January 26, 2004
ROMNEY LAUNCHES $100 MILLION PROGRAM TO SPUR NEW HOUSING
Follows through on his pledge to double housing starts by end of his term
Following up on his pledge to make Massachusetts more economically competitive and a more affordable place to live, Governor Mitt Romney today announced a new $100 million program to help finance the construction of thousands of new homes.
“We are on a mission to double housing starts in Massachusetts and this is one approach to help get us there without spending new taxpayer dollars,” said Romney. “These new resources are critical at a time when public funds are limited, but the need for new housing is enormous.”
Over the next three years, the Priority Development Fund is expected to help create as many as 5,000 units of housing that would not otherwise be built and to leverage as much as $1 billion in additional financial resources.
Of the $100 million, $75 million will be set aside for the construction of new mixed-income housing developments where at least 20 percent of the units are affordable to low- and moderate-income residents. Another $22 million is earmarked for mixed-income housing development specifically around transit nodes. The remaining $3 million will go for planning assistance for communities to craft affordable housing plans that conform to the Romney administration’s smart growth policies.
Both for-profit and non-profit housing developers will be eligible to apply for the funds, which will be made available only to borrowers who receive first mortgage financing from MassHousing. The maximum amount of subsidy per unit will be $75,000.
Unlike prior housing programs that utilized a standardized approach to financing, the hallmark of MassHousing’s Priority Development Fund will be its flexibility. Most developers will likely use funds as a “gap filler” to make up for financing shortfalls due to the high cost of building housing in Massachusetts, although funds can also be used to write-down interest rates and provide credit enhancements or other loan guarantees. Funds will be awarded as low- or no-interest loans, due only upon sale or refinancing of the property.
Romney made the announcement at The Metropolitan, a 251-unit mixed-income housing development under construction in Boston’s Chinatown neighborhood. The Metropolitan’s co-developers are EA Fish Associates and the Asian Community Development Corporation.
MassHousing, the Commonwealth’s 37-year old quasi-public affordable housing bank, will administer the new Priority Development Fund. Funding will come from MassHousing’s reserves and anticipated mortgage repayments and no new taxpayer dollars will be needed.
“The Governor has set ambitious housing goals and we now have significant new resources that will help increase construction starts and improve our ability to attract and retain businesses with a new supply of housing for working families,” said Tom Gleason, MassHousing’s Executive Director.
The Priority Development Fund is geared primarily toward creating new mixed-income apartment complexes although condominium units that are part of a transit- oriented development will be allowed.
Preference will be given to development projects that meet smart growth criteria. These would include housing developments located in town centers or around train stations, and those that make use of existing infrastructure such as water and sewer lines.
Proposals that provide increased housing affordability, either by creating more low-cost units, reserving units for people with very low incomes or extending affordability for a longer period, will also be prioritized. Housing developments that can attract other private and public resources and that provide family units with three or more bedrooms will also receive preference.
The $100 million for the Priority Development Fund is not being generated through the sale of bonds, but instead has aggregated over time as a result of various improvements to MassHousing’s business structure as well as loan repayments, fees, other investments and the strong financial performance of more than 500 housing developments financed by the agency. Priority Development funds will be used in conjunction with mortgage loans made to developers, and those loans will continue to be funded through the sale of bonds.
For more information, visit the MassHousing Web site at www.masshousing.com.
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