Watertown Town Council COMMITTEE ON HUMAN SERVICES Meeting: November 7, 2018 Report: December 3, 2018 Read: January 8, 2019

Theme: Solutions and Examples to Create Affordable Housing Executive Summary

Committee Chair Anthony Palomba, Councilor at Large, called the meeting to order at 7:20 p.m. on Wednesday, November 7, 2018 in the Richard E. Mastrangelo Council Chamber. In attendance were Vice-Chair Councilor Caroline Bays; Secretary Councilor Susan Falkoff; Cliff Cook of the Watertown Housing Partnership; Kelly Donato, Assistant Housing Director of Somerville; Rachel Heller, Director of Citizens Housing and Planning Association (CHAPA); Brian Costello, Executive Director of Watertown Housing Authority; Michael Lara, Assistant Director of Watertown Housing Authority; Fred Reynolds, Chair of Watertown Housing Partnership, Helen Oliver, member of Watertown Housing Partnership; and Watertown residents. State Senator William Brownsberger along with Town Councilors Anthony Donato and Lisa Feltner later joined the meeting as well. Councilor Palomba introduced the first presenter, Cliff Cook, a resident of Watertown, a member of the Watertown Housing Partnership and Senior Planning Information Manager at the City of Cambridge. See Mr. Cliff’s PowerPoint presentation attached to the complete minutes. Major points of interest included: - Cambridge has made the development of affordable housing a major goal for many years. Presently, roughly 15% of the city’s housing stock of 54,700 units is affordable. - Cambridge has devoted significant Community Preservation funds to affordable housing. To date, $109 million of CPA funds have been dedicated. - Direct city support comes in several forms including operating funds (CPA, Dedicated Permit Fees, General Revenue, and Incentive Zoning Funds), capital funds, and city property. - Cambridge has a large housing staff within the planning department and they work with top-notch partners including the Cambridge Housing Authority and great affordable housing developers, nonprofit organizations and housing managers. - Cambridge’s Affordable Housing Trust in many ways functions as the city’s housing developer. It sets housing policy, distributes city housing funds, and supports non-profit housing developers. - Cambridge has an “Incentive Zoning” program that requires commercial developers to make housing contributions to offset the impact of increased housing costs attributable to new commercial development. - Cambridge’s inclusionary zoning is based on square footage, focuses on family size units (2 and 3 bedroom units), has a permanent deed restriction on the unit, and does not allow for in-lieu payments. Councilor Palomba introduced the second presenter, Ms. Kelly Donato, the Assistant Housing Director for the City of Somerville. He noted that Ms. Donato, a resident of Watertown, is a member of the Zoning Board of Appeals. See Ms. Donato’s presentation attached to the complete minutes. Major points of interest included: - Somerville is the most densely populated municipality in the Commonwealth. Similar to Watertown, the city is approximately 4 square miles, yet has a diverse population of 75,754. - Somerville has approximately 33,000 housing units, 66% of which are rental units. - The city has a demonstrated history of a commitment to creating affordable housing and stabilizing existing housing. - Some of the key programs announced in January 2018 by the Mayor of Somerville include the creation of an Office of Housing Stabilization, establishing a transfer tax on real estate taxes, revising the condominium conversion ordinance, creating a new emergency rent stabilization program, and utilizing district improvement financing. - Somerville’s Affordable Housing Trust plays a central role in the development of affordable housing and administers funds from inclusionary and linkage payments. Linkage payments have been an incredible powerful tool for financing. The Trust also administers the CPA housing funds, which has been a steady source of funding. Between 2014 and 2018, The Trust has received over $6 million. - Somerville’s “100 Homes” program has been particularly successful. Working with the Somerville Community Corporation and the Mass. Housing Finance Corporation, the program has created 50 units of affordable housing in that last two years. Councilor Palomba introduced the third presenter, State Senator Will Brownsberger. See the fact sheet on the Massachusetts Bond Bill attached to the complete minutes. Major points of interest included: - The Bond Bills allocates $1.8 billion over 5 years and is used for a variety of programs, including support for public housing ($600 million), for development and preservation of affordable housing ($400 million), and for the preservation of exiting expiring use affordable units. ($125 million). - The Bill provides critical support for maintenance of units at housing authorities, include the Watertown Housing Authority. - The Bill has also provided funding to protect units that can be converted from affordable to market rate by owners after a certain number of years. - Funds from the Bond Bill might be used as a component of a financing package for affordable housing creation in Watertown depending on the size and characteristics of the project. Councilor Palomba then introduced the final presenter of the evening, Rachel Heller, Director of Citizens Housing and Planning Association (CHAPA). See Ms. Heller’s presentation attached to the complete minutes. Major points of interest included: - CHAPA’s mission is to encourage the production and preservation of housing that is affordable to households with low or moderate incomes and to foster diverse and sustainable communities through planning and community development. - CHAPA works on state policy so, for example, the Housing Bond Bill was their top priority during the last legislative session, as was the Governor’s Housing Choice legislation. - CHAPA has expanded its services to provide the resources and technical assistance to help communities build coalitions to achieve community support for affordable housing projects. In addition, CHAPA works with many other state and non-profit organizations and is able to draw on their expertise and experience to provide a community additional services that they may not be able to provided. - CHAPA has worked with a diverse group of communities, including Acton, Newton, Arlington, and Essex. Communities can apply for help and, if selected, CHAPA will work with the city or town to determine what they wish to accomplish and therefore what services they need. Services can range from organizing community meetings and facilitating discussion with stakeholders to developing priorities and creating action plans.

