Boston’s former chief economic development officer and director of the Boston Redevelopment Authority (BRA) was part of a team that recently purchased the YWCA on Berkeley Street – receiving $850,000 in public funding to help seal the deal.

Mark Maloney ran the Boston Redevelopment Authority for seven years before retiring in 2007. He eventually moved on to become president of Boston World Partnerships (BWP), a nonprofit created by Boston Mayor Thomas Menino to raise international awareness of Boston as a business and intellectual epicenter. Menino is chairman of the organization’s board of directors, and the BRA provided seed funding for the group.

While BWP was founded with help from the city of Boston, the organization is now administered independently and receives no funding from the city, according to BWP staff.

Earlier this month, Maloney Properties, a property management company founded by Maloney with which he is no longer affiliated, and Project Place, a job training organization for the homeless, partnered in the $8.5 million purchase of the 67,624-square-foot, 40 Berkeley St. building.

Housing Preservation

Maloney and his wife, Georgia Murray, were approached to help provide financial backing for the purchase, working to secure the mortgage. Maloney also convinced the Boston Department of Neighborhood Development (DND) to allocate $850,000 to help preserve 55 of the residential units in the building for low-income residents. That will guarantee the long-term viability of the housing resource, according to Lucy Warsh, a DND spokeswoman.

DND will secure its financing with a loan agreement detailing the requirement that 55 of the units in the development be restricted for low- and moderate-income tenants in perpetuity, Warsh wrote in an E-mail. The loan will be secured by a promissory note, a recorded mortgage, and an affordable housing restriction requiring the units to be affordable. DND typically offers a maximum of $1 million per project to support affordable housing developments.

The property is home to a mix of residential uses, including a hostel, long-term apartments and the aforementioned affordable housing. DND sets aside funds every year to help landlords offset the costs of retaining affordable housing when a building is purchased to ensure the units continue to hold their affordable status. Project Place was the actual applicant for that funding, and the group leads the affordable housing program.

The units do not generate significant income on their own, and without the $850,000 in public funds, Maloney told Banker & Tradesman it would have been difficult to keep the affordable units as part of the property because of the way his partnership structured its business plan.

“In order to put all the components of financing together, there was a gap that required the assistance of the city,” resulting from the pro forma the partners used to analyze how much debt they could carry, Maloney said. Thanks to the extra funding, “We’re going to be able to stabilize it and run it as it has been without any sort of change.”

Public, Private Purposes

But some local community activists said they believed the city should not be so quick to provide public dollars to former employees.

“Why is this a good use of $850,000, if we have that kind of money lying around?” asked Back Bay resident Shirley Kressel, a landscape architect turned community organizer. “It’s the BRA director that is getting these subsidies.”

Maloney maintains that he never had dealings with the property as BRA director and thus has no conflicting interests, enabling him to approach the city for the affordable housing funds.

Even so, some institutional leaders in the city bemoan the loss of public funding to private interests.

“We’re always concerned when funds that might be dedicated to public purposes are diverted,” said Henry Lee, president of the Friends of the Public Garden, who has been searching for corporate sponsors for upgrades to the Boston Common.

Part of Maloney’s work with Boston World Partnerships involves connecting business people from a multitude of industries. According to a staffer at the organization, BWP has acquired funding from sponsors like State Street Foundation and Fidelity Investments. The group counts the BRA and Maloney Properties as “partners” on its website.

The YWCA said its mission has changed such that housing is no longer a central concern, according to Diana Pisciotta, who handles public relations for the Y. Instead, it has evolved to focus more on empowering women and eliminating racism, and less on affordable housing.

“When [the YWCA] had the opportunity to sell to a buyer so that [the Berkeley St. property] remained a resource for affordable housing in the city, they decided that was a good transition,” Pisciotta said.