,” said Susan Snyder, planning administrator for the town, about the prospect of losing the 40 units from the inventory. Selectman Joseph Sergi said he was concerned about the issue but could not comment yesterday as he had not received updates on the meeting.
Pepperell Meadows is comprised of six buildings that include a total of 32 one-bedroom and eight two-bedroom apartments for seniors, according to William Gouzounis, director of housing for USDA Massachusetts. Tenants pay 30 percent of their income toward “housing cost,” including rent and utilities, while the USDA lowers the interest rates on its loans for landlords according to tenants’ income levels.
Salo said Steele has owned Pepperell Meadows for the past 34 years on a 40-year USDA loan and will no longer be obligated to rent the units at the affordable rents after 2016. But instead of paying off the loan in six years, Steele wants the USDA to extend his loan for another 20 years and provide him with a grant toward improvements as an incentive to keep an affordable complex in the community.
Steele, who is pushing for a congressional bill called “Saving Rural America,” strongly believes in affordable housing, Salo said. He said the USDA incentive program would also guarantee he will have steady income from the federal reimbursement for the rent for the next 20 years to come.
Many tenants said they were happy with the apartments.
Penny Hillman, a 17-year tenant, said she felt nervous about what could happen to the apartments before yesterday’s meeting.
The incentive toward property upgrades may or may not come with the 20-year loan extension, according to Gouzounis. The USDA has also denied prepayment requests before. Salo said he is confident that the extension will be approved, and will know more in three months.
“We now have specific contact people who will keep us informed along the way,” Hillman said.