Councilor Palomba thanked the presenters and noted that the Committee is hoping that at the December meeting there will be a discussion of what the Committee has learned and what policies and programs might be helpful to Watertown. Residents will be encouraged to present their ideas at the December meeting.

Councilor Falkoff made a motion to adjourn. Councilor Bays seconded the motion. All were in favor.

The meeting concluded at 9:32 pm. The minute were prepared by Satenik Karapetyan Watertown Town Council

COMMITTEE ON HUMAN SERVICES Meeting: November 7, 2018 Report: December 3, 2018

Theme: Solutions and Examples to Create Affordable Housing

Committee Chair Anthony Palomba, Councilor at Large, called the meeting to order at 7:20 p.m. on Wednesday, November 7, 2018 in the Richard E. Mastrangelo Council Chamber. In attendance were Vice-Chair Councilor Caroline Bays; Secretary Councilor Susan Falkoff; Cliff Cook of the Watertown Housing Partnership; Kelly Donato, Assistant Housing Director of Somerville; Rachel Heller, Director of Citizens Housing and Planning Association (CHAPA); Brian Costello, Executive Director of Watertown Housing Authority; Michael Lara, Assistant Director of Watertown Housing Authority; Fred Reynolds, Chair of Watertown Housing Partnership, Helen Oliver, member of Watertown Housing Partnership; and Watertown residents. State Senator William Brownsberger along with Town Councilors Anthony Donato and Lisa Feltner later joined the meeting as well. This was the sixth meeting the Human Service Committee to discuss the need for affordable housing in Watertown. Councilor Palomba introduced the first presenter of the evening, Cliff Cook of the Watertown Housing Partnership and Senior Planning Information Manager at the City of Cambridge. Mr. Cook began his presentation (see attached) with a brief review of the housing stock in Cambridge that includes over 54,700 units, including those currently under construction, 8,100 that are affordable units. The greatest source of growth for affordable units in Cambridge has been through the Inclusionary Housing Program. The ratio of affordable housing is at roughly about 15% but it has been slipping which has been a source of concern for the city. Area Median Income (AMI) has increased dramatically over the last few years and at the same time, the median condominium sale prices in Cambridge have more than doubled which has resulted in an overall lack of affordability in the market. Mr. Cook explained that while it is important to develop housing for those who cannot afford to live in your community, it is also important to develop housing for those who can. Cambridge’s success with affordable housing relates to the City Council’s goals adopted in 2016: 1) To increase access to affordable housing for all income groups. 2) To ensure that Cambridge offers economic and educational opportunity to all. Cambridge has consistently made housing a top priority. In Mr. Cook’s 23 years, working with the city, the need for and the production of affordable housing has been an ongoing conversation. The city has the luxury of working with a large staff within the planning department and they work with top-notch partners including the Cambridge Housing Authority and great affordable housing developers, nonprofit organizations and housing managers. Financial support for affordable housing comes from different sources. The bulk of the City’s CPA funding goes toward affordable housing. To date, $109 million of CPA funds have been dedicated to affordable housing. Additionally, 25% of the funds from permit fees for commercial construction are used for affordable housing. The city has also provided property for affordable housing development when there has been an opportunity to do so. The