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MHP teams with state to help keep nearly 300 units in Salem affordable

Posted on June 6, 2003

SALEM --- Two affordable housing complexes in Salem will continue to serve the city’s low-income and working class citizens for years to come thanks in part to long-term financing from the Massachusetts Housing Partnership and the Commonwealth of Massachusetts.

MHP is teaming with MassDevelopment, Fleet, Banknorth and the Federal Home Loan Bank to provide $25.2 million in long-term private sector financing to keep 283 apartments at Salem Heights affordable for the next 100 years. MHP has also provided long-term financing to keep affordable 56 apartments spread across eight buildings in the Salem Point neighborhood.

Both Salem Heights and Salem Point received additional good news Friday when Governor Mitt Romney announced that the state Department of Housing and Community Development (DHCD) is providing additional financing of $1.75 million for Salem Heights and additional funding of $1.1 million for Salem Point Rental Properties to pay for much-needed improvements.

Appearing at an afternoon press conference at Salem Heights with Salem Mayor Stanley Usovicz and DHCD Director Jane Wallis Gumble, Romney also announced state funding for 31 other affordable housing efforts in 22 communities across the state. 

The governor’s appearance capped Mayor Usovicz’s efforts to persuade longtime Salem Heights’ owner Corcoran, Mullins and Jennison (CMJ) to sell the property to an owner who would keep the complex affordable. CMJ eventually agreed and the city announced in February that CMJ had agreed to sell the property to Preservation of Affordable Housing (POAH), a Boston-based non-profit organization. The agreement was subject to financing and stipulated that Salem Heights would remain affordable for the next 100 years.
Following the city’s February announcement, MHP worked with MassDevelopment, Fleet, Banknorth and the Federal Home Loan Bank to quickly put together a unique financing package. A quasi-public state agency that uses private bank funds for affordable housing, MHP is providing $7.2 million in direct financing and another $18 million generated through the sale of tax-exempt bonds issued by MassDevelopment. These bonds are backed by letters of credit from Fleet’s Community Investment Group, Banknorth and the Federal Home Loan Bank. By providing the financing this way, POAH was able to borrow private funds at the lowest possible long-term interest rate, making the affordable housing preservation possible.

“This is an example of a city trying to save its affordable housing and the state stepping in to help by serving as a catalyst for private investment,” said Clark Ziegler, executive director of MHP. “This is what can happen when people in local government, state government and the private sector get together to solve a problem.”

Thanks to a 1990 state law, MHP uses private funds from the banking industry to provide long-term financing at below-market rates to create and preserve affordable housing. Since 1990, MHP’s loan pool has grown to nearly a half-billion dollars and it has financed nearly 10,000 units of rental housing.