Grant
Community Economic Development Assistance Corporation ($1,000,000)
Program-Related Investment
Community Economic Development Assistance Corporation ($3,500,000)
Background
Overall, Massachusetts has a very strong housing market — its rental market is the fifth most expensive in the country with more than 48 percent of renters and 33 percent of homeowners paying more than 30 percent of their income for housing in 2005/2006. By 2019, approximately 41,000 units of subsidized rental housing throughout Massachusetts may lose their affordability restrictions as a result of prepayments, opt-outs, and, increasingly, the expiration of subsidized 40-year mortgages. Of the various housing subsidy types, properties with 40-year mortgages are particularly at risk, because there are no federal protections or incentives in place to facilitate the preservation of this portfolio or to protect tenants from increasing rents. The strain on assisted housing in Massachusetts is exacerbated by the loss, due to foreclosures, of unsubsidized two-to-four unit rental properties that traditionally have provided the bulk of low-cost housing in the state. Compounding this loss, the physical deterioration of the second oldest housing stock in the U.S. threatens the continuity of both assisted and unassisted affordable housing.
Project Description
The grant will enable Community Economic Development Assistance Corporation (CEDAC) to provide staff support to implement an Interagency Working Group to coordinate the housing preservation activities of state, federal, and local agencies, to advocate for necessary state and federal policy changes, and to formulate a joint plan to stabilize properties in the assisted housing portfolio and establish priorities for allocating public resources. CEDAC will also create an early-warning system to support interagency decision-making and priority-setting by enhancing an existing preservation database. The system will monitor the assisted multifamily housing stock and identify properties at risk of opting out of subsidy contracts and properties with physical and financial problems such as high vacancies, poor physical condition, poor management, and troubled tenancies. The grant will also support an advisory committee comprising housing advocates, developers, and real estate professionals that will serve as a forum at which leaders from the public, private, and nonprofit sectors could discuss issues, share information, and provide feedback and guidance to promote the preservation of affordable housing throughout Massachusetts.
The program-related investment will support the Massachusetts Preservation Loan Fund, which will provide patient predevelopment and acquisition financing for large-scale preservation projects such as portfolio acquisitions that have few other financing options. The Loan Fund will provide lines of credit to qualified buyers and unsecured loans for purchase money deposits and other upfront costs as buyers demonstrate progress. There will be no specific loan to value ratio requirements for predevelopment loans. To qualify for financing, borrowers will have to demonstrate a feasible plan to acquire the properties and preserve them as affordable for a minimum of 30 years. Properties from all parts of Massachusetts will be eligible for financing as long as the transaction is consistent with the preservation priorities as determined by the Interagency Working Group. Together, the predevelopment pool and acquisition financing will create a substantial amount of new resources for preservation. Other capital sources for the Loan Fund include local banks and lending institutions, Massachusetts Housing Investment Corporation, Massachusetts Department of Housing and Community Development, the City of Boston, and CEDAC.
Contact
Press inquiries:
Phil Hailer
Communications Director
Department of Housing and Community Development
100 Cambridge Street, Boston, MA 02114
617-573-1104
philip.hailer@state.ma.us
Grant lead contact:
Bill Brauner
617-727-5944
bbrauner@cedac.org
PRI activities:
Karen Kelley
Director of Finance and Operations
Community Economic Development Assistance Corporation (CEDAC)
One Center Plaza, Suite 350, Boston, MA 02108
617-727-5944
kkelley@cedac.org
Joseph Flatley
Massachusetts Housing Investment Corporation (MHIC)
70 Federal Street, Boston, MA 02110
617-850-1000

The John D. and Catherine T. MacArthur Foundation does more than just sponsor shows on ‘BUR

By adamg – Thu, 02/26/2009 – 3:55pm.

The foundation today announced it’s committing $4.5 million to help preserve affordable housing in Massachusetts.

