Suit says housing authorities were cheated

Three of the largest public housing authorities in Massachusetts filed a lawsuit yesterday accusing the Romney administration of shortchanging the state's nearly 250 local authorities by millions of dollars, causing housing conditions to deteriorate and forcing the closing of hundreds of substandard apartments.

The housing authorities in Boston, Cambridge, and Brookline contend that Governor Mitt Romney violated state law by freezing subsidies for operating and maintenance costs starting in 2003. The move has resulted in a "near crisis" for authorities that run nearly 50,000 apartments statewide for poor, elderly, and disabled residents, the suit said.

"If something isn't done now to fully fund or properly fund these housing units, then the next time the budget process comes around, it's going to be fiscal year '09, and by then the number of units that will have deteriorated and have to be taken off the market is enormous," Steve Young, a lawyer for the three authorities, said in an interview.

The three authorities manage about 4,000 apartments, but proponents of the suit filed in Suffolk Superior Court hope it will address subsidies for all housing authorities in the state.

The suit was filed a month after state Auditor A. Joseph DeNucci issued a scathing report that said Romney's funding of public housing has left thousands of residents living in squalid conditions. DeNucci's office reviewed conditions in about a quarter of the 247 housing authorities.

His report found that more than 1,000 apartments were in such disrepair -- with missing hand railings, cracked and damaged foundations, extensive mold and midew damage, and rodent and insect infestation -- that they had to be taken off the market. Meanwhile, 81,000 people were on waiting lists for apartments, DeNucci said.

Steve Carvalho -- chief of staff for the Department of Housing and Community Development, which funds the housing authorities -- said his department recognizes that costs to authorities have risen and increased subsidies for operating and maintenance costs by 7 percent in fiscal 2007. But he declined to comment further, citing the litigation. His department and the Executive Office of Administration and Finance are the defendants in the suit.

Gregory P. Russ, executive director of the Cambridge Housing Authority, said the 7 percent increase does not begin to address years of underfunding. His authority, which manages 663 apartments, had to close more than a dozen apartments in the past year at Jefferson Park Apartments because of problems that ranged from mold to worn floors.

"It's been awful," he said. "Basically, I feel like we have a lot of good things going on in the state, but the public housing that the state funds has been sort of like a forgotten asset," he said.

A 1971 state law caps the rent paid by residents of public housing apartments at no more than one third of a household's income, the lawsuit said. .

In 2001, the average household income in such apartments was less than $15,000.

The law requires the state to make up the difference between what authorities receive in rent and the cost of operating and maintaining apartments, the suit said.

But a study by the Harvard Graduate School of Design found last year that despite the subsidy, authorities were losing on average about $140 a month for each apartment, said Young. That translated into an annual shortfall of about $79 million for the authorities, which manage 49,968 apartments, according to the Harvard study.

The lawsuit blames the problem on a freeze on subsidies for operating and maintenance costs other than heat and electricity. The freeze fails to take into account dramatic increases in a variety of costs, said the suit. For example, the cost of property insurance for the Cambridge Housing Authority rose 279 percent from fiscal 2000 to fiscal 2005.

In July, the Legislature's Subcommittee for Public Housing issued a report that agreed with the housing authorities.

It said that the state should have given authorities $194 million in 2002 to cover operating and maintenance costs, instead of $115 million.

Young said that underfunding the authorities will only cost the state more in the long run.

"A lot of these units are for elderly and disabled people who aren't able to maintain these properties themselves," he said. "If you don't maintain them . . . you're going to have a tremendously costly process of remedying that."

Jonathan Saltzman can be reached at jsaltzman@globe.com.