Proposed Changes to IDP
Mass Alliance of HUD Tenants
42 Seaverns Avenue/Jamaica Plain/MA/02130
617-522-5133/617-233-1885 [email protected]
To: Mayor Michelle Wu
Arthur Jamison, Director, BPDA
Sheila Dillon, Chief, Mayor’s Office of Housing
From: Michael Kane, Director, Mass Alliance of HUD Tenants March 8, 2023
Staff, City Rent Subsidy Coalition
Re: Proposed changes to Boston’s Inclusionary Development Policy
This letter is submitted on behalf of the Mass Alliance of HUD Tenants (MAHT) and the City Rent Subsidy Coalition (CRSC).
MAHT and CRSC support the goals of the Coalition for a Truly Affordable Boston (CTAB), to more closely align Boston’s IDP program with the urgent need for rental housing affordable to the majority of Boston’s residents. Our focus is on how City Rent Subsidies and Section 8 Tenant Protection Vouchers can be utilized to achieve CTAB goals of a deeper average income for the rental units set aside for IDP, and 33% affordability for new IDP rental housing overall.
1) To achieve the goal of 40% AMI average for tenants in IDP set-aside units, require developers to utilize City Rent Subsidies for a portion of IDP units
The Mayor’s proposal calls for 17% IDP set-aside units (17 out of each 100 new units), aiding renters with an average of 60% AMI. If 10 of these 17 units were assisted with City Rent Subsidies, the average AMI would drop to 40% of AMI, achieving a key CTAB goal. This would also ensure developers receive the full IDP rent for these units, with no further commitment (i.e., rent reductions) from their own resources. Some IDP renters would also remain in the 60- 70% of AMI range, further diversifying incomes in IDP buildings.
Note that a 10% set-aside for City Rent subsidies (i.e., 10 out of 17 required IDP units) is comparable to the 10% homeless set-aside which the City now requires from recipients of City grant/loan programs, such as the Neighborhood Housing Trust Fund. Utilizing City subsidies for these units will promote the Affirmatively Furthering Fair Housing mandate for BPDA approved housing, by increasing the mix of ELI households of color in new IDP buildings, thus promoting racial equity and class diversity.
If IDP units are increased beyond 17%, we recommend increasing the City subsidy units proportionately to maintain a 40% average AMI in IDP units.
Boston’s City Rent Subsidy program. MAHT spearheaded the CRSC in 2015 to advocate for a City-funded subsidy for low-income renters, funded from the regular City budget, similar to the Local Rent Subsidy Program (LRSP) in Washington, D.C., to address Boston’s severe shortage of housing affordable to Extremely Low-Income renters and homeless people.
In January 2020, Mayor Walsh announced a pilot Boston Rent Subsidy Program, funded at $5 million/year, to be administered by the Boston Housing Authority (BHA). The CRSC was invited to participate on an Advisory Committee to help the BHA design and implement the new program. Quarterly meetings have been held since fall 2020.
Initially, the BHA resolved to target City funds as Project-Based subsidies in new developments in Boston, capped at the IDP rent level of 70% of AMI, or the Low-Income Housing Tax Credit (LIHTC) rent at 60% of AMI. Subsidy commitments were to be long-term to provide permanent housing for Extremely Low Income (ELI) and/or homeless Boston residents. The BHA agreed to prioritize currently unhoused working families with children in the Boston Public Schools. Because these are City, not federal, funds, the BHA is able to assist undocumented residents and unhoused families not otherwise eligible for federal funds.
In July 2022, Mayor Wu and the City Council approved $9.75 million/year for City Rent Subsidies in the FY 2023 budget, enough to permanently house up to 900 ELI or currently unhoused families, at IDP or LIHTC rent levels.
Project-based City Rent Subsidies are underutilized. In November 2022, the BHA provided an analysis of the allocation of funds to date. Only 175 units had been allocated or committed as project-based assistance, in five developments, in the first 16 months of the program. The BHA has had difficulty “marketing” project-based subsidies in new LIHTC or IDP developments; very few developers have applied. The BHA is “land-banking” the remaining funds by issuing temporary city-funded mobile Vouchers, until such time as project-based developers can be found. That leaves up to 725 additional Project Based City Subsidies that can be allocated now for IDP or LIHTC units in new, mixed- income developments.
“Marketing” by BHA, BPDA and the City is the key. Although promises have been made, the BHA’s marketing of the Rent Subsidy program has fallen short. BPDA officials until recently seemed to be unaware of the new program. CRSC members have found that most nonprofit and for-profit developers of LIHTC or IDP housing are unaware that the program exists.
