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 Masschusetts 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