National Association of Housing & Redevelopment Officials STATE PUBLIC HOUSING PROGRAMS FY2020 BUDGET REQUEST Subsidies to Public Housing Authorities (7004-9005) – $72 MILLION

Subsidies to Public Housing Authorities (7004-9005) – Request $72M State Law: Subsidy Equals Difference Between Rental Income and Actual Operating Costs M.G.L. c. 121B §32 requires the Commonwealth to fill the gap between the reduced rents and the cost of operations with subsidy. However, state budget caps are based on the subsidy appropriated NOT operating costs. There is no relationship between property maintenance/management costs and what the Legislature appropriates yearly in operating subsidy. Documented Need for Operating Subsidy Exceeds $115 Million An October 2006 State Audit, September 2006 Harvard Cost Study, July 2006 Legislative Report and the February 2008 DHCD Real Cost Study all substantiated the true costs, using federal standards, as $112-115 million annually.

Line Item Frozen for Six Fiscal Years; 1.5% Increase in FY19 Public Housing Operating Subsidy, line 7004-9005, had been level funded from FY2013- FY2018 – six budget cycles – at $64.5 million. With inflation, that equates to a 6.9% cut. Emergency Assistance program saw a 50% increase over the same timeframe. The FY19 budget added $1 million, a 1.5% increase to $65.5 million. Governor Baker’s House 1 Budget for FY2020 level funded the line at $65.5 million.

Public Housing Operating Subsidy v. Emergency Assistance 300 250 200 150 100

$ in $ Milliona 50 0 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 (Gov. Budget) Fiscal Year

Public Housing Operating Subsidy Emergency Assistance - Shelters

Commonwealth’s Most Cost-Effective Option Local public housing is the state's most cost-effective housing for low-income seniors, families and the disabled. The average subsidy currently is $130 per unit per month ($65.5M divided by 41,900 eligible units). The cost of a shelter is approximately $3,000 per person per month. Long-term care in nursing homes averages $10,750 per person per month. Allowing seniors to age in place and stay out of premature long-term care placement could save the state millions annually!

Public Housing = State's Most Cost-Effective Option 12000

10000

8000

6000

4000

2000

0 Monthly Costs

Public Housing Unit [$128] Shelter [$3,000] Long-Term Care/Nursing Home [$10,750]

Tenant Rents Cover 75% of Expenses Operating subsidy represents only 25% of budgeted expenses statewide; tenant rents, two- thirds of which are seniors, cover the other 75%.

Budgeted Operating Expenses

25%

75%

Tenant Rents Operating Subsidy

LHAs Meet or Exceed Performance Benchmarks on Stretched Budgets Housing authorities are mandated by law to house qualified homeless families and seniors, and continue to provide safe, decent, sanitary housing on stretched budgets. Newly-implemented performance measurements indicate that the majority of local housing authorities are meeting or exceeding benchmarks.

Increased Subsidy = Enhanced Resident Services, More Staff, Faster Unit Turnovers Additional Resident Services & Programs Resident services and programs promote self-sufficiency for families, allow seniors to age in place, and enhance the quality of life for all public housing residents. DHCD recently surveyed residents in the public housing units it oversees statewide. In addition to overall satisfaction among residents with their housing authority’s communication, customer service and responsiveness, the survey results showed:

78% of families would be interested in services and programs, including: job training programs, money management programs (budgeting, income building), children’s programs (tutoring, afterschool activities, child care), adult education (GED, ESL, educational counseling). 70% of elderly/disabled residents would be interested in services and programs, including: visiting nurse, meals programs, home health aides.

Faster Vacant Unit Turnovers Currently, the number of vacant units is fewer than 3%, or 1,000, statewide but, considering there are more than 100,000 on waiting lists across the Commonwealth, every unit should be available to house low-income families and seniors, including homeless and veterans. Of the currently vacant units, 60% have been vacant for more than 90 days, and 20% are estimated to cost over $10,000 to get back online. The length of vacancy and high costs are a result of lack of funding for additional maintenance staff, outsourcing costs, and aging developments. The average age of all public housing units is 52 years!