We strongly urge the BPDA, BHA and MOH to proactively meet with prospective IDP (and LIHTC) developers, and to require utilization of City Rent Subsidies to provide homes for ELI/homeless families to improve the income and diversity mix of new developments.
2) Achieve the CTAB goal of up to 33% of housing affordable to Boston residents in new IDP buildings, by utilizing additional Section 8 Housing Choice Vouchers paying the Small Area Fair Market Rent (SAFMR)
The Mayor’s proposal commendably includes a 3% set-aside (3 out of 100 units) for regular BHA Section 8 Housing Choice Vouchers which pay the Small Area Fair Market Rent (SAFMR) to landlords. Requiring IDP developers to accept additional Section 8 Vouchers, could approach the 33% goal. There are 14,000 or so Vouchers issued by the BHA each year. Many Voucher holders have difficulty finding an apartment, even with the SAFMR due to widespread discrimination against Section 8 voucher holders, so IDP buildings could help these Voucher holders find a home.
The SAFMR is substantially higher than IDP rents, up to a $1,200 to $1,500/month more in 1 BR apartments, and $1,500 to $2,300/month more in 2 BR apartments, in the higher income neighborhoods where IDP buildings are typically located. At the same time, IDP developers are able to obtain anywhere from $664 to $2,699/month for new luxury market rents above what SAFMR Vouchers can pay, depending on neighborhood/zip code. (See attached chart). So accepting up to 13% additional Vouchers at SAFMR (beyond the Mayor’s proposed 3%) would likely mean developers absorbing a reduction below potential market income, in these units.
However, this amount would be at least partially offset by the “savings” from what developers are otherwise being asked to absorb in the Mayor’s proposed IDP plan. If 10 IDP units are subsidized with City Rent subsidies at the IDP rent, we believe that another 5 to 10 units could accept SAFMR Vouchers, at little or no additional marginal cost to the developer. The Section 8 set aside, could be achieved either by accepting mobile Vouchers or a Project Based Voucher contract from the BHA.
In sum, we recommend that the BPDA (1) utilize City Rent Subsidies in the IDP set aside units to lower average AMI to 40%, and (2) require acceptance of Section 8 subsidies paying SAFMRs in the remaining non-IDP, “market” units, to achieve the overall goal of 33% affordability urged by CTAB. This arrangement would enable creative developers to offer a more truly diverse, equitable and socially healthy income mix in future IDP buildings, at little or no additional “cost” beyond that required by the Mayor’s current proposal.
Michael Kane's Testimony to support and amend Mayor Wu’s proposed Home Rule Petition to Stabilize Rents
Mass Alliance of HUD Tenants
42 Seaverns Avenue/Jamaica Plain/MA/02130
617-522-5133/617-233-1885 [email protected]
To: Ricardo Arroyo, Chair Date: March 2, 2023
Government Operations Committee
Re: Testimony to support and amend Mayor Wu’s proposed Home Rule Petition to Stabilize Rents
From: Michael Kane, Director, Mass Alliance of HUD Tenants (MAHT)
Member, Mayor’s Rent Stabilization Advisory Committee
Thank you for today’s hearing on Mayor Wu’s proposed Home Rule Petition. MAHT is here to support Mayor Wu’s Home Rule Petition, and to propose amendments to strengthen it.
MAHT is a coalition of tenant groups in privately-owned, government assisted housing in Eastern and Central Massachusetts. Since 1983, MAHT has helped preserve more than 8,000 subsidized apartments in Boston that were at risk of conversion to high market rents, one building at a time, through tenant organizing.
At the same time, Boston has lost more than 2,100 previously affordable apartments by conversion to high market rents since 1996. Another 928 are at risk of conversion today, including the Forbes Building in Jamaica Plain and Babcock Towers in Brighton. Elderly and disabled tenants at the Forbes, who face up to $1,200 per month rent increases in 2023, urgently need rent stabilization to avoid mass displacement.
Mayor Wu is to be commended for her visionary leadership and courage in proposing a Rent Stabilization proposal in response to Boston’s rental housing crisis. Likewise, a majority of the City Council is to be commended for evident support for rent stabilization, for the first time since the 1970’s. For the 2/3 of Boston voters who affirmed our support for rent control in the 2021 election, this is an exciting and hopeful time. Together, our growing, powerful movement has begun to chip away at the anti-regulation climate at the Statehouse.
Since the repeal of Boston’s “expiring use” rent control by the legislature in 1995, the City Council and three Mayors have unanimously supported MAHT’s Home Rule Petition to restore controls to “expiring use” housing. We appreciate the Council’s vote to re-file this measure in October 2022. While Statehouse leaders have blocked passage of Boston’s “expiring use” HRP--and most attempts to regulate real estate markets--since the late 1990’s, strong leadership by Mayor Wu and the Council, and growing support statewide, offers hope that Boston’s Home Rule proposals, and/or statewide enabling legislation, can be passed in this legislative session.
