New fund will keep rents low
$150m loan program aims to preserve affordable housing
By Jenifer B. McKim, Globe Staff | December 1, 2009
A state effort to preserve affordable-housing rental properties received a boost yesterday as Governor Deval Patrick unveiled a $150 million loan fund aimed at helping organizations and individuals buy such developments and keep rents below market prices.
Patrick said the loan program, created with private and public funds, will be targeted at privately owned, subsidized properties that include rent restrictions for low-income residents, most of whom are senior citizens or disabled.
He detailed the plan at the State House during an event scheduled to celebrate a new law that gives the state right of first refusal on thousands of properties whose rent restrictions are set to expire. About 41,000 units of affordable housing are scheduled to revert to market-priced rents over the next decade as their owners pay off publicly subsidized mortgages and agreements keeping rents artificially low expire. Most of the apartments were created between the late 1960s and early 1980s when developers received financing incentives from the government in return for making apartments available to low-income tenants.
At the event, Patrick told community activists and housing advocates that the two measures together will “create a rational and predictable process’’ for the transfer of affordable housing units to new owners. He lauded the decades-long effort to preserve affordable housing in Massachusetts, which has some of the nation’s most expensive real estate.
“Today, all of you, working together, have protected our affordable housing stock and, most importantly, tenants in every corner and county of the Commonwealth,’’ Patrick said.
The loan fund will assist for-profit and nonprofit buyers interested in purchasing affordable housing by providing them with temporary funding while they seek permanent financing. The fund includes $100 million from the Massachusetts Housing Investment Corp., a private nonprofit created to support affordable housing, $40 million from private lenders, and $3.5 million from the John D. and Catherine T. MacArthur Foundation, a Chicago nonprofit that supports housing and economic development.
The legislation signed by Patrick last week gives the state Department of Housing and Community Development or its designee the first chance to purchase publicly assisted housing as it becomes available. It also requires that tenants and municipalities be notified about looming expiration dates on rent restrictions and limits rent increases for three years on properties that convert to market rates.
Housing advocates lauded the efforts to keep rents manageable for low-income residents, although it is unclear how many property owners plan to sell or eliminate their affordable housing units.
The new fund “will allow nonprofit or for-profit owners to acquire these properties quickly and keep them affordable over the long term,’’ said Aaron Gornstein, executive director of the Citizens’ Housing and Planning Association. “It is critical to have access to the capital.’’
Jenifer B. McKim can be reached at jmckim@globe.com.

© Copyright 2009 The New York Times Company

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$150m loan fund aimed at preserving affordable rentals
November 30, 2009 12:40 PM

By Jenifer B. McKim, Globe Staff

Governor Deval Patrick today unveiled a new $150 million loan fund to help people buy rental properties that are about to lose their affordable housing restrictions, which limit how much much rent tenants can be charged.

The fund, created with private and public funds, will be used to “support and secure” government-subsidized properties that have rent restrictions for low-income residents, most of whom are senior citizens and people with disabilities, according to the state.

Patrick talked about the fund today at a State House event with housing and community leaders that was scheduled to celebrate the passage of a new law that creates a regulatory framework to preserve affordable rents in so-called “expiring use” properties. The law gives the state Department of Housing and Community Development first option to buy thousands of government-subsidized properties that have rent restrictions. Over the next decade, about 41,000 units of affordable housing are scheduled to lose their rent restrictions, according to the nonprofit Citizens’ Housing and Planning Association.

The legislation deals with homes built by private companies with public subsidies. Rents on such properties are capped, but the restrictions can expire, typically when the mortgage is paid off. Under the new law, rent increases would be limited for three years once a property is no longer designated as affordable.

“Preserving affordable rental housing keeps our working families strong and our economy strong,” Patrick said in a written statement today.

GOVERNOR PATRICK HIGHLIGHTS ‘EXPIRING USE’ RENTAL HOUSING LAW, ANNOUNCES $150M FUND TO PRESERVE LONG-TERM AFFORDABLE HOUSING
New law, leveraging of public/private funds protects tenants
BOSTON – Monday, November 30, 2009 – Standing with housing and community leaders, Governor Deval Patrick today highlighted a law he signed last week to keep publicly-assisted rental properties affordable and announced the roll-out of a $150 million loan fund leveraged primarily through private dollars to support and secure long-term affordable housing preservation efforts.

