WHAT ARE THE ROADBLOCKS TO BUILDING AFFORDABLE HOMES IN GREATER BOSTON?
First off, thank you very much for inviting this conversation about housing affordability. This topic is one that I have worked on for many years first as a lawyer representing tenants, and now as the executive director of The Neighborhood Developers (TND), a Chelsea-based organization that produces and provides homes that are affordable. While I am distressed that high housing costs stress so many families nationwide, I am heartened that the topic is getting the attention it deserves. I believe that having a home is a human right. And more importantly, I know that a home provides an important platform for the success of individuals and families.
Over the last three years since I joined TND, I’ve come to better understand the resource and policy barriers nonprofits like mine face as we seek to produce more affordable homes. In short, the primary obstacles are high costs associated with purchasing land and construction, zoning regulations, and limited public funding required to make the homes we produce affordable to renters or buyers. We can’t mitigate the high cost of construction too much as that is driven by labor and material costs. Yet there are policy changes we can make that would bring down housing production costs. For example, municipalities require a certain number of parking spots per apartment—but our residents never need as much parking as we’re required to build. Building parking is expensive and it takes away from building housing, not just in terms of the cost, but in terms of the space. A simple zoning change to parking requirements could be a first step, particularly in transit-oriented neighborhoods.
Another positive development is that the recently passed Housing Choice legislation in Massachusetts reduced the number of votes required for special permits. Previously, one needed to have a supermajority for most housing zoning decisions, including relief from parking requirements. Now as a result of Housing Choice, this has changed. Today, some, but not all, housing-related decisions only need a simple majority. That’s a great improvement. Also, there have been discussions in our communities about creating a special affordable housing overlay district. That would mean that in that district builders would have less restrictive zoning requirements if their proposed development contains a certain amount of affordable homes. So, going back to the parking example I mentioned earlier, that would be very helpful to overcoming that particular roadblock.
SO THE FUNDING FOR AFFORDABLE HOUSING PRIMARILY COMES FROM THE FEDERAL GOVERNMENT THROUGH THE STATE?
Yes, that’s right. Some states, like Massachusetts, also invest directly in affordable housing production. But the lack of sufficient public investment is another major barrier to affordable housing production. We’re very grateful for the public financing we receive, and by we, I mean affordable housing developers. We could create more affordable homes if there was more public investment in housing. Unfortunately, federal funding for affordable housing has shrunk over the decades and that is a major factor in our affordable housing crisis today: production of homes hasn’t kept up with demand. We have deferred investment. The good news is that we’re in a better position now because we have a federal administration and a state administration that are both eager to invest in affordable housing. The American Rescue Plan Act funding provides an opportunity to take what is already happening to a larger scale. Governor Baker has proposed a significant portion of American Rescue Plan Act (ARPA) funding for that purpose. We don’t yet know whether the Governor’s proposal on affordable housing will be accepted or not.
Why is public financing required? Generally, in our service area, it takes about $500,000 to build just one modest apartment or home, on average. So, already, it’s not affordable. In order to make the home affordable, we have to reduce that number by using public financing to offset the cost of production. With the public investment, we can offer homes at affordable rates - both rental and homeownership.
COULD YOU DESCRIBE A PROJECT WHERE ALL THE FORCES CAME TOGETHER AND IT REALLY WORKED?
I’d like to give you two examples, one in Chelsea and one in Revere, not just because they cover two of our communities, but because they’re very different.
The first one is the 181 Chestnut building in Chelsea, a former convent with 32 apartments in it. It came up for sale in 2019. The previous owner had renovated the property, turned it into residential apartments, and kept the rents relatively low. When the property came on the market, there was a great likelihood that a new owner would raise the rents—and we didn’t want that to happen. We didn’t want the residents who were in the building to face displacement. We successfully acquired the building and secured public financing to make the homes permanently affordable, allowing the residents to have the opportunity to stay in their homes. That is a preservation strategy. We did some rehab and some building improvements, but they’re minor compared to what we usually need to do. I mentioned that building a new apartment costs about $500,000, but in this case, the round number would be about $300,000 per unit, which is a much lower cost per unit investment.
What you need to purchase buildings like that is low-cost capital, similar to the Boston Foundation’s Business Equity Fund, which provides low-interest, patient loans to businesses owned by people of color. We need a similar financing tool for affordable housing in order to repeat this kind of purchase. Low-cost capital enables us to acquire and hold the properties while we assemble the public subsidies and private financing required to permanently preserve the affordability of the homes. We have a window of time to preserve affordable homes like those at 181 Chestnut. I don’t know how long that window will remain open in the Greater Boston area, to be honest. Right now, we are seeing opportunities to replicate the success of 181 Chestnut. So, this is the perfect time to make it possible for community development corporations to purchase these buildings and put deed restrictions on them so they remain affordable. We were glad that the project worked out, but in order to replicate that experience, we’re going to have to have financial support.
My other example is a new construction project located at 571 Revere Street in Revere. It has 51 apartments and we just had the ribbon cutting for it in late July. It’s a gorgeous building in a location that is just steps away from Revere Beach. Each apartment has at least one beautiful view, if not two. The building is in a district that has recently experienced the addition of 2,000 market-rate units—TND’s are the only affordable units added to that neighborhood. Revere Beach was the first public beach in the country and we just celebrated its 125th anniversary! So, it was important to us to try to provide affordable housing close to the beach and we’re thrilled we managed to do that, particularly because so many market-rate units have recently gone up there.