Forbes Building Tenant Association Wins One Year Rent Freeze!
After sustained pressure from the Forbes Building Tenants Association (FBTA) with support from the Mass Alliance of HUD Tenants, All City Management (ACM) has notified 75 former 13A "legacy" tenants whose leases expired December 31, of a one-year Rent Freeze!
These are all lower income tenants who received a six-month lease in May 2022, after state 13A rent restrictions expired. Tenants were facing up to $1,200 per month rent increases until the freeze was announced. While the short-term freeze provides much appreciated breathing room, there is still work to be done to save the Forbes as affordable housing for the long term.
The FBTA has kept the drum beat steady through rallies, in the press and at the Jamaica Plain Neighborhood Council to save their homes, in the face of numerous broken promises and missed deadlines from All City Management. But we know the pressure is working! In addition to the rent freeze, ACM's team has now publicly committed to reach a deal that will preserve all 147 apartments as affordable housing for mostly senior and handicapped tenants.
However, ACM has yet to submit a workable, written proposal to the City and State, and missed a key deadline in October to apply for funds. Reportedly, ACM is requesting $40 million more in public subsidies than State guidelines allow. Stay tuned!
The FBTA and Mass Alliance of HUD Tenants are working closely with newly elected Representative, Samantha Montaño, to rengage the City and the State to encourage a timely and favorable preservation deal, and to pursue the passage of a Boston Home Rule Petition that would give the City the authority to require building owners like ACM to accept preservation deals. The FBTA also recently won the approval from the Jamaica Plain Neighborhood Council to send a letter in support of the FBTA affordability goals to City and State officials.
The Forbes Building Tenant Association continues to advocate in the community and with the legislature to win long-term affordability of the building.
Please direct your questions to the Mass Alliance of HUD Tenants at: 617-522-5133 or by email at: [email protected]
Annual Holiday Party is a Success!
Saturday December 17th, we hosted our first in person holiday party since 2019. We were absolutely thrilled to be able to gather back in person this year to eat delicious food, enjoy beautiful music and honor the hard work of our member Tenant Associations, Civic Engagement Team and Lobby Team including:
Forbes Building Tenant Association for continuing their heroic campaign to secure permanent affordability and Save Their Homes.
Georgetowne Tenants United for winning a model Eviction Prevention Plan from Beacon Communities for 18,000 Beacon tenants nationwide.
We were honored to have Boston city councilor Ruthzee Louijeune and state representative Mike Connelly take the time to stop by and offer words of support. We appreciate their continued support for our organization and low-income tenants across the state. There is a lot of work ahead and we look forward to working with them in the new year.
In Memory of Ellie McCarthy
We are saddened to announce the recent passing of Ellie McCarthy, long time MAHT volunteer and resident of Ausonia Apartments in the North End. She supported MAHT at various rallies and protests and traveled to Washington D.C. to fight with tenants across the country on housing issues. She will be dearly missed.
Major Victory for the CRSC and MAHT
The final Boston budget approved on June 30, increased the City Rent Subsidy Program to $9.75 million/year! This is a major victory for the CRSC and MAHT—we had advocated to increase the $5 million pilot program, by doubling it this year!
Mayor Wu had originally requested $7.5 million/year in her budget, an increase of $2.5 million but short of the CRSC goal. On June 6, the Council voted to increase this, to $10m and offset the extra cost with cuts to the Fire and Police Departments. The Mayor vetoed the police cuts and responded back with a $9.35 million offer.
Celebrating MAHT and Tenant Acomplishments
It was a beautiful day for our annual meeting this past Saturday to celebrate the many tenant leaders and tenant associations who work hard to save affordable housing across Massachusetts. We were excited to present awards to:
The Forbes Building Tenants Association in Jamaica Plain for gaining community support to get their owner to commit to permanent affordability
Georgetowne Tenants United in Hyde Park for winning a comprehensive survey of water leaks and mold and Emergency Rental Assistance for tenants behind on rent
Babcock Towers Tenants Association in Brighton for securing their landlord’s acceptance of 46 Vouchers from the BHA to save their homes
Marcus Garvey Tenants Association in Roxbury for successfully protesting sudden rent increase notices and restoring dialogue with management
The City Rent Subsidy Coalition for winning support to increase Boston’s City Rent Subsidy Program from $5 million to $10 million annually
Newcastle-Saranac Tenants Association in Roxbury for surviving relocation and renovations and winning owner’s commitment to seek additional Vouchers to lower rents for tenants
The Sandi Padellaro Award for Outstanding Tenant Leader to Yuri Fershter from Babcock Towers Tenants Association for his courageous, brilliant, and compassionate leadership to win creative new resources for tenants citywide and enable his neighbors save their homes
We also had the pleasure of having chief of housing for the city of Boston Sheila Dillon, Boston city councilor Ruthzee Louijeune, and state representative Mike Connolly stop by and express their support for affordable housing and all of the great work MAHT does. We look forward to continued partnership with them.
