Middle Line project snagged

By Nelson Sigelman - March 9, 2006

Unresolved questions about conflicts of interest, concerns that a response to a request for proposals may not pass state muster, and uncertainty about how best to use town funds left the Middle Line Road affordable housing development, Chilmark's first affordable housing project, in a snarl this week.

The issues arose first on Feb. 21 at a joint meeting between the selectmen and the housing committee to discuss a development proposal submitted by a group including the Island Housing Trust (IHT), South Mountain Company of West Tisbury, and the Dukes County Regional Housing Authority.

The consortium's proposal dated Jan. 20 was the only response to a town request for proposals to build 12 housing units, consisting of six privately owned houses and six rental units on 21 acres of town-owned land off Tabor House Road.

On Tuesday afternoon, Ron Rappaport, Chilmark town counsel, appeared before the three selectmen and members of the Middle Line Road subcommittee. The town officials looked to Mr. Rappaport to begin to unravel the interlocking legal and financial questions arising from the IHT proposal.

For now, selectmen are taking no action pending responses Mr. Rappaport awaits from the state ethics commission, the office of the state Inspector General, and an outside lawyer with expertise in the Community Preservation Act.

The issues and questions the selectmen asked Mr. Rappaport to address stem in part from the multilayered push to create affordable housing in Chilmark and the appearance of conflicts of interest.

On Tuesday, he addressed those issues as well as he could.

Mr. Rappaport said that based on a letter Perry Ambulos received from the state ethics commission, Mr. Ambulos, who had asked to serve on the housing committee, would have a clear conflict because he was also among the pool of applicants for a Middle Line house. Following a brief discussion, Mr. Ambulos said that while he did not think there was a conflict, he did not want to create a distraction and would not serve on the committee.

Mr. Rappaport had also spoken with ethics officials about the involvement of John Abrams, who is the president and CEO of South Mountain Company and serves on the boards of the Island Affordable Housing Fund and the Island Housing Trust. Mr. Abrams was off-Island and could not attend the meeting

Mr. Rappaport said that based on his conversations with ethics officials, there is an issue whether South Mountain could participate in the project.

In November 2004, Chilmark selectmen signed a $24,000 consultancy contract with the South Mountain Company and Keen Development Corp. of Cambridge for planning and consulting services to develop the Middle Line Road property. Mr. Rappaport explained that when the town hired Mr. Abrams as a consultant, it may have made him a municipal employee.

Because the feasibility study was an integral part of the RFP process, in effect Mr. Abrams might be seen to have been bidding on a project that he helped to create as a municipal employee, Mr. Rappaport said.

Mr. Abrams had sought an informal opinion from the ethics commission prior to submitting his proposal, but no major concerns were raised then. Mr. Rappaport said the state ethics commission wanted a more detailed submission from Mr. Abrams, prior to providing a formal ethics ruling. He said he did not expect a long delay.

Several concerns for which Mr. Rappaport awaits answers hang on the extent to which the town could allow the IHT to modify its submitted proposal without running afoul of the laws governing bidding procedures.

Prior to the Feb. 21 meeting, the IHT submitted an addendum with changed median income ranges and modified cost of rentals, the subject of some comment by consultants who reviewed the proposal for the town.

The IHT proposal, dated January 20, lists total development costs of $3,589,490, of which $2,307,283 would come from rents and home purchases, $982,207 from Community Preservation Act funds, and $300,000 from the Island Affordable Housing Fund.

One small footnote at the bottom of the page containing an outline of the sources and uses of funds is unacceptable, the selectmen said. It provided that, "If development costs exceed estimates, the resulting shortfalls could be made up with town funds, private donations, increased use of CPA funds, or any combination of these sources."

Mr. Rappaport said the question was whether the town could accept a proposal that was open-ended and whether the town or applicant could be allowed to strike a provision.

More complicated was the question of the use of CPA funds. The town currently has accumulated $564,000 in available CPA funds for Middle Line Road, the use of which would need to be voted on at a town meeting, as would any lease.

Chilmark voters in June agreed to finance construction of the 12 units using a combination of rental income, home sales, and state funding with the expectation that that would avoid the need to ask voters to pay a large share of the cost.

The current arrangement, in which the town hands the project over to a nonprofit, avoids the municipal requirement to pay prevailing wages, a constraint that would add to the costs. But the use of CPA funds may in fact not provide enough political separation to put the project outside the public realm.

The use of CPA funds could also affect the ability of the town to impose local residency requirements. For answers, Mr. Rappaport sent a letter with a list of five questions to Joshua Davis, a Boston attorney the town has relied on previously to advise the town on the use of CPA funds.

He asked:

1. Given the extent of CPA funding ($982,000.00), the extent of Town control over design, the fact that the Town gets the property back after 99 years, do you believe that the Prevailing Wage Act (and possibly other public bidding laws) applies to the project?

2. Given the use of CPA funding, would you update your comments about residency requirements contained in your June 10, 2005, letter?

3. Do you believe that the CPA funds can be committed into the future? It is my understanding that there is approximately $500,000 in CPA funds available for distribution. Can the Town bond against future CPA funding?

4. Do you believe that the proposal can be approved by the Selectmen without a town meeting vote (I do not, given the CPA issues and the 99-year lease issue, which, in my opinion, require a town meeting vote)?

5. Do you have any opinion as to whether a town has the authority to lease property for more than 10 years, even with the vote of the town meeting, absent a special act of the Legislature?

The outstanding questions came as a disappointment to many in the room. Warren Doty, a selectman, said that the original schedule called for the project to be completed by Nov. 2008. "I would love to stick to that schedule," said Mr. Doty.

He said if the circumstances required that the proposal be rejected, it was important to do it as soon as possible and move forward.

Frank Fenner, chairman of the selectmen, said, "We want to do this, but we want to do it correctly."

Zee Gamson, a member of the housing committee, expressed concern that after all the time, money, and effort invested in the project, it was being delayed. "What I'm hearing are details," said Ms. Gamson. "All projects are complicated. Move forward. It is so easy to get knocked over by the details."

But Mr. Fenner cautioned, "We have to make it proper. We have to make it legal, or the town will pay the price.