The ribbon cutting is the best place to see everyone who has participated in a project like this; it takes a village. The ribbon cutting is the time when everyone comes together to celebrate their collaboration. Our real estate team is at the center of this, bringing all of these components together. It’s beautiful to see everyone who contributed it: architects, investors, lawyers, engineers, consultants, contractors, and local, state, and federal partners. Seeing everyone in one place, proud of the accomplishment, is a really nice moment.
WHAT ROLE CAN PHILANTHROPY PLAY IN DEVELOPMENTS LIKE THIS? WHAT CAN BE DONE TO REALLY HELP MOVE THE NEEDLE ON AFFORDABLE HOUSING?
As I mentioned earlier, a low-interest, patient loan program that can be accessed quickly is an ideal way for philanthropy to take a leadership role. Take the Chelsea apartment building, as an example. For us to jump in and preserve the affordable apartments, we have to move quickly and have access to 20% of the purchase price. Access to low-cost capital could be provided by a foundation. After a few years we will assemble financing to rehab and refinance the property. At that time, we can recycle funding for the next acquisition, and after ten years, we can pay the foundation back.
What’s beautiful about that kind of support is that it can be leveraged. It doesn’t pay for everything, but it leverages other types of funding and opportunities. In the end, the foundation’s investment is returned for another use. But the contribution the funder makes of low-cost capital is key to the entire picture. Think of it as a program-related investment by the foundation
There is a second piece that I’ve been thinking a lot about in terms of the pandemic when it comes to how philanthropy can help—and TBF has been involved in that, for which I’m grateful. When the pandemic started, the big issue was that there weren’t enough resources out there to help people. I was honored to serve on a Boston Foundation panel about the need for rental assistance during the pandemic, and after that, a lot of rental assistance did become available. The state first invested significantly in assistance and then the federal government made additional resources available. It’s my understanding that Massachusetts had about $40M a year in rental and mortgage assistance before the pandemic. Because of the loss of income during the pandemic, through no one’s fault, there is now $800M available thanks to COVID relief.
I’m very grateful for that. Now we have a new problem: accessing rental assistance is very difficult. The application itself is complicated. There are language barriers and digital access barriers for people in our community. And even for people who do speak English and have a computer, the process at times has been too complicated for a lot of people.
At TND we therefore started helping people apply for rental assistance using a hotline model. Our hotline team has helped 1,000 people so far bringing in $8 million in rental assistance to our communities. One way that philanthropy can help is to provide flexible funding that enables nonprofits to innovate and adapt to needs on the ground. The Boston Foundation has done that for us and I’m really grateful for that.
HOW CAN BUSINESSES HELP?
We don’t have many businesses in Chelsea or Revere that are large enough to help on a big scale, so we’re hoping businesses in Boston will realize that our communities are the backbone, in many ways, for Greater Boston. You can find the produce market in Chelsea as well as the oil reserves and road salt for the whole region. These services are essential, yet they have environmental and health impacts on our communities— and the people that live here. So, I think it would be great for businesses in the Greater Boston area to contribute to an investment pool to support affordable housing in our area.
DO ANY OF THE BUSINESS ASSOCIATIONS, SUCH AS THE GREATER BOSTON CHAMBER OF COMMERCE OR BECMA, HAVE A ROLE TO PLAY?
The answer is yes. We’re members of our local chambers of commerce, but they don’t have the deep wealth as in Boston. If the larger business associations could invest in our communities, they would support many minority- and women-owned entrepreneurs.
BACK TO COVID-19, IT SEEMS THAT WHEN THE NEED IS GREATEST, IT TURNS OUT THAT THERE ARE RESOURCES THAT CAN BE TAPPED.
Absolutely! Chelsea is known for its ability to collaborate. Many public and private sector leaders and citizens joined response teams. Collectively, we creatively secured resources to respond to the many needs caused by the pandemic.
The pandemic helped to shine a spotlight on inequities in housing and health in Greater Boston. We always think of home and health as connected, but it became immediate and urgent during COVID-19. Early on Chelsea had one of the highest rates of COVID-19 in the state and the country; it also has more overcrowding in homes than any other place in Massachusetts. For several years, TND participated in the Boston Foundation’s Health Starts at Home initiative. We found that just letting people know that they were going to receive assistance to secure a better housing situation helped to reduce their anxiety so significantly that it improves their health outcomes and their children’s health outcomes even before there was an actual physical change to their living situation. I found this really encouraging, so we remain engaged in this work along with key allies like MGH, even though the initiative has ended.
YOU HAVE EMPHASIZED WORKING CLOSELY WITH COMMUNITY MEMBERS WHEN YOU WORK TO DEVELOP AFFORDABLE HOUSING. WHY DO YOU THINK THAT’S IMPORTANT?
A central part of our mission is to enable community members to determine their own future. We deeply believe in the power of community and in the agency of organized people. We have community members who have lived experiences who are educating themselves about policy challenges and solutions—and they’re coming together to determine what makes sense to pursue. The housing crisis is a systemic inequity and the logical conclusion is that we need systems change. We’re moving as fast as we can to build and preserve as much affordable housing as possible, but we recognize that we can’t just build our way out of the housing crisis. It’s too big. So, we need to do more than build homes. Community organizing is a key strategy. We have a team that works on base building, leadership development, and coalition building to get the policy changes we need to address this crisis.