Capital funds authorized in the bond bill CANNOT be used for maintenance labor, contract costs or maintenance supplies. Additional operating subsidy would allow housing authorities to hire sufficient maintenance staff, contract out unit turnover functions, and purchase adequate supplies.

[See chart below for examples of allowable capital expenses vs. operating expenses]

Bond Funded Capital Expenses v. Operating Expenses

ALLOWED TO BE BOND-FUNDED NOT ALLOWED TO BE BOND-FUNDED (USE CAPITAL FUNDS) (USE OPERATING FUNDS)

EXPENSE TYPE SITUATION EXAMPLE EXAMPLE SITUATION

Materially adds value Maintains value of the to the asset. asset. Repaint entire Spot painting; GENERAL Prolongs useful life by development interior decorating. Repairs/replacements to CAPITAL at least 5 years. envelope. meet or extend useful EXPENSES life.

Project cost is greater Project cost is less than than $1,000 AND $1,000 OR component is component being not tracked in Capital replaced is tracked in Planning System (CPS). Capital Planning System (CPS).

Replace entire HVAC Replace a section of system. pipe.

Replacement of Roof replacement. Roof patching. Repair to building building systems based systems. BUILDING upon lifecycle. Envelope: replacing Envelope: spot SYSTEMS more than 20% of replacement of siding. worn/damaged siding.

Envelope: repointing Envelope: spot a building. repointing.

Replacement of all Replacement of one Replacement of kitchen appliances in kitchen appliance equipment based upon a building at the end because it’s broken. lifecycle, generally as of their useful life, BUILDING part of a long-term, per industry norm. Replacement of a broken COMPONENTS predictable schedule, piece of equipment. OR OR as part of an overall EQUIPMENT plan to upgrade Replacement of all Installing one Energy equipment (e.g. for refrigerators to Star refrigerator in a energy or water Energy Star models unit as a replacement conservation as part of an overall for a broken purposes). energy conservation refrigerator. plan.

ALLOWED TO BE BOND-FUNDED NOT ALLOWED TO BE BOND-FUNDED (USE CAPITAL FUNDS) (USE OPERATING FUNDS)

EXPENSE TYPE SITUATION EXAMPLE EXAMPLE SITUATION

Complete Painting; carpet Primarily consists of modernization of cleaning; Replace, repair, or replacement of room(s) in a unit replacement of refurbish components components tracked which has not been failed or failing not listed in CPS; work UNIT in CPS, plus associated turned over for individual typically done on unit TURNOVER finish work and other many years or has appliances; cabinet turnover. incidental repairs been subject to refinishing and which together are unusually hard use repair (as opposed worth less than 15% so that capital to replacement). of the project TDC. components have reached ends of useful lives.

Heavy site work Removal of trees or Snow plowing; lawn Routine site SITE WORK requiring special large tree limbs. mowing; regular maintenance. equipment and special landscape expertise. maintenance.

STAFF: With project manager approval, LHA may use Capital funds applied toward administration PLANNING & up to 10% of its Formula Funding for capital must be recorded in operating budget. Funds ADMINISTRATION administrative purposes, including paying for are still subject to bond rules for contracts and FOR CAPITAL staff time. AIMM authorities may use up to expenditures. PROJECTS 13% of Formula Funding.

Needs to be a formal, approved budget for Upon approval, wages paid on a reimbursable STAFF: the whole project. Wages paid on basis, for overtime or for temporary or seasonal LABOR FOR reimbursable basis at the hourly rate specific employees filling in for more skilled permanent CAPITAL to each permanent employee. Capital bond employees. Requires careful record keeping. PROJECTS funds cannot be used to pay staff retirement benefit costs. Requires careful record keeping.