primary channel for funding is the city’s Affordable Housing Trust, which acts as the housing partnership for the city. The people on the Trust are involved in policy development and in approving housing programs. This allows for flexible terms and quick action that helps affordable housing developers compete in a challenging, competitive market. Mr. Cook also explains that Cambridge allows developers to make contributions to offset the impact of increased housing costs attributable to new commercial development. They determine this by way of the Nexus Study completed every few years. The City is always looking at opportunities to create affordable housing. In some respects, the housing division functions like a developer. Some of the ways the city can create affordability is through new construction, acquisition and rehabilitation of existing multi-family housing, conversion of non- residential buildings, condominium acquisition, and buy-down of homebuyer costs. Mr. Cook explains that inclusionary zoning is very different in Cambridge then in most communities. There is a permanent deed restriction on specific units in a building and there is no off-site or in lieu of payment options allowed. The City also has a homeownership programs called “Homebridge.” The city pre-qualifies buyers for what they can afford and buys down the cost of market rate units for income eligible residents. Councilor Bays asked Mr. Cook how housing units could lose their affordability. Mr. Cook explained that privately owned, federally subsidized housing is initially granted a 40-year mortgage and 20-year payoff allowance. These developments are sometimes referred to as “expiring use” developments, since at the 20-year mark a developer can opt-out of the program and rent units at market value. Councilor Bays asked Mr. Cook whether any of Watertown’s developments are at risk of expiring. Rachel Heller, Director of Citizens Housing and Planning Association, listed several that are expiring use but also explained that does not mean they will be lost as there is a big push at the state level to preserve the units. To note, Arsenal Apartments expires in 2033 and Beaver Brook in 2025. Brigham House Assisted Living and St. Joseph’s Hall are also at risk. Councilor Falkoff then asked Mr. Cook to explain inclusionary zoning in Cambridge. Mr. Cook explained that the city uses a system based on a square footage threshold. The system gives the city much more flexibility especially when it comes to the enormous need for family-sized (multi-bedroom) units. He went on to explain that the way inclusionary works in Watertown is that inclusionary units are initially scattered throughout a building but once someone moves out of a unit there is no guarantee that an eligible tenant will move into the same unit, rather the tenant could be placed in a different unit elsewhere in the building. Over time, the developer could maneuver their affordable units into a particular part of the building. There are positives and negatives for both policies. Councilor Palomba asked about the “dedicated permit fees”. Mr. Cook said it is a relatively new action on the part of the City and they are waiting to see how exactly it plays out. Councilor Palomba asked whether Cambridge allocates money from its operating funds to the Affordable Housing Trust. Mr. Cook explained that they have at times but it is based on the availability of funds.

Councilor Falkoff asked Mr. Cook how many staff members are dedicated to the housing issue in Cambridge. Mr. Cook replied it’s about 14 people.

At 8:00 PM as Mr. Cook concluded his presentation, Councilor Palomba introduced Senator William Brownsberger who joined the meeting.

He then introduced Kelly Donato, Assistant Housing Director from Somerville.

