Solving the Massachusetts affordable housing crisis will not be possible unless we preserve existing housing as well as produce new homes. Given the housing production constraints Massachusetts faces, losing even one unit of our current affordable housing stock strains an already-overburdened system. Massachusetts is on the verge of losing thousands of units of affordable housing across the Commonwealth if the state does not move quickly to fix a problem decades in the making.
In the 1970s, the Commonwealth established the 13A program, an affordable rental development program modeled after a federal initiative. The MassHousing 13A mortgage program provided an interest rate write-down to 1 percent for developers of affordable rental housing. A subsidy from the state made up the difference between the 1 percent interest rate and the market interest rate at the time that the loan was originated. Through this mechanism, thousands of affordable housing units were created across Massachusetts.
But because of the way the program was financed, thousands of units are now at risk of conversion to market-rate rent: 4,200 in total, with 3,200 at higher risk. The mortgages developers used to produce this housing are reaching the end of their 40-year terms and, if the property owners decide to convert these apartments into market-rate homes, the families and individuals living in them could face much higher rents. It is worth noting that, over time, many of these units became home to elderly individuals.
The good news is that Massachusetts has a strong track record of preserving affordable housing in innovative, effective ways. In 2009, the Commonwealth passed Chapter 40T, a landmark law designed to help preserve a broad range of affordable units built with state or federal funding in the 1960s, 1970s, and 1980s. The law gave the state new tools to monitor and manage the Commonwealth’s affordable housing portfolio. These tools include expanded public notice requirements, a “right of first refusal” granted to the Massachusetts Department of Housing and Community Development (DHCD) if an affordable housing development is put on the market for sale, and new tenant protections when an owner terminates affordability. Additionally, the Commonwealth established the $150 million Massachusetts Preservation Loan Fund, managed by the Community Economic Development Assistance Corporation (CEDAC) and the Massachusetts Housing Investment Corporation (MHIC), for predevelopment and acquisition financing for preservation projects. This loan fund has helped to preserve almost 5,000 units across Massachusetts.
Chapter 40T has played a crucial role in maintaining affordable housing units. In June 2015, CEDAC, along with the Massachusetts Housing Finance Agency (MassHousing), issued an assessment of the effectiveness of Chapter 40T in preserving affordable housing. The report found that more than 11,000 units across Massachusetts have been preserved since the inception of 40T. Most importantly, no affordable developments have been lost to sale in the five years since Chapter 40T became law. The report showed that the law’s most innovative provision– DHCD’s right of first refusal – has worked effectively to help protect tenants while placing no undue burdens on owners. In short, the law is working to protect vulnerable families.
The Commonwealth does not have years to preserve the 13A properties – the mortgages for these buildings are already maturing. But Massachusetts can apply the same kind of creative thinking to this challenge as it has brought to other affordable housing properties at risk. One solution has already been proposed. State Representative Kevin Honan, House chairman of the Joint Committee on Housing and a champion of affordable housing for many years, has introduced a bill at the State House to allow for the use of up to $15 million in additional state low income housing tax credit to maintain the 13A properties. The tax credits will generate about $53 million in funding that can be used for acquisition and renovation of these properties. Rep. Honan’s legislation represents the single most important action that the state can make to preserve the housing units and protect the vulnerable residents.
Massachusetts has become a model state in both understanding the need for preservation and in finding innovative solutions to maintain affordable housing units. Preserving the Section 13A portfolio will be a huge challenge but failing to act will result in the loss of thousands of affordable units and impact families and elderly residents across the state. While there is a public cost to solving this problem through a preservation strategy, Massachusetts will face much larger costs from a failure to act now.
Roger Herzog is Executive Director of the Community Economic Development Assistance Corporation (CEDAC). Bill Brauner is CEDAC’s Director of Housing Preservation and Policy.
Tag: Housing
Clive McFarlane: Affordable housing gains in Worcester hurt by neighboring towns
Earlier this week, the Worcester Regional Research Bureau published a brief indicating that only 46 of 351 Massachusetts communities have achieved a state guideline (Chapter 40B) requiring at least 10 percent of their housing to be qualified as affordable.