Source: DHCD Massachusetts State-Aided Public Housing Preservation and Modernization Program Guidelines (February 2017)

National Association of Housing & Redevelopment Officials

About MassNAHRO MassNAHRO is the member organization of public housing authorities across the Commonwealth. VALUE STATEMENT We believe housing is a basic human right. Public and affordable housing is a sustainable and fiscally- responsible business model. Our organization exemplifies commitment to advocacy, professionalism, innovation, resilience. VISION Our vision is to be the premier membership organization and unparalleled resource for the housing profession. We will provide leadership and tools to build capacity and empower agencies to preserve, protect, and expand inventory. In doing so, we will become powerhouse advocates for public housing. Key behaviors we encourage and support: Innovation, Professionalism, Ethical behavior. MISSION The mission of MassNAHRO is to educate, support, and advocate for our member agencies to ensure the preservation, protection, and expansion of public and affordable housing. By adhering to the highest industry standards, we provide professional development to create and sustain strong agencies, staff, and boards, resulting in empowered residents and healthy communities. MassNAHRO is the leader in connecting public agencies of all sizes, state and federal, to resources necessary to achieve professional success through collaboration, education, and advocacy.

MassNAHRO MEMBERSHIP

• 242 Local Housing Authorities Members Own/Manage: • 4 Community Development Agencies • 43,000 State Public Housing Units • 1,500 Executive Directors/Board Members • 38,000 Federal Public Housing Units • 38 Affiliate Members • 3,500 State Rental Assistance Units • 140 Individual Members • 55,000 Federal Section 8 Vouchers

Representative Nika Elugardo 15th Suffolk Communities in Mission Hill • Jamaica Plain • Roslindale • Brookline

Priority Housing Bills, 2019

H3562 An Act to enable public housing authorities to borrow against real estate equity of publicly-owned properties

Safe and affordable housing, like education and healthcare, is a right, and the tools and assets of the Commonwealth may be leveraged or otherwise used to develop programming and cooperative financing agreements consistent with a public policy of equitable housing for all. At the same time, the Commonwealth of Massachusetts is in a housing crisis, and we must adopt policies that protect tenants of all income levels, from displacement and homelessness.

● Empowers Housing Authorities to Borrow Against State-Owned and State- Encumbered Land: Local housing authorities are currently unable to freely utilize the equity of land or properties they hold to finance redevelopment, capital projects and/or maintenance of state-aided public housing properties. However, they are able to do so for federally-aided housing properties. This bill would close this opportunity gap for state- aided public housing, allowing for more financing options, improving conditions, and helping to prevent loss of units. ● Makes Land Assets and Land Equity More Accessible for Affordable Housing Projects and Levels the Playing Field for Large and Small Developers: Increases in cash revenues through taxes and fees, while necessary, are insufficient to fund adequate and affordable housing for all. We must leverage the state's considerable financial resources, held in publicly-owned land, for housing. This bill would allow local housing authorities, nonprofits and community and tenant groups and municipalities (in partnership or alone) to raise capital for affordable housing development and services by borrowing against the equity of state-owned property, locally or elsewhere. ● Housing First in Surplus Land Disposition: This bill would also require, as an additional step in the Chapter 7C process, that municipal affordable housing development projects (which can include provision of resident services) are prioritized in decisions about disposition of publicly-owned land. ● Simplifies Procurement; Protects Prevailing Wage: The final provision of this bill removes special procurement requirements under Ch. 149 for local housing authorities, while maintaining prevailing wage requirements. Local housing authorities are currently the only affordable housing developers statewide that are required to engage in this onerous procurement process, which often results in increased construction costs, delays and lost opportunities for affordable housing.

REP. ELUGARDO PUBLIC HOUSING BILL SUMMARY

Title: AN ACT ENABLING PUBLIC HOUSING AUTHORITIES TO BORROW AGAINST REAL ESTATE EQUITY OF PUBLICLY- OWNED PROPERTIES

Number: H.3562

Sponsor: Rep. Nika Elugardo

Prior History: 1/18/2019: Bill filed 1/22/2019: Assigned to the Joint Committee on Housing 7/30/2019: Hearing before Joint Committee on Revenue

Summary: Authorizes housing authorities to borrow against state-owned land to leverage additional resources. Prioritizes municipal affordable housing development projects for dispositions of surplus state-owned land. Removes special procurement requirements under ch. 149 for local housing authorities.