Part of the money will go to the Community Economic Development Assistance Corporation to coordinate federal and state aid for affordable-housing projects, and part will go into the Masschusetts Preservation Loan Fund, which will loan out money to developers who agree to keep their rents down for at least 30 years. The foundation sees preservation of existing housing stock as critical, because it costs a lot less than building new units.

http://www.universalhub.com/node/23525

GOVERNOR PATRICK ANNOUNCES STATE TO RECEIVE $4.5 MILLION FROM MACARTHUR FOUNDATION TO PRESERVE AFFORDABLE RENTAL HOUSING
Investment expected to leverage $150 million to keep 9,000 homes affordable in Massachusetts
With the prospect of losing more affordable apartments to higher rents as a growing number of subsidized long-term mortgages expire, Governor Deval Patrick today announced that the John D. and Catherine T. MacArthur Foundation will award Massachusetts $4.5 million to preserve the long-term affordability of existing privately owned multi-family rental housing.
Massachusetts is facing a potential loss of subsidized rental housing that will affect nearly 41,000 families over the next 10 years. This award is expected to leverage more than $150 million — primarily in private investment — for a statewide loan fund to preserve affordable rental homes for an estimated 9,000 families, or more than 20 percent of the rental housing now at-risk of being lost. Massachusetts is the 5th most expensive rental housing market in the nation, an increasing problem that has only been exacerbated by the loss of unsubsidized rental housing due to foreclosures.
“In these challenging times, we must use every available resource to preserve affordable rental housing for hard-working residents throughout Massachusetts,” said Governor Patrick. “We are grateful to the MacArthur Foundation for helping us in our ongoing efforts to ensure long-term, stable housing opportunities for wage earners on all income levels.”
Specifically, the Massachusetts Department of Housing and Community Development will implement the state’s MacArthur Foundation award. A $1 million grant will go to the Community Economic Development Assistance Corporation (CEDAC) to support an interagency working group to coordinate local, state and federal housing preservation activities, and establish an early warning system to identify properties that are at risk of market rate conversion. The group will formulate a plan and establish priorities for allocating public resources to keep those developments affordable. CEDAC is a quasi-public community development finance institution created in 1978 to provide technical assistance, pre-development lending, and consulting services to non-profit organizations.
The MacArthur Foundation will also target $3.5 million in program related investments, or low-cost loans, to support a $150 million Masschusetts Preservation Loan Fund for predevelopment and acquisition financing for preservation projects. Financing is available to for-profit and non-profit developers who demonstrate a feasible plan to acquire the properties and preserve them as affordable for a minimum of 30 years.
“Massachusetts leads the nation in having the most units of affordable housing per capita, but these are at risk if we do not act now. The foundation’s recognition of Massachusetts’ leadership role is welcome,” said Congressman Barney Frank. “As Chairman of the Financial Services Committee, I am very pleased with the work Governor Patrick and his housing officials have accomplished so far, and I am confident they will continue to provide the resources to maintain this vitally important affordable housing.”
“For many years, the goal of home ownership in the U.S. has been emphasized and as a country we lost sight of the value of rental housing in a balanced national housing policy,” said MacArthur President Jonathan Fanton. “We now have an opportunity to reset the policy agenda, restore rental housing to its proper place, and reshape the policy environment so that it both encourages rental housing preservation and makes it easier to do. State and local governments are at the forefront of this effort, showcasing innovation and trying fresh approaches.”
The MacArthur Foundation’s announcement today is part of a $32.5 million nationwide award to a total of 12 states and cities nationwide. In addition to Massachusetts, the states include Iowa, Florida, Washington, Vermont, Pennsylvania, Oregon, Ohio, Minnesota, and Maryland, as well as the cities of Denver and Los Angeles.
CEDAC will partner with the Massachusetts Housing Investment Corporation (MHIC) to create the loan fund. 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. Through its relationships with state and local funders, MHIC will provide up to $100 million of loan fund capital for acquisition loans of preservation transactions. Other capital sources for the loan fund are expected from local banks and lending institutions as well as DHCD, CEDAC and the City of Boston.
“This MacArthur Foundation award will help Massachusetts keep thousands of units affordable for families over the next 10 years as we put systems in place to best identify and implement policies and actions to prevent further affordable housing losses,” said Roger Herzog, CEDAC Executive Director.
“We’re excited to be partnering with the Patrick Administration and CEDAC to meet this critical need,” said Joe Flatley, President of Massachusetts Housing Investment Corporation (MHIC). “MHIC looks to build on its track record of financing the preservation of affordable housing, and through this initiative effectively assembling the resources to ensure that this housing is responsibly preserved.”
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12 States & Cities to Preserve 70,000 Affordable Rental Homes with MacArthur Support

February 26, 2009

Affordable Housing, Press Releases

(Chicago, IL) — Seizing the opportunity to make needed long-term investments in the face of a weak economy, 12 states and cities are launching innovative projects to preserve more than 70,000 affordable rental homes.

The new projects will assist military families in Maryland, seniors in rural Iowa and Vermont, low-wage workers in Florida and Oregon, and people who have been homeless in Los Angeles. They will promote energy efficiency in Pennsylvania, save distressed buildings in Minnesota, improve management of rental housing in Washington State, and ensure that rental homes are available in gentrifying areas near public transit in Denver.

