Municipal Affordable Housing Trusts - Oct 14th, 2020

Held via video-conference. This was a presentation on Municipal Affordable Housing Trusts (MAHTs), organized by Arlington's Housing Plan Implementation Committee and Department of Planning and Community Development.

Shelly Goering (Massachusetts Housing Partnership) gives an opening presentation. MHP works in four areas: community assistance, lending, one-mortgage, and the center for housing data.

MAHTs were enabled by state law in 2005, via MGL Chapter 44 Sec 55C. This is the state law that allows cities and towns to establish their own affordable housing trusts. The trusts are overseen by a board, which is a public entity. Boards have power to buy and sell property, and the state regulations don't require them to bring an article to town meeting before doing so. There must be at least five trustees, though seven is also a common number. One of the MAHT trustees must be a member of the select board.

Municipalities can adopt local bylaws that refine what's allowed in the state statute. MHP recommends not putting too many restrictions on the board; restrictions limit flexibility, and flexibility is one of the main benefits of establishing an MAHT.

Common funding sources include CPA monies, in-lieu payments under inclusionary zoning, transfers of free cash, municipal bonds, and real estate transfer fees. It really depends on how the municipality wants to fund the MAHT. MAHTs can also receive donations of money or land.

When considering an MAHT, it's beneficial for municipalities to perform a needs analysis, to set priorities, and to set benchmarks. We have a huge need for housing, so there's benefit in being focused. Municipalities will need a working board of trustees, a chair who's willing to champion the efforts, and technical/administrative support.

Trusts should be transparent, especially since they have the ability to spend money without going before town meeting.

Trusts can both fund and initiate projects. They can also provide rental assistance.

The basic activities of the trust are: acquire, create, preserve, and support. More or less everything that a CPA committee can do with affordable housing funds.

Some MAHTs have preservation programs which purchase, refurbish, and sell housing. This typically requires a subsidy of around $225,000/unit. Sudbury has a program that purchases 1--2 units/year. These units are then sold to household with the requisite AMI eligibility.

Keith Bergman presents next. He was involved in establishing Concord's MAHT, and will talk about his experience in that role. He's also served as the town manager for Littletown and Provincetown.

Concord adopted the state MAHT law in 2019. In 2020, they passed a bylaw allowing the trust to receive and disburse funds, subject to guidelines adopted by their select board. Concord has slightly more than 10% of their housing on the Subsidized Housing Inventory (SHI), and their main concern was maintaining their 40B safe harbor status.

Concord sought to establish a predictable revenue source for the fund. They enacted a fee on building permits and a transfer tax (1% on the amount over $600k). They established their transfer tax via home-rule petition. See MA senate bills S.2317 and S.2318.

Concord appointed a five-person board for the MAHT, and found that the state statute provided significant language for their local bylaw. Their select board needs to approve certain actions: borrowing money, taking out a mortgage, buying property, and selling property. These requirements were based on a Conservation Commission's ability to acquire land for open space.

Erin Zwirko, who's facilitating the event, opens it up for questions and answers.

(Erin Zwirko) Ms. Zwirko asks the first question. Arlington has an active CPA committee. What's the typical flow of funds from the CPA to MAHT to developers?

(Shelly Goering) Ms. Goering says that some communities like the trust to be the primary funder of affordable housing projects, and they'll transfer CPA money directly in to the MAHT. Some CPAs require that MAHT to file applications for funding.

(Keith Bergman) Mr. Bergman advises against putting CPA and MAHT at odds with each other. In Concord, the two groups collaborate on applications.

(Annie LaCourt) Ms. LaCourt asks what steps Arlington is looking at. She's asks how the MAHT will work with CDBG and the Housing Corporation of Arlington. She asks if we can use an MAHT to get more affordable units (lower %-AMI) in 40B developments.

(Erin Zwirko) Ms. Zwirko says we're planning to perform both steps during this town meeting: adopt the state legislation and pass a local bylaw. Arlington currently has 5.5% of its housing on the SHI, but this may change after the 2020 census. She believes it's possible to catch up to 10%. Our housing production plan expires next year, and we'll be putting out an RFP to update it. Part of the update will look at ways that the Community Preservation Act Committee, the Housing Corporation of Arlington, and the Arlington Housing Authority can work together towards achieving 10% SHI.

(Patricia Worden, HPIC) Ms. Worden believes that Arlington should be more interested in achieving 1.5% of land dedicated to subsidized housing. She things that 10% affordable housing will be impossible in Arlington. She says that funds can be used to purchase and renovate housing. She also points out that no one applied for CPA affordable housing funds this year.