Indeed, while Worcester has 13.4 percent of its housing units qualifying as affordable, the Research Bureau points out that none of the surrounding towns comes close to the 10 percent threshold, with Shrewsbury, 6.2 percent, being the highest of the surrounding towns, and Boylston, 1.4 percent, the lowest.
Worcester’s compliance relative to its neighbors “forces questions about the responsibility of surrounding towns to accommodate low-income residents,” the Bureau noted, arguing that the Chapter 40B law is not working and asking questions such as whether it should be made mandatory, or amended to provide developers with incentives to build affordable housing.
The bureau’s brief is the latest acknowledgement of what some have labeled a Massachusetts affordable housing crisis, fueled by inadequate supply and high rental costs. According to the Citizen’s Housing and Planning Association, for example, Massachusetts ranks eighth in the country in income inequality and seventh as the least affordable state for renters.
Michael Kane, director of the Massachusetts Alliance of HUD Tenants, said only about one in four lower-income individuals who qualify for subsidized housing is getting it. Meanwhile, almost 30 percent of those who currently have subsidized housing are living in sub-standard accommodations, he said.
The squeeze is likely to get worse, he said, noting that according to the Community Economic Development Assistance Corporation, the low-income restrictions for many affordable units built in the 1960s through the 1980s are due to expire, creating the potential of significant losses in affordable housing units should owners decide to opt out of their subsidy contracts.
This is already happening in Worcester.
In 2010, Mountain Village, now the Fairways Apartments, converted 140 of its 200 affordable units into market-price rentals. The other 60 units are at risk of losing their low-income restrictions in 2019.
Also at risk in 2019 are 156 units at Stratton Hills and 70 at Matheson Apartments.
With the Fruit Sever Apartments complex now up for sale, another 132 affordable housing units at the complex could be in jeopardy, as the landlord has the option of selling the apartment complex to a buyer who will not preserve the affordable units.
For now, the potential sale of the Sever apartments has triggered the provision of a law giving the state the right of first refusal in buying the apartment complex, and the state has acted, finding a buyer in Community Builders, a nonprofit real estate developer that owns or manages apartments.
The developer has made an offer for Fruit Sever Apartments, which, if accepted, will preserve 132 affordable units.
Among those waiting anxiously on the outcome of the sale is Joel Dress, a resident of the apartments for nearly 20 years. His insecurity, however, began a long time ago.
Less than two months following his liver transplant surgery in November, Mr. Dress, then 57 years old, found himself facing eviction, partly, he said, based on charges that he wasn’t paying his rent on time, the first of the month.
But Mr. Dress, who had been actively involved in the apartment complex’s tenant association, fighting against rent increases and advocating for improvements in living accommodations, said he had for years been paying his rent on the second Wednesday of each month, which was the date he always received his Social Security check.
Mr. Dress was able to stave off eviction with the help of the Massachusetts HUD Tenants Association, which helps individuals in subsidized housing such as Mr. Dress resolve issues with their landlords. In this case, Mr. Dress was partnered with a local lawyer who helped him make the case that his landlord had not made adequate rent payment accommodations before moving to evict him.
His battle is not over, as he currently has a case in Worcester District Court against his landlord, but he and others like him are finding other allies in their struggle to find and keep affordable housing.
State Sen. Harriette Chandler has filed a bill that that would provide a number of tools to help municipalities create and maintain affordable housing units.
City Councilor Sarai Rivera is among those locally pushing for stronger protection of the rights of tenants living in subsidized housing, while speaking to the urgency of preserving affordable units that are at risk.
“Not only do we need more affordable housing units in the city, but we have to preserve the units that are currently available, and particularly units occupied by our elderly residents” she said.
It is too bad, however, that the gains Worcester made in providing affordable housing is being undermined by the less than adequate efforts of its neighbors to do their part.
