Perhaps the hardest part of directing MACDC is balancing the valid, yet competing, interests of our diverse membership. This challenge came to the forefront at a recent MACDC Member Policy Summit in Framingham.
The main agenda item at the summit was to discuss how we think the Department of Housing and Community Development (DHCD) should allocate its limited affordable housing resources. With the competition for housing dollars tighter than it has been in years and with developers waiting in line for years before they can secure the needed subsidies, this is a critical question.
Should we prioritize the preservation of existing affordable homes or the production of new ones?
Should we locate more homes in higher income communities or focus resources on traditionally underinvested neighborhoods?
Should we prioritize seniors or families? the working poor or homeless families? Should we build a smaller number of large projects or a larger number of small projects? Rental homes or homeownership? The list of competing interests goes on and on.
The Massachusetts Housing Partnership made a significant contribution to the discussion recently by looking at the 403 projects and 20,973 units financed under the Patrick Administration. Did you know that “non-urban” areas received 26% of the units and Gateway Cities 31%? Did you know that 63% of the units were Preservation units and 7% were for Special Needs populations? Do those numbers seem like good outcomes to you?
When we presented this data to our members there were many opinions. Most thought that DHCD has done a good job balancing competing goals, and that DHCD’s decision to institute a pre-application process and clearer funding priorities should help the system function better. That said, most agreed that there is room for further improvement and refinement. We also agreed that MACDC members need to talk further to see if we can fashion specific recommendations for the future and our policy committee will be tackling these questions in the months ahead.
In the meantime, I offer these thoughts about how we can approach these challenging questions.
- Grow the pie: We can’t allow these competing interests to distract us from the need to increase the resources allocated to affordable housing. This means passing the Affordable Housing Bond Bill this year, maintaining the state housing tax credit at $20 million per year, and increasing the state’s annual capital budget for DHCD.
- Take a balanced approach: We need a balanced approach that responds to the different housing needs across the state – it should not be an all or nothing equation. One approach to doing this would be to set goals (or ranges) for key objectives so people understand that the state will fund a diverse mix of project types. EOHED does this in the MassWorks program and DHCD has done it as well for particular items - we currently have a goal of creating 1,000 supportive housing units over the next three years. Boston Mayor Thomas M Menino’s Leading the Way program is another example of how this can be done. Goals should be flexible and multi-year so they don’t get applied in a rigid manner, but they are a useful way to express state objectives, drive performance, and to measure progress over time.
- Look for “two-fors”: While most of the resources allocated to DHCD are housing dollars, it is important to remember that state has both community development and economic development goals as well. DHCD should prioritize projects that advance multiple state objectives across program silos. One welcome advance in this direction is new language in the Affordable Housing Bond bill filed by Rep. Honan and Sen. Eldridge that would make it easier for DHCD to finance mixed use developments.
- Put homeownership back in the mix: MACDC understands why the state stopped funding new homeownership projects during the housing meltdown that began in 2008. However, over the long term, our housing agenda must include both rental and homeownership development. Rental housing should remain the priority but allocating 5-10 percent of the state’s resources to homeownership development seems like a reasonable balance.
- Use flexible dollars flexibly: Tax credits are by far the largest resource in the housing system (78% according to MHP) and therefore most projects will be funded with tax credits and subject to the rules and constraints of this resource. Thankfully, the Massachusetts Legislature and Governor have wisely allocated significant state resources to affordable housing (over $80 million/year) that can be allocated more flexibly to finance deals for which the tax credit program does not work (e.g. smaller projects, homeownership projects and deals serving slightly higher income levels.) Unfortunately, over 80% of those flexible state dollars are being used to support LIHTC deals, leaving very little money left over to fund anything else. If (say) 50% of the state's flexible funding was allocated to non-LIHTC projects, the state could fund more smaller rental projects which are often the best fit for special needs populations, rural and suburban communities, and for key sites and buildings in distressed urban neighborhoods. (Of course, this would mean fewer LIHTC deals funded each year and it would require adjusting program rules related to caps on tax credits so I'm sure some of my readers would object to this recommendation!)
Any reallocation of existing resources will involve winners and losers so it is never an easy conversation or decision. As hard as it is within the MACDC membership, it is even harder when all the stakeholders are brought into the conversation so I offer these ideas as a way to advance a conversation - not to suggest that there are easy or obvious answers. And in the meantime, MACDC will devote most of our time and energy to the first suggestion - growing the pie - because that makes all of the other decisions a bit easier!