Ms. Donato began by stating that Somerville is the most densely populated municipality in the state. Somerville, like Watertown, is 4.1 square miles but has a much larger population of 75,754. They have approximately 33,000 housing units of which 66% are rental. Ms. Donato noted what she called a sad statistic - last year the Somerville Housing Authority issued 50 vouchers of which 21 were returned because they couldn’t find housing and only 6 were used in Somerville. She noted that housing vouchers often do not solve housing problems.

Ms. Donato then identified the 10 housing priorities that the Mayor of Somerville set forth in January of 2018:

1) To establish an office of housing stability; the hope is to focus on services to help with the housing search and for the housing division to focus on housing production. 2) A transfer charge on real estate taxes which would allow for funds to be dedicated to the creation of affordable housing and preservation. 3) Forming a land trust. 4) Revising the condominium conversion ordinance. Ms. Donato says between 2010 and 2017, 1,130 total rental units were converted to condo units which has been a catalyst for displacement. 5) Re-launching the lead paint program. The city received a grant from HUD which should help increase their supply of family-sized housing stock that’s in compliance with lead-based paint requirements. 6) A zoning overhaul is before the Board of Alderman Land Use Committee. Zoning in Somerville had not been updated since the 1990’s. 7) Creating a new emergency rent stabilization program, trying to identify gaps in programs that exist and which are very popular. 8) Somerville is looking into regulating commercialized home-sharing to protect rental properties and maintain neighborhood stability. 9) Somerville is looking into creating district improvement financing (DIF) for affordable housing which would designate real estate tax revenue from a particular project or development area for affordable housing. 10) Implementing a right-to-purchase program. Washington D.C. is an example of a community that has this program. It would give tenants the option to purchase their unit at fair market value or would allow a third party like a non-profit to purchase the unit.

Councilor Palomba asked Ms. Donato to explain how something like initiative #9 would apply to the Arsenal Yards. She explained that the town would designate that particular project and the tax revenue would be put into a special fund that can be used for affordable housing. The town can designate up to 100% of it over a specific period of time.

The next area Ms. Donato touched on was Somerville’s own Affordable Housing Trust Fund. She stressed that it’s been incredibly valuable. Since 1990, the Trust has administered two types of funds:

1) Trust funds; sources are fractional payments from inclusionary zoning and commercial linkage payments. Linkage payments are for commercial projects over 30,000 square feet at a rate of $10 per square foot. The city has also added a new jobs linkage at $2.40 per square foot for projects that are over 15,000 square feet. To date for linkage, they’ve received over $4.8M dollars and they have another $2M that will come in over the next few years and that doesn’t even include the vast majority of blocks at Assembly Square. Linkage, she says, is an incredibly powerful tool for financing.

2) The trust also administers CPA funds and it has been a steady 45% allocation. Between fiscal years 2014-2018 they’ve received over $6 million in CPA funds.

Ms. Donato also dove into the “100 Homes” program done in partnership with Somerville Community Corporation. It was designed to be able to create affordability through deed restrictions where none had previously existed. Somerville Community Corporation got a revolving line of credit from the Mass. Housing Investment Corporation and that line of credit is used for the initial acquisition. To date, they have secured 50 units of affordable housing over the last two years. Somerville has committed $9.8M in CPA funds to the “100 Homes” program. Presently the Trust and the Community Preservation Committee (CPC) are pursuing a $6M dollar bond for the program.

Councilor Falkoff asked Ms. Donato about the staff working on housing in Somerville. Ms. Donato said there are 13 on the team, but only one full time staff member. While Councilor Falkoff was surprised at the large staff, Ms. Donato said it's a lot of work and they still need additional help.

In conclusion, Ms. Donato ended by touching on challenges – high acquisition costs and high construction costs. For one project alone, Somerville invested over $2M for 11 units, 8 of which are going to be affordable but she noted that for the households that do get those units, every unit counts.

Next to present was Senator Will Brownsberger who explained the Massachusetts Housing Bond Bill. He noted that the Bond Bill is a major way the Commonwealth supports the production of affordable housing for low- and moderate-income residents (see attached). The current Bill authorizes $1.8 billion in capital spending for the state’s affordable housing programs, and expands and extends several tax credit programs. The most significant segment is the funding for public housing and support to ensure housing authorities like the one in Watertown are well maintained.