Fighting For Affordability In The South End
Nonprofit community-building organization Inquilinos Boricuas En Accion (IBA) was formed in 1968 when urban renewal threatened the homes of longtime residents of Boston’s South End. Nearly a half-century later, housing pressures are as strong as ever, with luxury apartment and condominium development booming while waiting lists for affordable housing grow. Vanessa Calderon-Rosado joined IBA in 2003 as its chief operating officer. Now the CEO, she’s leading IBA’s bid to expand its management to nearby housing communities and refinancing its debt to improve its bargaining power acquiring additional properties.
Q: What’s the history of the 435-unit Villa Victoria property?
A: We were founded in 1968 and it was part of stopping the threat of displacement, given the urban renewal plans for this neighborhood. It had already happened in the West End, and it had started happening in what we today call the Ink Block development, which at the time was known as the New York streets. This part of the South End, designated as parcel 19 by the Boston Redevelopment Authority, was next. The primarily Puerto Rican community that lived in this parcel organized to stop the plans and as a result they created IBA to develop affordable housing for redevelopment of the parcel, along with commercial development and a number of services they recognized were needed. They also were a strong force for creation of the Blackstone (Innovation) School, the South End Community Health Center and the Blackstone Community Center. Villa Victoria was developed in phases starting in the early 1970s through the mid-1980s. Today we have 521 units of housing in our portfolio. We have developed about 1,000 units over 47 years. Some of them were turnkey developments to the Boston Housing Authority (BHA). Some of them were homeownership opportunities. Our portfolio is mostly in the South End, but we also have units in Lower Roxbury and Mattapan.
Q: How big is your waiting list right now?
A: The waiting list is really a very sad story. In fact, our waiting list right now is close to 12,000 individuals, which just underscores the need for affordable housing in the city. It tells you in a lifetime we will not be able to serve those families. It’s a staggering number. Our turnover is quite low. Our vacancy rate is very low as well. In terms of eligibility, our residents are low-income and very low-income. We have an aging-in-place component and a growing number of elders. Approximately 68 percent of our residents are Latinos and about 26 percent are Chinese.
Q: What are your plans for expanding your affordable portfolio?
A: There’s some property that abuts ours on West Newton Street and the BHA has put out a request for proposals for a total of 146 units. We presented to the BHA two weeks ago. There are two other bidders. We feel that we are the best-positioned developer for the property because of our location – across the street – where we have our program spaces with the art center and preschool program. That was one of our turnkey developments in the late 1970s. These units are a row of brownstones and it’s in a landmark historic district. The idea is to preserve them. Our plan is to rehab the units, HVAC systems, repoint the buildings and do inside renovations. And we’re looking at putting up solar panels. We contract with a security company and we take pride that our community is quite safe. We feel that extending our reach to West Newton Street will benefit the residents by creating a safer environment within the larger South End community. Also, we are a tenant-controlled organization – 51 percent of our board are residents – and those residents from West Newton will be able to run for the board if they want to be given a more direct voice.
Q: What are the income eligibility requirements?
A: Right now it’s $19,000 for a family of two and the rents are $600 to $800 a month in this neighborhood. A brownstone further up on this street would be $3 million.
Q: How is gentrification affecting South End in 2015?
A: That’s one of the biggest challenges. In this neighborhood, it’s extremely hard to acquire property that makes it feasible for development. We have been outbid by private developers who turned properties into luxury apartments and luxury condos. It is still part of our niche, however. We are refinancing part of our portfolio, which is financed through low-income tax credits. We have built great equity in those properties and we will reinvest it in renovations and to be more aggressive in terms of developing housing. If there’s an opportunity that comes along where we can bid a little higher to compete in the neighborhood, those are some things to look at. We’re also looking at our strategic business plan, whether we could densify Villa Victoria. We have already done a preliminary study for areas we feel we could we could build up on our property.
Q: How many additional units?
A: Anywhere from 40 to 70 units. We could build up, or use open spaces that are not currently used.
Q: As a member of Mayor Walsh’s transition task force, what progress do you see on the affordable housing front?
