Rick Muraida

It’s no secret that the suburbs lag behind Boston in the creation of affordable housing. Year after year, economists have noted that the suburbs could learn much from Boston and its best practices for reducing the time it takes to secure housing permits and construct units. 

The 2017 Greater Boston Housing Report Card outlined this trend clearly. While housing permits in Boston and Greater Boston were up 12 percent from 2016, communities outside of Boston were on track to approve 7 percent fewer units. 

Suburban communities have historically been resistant to develop affordable housing. As a result, in order to spur this type of development, the so-called Chapter 40B law was passed in 1969. This law allows developers to bypass local zoning in communities with less than 10 percent affordable housing. Despite the 49-year-old law, eight in 10 communities in Massachusetts are still falling short of the 10 percent benchmark and nearly 50 percent of communities have less than 5 percent. 

Housing is considered affordable when it accounts for 30 percent or less of household income. Yet, according to the Massachusetts Department of Housing and Community Development, only 9.7 percent of housing across the state qualifies as affordable or subsidized. While Boston has more than 51,000 affordable housing units, or 19 percent, suburban communities such as Belmont and Norfolk only have 365, or 3.6 percent, and 128, or 4.1 percent subsidized units, respectively. 

The lack of affordable housing has significant consequences for suburban towns as the population ages and seniors look to downsize. And the problem extends beyond empty-nesters, as the same 2017 report card found Millennials who can’t afford homes are putting a strain on the rental market. It’s also resulted in alternative trends for both builders and homeowners, including the creation of co-housing, multi-unit housing and the emerging micro apartment concept. However there have been some bright spots, such as the Moderna Needham project looking to provide 34 affordable units to the Boston suburb. 

As lenders, we can’t control the speed at which housing permits are granted, the rising costs of construction or when legislation is passed; however, we can find ways to support developers and homeowners in our communities by backing affordable housing projects that add to our housing supply and provide viable options for residents. Having access to and knowledge of low-income housing tax credits, for example, can help to promote the development and rehabilitation of affordable housing in our communities. 

Four Assignments for the Business Community 

There are four steps that the business community can do to advance the creation of affordable housing, which has a positive ripple effect on the overall economy. These steps include  

educating borrowers on the advantages of low-income tax credits. If the per capita allocations increase, more housing that meets the requirements of the program could be developed and/or preserved. Additionally, these properties could be targeted to populations with even fewer resources. 

Another step is supporting changes to local zoning to enable increased density. The biggest challenge, however, is creating what is commonly known as “workforce housing,” or homes for those earning 60 to 120 percent of the area median income for which there are no significant subsidies. MassHousing has taken a leadership role in helping fund some of this important work, but more has to be done at all levels to help meet the need for affordable housing. 

The business community can also advocate for creative affordable housing solutions. Massachusetts has and continues to be a center of innovation in many sectors. Creative affordable housing solutions often originate here and migrate across the country and soon become “best practices.” With all of the intellectual capital located here, I’m hopeful that the public, private and nonprofit sectors will continue to work together, as we have in the past, through groups like the Citizens Housing and Planning Association (CHAPA) and others, to expand our thinking and find solutions that work for the long-term benefit of the commonwealth. 

A final step is maintaining prudent lending practices that ensure developers and owners of affordable housing can remain financially stable. From a borrower’s perspective, lending has improved, in that the industry is mature and lenders are more experienced and therefore more comfortable with lending in this sector. In addition, public resources such as the low-income housing tax credit program have been a steady source of capital. The challenge for lenders is to remain flexible but firm on loan structures to support the long-term needs of the community. 

As demand for affordable housing across Boston suburbs outpaces supply and home prices continue to increase, we need to educate, support, advocate and maintain affordable solutions that will allow people to remain in their communities. 

Richard Muraida is a senior vice president and regional manager at Rockland Trust.