Brian Costello, Executive Director of Watertown Housing Authority noted that the Bond Bill provides the funds to protect the loss of units that are in jeopardy of becoming market rate units because of the expiring use clause in a developer’s contract. Without the Bond Bill supported by the Legislature, much of public housing would be lost. The immediate need in bond money right now statewide is $1.5 billion. In the most current Bond Bill, $600 million is earmarked to keep housing authorities across the Commonwealth afloat and sustainable.

Councilor Palomba posed the question: how does the bond bill prevent that from happening? Rachel Heller jumped in and noted that there is a program, the Community Improvement Preservation Fund, which is specifically for expiring use units. Ms. Heller explained that there is a State Preservation Advisory Committee that meets on a quarterly basis and reviews a listing of what is expiring. She also noted that some developers reach out to the state and indicate an interest in preserving their developments as affordable. She pointed out the state’s Chapter 40T program which has helped to preserve over 15,000 housing units since 2015. It is a landmark piece of legislation in the country.

Elodia Thomas, Watertown resident asked whether there is a way to buy units from property owners in increments as the expiration date gets closer. Senator Brownsberger said there are partial solutions but it’s a hard problem to solve considering it’s not a few units but whole buildings that expire.

Councilor Palomba noted that the Committee was recently discussing the possibility of the Town’s branch library as a potential site for an affordable housing development, and that the Metrowest Collaborative ran some very preliminary figures. He wondered whether the Bond Bill was a possible source of funding for this effort. Senator Brownsberger noted that for any given project financing is always a collection of pieces, which is assembled by people with expertise in the combination of federal tax credits, state tax credits, various programs, and private capital in different forms. It is a very complicated process, but that is what developers are paid to do.

Councilor Palomba then introduced the final presenter of the evening, Rachel Heller, Director of Citizens Housing and Planning Association (CHAPA). The group’s mission is to encourage the production and preservation of housing that is affordable to households with low or moderate incomes and to foster diverse and sustainable communities through planning and community development. They work to expand access to housing by administering the Mass Access Database, the most comprehensive listing of affordable developments across the state. They also work on developing the affordable housing field.

Ms. Heller explained that CHAPA works on state policy so the Housing Bond Bill was their top priority during the last legislative session. Can it work in Watertown? She said it could but that depends on the project and it's a developer-driven tool.

CHAPA has also worked on providing tools for communities through zoning reform. She said zoning is very restrictive throughout the state which is one of the reasons why the cost of homes is so high. One of the bills they worked on was the Governor's Housing Choice Legislation which would have changed the state law to reduce the required vote from 2/3 supermajority to a simple majority for certain smart growth zoning changes. None of the zoning reforms they supported went across the finish line during the last legislative session. They are now determining what legislation they will support in the next session.

Ms. Heller said Massachusetts is very fortunate to have so many wonderful programs to tackle the housing issue but mortgages and rents are rising at a pace that makes it impossible for these programs to address the need. She noted that no matter how much state funding is available for affordable housing production and preservation most decisions are made at the local level. She said community support can make or break a housing development at the local level.

CHAPA works with cities and towns to help build community support through creating coalitions and involving all relevant stakeholders. They understand there is not one approach that fits all cities and towns because every community is different in what they need and what CHAPA can provide. In addition, since CHAPA works closing with many state agencies and statewide and regional organizations that provide technical assistance to municipalities they are able to access additional services for a community.

Acton was the first community CHAPA work with to implement its new initiative. They helped form a coalition, set up regular meetings, developed a town meeting warrant guide and hosted forums on the strategies under consideration. The next steps involve forming a working group building on existing town efforts and developing an action plan. CHAPA has expanded its community-based work in Newton, Amherst, Arlington and Essex.

