Agency has provided $923 million in financing to preserve 5,851 apartments in 37 housing communities since July 2015
MassHousing is leading the way in preserving affordable rental housing in Massachusetts as the Agency has provided approximately $923 million in financing to preserve 5,851 apartments in 37 housing communities since July of 2015.
"Preservation is an important topic when it comes to affordable housing in Massachusetts and MassHousing has been committed to preserving and rehabilitating as much of the Commonwealth's existing affordable housing stock as possible," said MassHousing Executive Director Tim Sullivan. "Considering the high cost of construction, preserving existing affordable housing is the most cost-effective way to help provide an affordable place to live for Massachusetts residents and we are working hard to do that with innovative, customer-friendly loan products and enhanced customer service."
MassHousing's preservation efforts have impacted 27 communities stretching from Boston to Pittsfield.
A large factor in MassHousing's preservation effort has been new loan products for the owners and developers of multifamily housing communities. Two products in particular that offer lower interest rates in the low-to-mid 3% range and enhanced customer service have been the foundation of the Agency's preservation success.
MassHousing offers the Multifamily Accelerated Processing (MAP)/Ginnie Mae Joint Venture Initiative through the U.S. Department of Housing and Urban Development (HUD) to the owners of rental housing communities, which provides lower interest rates and a faster review process while preserving and extending affordability for hundreds of low-income senior citizens and families. The Agency has partnered with two well-known and experienced MAP lenders: CBRE and Rockport Mortgage Corporation.
The Agency also offers a loan program through the Federal Financing Bank (FFB). The FFB program resulted from a partnership established in 2015 with the U.S. Department of the Treasury, HUD, and state Housing Finance Agencies (HFAs) including MassHousing. That partnership, in which the FFB purchases a 100% participation interest in the loan that is 100% insured by HUD, provides lower interest rates on loans to owners of subsidized rental housing, giving them new incentives to refinance, make capital improvements and lock in long-term affordability for lower income residents.
MassHousing is also only one of three Housing Financing Agencies (HFAs) in the country recycling Private Activity Volume Cap as part of its preservation effort. Private Activity Volume Cap is the federal bonding authorization that allows private borrowers to access tax-exempt interest rates and so-called 4% tax credits for rental housing financing through governmental issuing authorities. It is made available annually and is calculated at $100 per citizen in each state, or almost $700 million annually in Massachusetts.
Since the economic downturn in 2008, and until just recently, there has been for the most part enough volume cap to satisfy demand, particularly where unused volume cap – or "carryforward volume cap" – was passed over from one year to another. But with the economic recovery a surge in Private Activity Cap bond issuance occurred depleting available volume cap.
In order to help preserve and extend volume cap, MassHousing has entered into a line of credit agreement with J.P. Morgan to allow the volume cap previously used by a multi-family project where the loan has been prepaid to be used again for future multi-family financing.
In July, MassHousing used $8.1 million in recycled volume cap for the first time when it closed $56.7 million in financing for the 209-unit Genesis House for senior citizens in Brighton. MassHousing joins New York and Washington as the only other states to successfully recycle Private Activity Cap for Rental loans and the Agency is hoping to use more recycled volume cap by the end of the calendar year.
Still, affordable housing preservations are complex and sometimes challenging and involve numerous local, state, federal and private financing sources. The Urban Institute recently published a study of several affordable housing preservations from around the country, including Putnam Square in Cambridge, which received $1 million from MassHousing through the Affordable Housing Trust Fund.