Posted on July 18, 2005
Using its ability to provide long-term, private-sector financing for affordable housing, the Massachusetts Housing Partnership (MHP) is committing $2 million to help create 96 units of affordable housing in the Allston section of Boston.
MHP is making the loan to an affiliate of Allston Allston Brighton Community Development Corporation (ABCDC). A non-profit housing organization that has developed nearly 400 units of housing, ABCDC has purchased four market-rate apartment buildings and will rehabilitate and convert them into affordable housing. Three buildings will be converted into the 59 rental units while a fourth building will be converted into 37 affordable condominiums.
MHP is helping to finance the rental portion of the effort, committing $1.3 million in first-mortgage financing and a low-interest, $750,000 second mortgage from Home Funders, a program that helps developers provide more units for lower-income people.
When complete, 100 percent of the rental units will be affordable to households with incomes below 60 percent of median, which in Boston is $39,720 for a household of two. Many of the apartments will rent for much less, depending on the size of the household. Eleven are targeted for household incomes below $9,925; 16 for households below $19,850; seven for households below $33,100; 16 for households below $39,720; and nine for residents with Section 8 vouchers.
The homeownership units will be sold to households with incomes below 80 percent of median, or $52,950. Income levels are based on household size. Incomes listed above are based on a household of two.
“These apartments are for the people who work in the neighborhood, the people that work at the universities and the businesses nearby,” said John Woods, ABCDC’s director of housing development.
MHP is part of a unique blend of public and private lenders that is keying ABCDC’s ability to create affordable housing in a part of Boston where the demand for rental apartments by college students keeps rents high.
Most unique is the Boston Housing Authority providing a $1.8 million grant through the federal Hope IV program and a yearly operating subsidy of federal funds for 34 of the rental units, which will be considered public housing units. Most often, public funds are used only for public housing projects, and are rarely mixed with private funds to acquire and convert market-rate housing, or in properties that offer both private and public housing.
“The universities and colleges are a vital part of our city but the reality is the student population puts tremendous pressure on our housing supply,” said Boston Mayor Thomas Menino. “This was an opportunity for the city, the state, non-profit and private sectors to be creative, buy market-rate properties and turn them into decent affordable housing, right in the heart of the community.”
The properties are located within walking distance of bus service on Harvard Street, and trolley service on Commonwealth Ave. When renovations are complete, the three rental apartment buildings will offer 10 studio, 33 one-bedroom, 15 two-bedroom and one three-bedroom apartment. Five apartments will be handicapped accessible, six units will be reserved for Department of Mental Health clients, and eight will be reserved for individuals with a form of autism known as Asberger’s Disease.
Further public funding is being provided by the state’s Affordable Housing Trust Fund and through federal HOME and other federal funds distributed by both the state Department of Housing and Community Development (DHCD) and the City of Boston.
On the private side, in addition to MHP financing, the effort will receive private investment through the sale of federal low-income housing tax credits awarded by DHCD; construction financing by Bank of America and further financing from the Combined Jewish Philanthropies, which will provide services for residents in the eight apartments set aside for individuals with autism.
ABCDC received acquisition financing from a consortium of lenders that included the Massachusetts Housing Investment Corp., Boston Community Capital, Property Casualty Initiative and the Community Economic Development Assistance Corp.
“This is a new venture for us because it involves converting existing private housing into both public and private housing, using a mix of public and private funds,” said Clark Ziegler, MHP’s executive director. “We think there’s great potential for the private sector to do more to help public housing authorities create housing, either by working together to take advantage of market opportunities, or by investing in existing public housing sites.”
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About MHP: MHP is a quasi-public state agency that finances affordable rental housing with private bank funds, an outcome of a 1990 state law that requires banks that purchase other banks to make funds available to MHP. Bank transactions such as Bank of America’s purchase of Fleet Boston trigger the state statute that funds MHP. That acquisition resulted in a $406 million loan and an $18 million grant to MHP, pushing MHP’s total loan pool to over $1 billion. MHP is one of the state’s leading producers of affordable rental housing. Since 1990, MHP has provided over $410million in permanent loans for the financing of 12,000 units of rental housing. In addition to financing, MHP helps cities and towns initiate and develop affordable housing. It also provides homeownership opportunities through the SoftSecond Loan Program, a mortgage program for low and moderate-income first-time homebuyers.
About HomeFunders: Home Funders is a collaboration of public and private funders who have rallied to address the shortage in low-income housing units in Massachusetts. Founders of the collaborative include the Paul and Phyllis Fireman Charitable Foundation, The Highland Street Connection, The Hyams Foundation, The Boston Foundation, The Mellon Charitable Giving Program/Peter E. Strauss Trust. The Home Funders partners to date include: The Vincent Mulford Foundation, The Lynch Foundation, The City of Boston, FleetBoston Financial Foundation, The Commonwealth of Massachusetts, The Morris and Esther Horowitz Family Foundation, The F.B Heron Foundation, Kenneth Novack and Nixon Peabody, LLP. Home Funders recently welcomed The Annie E. Casey Foundation, The State Street Corporation and Fidelity Management Trust Company as partners.