A: The Department of Neighborhood Development put together a housing task force that recommended 53,000 additional units of housing by 2030. The skeptic in me … says those are reports that go onto a shelf to collect dust. A couple of weeks ago, the mayor announced he is going to increase linkage payments and inclusionary development policy funds for development of affordable housing. So I think that is huge progress. The mayor hasn’t said what the new number will be (for the increase in payments). We don’t know what happens to those funds. They go into a black hole at the BRA. They are developing ways to track those funds and make sure they’re used for that purpose. That was a very strong recommendation that came out of the transition report, and it’s happening. I’m sure it’s not going to be enough. But we’ll see. We’ll advocate for more if it gets too low, or we’ll celebrate if it’s the right amount.
Calderon-Rosado’s Top Five Favorite Reads (In No Particular Order):
1. “Cien Años de Soledad,” by Gabriel García Márquez
2. “Lean In,” by Sheryl Sandberg
3. “From Good to Great,” by Jim Collins
4. “Don Quixote,” by Miguel de Cervantes Saavedra
5. “The Miraculous Journey of Edward Tulane,” by Kate DiCamillo
Chinatown’s Chauncy House Gets A $16M Facelift Via MassHousing
The Community Builders (TCB) of Boston have arranged for a financing package through MassHousing to renovate its historic affordable housing apartment complex in Chinatown.
The 12-story, 88-unit Chauncy House, located at 115 Chauncy St., will receive a $16.4 million financing package for renovations including window replacements, kitchen, bathroom and elevator upgrades, improved ventilation, replacement of the fire alarm system and replacement of hot water storage tanks. The building’s terra cotta façade will be power washed, patched and repaired. Additionally, five apartments will be upgraded to be fully accessible.
As a result of the MassHousing financing the Section 8 subsidy will be extended at least 15 years.
MassHousing’s financing includes a $9.2 million construction and permanent loan, and a $7.2 million bridge loan. Other financing sources for the transaction were the use of state and federal Historic Tax Credits and federal Low-Income Housing Tax Credits.
“We are excited to be able to preserve quality affordable housing in Chinatown, a dynamic neighborhood which is under significant development pressure. Now, with financing from MassHousing, the 88 families that call Chauncy House home will have an even better place to live,” TCB President and CEO Bart Mitchell said in a statement.
Chauncy House was built in 1922 as the Wendell Phillips Building and was converted from offices to housing in 1973. The building is listed in the National Register of Historic Places. It contains 22 studio and 66 one-bedroom apartments.
Just-A-Start celebrates Bishop Allen restoration
Just-A-Start recently celebrated the preservation and rehabilitation of the Bishop Allen Apartments, a 32–unit family housing development.
The ceremonial ribbon cutting brought together both state and local leaders dedicated to community development.
Speakers included Deborah Ruhe, executive director of Just-A-Start; Peter Munkenbeck, president of the board of directors, Just-A-Start; Chrystal Kornegay, undersecretary of the Massachusetts Department of Housing and Community Development; David P. Maher, mayor, City of Cambridge; Richard C. Rossi, city manager, City of Cambridge; Anne L. Randall, executive vice president and chief operating officer, Boston Private Bank & Trust; Joseph Flatley, president and CEO, Massachusetts Housing Investment Corporation; Tim Toomey, state representative; Marjorie Decker, state representative; Roger Herzog, executive director, Community Economic Development Assistance Corporation; Charles Sullivan, executive director, Cambridge Historical Commission; and Jennifer Ramsey, resident.
“Thank you all so much for what you’ve done here,” said Ramsey, who will move into the apartment buildings with her son this weekend. “My grandparents lived here, my parents live here, and thanks to Just-A-Start, I can raise my son here.”
Bedford VA to offer new housing opportunity for homeless vets
A cornerstone ceremony will be held at the Edith Nourse Rogers Memorial Veterans Hospital June 29 for Bedford Green, a housing development for homeless veterans that will be the first in the country offering independent living options for homeless vets age 55 and older.
The ceremony will be near the Patriot Golf Course located at Edith N. Rogers Memorial Veterans Hospital, 200 Springs Road in Bedford. It begins at 1 p.m. Monday, June 29.
“When they (Vietnam War veterans) returned home in the ’60s and ’70s, they were not greeted with the same level of support that exists today,” said Ken Link, chief of social work service for the Bedford VA. “It made them reticent to reach out for help due to earlier experiences that were not very positive.”
