The Brian J. Honan Apartments in Allston, which were completed in 2005, were developed using state tax credits.
Housing advocates are pushing lawmakers to expand and extend a program that developers have used to build about 2,100 affordable apartments in Massachusetts.
The state’s Low Income Housing Tax Credit Program provides tax incentives to developers to create affordable rental housing.
“It’s been a very effective program. It’s due to end in 2009 but we hope it will be reauthorized in the coming year,” said Aaron Gornstein, executive director of the Boston-based Citizens’ Housing and Planning Association.
The $100 million program has helped create about 3,000 homes, 70 percent of which are affordable to lower-income households. The program was created in 1999 and extended in 2004 for another five years.
Groups like CHAPA want the Legislature to permanently extend the tax credit program and increase annual funding from $4 million to $10 million.
Supporters say the program, which is similar to a federal tax credit program, has leveraged private investment in affordable housing.
“Both the federal and state tax credit programs are intended to stimulate private investment in low-income housing, and therefore reduce the amount of appropriations that the state and [federal officials] have to make to enable low-income housing,” said Ellen Feingold, president of Jewish Community Housing for the Elderly.
Rep. Kevin Honan, D-Boston, and Sen. Brian A. Joyce, D-Milton, have filed a $1.25 billion housing bond bill that would expand the tax credit program and make it permanent. Honan also has filed a separate bill currently before the Legislature’s Revenue Committee that would increase funding to $10 million annually.
“I’m a strong supporter of the Massachusetts Low Income Housing Tax Credit Program. It’s been responsible for the production of thousands of housing units since its inception,” said Honan, co-chairman of the Joint Committee on Housing. “It’s one of my priorities. The Legislature is committed to this program. We renewed it in 2004 and we’re taking a really close look at extending the program.”
Tax credits have been used to substantially renovate the former Long-Glen Apartments, now known as the Ray Dooley Apartments, and to build the Brian J. Honan Apartments. Both projects were developed by the Allston Brighton Community Development Corp. and are located in Allston, a district Kevin Honan represents.
“We just have to put it up for consideration. There’s a lot of pending issues before the Legislature. We just need to continue to advocate for it,” Honan said.
Affordable housing advocates say there is wide support for the program and virtually no opposition.
Joyce said he expects action on the bond bill and tax credit program this legislative session. “It has been successful in helping to create additional affordable housing. Clearly we continue to have an acute need for additional affordable housing to keep us economically competitive,” he noted.
The state Department of Housing and Community Development awarded tax credit funding for projects in early fall. But according to some, it is unclear whether DHCD will be able to award more credits during its next funding round in February.
‘Critically Important’
Lisa Alberghini, executive director of the Archdiocese of Boston’s Planning Office for Urban Affairs, said the state tax credit is more flexible than the federal program.
“We believe it is critically important that the state Low Income Housing Tax Credit be extended and made permanent,” she said. “Massachusetts needs every dollar it can get to address the severe need for affordable housing.”
POUA plans to apply for state tax credits for 35 one-bedroom apartments for low-income elders it is planning to build near a church property in Billerica. For that project, POUA plans to combine tax-exempt bond financing with federal and state tax credits.
Using the tax credit program can be challenging for developers, who often have to rely on teams of lawyers and accountants to make the financing deals work.
“In a time when the state and [federal government] are experiencing severe budget shortages, it probably makes sense to finance affordable housing through tax reductions, and therefore we support the extension of the state Low Income Housing Tax Credit program. But in a larger sense, all of the money comes from the same place and tax credits become an extremely expensive way to secure funds for low-income housing development,” Feingold said.
Howard Cohen, chief executive officer of Beacon Communities, said the tax credit has been used for “difficult-to-develop projects.”
“The state has been every selective in the projects it’s used it for,” he noted.
Beacon Communities has used tax credits to redevelop vacant mill buildings in downtown Haverhill into loft-style units. The firm also used tax credits to develop an intergenerational community in Easthampton that includes rental homes for foster families and adults who are 55 and older. The project, known as Treehouse at Easthampton Meadow, has received national attention.
“We’ve used it for projects that are quite tricky and hard to do,” said Cohen.