With the stock of affordable rental housing disappearing at an alarming rate, MacArthur’s $32.5 million investment – $9.5 million in grants and an additional $23 million in low-interest loans – will leverage more than $147 million in other funding. The news was welcomed today by federal, state, and local housing officials across the country.

“These grants have spurred state and local innovation and leadership in the preservation of affordable housing,” said U.S. Department of Housing and Urban Development Secretary, Shaun L. Donovan. “At each grantee site, a representative of HUD has participated in developing the strategies and aligning efforts. It is my goal to make HUD a strong partner at the state and local level. The MacArthur Foundation should be commended for supporting partnerships across the government, private and nonprofit sectors.”

State and local governments in 40 states competed for MacArthur’s support, indicating broad, national interest in preserving affordable rental housing. The Foundation’s funding for these 12 projects is a part of MacArthur’s Window of Opportunity initiative, a $150 million, ten-year effort to preserve affordable rental homes across the nation. By investing in public sector initiatives such as these, the Foundation hopes to help create a wave of policy reform in cities and states that will make it possible to preserve one million homes this decade.

“For many years, the goal of home ownership has been emphasized in the U.S. and as a country we lost sight of the value of rental housing in a balanced national housing policy,” said MacArthur President Jonathan Fanton. “The end of the housing bubble and a wave of foreclosures have underscored the importance of affordable rental housing. We now have an opportunity to reset the policy agenda, restore rental housing to its proper place, and reshape the policy environment so that it both encourages rental housing preservation and makes it easier to do. State and local governments are at the forefront of this effort, showcasing innovation and trying fresh approaches.”

Almost all Americans are renters at some point in their lives. Today, about one in three households – home to more than 75 million people – rent their homes, a number that is rising because of the foreclosure crisis and overall weak market for home sales. Yet, the supply of affordable rental homes is shrinking. Over the last decade, more than one million affordable rental homes were lost due to demolition, conversion to condominiums, expiring government subsidies, and rapidly rising rents. An additional one million homes are expected to be lost in the decade ahead. For every affordable home built each year, two are lost. This means there are not enough affordable homes for millions of Americans all across the nation, not simply in urban areas.

Now, while housing prices decline, acquiring multi-family rental properties is becoming more affordable, enabling cities and states to use scarce dollars more efficiently and effectively. The average cost to preserve a home is half that of building a new one. Preserving affordable housing also provides a stimulus to local economies. For instance, each job supported or created through affordable housing development in Oregon generates another one and one half jobs, on average.

“We’re leveraging our mass transit expansion and ensuring that Denver residents of all income levels have access to affordable housing near these critical transportation corridors,” said Denver Mayor John Hickenlooper. “This creates important economic opportunities for our workforce and further strengthens the character and vitality of Denver’s neighborhoods.”

Examples of the 12 creative state and local projects include:

* Denver – The City and County will establish a new loan fund for transit-oriented development that preserves affordable rental housing near existing and planned regional public transit stations. This investment will also help residents access job centers throughout the region. The Denver metropolitan area is undergoing the largest expansion in the nation of its public transit system.
* Maryland – Military base closures and the related relocation of 40,000 households will increase pressure on rents in eight counties. The State will ensure that rental housing preservation is a key element of the region’s response to the base closures by identifying preservation opportunities and creating a compact among state and local housing leaders to align efforts.
* Oregon & Portland – The City and State are expanding the Oregon Housing Acquisition Fund, a revolving loan fund created to finance the purchase of at-risk properties until permanent financing is available. Over the next five years, federal subsidy contracts will expire on 80 percent of Oregon’s privately-owned rental housing. Nearly one-quarter of these homes are located in Portland, where more than 2,700 families are waiting for rental assistance.
* Pennsylvania – In the largest such effort in the nation, Pennsylvania will conduct comprehensive energy audits to determine the most appropriate and cost-effective improvements for increasing energy efficiency in rental homes. Results will help reduce anticipated 40 to 60 percent increases in utility expenses in affordable rental housing for some of Pennsylvania’s neediest families.
* Download a summary of all 12 projects »

The MacArthur Foundation has a long history of commitment to affordable housing. Last year, the Foundation announced a $68 million investment in foreclosure prevention and mitigation in Chicago. The Foundation also supports a $25 million research program on how housing matters to families and communities. More information is available at www.macfound.org/housing.