Link added it was this dynamic led to some vets of this era becoming chronically homeless.
One of the goals of the 70-unit building, which will be on four acres near the golf course on the Bedford VA’s campus, is to bring this group “back into the fold so they can see that there is a true effort on the part of state and local governments to support these vets in getting the resources and services necessary to integrate into the community and be successful in pursuing their goals whatever they may be,” said Link.
Bedford Green social workers will assist the senior vets in accessing the medical, psychological and vocational services available at the Bedford VA to address factors that may have contributed to their situation. Veterans who qualify to occupy the furnished, mostly one-bedroom apartments available by the spring of 2016 will pay rent based on a sliding scale up to one-third of the market value of the unit. No one will be turned away due to lack of funds.
Veterans can stay as long as they like provided they meet the requirements set by the U.S. Department of Housing and Urban Development and VA Supportive Housing Program, which issues the housing subsidies.
Finding safe and secure homes for vets to live in close proximity creates an environment with unique benefits, said Laurel Holland, the grants and per diem liaison at the Bedford VA.
“Vets derive a huge amount of healing by being around their cohort; that’s their family,” said Holland. “When they have community living and still have independence, it’s the best of all worlds.”
To provide that sense of community, governmental agencies and private donors such as The Home Depot Foundation, which granted the project $500,000, joined forces to pay for the $21 million development. The partnerships are a direct of the 2011 Building Utilization Review and Repurposing (BURR) Initiative to end homelessness for vets of all ages.
The 2014 estimate for homeless vets nationwide was just under 50,000. During that same time period in Massachusetts, the number of homeless veterans was estimated at nearly 1,300.
The BURR initiative allows for “third-party providers to finance, design, develop, maintain, operate housing on unused land or buildings on VA property,” according to the Department of Veterans Affairs. The VA retains ownership of the land, while community partners develop and operate the housing options.
In response to the initiative, the Bedford VA partnered with Peabody Properties, Windover Construction, the Affordable Housing Services Collaborative, Horsley Witten Group, The Architectural Team and New Ecology to develop and manage Bedford Green.
“Our goal is to allow people to age in place with grace,” said Betsy Collins, a senior project manager for Peabody Properties.
Financing given for nonprofit housing projects in Worcester and Uxbridge, and Southbridge child care
The Community Economic Development Assistance Corp. has approved $188,672 in financing for two nonprofit housing developers and a Worcester County child care provider.
The public-private community development finance institution approved a $100,000 loan to the Worcester East Side Community Development Corp. for its Forbes Street project in the Lincoln Street neighborhood. The CDC plans to build eight one-bedroom units on two vacant sites it acquired in 2011 and 2012. The units will be reserved for state Department of Mental Health clients who are homeless or at risk of being homeless.
Uxbridge Housing Associates Inc. received a $48,672 increase to an existing loan of $101,300 that CEDAC approved in Nov. 2013. The loan will fund Uxbridge Housing Associates’ plans to acquire and redevelop the historic former Virginia Blanchard School. When complete, the development will have 25 units of affordable rental housing for low- and moderate-income families in the Uxbridge area.
Also, CEDAC granted a $40,000 pre-development loan to Tri-Community YMCA for the renovation of its child care facility in downtown Southbridge. After leasing the space for 15 years, the YMCA purchased the site from the town last year.
Mass. Nonprofit To Build, Renovate 20 Group Homes With $17M Bond
CIL Realty of Massachusetts Inc. (CILRM) has received a $16.95 million MassDevelopment bond to create housing for disabled individuals across the state.
CILRM will use the proceeds to acquire land, construct, renovate, furnish and equip 20 licensed group homes for individuals with developmental disabilities in Amherst, Brockton, Danvers, Easton, Edgartown, Granby, Hadley, Leicester, Leominster, Montague, Orange, Pittsfield, Plympton, Randolph, Rockland, Sandwich, South Hadley and Walpole. The nonprofit currently owns 16 of the 20 facilities, which were financed through a construction line of credit that will be refinanced through the proposed bond issue.
