Memorandum

TO

Donald A. Myers, Director

Operations Division, HMHM

ele

John G. Terranell, Director, Housing Management Division,
Detroit Office, 5.4HM

SUBJECT: Project #048-44001

Amy Jo Manor

Mt. Morris Township, Michigan

In response to your May 9, 1986, memorandum regarding amending the current Section 8 Contract to add an additional 25 units, we projected future rental increases based on historical data. Our projections conclude that the current budget authority would be sufficient to support the additional 25 units. With regard to the four questions raised in your May 9th memorandum, please be advised of the following:

There are tenants in place at this time who are eligible for Section 8.

The budget authority is sufficient so that amending the contract will not be necessary in the near future.

This

This office submitted our Section 8 needs survey in early 1986.
project was not included in the survey because it does not have an
insured mortgage.

The addition of these 25 units would assist in stabilizing tenancy therefore reducing unit rehab expenses and vacancy loss. This would also alleviate some of the cash flow problems the project is currently experiencing.

Based on the above, we recommend that authorization be given for the additional 25 units. If you have questions, please contact Beverly Downing at 226-4904.

As I have today returned from a site visit to Amy Jo Manor, a 236_HUID_
held property in Mt. Morris Township near Flint, I find it necessary to
write you directly and again ask for your help.

Amy Jo consists of 80 two-bedroom apartments and 80 three-bedroom
apartments a 160 unit apartment complex. We currently have 91 units
of Section 8 with an additional utilization of reserves for 25 units
totaling 116 units currently.

Amy Jo is not in a desirable location and, therefore, we are unable to
attract residents that can afford to pay the rents necessary to meet
expenses. We currently have five people out of 160 units working, with
the remainder receiving aid to dependent children (ADC) social
security, general assistance, or child support as their source of
income. All of the people living in Amy Jo would qualify for Section
8, as 97% are unemployed. Even the 3% that are employed would fall in
the "very low" income category.

In October of 1986 we had to raise the rent to a level that would
enable us to meet our expenses and maintain the property. This
resulted in a 66% property turnover rate with vacancy loss from January
through July 31st of this year reaching $41,000 (9%). This is even
more dramatic when one considers that the majority of the turnover and
vacancy was actually in 69 or 43% of the units. When we raised the
rent we escalated from our normal vacancy of two to three units to a
high of 26 units.

Mr. Thomas T. Demery
August 18, 1987
Page 2

An additional expense incurred by Amy Jo arises when the family that cannot afford to live at the community must either move or be evicted due to arrearages in rent. Aside from incurring excessive legal costs, which the evicted person could not afford to repay the property anyway, we are also faced with rehabilitation to the unit as well as leasing and advertisement expenses in order to find a new resident. The new resident cannot afford to pay the rent either and we will be back in the same unending syndrome within a four to five month period.

The only way to keep Amy Jo from eventually ceasing to be a viable property for low and very low income people is to provide 100% Section 8 funding for the property. The existing 91 units allocatted must be increased to the full 160 units in order to satisfy the housing needs and the economic restraints faced by the people of Mt. Morris Township.

I thank you in advance for your assistance and look forward to the much needed resolution of this difficulty.

Thank you.

Yours Respectfully,

Robert J. Pendergast

cc: 7823.01