Harvard Lost Little When Selling Rent-Controlled Housing Units
Harvard apparently suffered little economic loss in selling the rent-controlled apartment building at 18-20 Ware St. to a non-profit housing group, University officials said yesterday, but they added that they performed a public service by not selling it to entrepreneurs.
This week's Harvard Gazette featured the sale as a contribution to low-and moderate-income housing in Cambridge.
Harvard sold the building for $850,000 to Homeowners' Rehabilitaion, Inc., and Cambridge Neighborhood Apartment Housing Services, two non-profit organizations that in turn formed Cambridge Community Housing, Inc. The property was assessed at $2.1 million, according to Harvard officials.
The tenants of the 56-unit rent-controlled building will remain in their homes as before, but if one leaves, Cambridge Community Housing will open the vacant apartment to a federally subsidized tenant.
Harvard leased the building 10 years ago with an option agreement allowing it to buy the building when the lease expired, return it to the owner, or resell it.
The University was not making profits or losses on the rent-controlled property at the time of the October sale, said Sheldon G. Tandler, comptroller of Harvard Real Estate, which managed the building. "Harvard is not involved in maintaining rent-control property for a profit. In fact, it breaks even. It operates the property to break even," he said.
While Harvard is petitioning the Rent Control Board for permission to raise the rents, the University apparently would have gained little from buying the building. In addition, the building was outside a self-imposed "red line" beyond which the University has agreed not to buy residential buildings.
If Harvard had sold the apartment building on the open market, or had allowed the previous owner to do so, it might have risked negative publicity in opening up the building to speculation. It is not clear how much the fact that the building was rent-controlled would have affected its market value.
"There were a lot of entrepreneurs waiting in the wings who would have paid substantial money to obtain this property," said Tandler. "Harvard did without this money to provide a service for the community."
Jaqueline O'Neill, Harvard's associate vice president for state and community affairs, said she spoke to tenants at a party given last week to celebrate the sale. Her estimate, she said, is that only 10 per cent of the tenants oppose the sale. "Understandably, when a building changes hands there are always concerns by the tenants about what the future of the building will be."
The most specific complaints have come from tenants Jacqui Kennedy and Frank Farley. They say they fear the owners might try to turn the building into a type of co-op in which only subsidized tenants or those who could afford mortgage payments would be able to stay.
O'Neill also said she estimated that "80 per cent of the tenants don't one way or another and 10 percent are enthusiastic about [the chance of creating a co-op] because they see an option to own their own building in the future."
The building could become a limited equity co-op if 80 per cent of the tenants voted for it. In that case, those tenants receiving subsidies under the federal Section 8 program could use their government money towards a mortgage rather than rent.