Ms. Thomas posed the question of how a community can get involved with CHAPA. Ms. Heller said that CHAPA holds an open round for communities to apply for help on the ground. Some are chosen to get help on the ground while others receive specific resources. CHAPA determines what a community receives based on what they are trying to accomplish. They also host educational events and forums. Councilor Bays asked as a follow-up what CHAPA’s involvement in a community looks like. Ms. Heller said it depends on the individual community. They come in and get a sense of what the community is hoping to see and then they start to help organize meetings, facilitate conversations, spending time in community meetings, listing concerns and priorities and then developing a plan around that. The premise of this initiative is to build up the community voice and to help build bridges.

Councilor Palomba thanked the presenters and noted that the committee is hoping that in the final December meeting there will be a discussion of all they have heard and how to focus on resources and ideas for Watertown. Residents will also be encouraged to present. Councilor Palomba said he looks forward to coming up with something that the committee can take to the full council.

Councilor Falkoff made a motion to adjourn. Councilor Bays seconded the motion. All were in favor.

The meeting concluded at 9:32 pm. The minute were prepared by Satenick Karapetyan.

Watertown Town Council Committee on Human Services Affordable Housing Discussion

November 7, 2018 Cambridge Housing Stock 2000 2010 2018 Population 101,355 105,162 113,630 Housing Units 42,073 47,291 54,713 Affordable Housing Units 6,500 7,240 8,117 Ratio of Affordable Housing 15.4% 15.3% 14.8% Area Median Income (100%) $65,500 $91,800 $107,800 Median Condo Sale Price $302,500 $424,000 $898,000 Median Asking Rent: 1-bedroom $1,383 $1,795 $2,500 2-bedroom $1,817 $2,300 $2,900 3-bedroom $2,000 $2,650 $3,300 Affordable Rent/HH @ 80% AMI $1,310 $1,836 $2,156 Affordable Rent/ 72% 80% 74% Median Asking 2-BR Rent Renters - Cost Burdened 40% 45% 42% Renters - Severely Cost Burdened 19% 24% 22%

November 7, 2018 Watertown Affordable Housing Presentation 2 City Commitment to Affordable Housing

Adopted Provisionally, October 2016 • Goal 1: Increase access to affordable housing for all income groups.

• Goal 2: Ensure that Cambridge offers economic and educational opportunity to all.

November 7, 2018 Watertown Affordable Housing Presentation 3 Housing Partners

• Much of the resources the city puts into affordable housing development and preservation is channeled through a strong network of community partners • Cambridge Housing Authority • Affordable housing developers and owners - HRI/Homeowners Rehab, Just-A-Start • Developers who also provide services – CASCAP, Transition House • Housing managers who focus on services – Heading Home

November 7, 2018 Watertown Affordable Housing Presentation 4 Who Is Served?

AREA MEDIAN INCOME % 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75* 80 85 90 95 100 105 110 115 120

Funding Assistance for Tenants

CHA Housing Choice Vouchers often used in hard stock affordable rental housing

Affordable Units - Hard Stock

LIHTC-assisted - non-profit, private, CHA**

CHA Public Housing Non-profit & privately owned housing (non- LIHTC)** Inclusionary Rental Housing** Housing with additional affordability through other zoning/permitting conditions** City-funded Affordable Homeownership**

<- recommended Inclusionary Homeownership** expansion -> <-- 2016 pilot to Financial Assistance for Homebuyers** expand --> Housing with additional affordability through other zoning/permitting conditions** Financing for Homeowners & Small Property Owners Home Improvement Programs**

November 7, 2018 Watertown Affordable Housing Presentation 5 Affordable Housing Strategies

• City Funding & Land • Affordable Housing Trust • Incentive Zoning • Affordable Housing Development • Affordable Housing Preservation • Inclusionary Housing • Coordinating Access to Inclusionary Housing • Homeownership Programs • Home Improvement & Repair Programs

November 7, 2018 Watertown Affordable Housing Presentation 6 Direct City Support

City support comes in several forms: • Operating Funds • CPA • Dedicated permit fees • General Revenue • Incentive zoning funds • Capital Funds • City Property

