68realmass.pdf

A

Real

Massachusetts

Miracle:

Local

Affordable

Housing

Partnerships

Monte

Franke

The

1

980s

witnessed thefederal

government

's

near

total

withdrawal

of

its

housing

responsibilities

and

commit-ments.

States

and

municipalities

across the country

have

had

tostep in tofill

that

gap.

Massachusetts

and

its

communities have

responded

in

a

remarkable

effort

centered

largely

around

the

creation

of

local

housing

partnerships.

Local

housing

partnerships-coalitions

_of

local officials,

business

leaders, nonprofits,

and

housing advocates-focus

local

action

to

promote

affordable

housing

in

suburban

and

rural

communities,

as

well

as

incities

across

Massachusetts.

Throughout

much

ofthe1988Presidentialcampaign,the "Massachusetts Miracle"

was

toutedasashining

example

for other regions.

Even

though

the election loss by the

Democrats and

the recent

economic

downturn

have

re-moved

thelustreofthe

commonwealth's economy,

there areindeedmiraclesoccurringinthestate-asmallmiracle occurs every timea low- or

moderate-income

first-time

home

buyercloses

on

thepurchase ofahouse.

Home

prices in Massachusetts skyrocketed during the 1980sinresponsetoregionalaswellasnational

economic

trends.

Housing

pricesfaroutstrippedtherise inincomes.

The

median

salespricefora

home

inthe Greater

Boston

area

now

exceeds$180,000,requiringan

income upwardsof

$75,000,

which

is nearly twice the

Boston

area

median

income.

During

theeighties,averagerentsrose68percent. Publicawareness aboutaffordablehousing

problems

has soaredalong withprices.

Concern

about housing

problems

historicallyhas

been

focused

on

inner-city

and low-income

populations; affluent

communities

generally rejected the notions thatthey

had

responsibilityforafairshare ofthe housing.

The

eighties brought housing

problems

to the doorstep of

many

middle-income

homes

in the affluent suburbs. Once-secure

suburban

families

were

awakened

to

the realization that theiremployees,theirfiremen

and

po-lice,

and

eventheir

own

kids

now

had

verylittlechanceto

buy

a

home

intheir

home

towns. Every

town and

cityinthe

commonwealth-not

just the inner cities-now

had

their

own

housing problems.

The

1980salsowitnessedthe federal government's near

total

abandonment

ofitshousingresponsibilities

and

com-mitments.

Most

programs

were

stripped infavorofthe militarybuildup;

what

little

remained

offederal housing funds

was

targeted

more

directlytothevery

low

income.

Massachusetts

and

its

communities responded

with a

truly impressive housing effort centered mostly

around

localhousingpartnerships-cooperativeeffortsofthepublic, private,

and

nonprofitsectors to

produce

housing. Nearly

200

ofthe351cities

and towns

inthe

commonwealth

have designatedlocal

committees

oragenciesto act

on

behalfof the

town

intryingtodevelopaffordable housing.

Collec-tively,theseentitieshave

been

instrumentalinthe

develop-ment

ofthousands ofhousingunitsaffordabletolow-

and

moderate-income

families.

A

Little

History

While

the

push

towardlocalpartnerships

was

drivenby

statefunding,its

broad

successcan

be

tracedtotheappeal oflocal initiative

and

localcontrol,longestablishedtenents of

New

England

towns.

The

participatory

town

meetingis stilltheprimarypolitical

mechanism

fordecisionsin

most

communities

inthe

commonwealth.

Participationin local

housing

committees

seems

to

be

alogicalextensionintothe 1980softhesehistoricalantecedents.

The

GreatSocietyhousing

programs

ofthe1960s tended

to

emphasize government

design

and

control. Partnerships

emphasized

the relationship

between government and

the poor.

True

public-private partnershipsfor

community

re-vitalizationevolvedinthe 1970s.

Most

ofthe early partner-ships consisted of public-private

teaming

for individual projects in urban renewal

and

community

development

areas.

One

of the first national efforts at creating

and

sustaining partnerships

was

the

Neighborhood Housing

Services

(NHS)

model.

NHS

had

atargeted

neighborhood

focus,usuallyemphasizingrehabilitation

and

homeowner-Monte

Franke earnedhismaster'sdegreeinregionalplanning

in

_1975from

the UniversityofNorth Carolinaat

Chapel

Hill.

shipofexistingsingle-family

homes.

The

model

has

been

expanded

to

urban neighborhoods

acrossthe nation.