“Preserving affordable rental housing keeps our working families strong and our economy strong. By securing and expanding housing opportunities now and over the long-term, we can make a difference in the lives of our neighbors, bolster our communities and maintain Massachusetts on a path toward recovery,” said Governor Patrick.

“By maximizing all available resources, we are working to meet today’s economic challenges head-on by building and preserving affordable housing opportunities for families of all income levels,” said Lieutenant Governor Timothy Murray, chair of the state’s Interagency Council on Housing and Homelessness.

The Governor’s signing of the “expiring use” bill last week creates a regulatory framework to preserve affordable rents in properties where long-term, publicly subsidized mortgages are paid off and affordability restrictions can then expire. An estimated 90,000 units could be affected, with about 17,000 of those units at-risk of losing their affordability through expiring use over the next three years. The legislation establishes notification provisions for tenants within expiring use properties, a right of first refusal for the state Department of Housing and Community Development (DHCD) or its designee to purchase publicly assisted housing, and modest tenant protections for projects with affordability restrictions that terminate.

“Working together with tenants, property owners, preservation experts, and municipalities, the state now has a proactive, comprehensive strategy to permanently preserve more of the Commonwealth’s affordable rental housing stock,” said Senator Sue Tucker. “It is critical, particularly in this economy, that we maintain housing options that are affordable to low income families, seniors, and people with disabilities. Preserving affordable housing is much less expensive than building it new.”

“A strong Commonwealth is built by vibrant communities and stable households. This legislation will allow thousands of seniors, disabled and low income working families to feel the dignity of having a home and the pride of being part of a community,” said Representative Kevin G. Honan. “This legislation represents a collaborative effort between the Legislature, the administration, nonprofits, and the private sector. The tireless efforts of tenants and advocates were vital in creating a strong tool that will have a lasting impact on the lives of so many.”

The Governor also announced a $150 million preservation loan fund created by the state quasi-public Community Economic Assistance Corp (CEDAC) in partnership with DHCD as they put together a pool of resources to help secure rental developments that are about to lose their expiring use restriction. The program is leveraged through state bond funds along with a $3.5 million award to Massachusetts from the John D. and Catherine T. MacArthur Foundation, $40 million from private lenders, and $100 million from the Massachusetts Housing Investment Corp (MHIC). MHIC is a private non-profit entity founded in 1990 by a consortium of banks and other corporate investors to fill a critical gap in meeting the credit needs of affordable housing developers and owners who are unable to get financing for certain projects from traditional lenders.

“Enacting this legislation and loan fund helps us to preserve the vibrancy, vitality and rich diversity offered to residents in our cities and towns across the Commonwealth,” said DHCD Undersecretary Tina Brooks. “We are grateful for the ongoing support of the Patrick-Murray Administration and the Legislature as well as our partnership with CEDAC for helping us to leverage the public and private resources needed to secure this important preservation loan fund.”

“At a time when the economy and the state budget are facing great challenges, it is critical to advance innovative and cost-effective solutions to keep low income families and seniors in affordable homes”, said Aaron Gornstein, CHAPA Executive Director. “We commend the Legislature and the Governor for their outstanding leadership in passing a landmark bill that will utilize existing resources and public-private partnerships to preserve affordable rental housing.”

Governor’s Daily Update
Innovation, Education, Infrastructure and Regional Focus

Monday, November 30, 2009 – Protecting Massachusetts’ Tenants: Support for Affordable Housing

Standing with housing and community leaders in the State House this morning, Governor Patrick highlighted a law he signed last week to keep publicly-assisted rental properties affordable and announced the roll-out of a $150 million loan fund leveraged primarily through private dollars to support and secure long-term affordable housing preservation efforts. The Governor’s signing of the “expiring use” bill last week created a regulatory framework to preserve affordable rents in properties where long-term, publicly subsidized mortgages are paid off and affordability restrictions can then expire. “Preserving affordable rental housing keeps our working families strong and our economy strong. By securing and expanding housing opportunities now and over the long-term, we can make a difference in the lives of our neighbors, bolster our communities and maintain Massachusetts on a path toward recovery,” said Governor Patrick.
Learn More:
• Press Release From the Office of the Governor – http://www.mass.gov/?pageID=gov3pressrelease&L=1&L0=Home&sid=Agov3&b=pressrelease&f=113009_expiring_use_law&csid=Agov3
• Article in the Boston Globe – http://www.boston.com/business/ticker/2009/11/150m_loan_fund.html