Section 1

Declares that safe and affordable housing is a right. Declares state-owned land an asset that can help provide affordable housing.

Section 2

Adds Chapter 40X to the Mass. General Laws:

 Prior to the disposition of state-owned land, pursuant to ch. 7C, requires a determination of whether that land shall be made available for municipal affordable housing incentives and services. If that determination is made, the property will be made available to the municipality for the development of affordable housing.

 Authorizes housing authorities to undertake a program for municipal affordable housing development, incentives and services

 Authorizes a streamlined permitting process, pursuant ch. 40B, for a housing authority that partners with a nonprofit or community development corporation to develop affordable housing.

 Authorizes a municipality to leverage publicly owned housing authority land to provide municipal affordable housing incentives and services.

1  Incentives and Services under this program may include:

o Municipal decision-making processes o Education services for tenants o Tenant organized projects o Community benefits (i.e., community centers, daycare, education programs) o Provision for livable safe communities o Maintenance of affordable housing o Ownership interests of tenants

 Provides for municipalities to apply through the local housing authority to acquire the state-owned land that was declared available for municipal affordable housing incentives and services and will receive priorities for financial assistance to support these projects

Section 3

Exempts state- or federally-aided public housing redevelopment projects from public construction bidding requirements of ch. 149. Explicitly maintains prevailing wage requirements.

2 HOUSE DOCKET, NO. 3654 FILED ON: 1/18/2019 HOUSE ...... No. 3562

The Commonwealth of Massachusetts ______

PRESENTED BY:

Nika C. Elugardo ______

To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General Court assembled:

The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:

An Act enabling public housing authorities to borrow against real estate equity of publicly- owned properties. ______

PETITION OF:

NAME: DISTRICT/ADDRESS: Nika C. Elugardo 15th Suffolk Peter Capano 11th Essex Mike Connolly 26th Middlesex Mindy Domb 3rd Hampshire James B. Eldridge Middlesex and Worcester Carlos González 10th Hampden Tami L. Gouveia 14th Middlesex Jonathan Hecht 29th Middlesex Russell E. Holmes 6th Suffolk Patrick Joseph Kearney 4th Plymouth Christina A. Minicucci 14th Essex Liz Miranda 5th Suffolk Denise Provost 27th Middlesex Lindsay N. Sabadosa 1st Hampshire Jon Santiago 9th Suffolk Andres X. Vargas 3rd Essex Bud L. Williams 11th Hampden

1 of 6 HOUSE DOCKET, NO. 3654 FILED ON: 1/18/2019 HOUSE ...... No. 3562 By Ms. Elugardo of Boston, a petition (accompanied by bill, House, No. 3562) of Nika C. Elugardo and others relative to municipal affordable housing incentives and services. Housing.

The Commonwealth of Massachusetts

______In the One Hundred and Ninety-First General Court (2019-2020) ______

An Act enabling public housing authorities to borrow against real estate equity of publicly- owned properties.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

1 SECTION 1. The general court hereby finds and declares that:

2 (i) safe and affordable housing, like education and healthcare, is a right, and the tools

3 and assets of the commonwealth may be leveraged or otherwise used to develop programming

4 and cooperative financing agreements consistent with a public policy of equitable housing for

5 all;

6 (ii) land owned by the commonwealth is such an asset and provides municipalities

7 with the choice of developing affordable housing;

8 (iii) municipal control over the reality of affordable housing will provide holistic

9 improvements to the quality of life of the commonwealth’s citizens by reducing high economic

10 costs associated with housing poverty and the corollary negative impacts on public health and

11 safety; and

2 of 6 12 (iv) the assets of the commonwealth enable public housing tenants to organize at the

13 municipal level toward self-sustaining programs and projects that promote housing access and

14 justice.