Today

in Massachusetts, the scope ofpartnerships has been expanded. It is

no

longerjust project-based;itis

no

longerjustneighborhood-based;itis

no

longerjust

inner-city-based.

The

local housing partnershipis

an ongoing

entity

which

focuses

on

the affordablehousing

problems

of the

community

asawhole,inrural

and suburban

commu-nities aswellas incities.

The

partnershipcan

encompass

all

community

housingneeds.

The

Boston

Housing

Partnership

The

startofthe

modern

era ofhousingpartnerships in

Massachusettscanbetraced to

Boston

and

the

summer

of 1982.

A

consortium ofcivic

and

business leaders

began

meeting

under

the

"Goals

For Boston"

program

todevelop

model

partnershipsineducation,jobtraining,

and

housing.

The

group'shousing

subcommittee

recommended

a part-nership ofbusiness, government, neighborhoods, acade-mia,

and

foundationstoalleviatetheshortage ofaffordable housing. Early in 1983, the

Boston

Housing

Partnership

(BHP)

was

incorporated

under

the leadershipofthe chair of

one

ofBoston'slargestbanks. Itsambitiousgoals

were

to

produce

and

preserve

low-income

rental housing, to ensure lasting affordability,

and

to avoid

dependence

on

federalfunding.

Funded

initiallywithgrants

from

thecityof

Boston

and

the

Boston

Foundation,the

BHP's

firsthousinginitiative

(which

came

tobe

known

as

BHP

I)

was

to

produce

afford-ablerentalhousingthrough neighborhood-basednonprofit

community development

corporations

(CDCs).

The

tar-get:

500

units.

The

results:

700

unitsof housing in

69

buildings,

packaged

by the

BHP

and

ten nonprofits with $38million

from

twenty fundingsources,including

syndi-cation.

The

lastofthe

BHP

Iunits

were completed

in

June

1987.

While most

ofthe

700

units

were

acquisitionsofoccupied "atrisk"rental properties,

250

units

became

availablefor

occupancy

by

low-income

families.

Over

5,000 families applied.

The BHP's

second

major

initiative

(BHP

II)

was

to negotiatewith

HUD

tosecure

ownership

of

938

unitsin49 buildings, part of the so-called "Granite Properties," a

large portfolioofprivately

owned

subsidizedhousing which had

been

foreclosedby

HUD

in1982.

Working

in

coopera-tionwiththecityof

Boston

and

seven

neighborhood

non-profits,

BHP

packaged

$75millionforacquisition

and

re-habilitation.

Funding

included

$16

millioninequity

invest-ments

bytwelvelocalprivatecompanies, $55millionin

tax-exempt

bonds,

and

long-term Section 8assistance.

Com-pletionofrehabilitationisexpectednextyear.

The

accomplishments

of

BHP

todateare tremendous:

BHP

hashelpedinthe transferto

community

ownership

of 1800rental units in 164 buildings, representing

approxi-mately

$100

millioninreal estate.

According

to William Edgerly, State Street

Bank

and

Trust

Chairman and

BHP's

first

Chairman,

BHP

serves to

"illustratethevitalroleof

an

intermediaryinthese

complex

developments.

The

intermediaryisabletoaggregate

indi-vidual projects intoa largeprogram. Thiscreates

opportu-nitiesforfinancing

which

would

otherwisebe

beyond

the reachofa single

neighborhood

developer."

Since resourceswillalways

be

limitedinthe faceofthe great

need

foraffordable housing, they

must

be focused

where

theywillaccomplishthemost.

Boston

isfortunateto

havea large

number

ofcapable

Community

Development

Corporations

(CDCs).

BHP

concentrates

on

the

CDCs,

becausethe

CDCs

are

more

likelytostructure projectsfor

long-termaffordability,are

more

responsiveto

neighbor-hood

needs,

and

haveaccess to foundation

and

other

re-sources.

While

they

may

not be able to build as fast as

privatedevelopers,theirproductislonger-lastinginterms ofaffordability.

The

Massachusetts

Housing

Partnership

The

Massachusetts

Housing

Partnership

(MHP)

was

createdin1985. Picking

up on

the positiveexperience of Boston's Partnership,

Governor Michael

S.

Dukakis

an-nounced

itintheannualStateofthe State address,

and

the

legislature

responded

witha$35million

MHP

Fund

using astateexcisetax

on

bank

withdrawals

from

deposit

insur-ancefunds.

MHP

isverydifferent

from

BHP.