(Karen Kelleher, HPIC) Ms. Kelleher says the point of the trust is to promote affordable housing projects. She says that Ms. Worden is not speaking for the HPIC when she says that 10% SHI is unattainable.

(Steve Revilak) Mr. Revilak asks if the real estate transfer fee will come before Special Town Meeting in November.

No, the Transfer Fee article wasn't refiled.

(Steve Revilak) Mr. Revilak brings up Cambridge's 100% Affordable Housing Overlay. They're requiring projects to have a certain percentage of units available at 80% AMI or less. When Cambridge's Planning Board deliberated the AHO, a member of their planning department said that 80% was intended to act as a ceiling; funders will usually tie funds to a certain AMI percentage. He asks if our MAHT would impose similar restrictions.

(Shelly Goering) Ms. Goering says that affordability requirements are often tied to funding. For example, LIHTC projects have to build for 60% AMI. 40B requires market rate housing to subsidize affordable units. 40B projects usually provide units at 80% AMI. There's a 50% AMI option for 40B, but is generally not economically viable in this area.

(Karen Kelleher) Ms. Kelleher says they were considering an 80% AMI requirement.

(Pat Hanlon) Mr. Hanlon believes there's a tension between two objectives: having a strategic plan, and having flexibility. It seems like we need to figure out what that balance is. Mr. Hanlon asks how other communities balance these objectives.

(Shelly Goering) Ms. Goering says that planning helps to keep the trust from spinning its wheels, because the need is so great. Trustees need to develop a plan for how to go forward.

(Pat Hanlon) Mr. Hanlon likes the way that the way Concord integrated their Select Board into the process. He asks if Mr. Bergman has any comments on that.

(Keith Bergman) Mr. Bergman says that Select Board involvement ensures that there is a process in place. For Concord, the priority is maintaining their 40B safe harbor threshold of 10% SHI.

(Shelly Goering) Ms. Goering believes it would be good for Arlington to appoint trustees, and get them involved with the Housing Production Plan update.

(Al Tosti) Mr. Tosti asks why we need an MAHT, when we already have the housing corporation of Arlington, and the Arlington Housing Authority. He thinks it will just result in more bureaucracy.

(Erin Zwirko) Ms. Zwirko notes that the HCA is a private corporate, though they generally work towards achieving town goals.

(Keith Bergman) Mr. Bergman says that having the ability to act nimbly was a key consideration for Concord. The MAHT allows Concord to acquire property when the opportunity becomes available. Concord wants to ensure they can maintain 10% subsidized housing, and prevent 40B developments.

(Karen Kelleher) Ms. Kelleher says the starting point is the cost of housing, and how it acts as a barrier to coming here. The goal is to take advantage of opportunities to create affordable housing, and play a more proactive role. She hopes the Arlington Housing Authority can be part of this effort.

(Lynette Culverhouse) Ms. Culverhouse says it strikes her that 80% AMI would exclude Arlington teachers and other front-line workers. She asks if we can have a model based on minimum wage. She also asks how applicants are prioritized when affordable housing becomes available.

(Shelly Goering) Ms. Goering says it all comes down to subsidies. If you want more affordability, then you'll need to find more subsidies.

(Erin Zwirko) Ms. Zwirko says it's important to follow a fair marketing strategy. Selection strategies are also dictated by funding sources.

(Steve Revilak) Mr. Revilak says that Arlington's housing costs are dominated by the cost of land. A buildable one- or two-family lot is worth around $450,000, building not included. He asks if an MAHT could be used to fund a community land trust.

(Shelly Goering) Ms. Goering says that some communities have land trust. An MAHT can be used fund a land trust, if the community wants to go that way.

(Karen Kelleher) Ms. Kelleher says this is a great question, and the answer will be decided by future processes.

(George Kocur) Mr. Kocur asks what role DPCD would play, and if they have sufficient staff and resources. He asks what we'd need in order to make a difference.

(Jenny Raitt) Ms. Raitt believes that DPCD has the capacity to support an MAHT. DPCD would help with administration, technical assistance, and the development of an annual plan (which the trust would have to approve). The trust should provide reports to town meeting, and their work should be tied to the housing production plan. DPCD could also help with CDBG and CPA applications.

(Erin Zwirko) Ms. Zwirko says the next steps are hearings before the Select Board and Finance Committee.

With no further questions from the public, the forum ends.