Testimony in Support of Boston Real Estate Transfer Fee
Mass Alliance of HUD Tenants
42 Seaverns Avenue/Jamaica Plain/MA/02130
617-522-5133/617-233-1885 [email protected]
Testimony in Support of H4637, Boston’s Home Rule Petition
relative to real estate transfer fees and senior property tax relief
To: Sen. Adam Hinds and Rep. Mark Cusack, Co-Chairs Date: June 7, 2022
Joint Committee on Revenue
Members of the Joint Committee on Revenue
From: Michael Kane, Mass Alliance of HUD Tenants (MAHT)
As a statewide tenants union representing low income tenants in government assisted housing, the Mass Alliance of HUD Tenants (MAHT) urges a favorable report this week for H4637, the Boston Home Rule Petition (HRP): An Act relative to real estate transfer fees and senior property tax relief.
The Committee is to be commended for favorably reporting several local HRPs (Nantucket, Somerville, Concord and others), empowering localities to raise real estate transfer fees and apply the resources for affordable housing in their communities. While time is short, the Committee’s recommendation gives these bills a greater chance at passage in this session. We urge you to add Boston’s HRP to these measures supported by the Committee.
In 2020, the Institute for Policy Studies published a Report, Money on the Table: Beacon Hill Inaction Stalls Affordable Housing Resources for Cities and Towns. Regarding Boston, the Report highlights two luxury residential buildings totaling 243 condos, The Dalton and Pier 4, demonstrating that Boston would have received $28.8 million in estimated revenue from the sale of condo units over $2 million, from these two buildings alone.
In 2020, MAHT identified more than 5,100 units in Boston’s luxury condo “pipeline” opening over the next two years (see attached chart). New luxury housing production has only accelerated since that date. In October 2021, MAHT identified more than 13,100 luxury high rise condo or rental housing units built since 2013 or in the pipeline in Boston. Passage of the Boston HRP will generate hundreds of millions of dollars for the City from increased transfer fees from sales of these high-end properties over the next several years.
Moreover, a substantial portion of the high end luxury condo sales are to overseas investors seeking a tax shelter or “wealth storage unit” to park speculative cash, with little or no intention of actually living in these units. The buyers and sellers of these super luxury condos can surely afford to pay 2% of the sales price for units selling over $2 million.
The vast majority of Boston’s residential sales, of course, are well under $2 million; the vast majority of Boston’s home and condo owners and buyers would experience no additional tax burden with the passage of H4637. And the luxury sellers would not pay a fee, on the first $2million of the sales price, only on the price above that amount.
In contrast to the other local real estate transfer HRPs, however, Boston’s HRP would also tap into another potentially vast source of revenue, from the sale of office and commercial properties in Boston’s booming downtown, Seaport, and other districts. As the hub of the Eastern Massachusetts economy, Boston has a high proportion of the commercial and office sector and has seen an explosion of new investment over the past 20 years. Allowing Boston to tax transfers over $2 million in this sector, would generate substantial additional revenue not otherwise available to the Commonwealth or smaller cities and towns, with no discernible adverse economic effects.
For example, in the year prior to June 2020, Boston registered 11 commercial/office transactions above $2 million each, totaling more than $2 billion in sales. Four flagship properties alone (245 Summer Street, 101 Federal Street, 109 Brookline, One Marina Park Drive) sold for $1.72 billion of this amount (source: Reonomy Report, 7/25/20). If Boston’s HRP had been in place, these 11 sales alone would have generated more than $40 million in revenue for affordable housing.
Most of the buyers or sellers of these properties, are not based in Boston. But they are benefiting from the enormous speculative boom in commercial real estate, linked to global investment trends, and fueled by Boston’s investment in infrastructure and development rights in the downtown/Seaport areas in particular.
