City's rules let not-so-needy get affordable units

Eric E. Liriano is a wealth management specialist. He drives a shiny new Porsche sport utility vehicle and recently sold a three-decker in Dorchester for more than a half-million dollars.

Thanks to the City of Boston, Liriano is also the proud owner of a three-bedroom condominium in the South End designated by the city as affordable.

Rollins Square, the mixed-income development where Liriano bought his deeply discounted unit, was hailed as a way to keep working-class families in a city where skyrocketing real estate prices have driven out many residents. A joint project between the city and the Catholic Archdiocese of Boston, it consists of 184 units, including 25 for low-income buyers and 48 for buyers with moderate incomes.

But when potential purchasers applied for the affordable units, a Globe review found, the city failed to impose limits on the applicants' personal assets, and six of the moderate-income units ended up in the hands of people who the city acknowledges may not have needed housing assistance.

People like Liriano. And Judith Klau, who owned a $330,000 condominium on Appleton Street in the South End when approved to purchase a two-bedroom Rollins Square unit for $230,000. Ping Lai and his wife, Tina, who already had a $373,000 condominium in Roxbury, were allowed to buy a 1,059-square-foot condominium for $235,000. The Lais now collect rental income on their Roxbury property.

Officials at the city's Department of Neighborhood Development, which approved the Rollins Square purchases, called these cases troubling, but stressed that the buyers represent a fraction of those who received affordable units at Rollins.

City officials said they relied on federal guidelines for affordable housing, which do not include a cap on assets, when they allowed the six buyers to purchase the affordable units.

Shortly after the Globe began asking about the Rollins buyers last month, the Department of Neighborhood Development imposed new limits to allow only applicants with $75,000 or less in assets to qualify for affordable housing.

Officials said the policy change had already been in the works, after a consultant's review determined that 54 of 671 applicants approved by the city last year to purchase affordable housing units had assets worth more than $50,000. One buyer had $311,355.

''At the city, we are constantly challenging ourselves to evaluate and reevaluate our policies," said Charlotte Golar Richie, head of the Department of Neighborhood Development.

A spokeswoman for the US Department of Housing and Urban Development, which issues the affordability guidelines the city used, suggested a reexamination of the federal guidelines, which primarily consider an applicant's income in determining eligibility. Under current federal rules, a small percentage of the value of an asset, or proceeds such as rental income from the asset, are added to the applicant's annual income.

However, other cities that use the federal guidelines, such as Cambridge, set their own additional asset limits.

''That's probably something we should look at," HUD spokeswoman Christine Foy said. ''We really want to see these affordable units go to those who most need them."

At Rollins, buyers of low-income units were required to be first-time homebuyers, with income of less than $40,800 for a single person, or $58,300 for a family of four. Moderate-income buyers were required to have annual income up to $62,350 for a single person, and $89,050 for a family of four.

The prices initially set for the low-income units ranged from $141,400 for a one-bedroom to $170,000 for a three-bedroom. Moderate-income units were priced from $210,000 for a one-bedroom to $260,000 for a three-bedroom unit.

Market-rate units were sold at whatever the market could bear, between $265,000 and $970,000. Rollins Square is located in a fast-changing and increasingly desirable part of Boston's South End, at Waltham Street between Harrison Avenue and Washington Street.

City officials said that after Sept. 11, 2001, they worried they would not be able to find enough buyers for the Rollins units because of softness in the real estate market. So, they scrapped the city's standard requirement that only first-time homebuyers be allowed to purchase moderate-income units at the development.

The Planning Office for Urban Affairs of the Archdiocese of Boston hired Maloney Properties, the company previously owned by Boston Redevelopment Authority director Mark Maloney, to screen applications and conduct a housing lottery that ranked potential buyers according to several criteria, including whether they lived in Boston or were disabled.

Maloney Properties forwarded the 73 buyers chosen through that process to the city's Department of Neighborhood Development and MassHousing, the state's affordable housing agency, for review. Both agencies approved the applications, and sales were completed.

City officials would not disclose approved buyers' incomes or the assets they reported on their applications, citing privacy concerns. But the Globe reviewed Registry of Deeds and City of Boston assessing records for all those who purchased units at Rollins Square, and identified five of the six buyers.

Along with Liriano, Klau, and the Lais, Jose A. Peralta also purchased one of the moderate- income units. A month before he bought a 1,030-square-foot condominium for $235,000 in Rollins, Peralta bought a multifamily dwelling on Parker Street in Roxbury for $540,000, deed records show.

Wai Ming Wong got a moderate-income, 864-square-foot unit at Rollins for $210,000. Under an urban renewal agreement, records show, Wong and her parents had bought property on Harrison Avenue in 1998 for $15,500 from the Boston Redevelopment Authority. Records show they sold it for $613,000 in 2001, the year before she applied to purchase a moderate-income unit. Wong said that her name was included on the deed for the Harrison Avenue property to help her parents get a mortgage, but that her parents did not share the proceeds from the sale with her.

Wong, Liriano, Lai, and Klau said they did nothing wrong. City officials stressed that all the buyers had qualified under the guidelines for the units they purchased. ''I read the application, and I applied," Lai said last week.

''I felt incredibly lucky," said Klau, a retired school teacher.

Liriano said he did not expect to be chosen, but was happy he qualified.

''The rules were very liberal," Liriano said in an interview last week. ''I was surprised I got it."

Peralta declined to comment when reached at his home last night.

Officials at MassHousing said they depended on the city to qualify Rollins Square applicants.

''MassHousing supports the City's recent change in policy that now imposes a limitation on assets," spokesman Eric Gedstad wrote in a prepared statement.

Lisa Alberghini, head of the Archdiocese's Planning Office for Urban Affairs, said the church didn't expect people who could buy real estate at market rates to be able to take advantage of the development.

Still, she said she was pleased with the overall result at Rollins and said her office will continue to work with the city to enforce its regulations.

''Obviously we're not in the business of creating opportunities for people to have rental property," Alberghini said. ''We relied on the broker, the city, and the Commonwealth to approve those sales."

Donovan Slack can be reached at dslack@globe.com. Christine McConville can be reached at cmcconville@globe.com