All 20 group homes will be leased to care providers for people with developmental disabilities. Each facility will be operated and managed by the organization leasing the residence and will house four to six Massachusetts residents with developmental disabilities. The project is expected to create 183 new jobs and 39 construction jobs.
CILRM owns 120 such residences in Massachusetts.
“CIL Realty of Massachusetts’s valuable services help people with developmental disabilities live in supportive settings,” President and CEO of MassDevelopment Marty Jones said in a statement. “MassDevelopment is pleased to continue our partnership with CILRM to help this nonprofit expand and renovate its homes in the Commonwealth to benefit a needy population.”
New Hope 2 gives new life to historic home
Following years of uncertainty and jumps in ownership, the old historic Red Cross building at 391 Pawtucket St. found new life on Thursday, opening as the House of Hope’s latest housing addition for seven families.
The $1.2 million “New Hope 2” project, funded with the help of the state, is the nonprofit’s fourth permanent housing building in the city. Tenants will receive Section 8 housing subsidies through the Lowell Housing Authority, along with support services from House of Hope.
These services include help finding employment or child daycare. Aaron Gornstein, head of the state’s Department of Housing and Community Development, noted the project’s combination of housing with such services.
“I think what’s significant about this is that it’s part of a permanent solution to ending homelessness,” he said.
The lot next to the historic Spalding House reached its final fate after years of conservation effort. Originally built in 1860, the house sits along the Pawtucket Falls and was originally part of the 10-acre Spalding House property.
Capt. John Ford, who owned the Spalding House from 1777 to 1789, sold it and later moved next to the current site. The land later became the home of the American Red Cross until its departure in 2003.
The Lowell Parks and Conservation Trust acquired the property in 2004, a move aimed to preserve the trust’s neighboring Spalding House that left it $1 million in debt.
But through former U.S. Rep. Marty Meehan’s office, the trust received a $1 million federal transportation earmark for the project.
“We do now have a brand new city park behind us, we have a fabulous neighbor,” said Parks and Conservation Trust Executive Director Jane Calvin, reflecting on the changes that occurred over the years.
“Forever and ever, though, this will be my million-dollar acre.”
The city later took over and transferred the property to Community Teamwork, Inc. Will Soucy, president of Soucy Industries in Pelham, bought the property in 2012 and did all the restorative work on the house and its backyard garage, both painted in a joyful light green.
The Franklin Square House Foundation also gave money to House of Hope to convert the house’s third floor into a three-bedroom unit, as well as make one of the units handicap-accesible.
Two modern family units are on each of the first two floors of the house, with one family on the third floor. In the old garage, a handicap-accessible unit features a kitchen, bathroom and two bedrooms just overlooking the water.
Maria Maldonado, a tenant living on the third floor of the house with her family, said she never thought she would have this blessing.
“It’s a dream come true because this brings stability to my family, to my children,” she said.
The Deal Sheet
Yesterday, The Community Builders broke ground on the affordable $27M, 94-unit Worcester Loomworks (they are hoping to channel Rumpelstiltskin and weave some gold out of that loom), which will expand its portfolio in this city to 733 rental units, says CEO Bart Mitchell.
Yesterday, The Community Builders broke ground on the affordable $27M, 94-unit Worcester Loomworks (they are hoping to channel Rumpelstiltskin and weave some gold out of that loom), which will expand its portfolio in this city to 733 rental units, says CEO Bart Mitchell.
The Loomworks, the adaptive re-use of a former mill at 93 Grand St, sits near Clark University where residents who satisfy admission requirements can attend college tuition-free. TCB has another 903 units under construction in 10 developments and 40 more projects in the pipeline. In Boston, it’s renovating 146 units in the South End and completing construction on 20 townhouses at the $200M Charlesview’s Brighton Mills. Marketing just started and already 1,034 households have applied for the homes selling for about $150k under market price, Bart says.
***
On Friday, TCB started permitting to build the $10M Clarion, 40 apartments and 5k SF of first-floor retail space, on a city-owned one-acre site at 311 Blue Hill Ave. If all goes well, it expects to break ground next year on the vacant parcel now owned by the city’s Department of Neighborhood Development. 27 apartments will be affordable