One story will illustrate just how much money Boston—and the Commonwealth—are “leaving on the table.” In 2013, the Swedish construction company Skanska spent $159 million to build 101 Seaport Blvd, which opened in 2015. A year later, in 2016, Skanska sold the building to the German real estate fund, Union Investment, for $452 million—close to three times the development cost. With such extravagant windfalls at stake, a 2% tax would have had no effect whatsoever on this sale. In 2015, Skanska then spent $281 million to build 121 Seaport Blvd next door, selling it to American Realty Advisors and Norges Bank for $455 million in 2018, as the building completed construction. Had the Boston HRP been in effect, the City would have collected $18 million from these two transactions alone.
As the Boston Globe writer Tim Logan commented on April 12, 2016 on 101 Seaport, “The deal reflects the surging demand from foreign capital for trophy real estate in Boston. Roughly half of the major office towers in central Boston have changed hands in the past few years, many to international investors willing to pay top dollar.” While one can debate the desirability of foreign speculators playing Monopoly with Boston’s downtown real estate, there is no question that the City is missing out on a huge source of potential revenue due to the current limitations on the state real estate transfer tax, which has not been raised in 50 years. Taxing these transactions over $2 million at 2% will have no negative effects whatsoever regarding whether these transactions occur, or on the overwhelming majority of Boston’s property owners.
According to the City of Boston, passage of H4637 would enable Boston to reap up to $100 million annually in new revenues over the next five years. Some five times greater than the annual revenue generated by the City’s Inclusionary Zoning process, this additional revenue will go a long way toward addressing the City’s affordable housing crisis. Since luxury
development is itself fueling the over-the-top speculation in real estate values and displacement of lower income renters, particularly people of color, across the city, the least we can do is tap into a small fraction of these speculative profits, to create funds to address the rental housing crisis that result.
Boston is poised to spend this money rapidly, and well. In 2020, former Mayor Walsh created a pilot $5 million/year City funded Rent Subsidy Program from the regular City budget, modeled on the successful Local Rent Subsidy Program operated since 2007 by Washington, D.C. MAHT anchors the City Rent Subsidy Coalition, 32 groups that advocated to create this program and currently advises the Boston Housing Authority on program design and implementation. Today, the pilot program is already a success, housing more than 250 homeless families with children in the Boston public schools or others with urgent housing needs. Mayor Wu has proposed to increase the amount to $7.5 million/year, and the City Council is poised to increase it to $10 million/year. If H4637 is passed, and additional funds are made available, the City and the BHA
will be able to expand rapidly beyond 500 families who will be assisted this year.
Of the $100 million/year which Boston would raise by passage of H4637, if Boston were to dedicate $50 million/year to the City Rent Subsidy program, Boston could provide up to 5,000 Extremely Low Income (<30% of AMI) and/or homeless families with permanently affordable housing. This would go a long way toward getting homeless people off the streets and meeting the low income rental housing need of 21,100 families earning less than $25,000 per year, who need housing assistance to stay in Boston, according to the City’s Housing Plan, Housing a Changing City: Boston 2030.
At present, Massachusetts’ paltry real estate transfer fee ($4.56 for every $1,000 of sales) is dwarfed by New Hampshire ($15), New York ($12.50), Vermont ($12,50) and Connecticut ($10.52), applying to all sales in these states (i.e., no exemptions). If these states can collect as much as triple Boston’s ordinary rate, surely Boston can be allowed to collect 2% on deals over $2 million.
We ask the Revenue Committee to expeditiously and favorably report out H4637, and to urge legislative leaders to pass all these vital measures in the current legislative session. Thank you for your consideration. I can be reached at 617-233-1885 if you have any questions.
Water Leaks and Mold Mitigation Continues at Georgetowne
Tenants continue to report positive results from tenant advocacy. MAHT volunteer and Georgetowne resident Arthur Sutton is excited to report that his apartment has had mold remediation after problems with flooding. We know that mold can bring potential health issues, so this is great news. Apartments continue be inspected so we look forward to hearing more positive outcomes.
Kitchen and closet before mold removal
Kitchen and closet after mold removal
Victory for Georgetowne Tenants: Beacon Communities Commits to Surveying 100% of Units for Mold and Water Leaks
Following years of advocacy from tenant association Georgetowne Tenants United (GTU), property management company Beacon Communities has agreed to hire a contractor to survey 100% of Georgetowne apartments and address major issues after they are detected. This is a huge win for GTU, which has been urging the property management company to treat water leaks and mold as widespread, systemic issues for years.
Already, several Georgetowne tenants have reported that their units have been inspected and that Beacon has successfully addressed longtime infrastructure and mold issues. Check out these before and after photos from one Georgetowne tenant. Prior to the most recent renovations, this tenant experienced frequent floods (~1 per year) and had to run fans all day and night to prevent persistent moisture from forming mold and triggering her allergies.
We look forward to sharing more stories like this one in the months ahead!