15 SECTION 2. The General Laws are hereby amended by inserting after chapter 40W the

16 following chapter:–

17 Chapter 40X.

18 MUNICIPAL AFFORDABLE HOUSING INCENTIVES AND SERVICES

19 Section 1. The following words, whenever used in this chapter shall, unless a different

20 meaning clearly appears from the context, have the following meanings:–

21 “Department”, department of housing and community development.

22 “Housing authority”, a housing authority or regional housing authority established

23 pursuant to either sections 3 or 3A of chapter 121B.

24 “Publicly owned”, an interest in real property of a housing authority or an interest in real

25 property record title to which is held in the name of a state agency, or the board of a state agency

26 or similar board of a state agency under section 32 of chapter 7C.

27 Section 2. Prior to disposition of publicly owned real property of the commonwealth

28 pursuant to chapter 7C, the commissioner of capital asset management and maintenance in

29 coordination with the secretary of the executive office of housing and economic development

30 shall determine whether such real property shall be made available for municipal affordable

31 housing incentives and services pursuant to this chapter.

3 of 6 32 In making such determination the commissioner and the secretary shall take into account

33 the following factors:

34 (i) existing zoning that limits the siting of low or moderate income housing in the

35 city or town in which the publicly owned real property is located;

36 (ii) financial or other deterrents to the production of low or moderate income housing

37 in the city or town in which the real property is located; and

38 (iii) ensuring that real property for disposition under this chapter is fairly made

39 available to all regions of the commonwealth, including gateway municipalities, rural areas and

40 suburban areas.

41 Upon making the determination that publicly owned real property shall be made to

42 available for disposition under this chapter, the commissioner and the secretary shall,

43 notwithstanding chapter 7C or any other law to the contrary, declare the property available to the

44 city or town in which the property is located for development of low or moderate income

45 housing in accordance with this chapter.

46 Section 3. A housing authority with publicly owned real property may undertake a

47 program for municipal affordable housing development, incentives and services.

48 Section 4. Notwithstanding the provisions of chapter 40A or any other law to the

49 contrary, a housing authority may propose to build low or moderate income housing in

50 partnership with a nonprofit organization or a community development corporation in a single

51 application pursuant to section 21 of chapter 40B and this chapter. The provisions of sections 20

52 to 23, inclusive, of said chapter 40B shall apply to such application.

4 of 6 53 Section 5. A city or town with a housing authority or similar demonstration of capacity to

54 comply with this chapter may participate in a program to borrow funds against real estate equity

55 of publicly owned properties to provide for municipal affordable housing incentives and services

56 as established in this chapter.

57 Section 6. The secretary shall oversee the program to include the following services in

58 conjunction with the building of low or moderate income housing:

59 (i) municipal decision-making processes;

60 (ii) education services for tenants;

61 (iii) tenant organized projects;

62 (iv) community benefits, including for example: community centers, daycare, and

63 education programs;

64 (v) provisions for livable safe communities;

65 (vi) maintenance of quality and equitable affordable housing; and

66 (vii) ownership interests of tenants.

67 Section 7. A municipality participating in this chapter shall submit an application through

68 its housing authority to the department for acquisition of state property declared to be available

69 for municipal affordable housing incentives and services.

70 Upon such application, the municipality may apply for development and financial

71 assistance in the form of grants or loans. Such application shall receive priority for such grants or

72 loans over a non-participating city or town.

5 of 6 73 SECTION 3. Section 34 of chapter 121B of the General Laws is hereby amended by

74 adding the following paragraph:-

75 Notwithstanding any general or special law to the contrary, construction and development

76 activity related to redevelopment of federally or state-aided public housing projects where the

77 land, buildings or structures associated with the housing project have been conveyed or

78 transferred to a private entity for purposes of completing the redevelopment shall not be subject

79 to any general or special law related to the procurement and award of contracts for the planning,

80 design, construction management, construction, reconstruction, installation, demolition,

81 maintenance or repair of buildings by a public agency, provided that the department shall review

82 and approve the procurement processes used to undertake this redevelopment. Nothing in this

83 section shall be deemed to exempt a housing project from sections 26 to 27H, inclusive, of

84 chapter 149.

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