Six ideas for using CPA money to build actual affordable housing

If you had $16 million that you could use for affordable housing, where would you spend the money? City officials are facing that question after Tuesday’s “yes” vote on Question 5, the Community Preservation Act, that will result in a one percent increase to our property taxes for affordable housing, open space, and historic preservation.

Officials say the surcharge could bring in $20 million, but, the law says, at least 10 percent has to be used for open space and 10 percent for preservation, which leaves the city with $16 million or so in the bank for affordable housing initiatives.

How can we get the most bang for those bucks? Following are six ideas, taken from a report, “Understanding Gentrification and Displacement,” that was presented late last month as part of the city’s Racial Equity Research Speaker Series. Many of the ideas are proven successes, and some are already being implemented by the city’s Department of Neighborhood Development.

1. Make existing “market rate” housing affordable. In Boston’s hot housing market, developers and speculators are buying buildings, improving them a lot or a little, and renting or selling them at much higher prices. Funds from the Community Preservation Act could buy and preserve them as affordable housing for renters and homeowners. A new city program is already being used for this purpose. Last week the city’s Acquisition Opportunity Fund helped buy 59 units in Dorchester and Mattapan from a bankrupt slumlord. The Codman Square NDC, which bought the properties with the city loan, will preserve them as affordable housing.

2. Help local nonprofits buy buildings. Another new city fund, the Rental Acquisition Program, helps nonprofits buy 6-plus unit buildings and keep rents affordable for 50 years. Funds from the Community Preservation Act could help this program buy more apartment buildings.

3. Swap repairs for affordable rents. Give long-term, moderate-income homeowners hefty low-interest loans for home repairs. In return, they’d agree to keep rents affordable.

4. Pay homeowners to bring their home sale prices down. In today’s market, longtime homeowners can get many times the price they paid for their homes decades ago. That’s good for the homeowners, who may need help paying their taxes or doing repairs, but disastrous for today’s moderate-income homebuyers and renters. Community Preservation Act money could pay homeowners some of the money they’d get on the open market. In return, they’d agree to sell their homes at lower prices to income-eligible buyers.

5. Help elderly homeowners stay in their houses, and… help them make home repairs or defer property taxes. In exchange, they would restrict rent increases and the city would get the first option to buy the properties when it went on the market. So far, these suggestions focus on existing housing, but here is one idea that could make new housing affordable:

6. Build affordable housing on city-owned land. One of the biggest costs in new construction is land. If you cut land costs, housing becomes more affordable. The city owns quite a bit of land; in fact, private investors are already developing housing on 172 city parcels through the city’s Neighborhood Homes Initiative. How affordable will this housing be? It could be permanently affordable if the city works with Community Land Trusts.

In the 1980s, the Dudley Street Neighborhood Initiative (DSNI) set up a land trust and built more than 200 housing units on vacant lots. DSNI made them affordable by just selling the buildings; the land stayed in a community-controlled trust. The homebuyers didn’t have to pay for the land and they can’t make money off it when they sell their homes. They will just recover their purchase prices plus improvements they made. Those homes will sell to low- and moderate-income people, and the community will keep permanently affordable housing in the neighborhood.

Will these ideas fly? We spoke with Sheila Dillon, director of the city’s Department of Neighborhood Development, and with Tom Callahan, who directs the Massachusetts Affordable Housing Alliance, a nonprofit that strongly supports the Community Preservation Act.

“The city is continuing to put a lot of muscle into affordable housing,” Dillon said. “We’re putting out land for new construction that’ll be deed-restricted affordable. We’re funding good projects. The new Acquisition Opportunities Program helps nonprofits and for-profits make existing housing affordable. We’re working hard not to lose any existing units.”

Dillon is enthusiastic about Community Land Trusts, not just for affordability but as “a deliberate way to build community. Our Housing Innovation Lab is working with multiple land trusts around the city. The biggest obstacle is land acquisition costs, and we’re making land available” – for urban farms, for starters.

Callahan has another take. At the Mass Affordable Housing Alliance “we want to do something about the racial home ownership gap,” he says. “It’s the widest it’s been for a long time. Of all the mortgages that went to buy homes in Boston over the past two years, only 10.5 percent went to black and Latino buyers. Continue that pattern for a decade and it’ll change the city.”

How would Callahan alter that picture? One way, he says, is idea No. 4 above: Make homes more affordable by paying today’s homeowners some of the price they could get on the open market. Another is to take “relatively affordable” houses and pay part of the purchase price; $50,000 to $100,000 per house is less than it would cost to build new affordable homes.

Decisions like that are at least a year away, Callahan says. The city won’t start collecting community preservation money until next July. Boston must also set up a Community Preservation Committee to decide how much money will go to parks, housing, and historic preservation.

“We want good people on the committee,” says Callahan. “And we want a grassroots process that’s open and participatory so the best ideas bubble up.”

Dillon agrees: The city wants to see “deliberate conversations.”