Friday, April 30, 1999
Affordable housing forum: Views from state, other towns
Cooperation rather than confrontation is a key ingredient for successful affordable housing development projects, according to three guest speakers at an information forum held on April 21 at Town Hall. Kate Racer, an associate director of the Massachusetts Department of Housing and Community Development (DHCD), Edith Fruscione, chairman of the Concord Housing Authority (CHA), and Marshall Derby, chairman of the Lexington Housing Assistance Board (LexHAB) all emphasized the benefits of strong partnerships between towns and developers, especially for comprehensive permit projects governed by the state's Chapter 40B regulations.
Racer, accompanied by Jeff Quinn of DHCD's Division of Private Housing, explained with commentary and handouts the essential elements of the state's Local Initiative Program (LIP), under which towns and developers are given incentives to pursue affordable housing projects with minimum state control or oversight. Both community-initiated and developer-initiated projects are covered by the LIP. For developer-initiated projects, the selectmen must provide a written endorsement of the project, allowing the developer to apply for a site eligibility letter from DHCD. Once in possession of the site eligibility letter, the developer goes to the town's zoning board of appeals to apply for a comprehensive permit, which starts the process of negotiating key aspects of the project, such as zoning relief, density, design and marketing. In towns with less than 10 percent of its housing stock classified as affordable, if support from the selectmen or agreement with the board of appeals is not achieved, the developer may appeal to DHCD for approval to proceed with a project which does not meet local zoning requirements.
Fruscione described two Concord affordable housing projects, one successfully completed and one currently underway. The completed development, a comprehensive permit project consisting of six units on Powder Mill Road, is on land declared surplus by the Concord School Committee. It did not proceed until litigation regarding the land transfer was resolved in favor of the CHA. Its financial feasibility depended not only on the land donation, but also on a $300,000 Town Meeting appropriation and a $933,000 federal Housing and Urban Development (HUD) grant. A seventh affordable unit, on a different site and currently occupied by a family of Russian émigrés, was also part of the project.
The second CHA initiative, consisting of six units on Walden Street and a seventh on Grove Street, was made possible by an $800,000 grant from DHCD. About $55,000, mostly in legal fees, was required to achieve the comprehensive permit
Many units in Lexington
In Lexington, the need for affordable housing was recognized and acted upon more than 15 years ago. LexHAB was created in 1983 by Town Meeting and an act of the state legislature. At the time, the town was closing unneeded schools and wanted to convert Muzzey Junior High School to affordable, limited equity condominiums. LexHAB, a non-profit corporation with seven board members and reporting to the board of selectmen, monitored initial sales and resales, and managed ten units which the town purchased. It also became an essential entity for producing future affordable housing for low and moderate income families, and now owns 43 rental properties33 attached units and ten single-family homes. Unlike the town's housing authority, which can only provide housing for low income families (defined as having 50 percent of the Greater Boston median income, or $30,000 for a family of four), LexHAB can also serve moderate income families (defined as having 80 percent of the regional medium, or $48,000 for a family of four).
Derby characterized LexHAB's ability to move quickly as a key advantage over town agencies. He cited two examples: quick acceptance of two existing homes offered at no cost, which were moved onto surplus town land; and the ability to make a same-day offersubject only to selectmen approvalon a home put on the market at a low price (for Lexington) at 10 a.m., with the offer accepted at 6 p.m. LexHAB receives no funding from the town's budget, but has received substantial seed money and six free condominium units from developers as part of negotiations with the town on other projects requiring zoning variances. Many of its single-family homes were built on surplus town land, using Minuteman Tech students for labor and the local Rotary Club for technical and contractor help. (Derby noted that one of LexHAB's board members is both a licensed general contractor and a member of Rotary.)
LexHAB's 43 dwelling units are all free of mortgage debt, and are leased to families who qualify under the established income guidelines, with annual eligibility reviews. The town property used has included tax title lots and surplus school property. Although acquiring surplus property requires a two-thirds vote of Town Meeting, Derby stated that LexHAB has never lost a Town Meeting vote. Many of the building and renovation projects have been done under LIP comprehensive permits, and all have been supported by the town's selectmen. According to Derby, the major downside of the LIP approach is that it takes an inordinate amount of time to receive state approval.
A lively question-and-answer session, moderated by former selectman Ralph Anderson, followed the guest speaker presentations. Many of the questions related to developer-initiated comprehensive permits. Racer firmly stated that in cases where no local agreement is reached and an LIP developer appeals to the DHCD, her agency will more likely side with the town if a clear commitment to develop affordable housing has been made and progress is underway. She added, however, "Towns with a record of resisting all approaches to affordable housing development should not expect help from the state in such cases. In the eyes of the state, you don't have to be at 10 percent. If you're making a good-faith effort, we'll pay attention."
Racer also recognized the special difficulties faced by towns such as Carlisle, whose land values make the financing of affordable housing more difficult. She stated that "The state doesn't expect any community to magically transform itself into something else." Other towns in similar circumstances have been successful in "getting money out of private pockets," she added. One example cited was Martha's Vineyard. which initially came up $90,000 short for a four-unit rental project to be developed under a comprehensive permit. After failing to obtain state approval for the project because of the financial shortfall, they enlisted resident Carly Simon to give a concert, and came back three months later with the additional $90,000. (A resigned murmur spread through the audience after hearing this story, suggesting to Racer that this might not be an appropriate model for Carlisle.)
What is affordable?
In response to a question about what would be considered "affordable," Racer estimated that a three-bedroom house would have to sell for about $95,000 to meet the state's definition. She also pointed out that even with a restriction on the resale price, it will be difficult to keep a house affordable for more than ten years or so. The owner of an LIP-developed affordable home is allowed to resell it to an income-qualified buyer at a price that provides a reasonable rate of appreciation to the seller. If an affordable home equivalent to a $400,000 market-priced home sold initially for $100,000 (i.e., 25 percent of the market-priced home), the state would insist that any deed restriction allow resale at 25 percent of the then-current market price. Assuming that the market price five to ten years later might be $800,000 if the real estate market continues to be strong, the affordable home could then be resold at $200,000, probably above what most income-qualified buyers could afford.
Considerable discussion was triggered by a question about giving preference to local town residents or others with connections to the town. Marketing plans for LIP developments may include a local preference for up to 70 percent of the affordable units. Racer stated, however, that this limit was flexible. She suggested that for a town like Carlisle, where the financing of affordable housing projects is difficult, the state might be willing to agree to an even higher preference level in order to help achieve town support.
Another question concerned the possibility that an LIP development could be designated for senior citizens only. Racer explained that the legislation creating Chapter 40B was intended to promote affordable family housing. The state has therefore been unwilling to allow age-restricted housing to be allowed under the LIP. In response to a question about the characteristics of LIP developments which do not succeed, all three speakers emphasized the importance of site location and planning, strong partnerships with developers, respect for political considerations and support of abutters as key determinants of success or failure.
In her closing remarks, Racer conceded that LIP projects can be very difficult and contentious, but suggested that her office would be flexible and helpful.
The forum was co-sponsored by Carlisle Communications, Inc. (publisher of the Carlisle Mosquito) and the Carlisle Housing Authority.
© 1999 The Carlisle Mosquito