It isstate-government

funded

and

staffedratherthan

an

independentnonprofit. Driven by the availablestate funding programs, it is

in-tendedto

promote

statehousinggoals. It isorientedto

new

production

and

home

ownership,

and

welcomes, even

so-licits,privatedevelopment.

MHP

is operated by a full-time director

who

works

closelywiththe SecretaryoftheMassachusetts Executive Office of

Communities and

Development

(EOCD)

to

coordinate

program

funding.

MHP

has a central office staff,plusa

network

of sevenregional

MHP

offices provid-ing technical assistance

and

oversight.

The

MHP

Fund

is

managed

by sevendirectorsappointed bythegovernor.

MHP

program

activitiesarecoordinated bya thirty-member

board which meets

quarterly,

and

in-cludes localofficials, privatedevelopers,

bank

presidents, business

and

labor leaders,

and

otherswithadirect interest inaddressing the

commonwealth's

housing needs.

The

boardhassixstandingcommittees.

Local Partnerships

The

frontlineofthe Massachusetts partnershipsystem, however, is the local housingpartnership.

The

partner-ships are coalitions of local officials, business leaders,

tocreate affordable housing.

The

growth oftheselocal

partnerships has

been phenomenal:

August, 1987 100localpartnerships January,1988 150localpartnerships

November,

1988 175 localpartnerships

Inlessthanthreeyears,overhalfofthe351cities

and

townsinMassachusetts designatedlocalpartnerships.

The

purpose ofthelocal

formance.

The

statewields

tremendous

influence

on

local

decisionsthrough

two

state policies:

• MassachusettsAnti-Snob

ZoningAct

(Chapter_774).

The

Actauthorizescomprehensive permitscoveringalllocal

permits

and

approvals,

which

can be granted by local

Zoning Boards

of

Appeals

forhousingprojects using certain federalorstatesubsidiesorboth. In thepast,it

POLICY,

ASSISTANCE

&

RESOURCES

LOCAL

INITIATION

&

SUPPORT

DEVELOPMENT

&

MANAGEMENT

partnershipisto focus lo-cal action to

promote

af-fordable housing: to bring together groups, analyze needs,

make

policy

recom-mendations,evaluatelocal

resources, assess housing/

program

options, educate the

community,

review

af-fordable housing

propos-als,

and

in

some

cases un-dertake direct acquisition

and

development.

The

local partnership's authority

comes from

the

localgoverning

body

(e.g.,

themayor,board of

select-men,

city/town manager).

They

range in structure

from

informal

committees

to incorporated

nonprof-its

and

landtrusts.

For

a local partnership

toreceive

MHP

recognition,it

must

meet

certain thresh-oldrequirements:

• _It

mus*

have balanced

community

_{representation.} • It

must

make

a

commitment

toaddressthefullrange of

localhousingneeds.

• It

must

conduct an assessment of

community

housing needs

and

resources.

• It

must

developviablestrategiestoaddressthe needs.

Encouraging

Local

Participation

MHP

uses a varietyofstate resources to assist local

housingpartnershipsin

providingabroadrangeof

afford-ablehousingopportunitiesforbothrenters

and

first-time

buyers. Resourcesareassembled

from

severalstate

agen-cies,particularlythe

EOCD

and

theMassachusetts

Hous-ingFinance

Agency

(MHFA),

tocreate a

network

of

fi-nancing

and

technicalsupportforthe

LHPs.

Most

state

housing

programs

now

givepriority forfundingto proj-ects

which

havethesupport ofthelocal

government and

housingpartnership.

MHP

alsoconductsreviewsofmunicipalhousing

per-THE MASSACHUSETTS

HOUSING

NETWORK

Cities

&

Towns

EOCD/

MHP

HUD

MHFA

Other

Quasi-Publics

Private

Lenders

Local

Housing

Partnerships

&

Other

Housing

Support Organizations

For-Profit

Developers

& Owners

Non-Profit

Developers

& Owners

Local

Housing

Authorities

has

been

usedprimarilybylocalhousingauthorities to obtain approvals for construction ofstate orfederal publichousing.

Now,

itisbeingused

more

aggressively bythestateto

encourage

communities

tograntpermits

toalldevelopers ofsubsidizedhousing.

Under

Chapter

774, a privatedeveloper

may

apply

for a

comprehensive

permit

and

must be

granted a hearingifthedeveloper hassiteapproval

from

astate

agency

and

a

commitment

for subsidies(or has applied

forsuchsubsidies). Ifa

community

turns

down

a

com-prehensivepermitapplication,

and

iflessthanten per-centofitshousing stockqualifiesasaffordablehousing, thenthedeveloper

may

appealthe decision toastate

Housing Appeals Committee.

