As chief executives of the two most prominent affordable housing agencies in Massachusetts, we expect a fair share of criticism in the media. However, a column in last week’s Banker & Tradesman was wildly off the mark and warranted a clear and swift response.
From the start, the provocative headline of the column strained credulity: “State Agencies Braking Actions Could Break Delicate Housing Recovery.” A sub-headline declared “MassHousing, DHCD Cut Affordable Housing Funding at ‘Crucial Time.’”
The assertion that “state housing officials…are pulling back dramatically” and have “closed their vaults” is not true. Those who work in affordable housing in Massachusetts know this is false, but we feel it must be re-stated: There is more money now for affordable housing than at any time in recent memory.
Here are some points worth noting:
MassHousing has set new lending records for each of the last four years and is on pace for a fifth. The Commonwealth just awarded MassHousing $560 million in new private activity bond volume capacity; the most any agency has ever been awarded. MassHousing’s interest rates for rental housing developers are among the lowest in its more than 40-year history.
DHCD is awarding funds from a record $1.27 billion housing bond bill; has awarded millions in federal stimulus funds to jumpstart more than two dozen projects; is putting more than $100 million into programs to protect neighborhoods from the blight of foreclosures and has a new $150 million fund to prevent affordable apartments from converting to market rents.
The column notes that both MassHousing and DHCD have curtailed their programs to finance construction of new condos and single-family homes. While true, the scale of these programs was modest. MassHousing’s lending program for new home construction – which produced about 1,000 units in 14 developments – was always intended to be a short-term, niche effort and lasted for five years. DHCD’s programs have always been geared toward rental housing with only a small amount of funds for new home ownership units. Private capital for new home construction has traditionally dwarfed that of our two agencies.
However, our commitment to affordable homeownership remains strong. MassHousing has been a leading source of mortgage credit for working families throughout the downturn, even while similar programs in other states were shut down. DHCD has invested millions to assure affordable, for-sale projects reached completion and were sold to low- and moderate-income families when the market dropped and few options were available.
Most distressing of all was the column’s assertion that our agencies have shifted our policy from financing new rental apartments to only preserving existing units. This is absolutely not the case.
We can only finance development proposals that are brought to us. We cannot go out and decide what kind of housing to build and where, but we are eager and able to fund both new construction and preservation without any policy shifts.
We are baffled by the claim that no new rental developments are being built. MassHousing has committed to lend for a number of new apartment projects in recent months: More than $35 million for the 130-unit Appleton Mills in Lowell; $5.9 million for the 72-unit Maple Ridge in Tyngsboro; $2 million for the 97-unit Ocean Shores in Marshfield and $1.4 million for the 62-unit Oliver Lofts in Boston. Many of these have substantial funds from DHCD as well.
Still, the fact remains that there are fewer proposals for new rental housing these days because of poor market conditions, and most developers and apartment owners are coming to us for preservation financing, not new construction.
While it is true that our two agencies have tightened our lending criteria, this is exactly what taxpayers and developers should expect from public agencies in a time of fiscal restraint. But make no mistake – while many conventional lenders have abandoned this segment of the market, there are substantial funds available from MassHousing and DHCD for worthy affordable housing development projects and for affordable mortgage loans. While these programs will not and should not drive the market, they are nonetheless critical resources for our residents with modest incomes.
Thomas R. Gleason;
Executive Director, MassHousing
Tina Brooks;
Undersecretary, Executive Office of
Housing and Economic Development
