VOL: 1 O. 29 JUNE 26 - JULY 2, 1979
SERVI G TRI-COU TV SOUTH STER
ICHtGA
"Yet, minoriti h ve five ye r-old developm nt
provided the majority of company but the fum of
th jobs with their ] 8 per Butzb ugh and G r 1 ha
cent of the funds n he dd- announced after three
ed. mon ths th t the
I Carr related that Ie inauditable, Henry
than 20 job ere created Th DC offici
and 15 of tho were du reported that cancelled
to minority firms ho ob- ch c ere missin , 10
tained the loan . docurnen tion gone or
ne r there.
The proposed housing
for the old "Fl ts" area of
Benton Harbor - if it ever
ge out of court - is an
example of ho the rich
get rich r be of the
poo.
Th Housi and Com-
munity De lopment Act
of 1914 created the Section
g ich i t is
on .. the drawing boards for
the 22 cres bet een Colfax
and art, arket and
Britain in Benton Harbor.
Section 8 is an inye -
ment vehicle. In ton ho
earn a minimum of $50,000
year are attr cted to Sec-
·00 8.
Though th y don't fi
nance all of the housing
de lopment, they get all of
the deductions for taxes,
intere and depreciation.
The inv tor -can write off
dollar for e c dollar
eel.
Furthermore, cash flow
bene 1 from rent begin
immediately.
What m e it uch a
lucrati investnnent? 111e
overnment.
ction 8 housing is for
10 income tenants 0
nWI p y only 15 to 25
percent of their income for
rent .. 111e government pick
up the balance - it b·
dizes the rent.
In ichigan, the ichi-
Ho· De lop nt
uthority lects localitie
here hou . ng is needed and
de . gnate it s Section 8
lopment.
Developers then vi'
for that Section 8 gree
ment becau it is good
cash at the bank or in quali
fying for an FHA mortgage.
U ually, inve ton pay bout
20 percent of the mo gee
ith today's infl tion
ary con truction co ts, ub-
. dized hou . g i often the
only way inve tors can tum
to make a profit and find
a tax shelter.
in .ilies
higher than the going rental
market. Section 8 is co Iy.
In the government's fiscal
year 1977, ending Sept. 30,
housing . tance payments
ere $367.2 million. In fis
cal 1978, they were $847.1
million, and are expected
to re ell $ 1 billion this fis
cal ye .
According to experts,
the Section 8 program is
not likely to be shut off
de pite grumhlings from
some quarters in Congre
that it . too costly. The
nationaly need for housing
makes it politically unten
able and President Carter
is a b cker of the program.
Charging irregularities
by past officials of the Uni
ted Community Develop
ment Corporation (UCDC ,
Benton Harbor a member
ship drive has been launched
to incre minority repre-
ntation in the organiza
tion.
Percy Carr, vice-pre' -
dent UC , harles elly,
U ard member. and
Charle Henry xecutive
Director signed 14 ne
minority businessmen on
the first day of the effort.
, 're out to et 100
participation from mm ri
ty busine men in Benton
Harbor," said Carr. "It' the
only y that this is going
to be run right.'
"The era of rule by the'
few for the few is ov r'
�d Kelly, who is chairman
of the UCDC Standard
Operating Procedures com
mittee.
Carr stated that of the
506, 580 in loan proce d
by UCDC since its incep
tion, only 18 percen t has
gone to minorities.
"Minoritie ha re-
cei d $84,442. If you
100 at our contract with
the city, the money i sup
po d to provide jobs for
Benton Harbor residents
and for minoritie ," Carr
explained.
A an examp of the
investor's role and receipts,
y a development was to
cost $4 million, and th Cap' Associates, the
community issues Chicago ba d fum that the
exempt bond for financin Benton Harb r City Com-
The developer could get missi on has decided on to
$3.6 million, 4O-year mort- build the city' Section 8
g e at about 7� percent. -though the courts may
The developer' equity decide differently - is a
is $400,000, and he'd pro- three year old firm that
b bly try to raise $750000 . has syndicated or develop
or so through syndication ed som 3 000 sub . dized
of a partnership. The money units on 33 sites valued t
ould be paid in four, 53.5 million.
five, or six parate pay- Capital ciate earns
n by, in thi , 15 its income from the syndi-
partners ho contributed cation of the de lopment.
50,000 each. Each development is syndi-
cated through private p ce
ment to bout six P Ye
partne . E ch share
includ a developer' fee
Cor 2
. Section 8 ha com
under some criticism. HUD
ho sub idizes the rents,
usually does so 20 percent
BOOKS INAUD ABLE
The boo have never
been audited ccording to
Charles Henry who
hired in April. The Board
ordered an audit for th
''1Oere
irregularitie '
"F b
check on one
They ccepted
Co .