• _ExecutiveOrder 21_5. This gubernatorial order_instructs

stateagencies to

deny

state funds(e.g., infrastructure

improvements

grants) to

communities which

are not

making

reasonableefforts toprovideaffordable

hous-ing.

MHP

Program

Initiatives

As

MHP

was

beingcreated,aconsensus

had

developed

among

housing experts thatthe state's

economic

growth hadresultedinahousing supplyshortage.Accordingly,the

new

MHP

emphasized

programs

thatcreated

new

housing.

More

recently,however,

MHP

hasrecognizedthe impor-tanceofassisting

communities

inthe preservationof

exist-ing subsidized housexist-ing.

In 1986,

MHP

and

MHFA

created the

Homeownership

Opportunity

Program

(HOP),

which

providesforthe

de-velopment

of

new

home

ownership

projects thatdesignate 5percent ofitsunitsforthelocalhousingauthority

and

at

least 25 percent ofunits affordable to

moderate income

people. Price limits for the

moderate-income

units are $85,000for

condos

and

595,000forsingle-family develop-ments, halfthe average priceof

homes

in the

common-wealth.

MHFA

loans are offeredto

moderate-income

resi-dents(generallyearninglessthan 535,000)atthe usual

tax-exempt

rateof8.5 to 9.5 percent,

and

MHP

providesan

interestwrite

down

for

mortgage payments

toequala 5.5

percent loan rate (and graduated to the full

MHFA

rate

overtenyears).

Other

MHP

programs

includeChallenge Grants of

up

to

$50,000 to local

communities

to support innovative

ap-Local

Housing

Partnerships

in

Three Massachusetts

Communities

Somerville,

Massachusetts

Somerville isan innersuburb north of Boston. It is

home

toTufts University,

and

convenientto

Boston and

Cambridge. Itconsists largely ofone-tothree-family

homes,

most

of

which

are

more

than30yearsold

and

arepricedinthe$150,000to$300,000range.

The mayor

convened

apartnership

committee

to assistthecityin de-velopinga

home

ownership

program

for

moderate

income

residents.

The

partnershipincluded keylocalbankers

and

realtors.

With

thehelp ofthePartnership

Committee,

thecitydesigneda

program which

com-bines

low

realtor fees

and

special underwriting criteria

from

local

lenders to

make

ownership

of two-

and

three-family structures afford-abletofamiliesearning

between

$30,000

and

540,000.

The

Lincoln-Perkins

Townhouses,

shown

on

theright,arenewly

con-structed,

three-bedroom

unitswithfullbasements,front

and back

yards,

and

off-streetparking. All units

were

soldto first-timehomebuyers.

John Taylor, Executive Director of the Somerville

CommunityCorporation, infrontoftheLincoln-Perkins Townhouses,sixunits_ofaffordablehousingsupportedand

assistedby the SomervilleHousingPartnership.

Fall

River,

Massachusetts

Fall River,insoutheasternMassachusetts about 45miles

from

Boston,is

an

agingcitylargelyoccupied by Portuguese immigrants

who

worked

infishingindustries

and

mills. Ithasnot experiencedthe high-tech

growth

of

most

ofeastern Massachusetts,

and

stillhas

many

affordable rental unitsinthecity'stripledeckers(40percent ofthehousingstock).

The

Partnership

conducted

astudy ofthelocal

market

and

determinedthatthe

most

importantstrategies

would be

to

help residents

buy

homes

asthey

became

available,

and

help ensure thatthe affordable rental units in tripledeckers remainavailableaftersale.

Acton,

Massachusetts

To

thewest of Boston,adjacentto

Concord and

otherveryexpensivesuburbs of Boston,

Acton

isauniquelyaffordable

suburban community.

Where

else will

you

find twelvebusinesspeoplemeetingat7

AM.

each

Monday

morning

todiscuss affordablehousing?

The

Acton

Community

Housing

Corporation

(CHC)

isa nonprofitpartnership authorizedbythe

town

toaddress affordablehousing

problems

and

toreviewthe affordablehousingaspectsofallhousingproposals.

The

CHC

has

become

one

ofthe

most

active localpartnerships,

and

has alreadysupported approval ofthree large

developments which

willoffer

proachesto localhousingneeds,Municipal

Advance

Pro-gram

(MAP)

grantsof

up

to$30,000forpre-development costs,

and

front-end loans

and

technical assistance to

non-profitsthroughastaterevolvingloan fund administered by the

Community Economic

Development

Assistance Cor-poration

(CEDAC).

