Susan Gittelman
Housing affordability and availability are the foremost policy issues that Massachusetts faces. Young professionals are leaving in unprecedented numbers, unable to get a foothold in the housing market. Seniors lack the choices that make accessible housing a real option. The pressures only continue to build as rents and home prices show no sign of abating, and everyone agrees that the problem is lack of supply.
Traditional market solutions aren’t sufficient to solve our housing problems, which impact individuals and households across the income spectrum. State leaders, to their credit, recognize that the magnitude of the problems require solutions of equally great magnitude. Earlier this month, legislators agreed on a $5.1 billion Affordable Homes Act housing bond bill – nearly three times the size of its predecessor, which was approved five years ago.
Among the innovative solutions in the legislation is a $50 million “Momentum Fund” designed to provide flexible financing to invest directly in market-driven, mixed-income housing projects that are currently stalled. It has been well documented that there are more than 10,000 such permitted units stalled in the Boston suburbs, and another 10,000 in Boston itself.
The idea is to create a fund to deploy targeted resources to “unstick” these projects and trigger broad-scale production of high-impact, multifamily housing developments that include both market and affordable units.
MassHousing, the state’s housing bank, will administer the fund, including sizing and structuring the public investments to allow private capital to achieve the returns necessary to build these projects. Later, when the projects are sold or refinanced, this investment would be returned to the state for use on other projects.
Why It’s a Big Deal
What makes the program unusual is that until now, state housing policy has mostly focused on residents earning 60 percent of annual median income (AMI) or less. The Momentum Fund gives policy makers a tool to address a looming issue – building projects for those earning between 60 percent and 100 percent of AMI. To be eligible, at least 20 percent of the units in a project must be affordable.
In the past, such a program would have been criticized for redirecting resources away from the neediest individuals. But the Affordable Homes Act recognizes the scope and complexity of the problem and attempts to take a balanced approach that addresses needs at multiple income levels. It includes $2.2 billion in bond authorizations for public housing and doubles the authorization for the state affordable housing trust fund to $800 million.
State officials estimate that Massachusetts needs at least 200,000 new housing units by 2030. According to Howard Cohen, chair of the board at Beacon Communities, Massachusetts was developing 25,000 new housing units annually during the 1980s. Issues such as interest rates and rising construction costs have reduced annual production to around 13,000 today, despite the existence of tools like low-income tax credits that weren’t available in the 1980s.
“If we could just get annual housing development back to 25,000, we could achieve the 200,000 new unit goal in nine years,” Cohen said. “Bond bill provisions like the Momentum Fund are designed to spark that production.”
Cohen also notes that a bond bill is a low-risk way to facilitate innovation since it generally only authorizes bonding rather than directing specific expenditures. Approaches that don’t work can simply be jettisoned.
‘We Need Every Tool’
Matt Noyes, director of public policy at the Citizens Housing and Planning Association (CHAPA), which focuses mostly on affordable housing, concedes that there is no silver bullet for solving our housing problem.
“We need to use every tool in the tool belt to get there, and the Momentum Fund is an important piece,” Noyes said.
The Momentum Fund has significant potential, but its biggest drawback is its limited size at $50 million. An early investment will be a multi-million-dollar commitment to unlock an Allston development offering almost 500 units of housing. At that pace the fund will be depleted quickly.
“Fifty million dollars can’t solve the entire problem,” said Paul McMorrow, a spokesman at MassHousing, “but it can jump start projects in a meaningful way.”
Most important is state leaders’ determination to address the housing crisis.
“The Healey-Driscoll administration knows it will take time before we see new units,” Howard Cohen said, “but they have nonetheless made housing a centerpiece of their agenda since they filed the bond bill last year.”
Passage of this housing bond bill in the waning hours of the legislative session shows that lawmakers concur. That rare mix of urgency with patience and cooperation will have to continue for Massachusetts to meet housing demand in the future. It’s a tall order, but the Affordable Homes Act and innovations like the Momentum Fund are proof-of-concept that together, it can be done.
Susan Gittelman is executive director of B’nai B’rith Housing, a nonprofit affordable housing developer currently working in Boston, Cambridge, MetroWest and the North Shore.
