AARON GORNSTEIN
‘A strong statement’

MassHousing launched a $100 million program last week to help finance the construction of up to 5,000 homes over three years and already two developments in Massachusetts will benefit from the new funds.

Gov. Mitt Romney and housing advocates last week touted the creation of MassHousing’s Priority Development Fund because it will help developers fill financing gaps allowing them to build affordable housing they would be otherwise unable to complete. The funding also will enable them to leverage as much as $1 billion in additional financing. The money will come from reserves that MassHousing has built up over the years.

Prior to the fund’s formal creation, MassHousing committed funds to mixed-income developments in Ware and Boston’s Roxbury neighborhood last year to help fill gaps in the projects’ financing. MassHousing had been working to put together the program for months when those developments sought financing from the agency. “It’s not unheard of for MassHousing to do additional loans for projects [to get done],” explained Eric Gedstad, a spokesman for MassHousing.

Urban Edge, a nonprofit community development corporation in Roxbury, received a $600,000 commitment to build a 64-unit, mixed-income rental development in Roxbury’s Jackson Square. The development, located at 85-89 Amory St., will include 16 units that are affordable to people earning 30 percent or less of the area median income and the rest of the units will be affordable to those earning up to 60 percent of the area median income.

“We don’t have enough funding like this. It is rather creative on the state’s part to use reserve funds that MassHousing has generated to [encourage] this type of housing, so I appreciate it very much,” said Mossik Hacobian, executive director of Urban Edge.

Developer John Rosenthal also received a $600,000 commitment from MassHousing back in August to develop Hillside Village, an 80-unit development in Ware. Of the 80 units, 57 will be affordable to those earning 60 percent or less of the area median income. The development also will include 16 units for people earning up to 30 percent of the area median, three for people earning 50 percent of the area median income and four market-rate units.

Of the $100 million fund, $75 million will be for the construction of new mixed-income housing where at least 20 percent of the units are affordable to low- and moderate-income residents. Another $22 million will be for mixed-income housing developed near transportation centers and $3 million will be provided to communities to come up with affordable housing plans that adhere to smart-growth principles.

The maximum subsidy per unit will be $75,000 and only developments that receive first-mortgage financing from MassHousing will be eligible for the program.

A Positive Sign

Advocates, who have been waiting to hear details from Romney about housing initiatives and programs that will help him keep his pledge to double housing starts throughout the state, praised the new fund.

“We would like to see more of these initiatives. I think this is a good start for showing firm commitment to affordable housing,” said Aaron Gornstein, executive director of the Citizens’ Housing and Planning Association.

In addition to housing centered near transportation, funding priority will also be given to housing units with three bedrooms or more. “It’s a strong statement from the administration that they want to see more family housing,” said Gornstein.

That’s particularly important, according to Gornstein, because there has been a trend for communities concerned about rising schools costs to restrict the development of family housing. Some communities in the metropolitan Boston area have limited the number of bedrooms in homes and encouraged the development of senior housing and so-called active adult communities that are marketed to empty nesters without children.

In commenting about the value of the fund, Gornstein said in other states, “We’ve seen when housing finance agencies have extra reserves that tend to get used to shore up the state budget deficit or to be used to fund programs that aren’t related to affordable housing.”

Word of the new program came just as the University of Massachusetts’ Donahue Institute released a study done for CHAPA and the Massachusetts Housing Partnership that reveals an increasing number of families are being forced to use a greater share of their income to pay for housing.

The study, “Winners and Losers in the Massachusetts Housing Market,” analyzed 2000 census data as it relates to housing and found that more than 260,000 homeowners, or 22 percent of all homeowners in the Bay State, and almost 339,000 renters, or 39 percent of all renters, spent more than 30 percent of their income on housing costs. In addition, 18 percent of all renters and about 8 percent of all homeowners spent more than half their income on housing.

“We tend to get immune to the housing difficulties that people are facing,” said Gornstein. “This data reconfirms that people are paying too much for housing.”

While some of the findings weren’t surprising, Michael D. Goodman, director of economic and public policy research for the Donahue Institute and co-author of the study, said one striking finding was “how deeply into the middle-class community this affordability issue stretches.”

“Not so surprisingly, and just as troubling, is the substantial challenge faced by lower-income families who have a difficult time finding housing they can afford,” he noted.

Goodman said a growing number of people have had to adapt by living with – or doubling up with – other family members. From 1980 to 2000, the number of families doubling up increased from 26,000 to 52,000 in Massachusetts and the number of children living in such situations rose 488 percent, according to the study.

Another key finding in the study illustrates that multifamily housing production has lagged behind demand. From 1990 to 2000, the state lost more than 20,000 units – either through demolition or deterioration – while 37,563 were created.

“If we’re able to substantially increase the number of new housing starts in Massachusetts, we will see the pricing of various apartments and homes moderate and perhaps even stabilize here,” Romney said in a press conference announcing the new MassHousing program. “And that’s something which I think we ought to be able to see over the next several years.”

Some housing advocates appeared to take the news of the housing initiative as a positive sign. “I think this administration appears to be making some very strong moves in the direction of addressing this housing crisis and I’m pleased and impressed and I hope this continues,” said Hacobian.