MHP

alsohas

become

involvedinrenegotiating expiring userestrictionswith

owners

offederallysubsidizedhousing

topreserve

permanent

housingopportunitiesforlow-

and

moderate-income

tenants,

and

has startedan

Urban

Initia-tives

Program

to

promote

housingpreservationstrategies inbuilt-up communities.

These

efforts reflect

an

aware-ness that the housing

market

hasslowed

somewhat,

and

provide

some

opportunities toacquire

and

preserve

exist-ingunits.

MHP's

Success

MHP

hasenjoyed

enormous

success.

The

HOP

program

alonehasprovided fundingforover 6,700

new

homes.

The

averagepriceof the affordableunitshasbeen under$80,000,

and

theaverage

income

ofthe

moderate-income

buyershas

been

$26,000.

Successes, however, are not

measured

solely by unit counts.

MHP

has also fostered a large

number

of coalition-building local partnerships, broadening participation in

housingto

many

communities

and

members

ofthe

commu-nity

who

have never before

been

included. It isa

new way

ofdoingbusiness.

Likeany public program,

MHP

is not without critics,

some

of

whom

believe that

MHP,

and

the

HOP

program

in particular, dictates the

agenda

tolocal partnerships,

who

become

toobusy respondingto privatedeveloper

propos-alsinsteadof developingtheir

own

agenda. Local partner-ships also have found it difficult to retain control over residentselectioninprojectsitapproves.

Some

local officialssuggest that the currentpolicies

may

foster conflicts

between

localdevelopers

and

thelocal part-nership. Developers

assume

theycan bypasslocalities

and

getpermitsthrough

Chapter

774

appealtothestate. This

is

more

acriticismoftheanti-snobzoning

powers

thanthe

MHP

programs.

For

its part,

MHP

has tried to stand behindlocalpartnerships

when

adeveloperhasnot

nego-tiated in

good

faith. Legislativeeffortsare currently

under-way

to revise

Chapter

774.

Some

localpartnerships have focused

on

moderate-in-come

homeownership

ratherthanneeds of

low-income

and

specialneedspopulations.

Finally,the

tremendous growth

ofthe

program

hasleft

MHP

unabletoprovide

enough

technical assistance toall

the

new

localpartnerships.

Some

ofthe

newer

partnerships

were

created"becausethestate said

we

needed

tocreate one,"

and

are lackingdirection.

Future

growth

of

MHP

and

its

programs

may

depend

on

initiatives ininvolving largeemployers

and

institutions in local partnerships,developing

programs

torespondtothe softeningreal estatemarket,

and

responding to needsin

oldercommunities.

Lessons

from

the

Partnership

Experience

There

isasimple elegancetothelocalhousing partner-shipmodel. Ithelpstoelevatethehousing

agenda

from

the

low-income

focusofthe

government

toa

community-wide

level.

The

partnershipallows forrecognitionofthe

spec-trum

of housingneeds: low-

and

moderate-income,family

and

elderly, rental

and

ownership,

and

special needs. It

promotes

innovation

and

localproblem-solving. Itoffersa

way

forsuccessfulrealestatepeople

and

businesses to give

something back

to their

community.

Participationinthe affordable housing partnership

becomes

acceptable-al-most

the

"United

Way"

ofhousing.

Because

partnerships rely

on

local goals

and

a

mix

of resources, they

may

not

be

as vulnerable to changes in

federalfunding.

By

coordinating

among

many

local actors,

thepartnershipcanassistwiththepackaging

and

approval of complicatedprojects thatmight

be beyond

the capacity ofa single developer.

The

partnership'seffortscan

complement

theactivities

ofthe localhousingauthority.

The

authority'smissionis

more

focused

on low-income

needs

and

access to federal

and

state public housing

and

rentalassistance resources.

The

partnershipcanfillinto

meet

otherneeds noteligible forsuchassistance,

and

hasaccess to

some

resourcesnot

typicallyavailableto authorities.

But

the authority

must

be a partofthepartnership

and

coordinateitsactivitieswith the partnership.

Above

all,localhousingpartnerships bring

community

focusto

one

of

our

most

important problems: the

need

for

affordablehousing. Inthiscontext,miraclescan

be

achieved.

Granted,themiracles

may

be

small.

Even

7,000 unitsis

arelatively small

number compared

to the hundreds of thousands of Massachusettsresidents

who

cannotaffordto

buy

a

home.

Nevertheless,theeffortscontinue

among

local

people

who

believe thatitisbetterto light

one

candle than