November 7, 2018 Watertown Affordable Housing Presentation 7 Affordable Housing Trust

• Established in 1988, chaired by City Manager • Comprised of housing finance, policy, development and planning experts • Set many City housing policy standards and offer policy advice to staff • Administer most City funds for housing • Flexible terms and quick action helps affordable housing developers compete in challenging, competitive market • Support for non-profit affordable housing developers

November 7, 2018 Watertown Affordable Housing Presentation 8 Incentive Zoning

. Developers make Housing Contributions to offset the impact of increased housing costs attributable to new commercial development . Applies to non-residential developments of 30,000 SF or greater . Rate currently $15/SF payable prior to release of C. of O. . Funds administered by Housing Trust . More than $5.4 million since inception

November 7, 2018 Watertown Affordable Housing Presentation 9 Affordable Housing Development • Funding of housing acquisition and development • Working with capable non-profit, public, and private for-profit partners • Creating affordability by: • New construction • Acquisition and rehab of existing multi-family housing • Conversion of non-residential buildings • Condominium acquisition • Buy-down of homebuyer costs

November 7, 2018 Watertown Affordable Housing Presentation 10 Affordable Housing Preservation

• Assessing Affordable Units at Risk • Expiring Affordability Restrictions • Units with physical or financial needs • CHA state-assisted public housing • Other existing affordable housing • Coordinate preservation/reinvestment/rehab • City funds often need to lead the way • Intensive work with stakeholders needed for success

November 7, 2018 Watertown Affordable Housing Presentation 11 Inclusionary Zoning

• Applies to developments of 10+ units and/or 10,000 SF or greater • 20% of floor area after density bonus set aside • Up to 30% density bonus, subject to zoning • Unit mix subject to negotiation with developer • Focus on obtaining family size units – 2BR or 3BR • Permanent deed restrictions on specific units • No off-site or in-lieu payment options • Fractional unit payment required • Over 1,000 units completed or underway

November 7, 2018 Watertown Affordable Housing Presentation 12 Lease Up of Inclusionary Rental Units

• City manages lease up of all inclusionary units • Single comprehensive application process • Screens and ranks applicants • 180 households housed 2017 and 2018 • For Rental Property Owners and Managers • No need to maintain separate applicant list • Assist lease-ups and annual recertifications • Assist Housing Choice Voucher lease-ups • Assistance with tenant issues & access to housing mediators

November 7, 2018 Watertown Affordable Housing Presentation 13 Homeownership Programs • First Time Homebuyer Classes • Programs: • Homebridge : Buys down cost of market rate units for income eligible buyers and cost eligible units • Inclusionary Housing: Substantial source of homeownership units in past • Downpayment Assistance: HOME money • Resale Pool: City administers single resale pool for units with city restrictions; buyer eligibility determined on unit by unit basis

November 7, 2018 Watertown Affordable Housing Presentation 14 Home Improvement & Repair

• Low or no-cost financing for home repairs for low, moderate and middle-income residents • Loan repayments into revolving fund • Offered through local non-profit partners who vet applicants, project manage improvements, receive payments • Rehab work priority for code violations, energy efficiency improvements, accessibility needs • Housing stabilization for homeowners • More than 400 units assisted in last 10 years

November 7, 2018 Watertown Affordable Housing Presentation 15 Envision Cambridge Comprehensive Plan • Lays out goals • Sets numerical targets • Testing zoning solutions • Offers wide range of actions to address different aspects of the issue

November 7, 2018 Watertown Affordable Housing Presentation 16 Other Policy Initiatives

• Always seeking opportunities to improve position when competing for funds and build argument for coordinated housing efforts across region • Designated as a Housing Choice Community • Metro Mayors Housing Taskforce • Active participant in this and other regional conversations • To be part of the solution need to be at the table where ideas are discussed and decisions made

November 7, 2018 Watertown Affordable Housing Presentation 17 What Somerville is Doing for Affordable Housing, November 2018

Some brief context to the housing crisis:

State housing production is about ½ of what is was in the 1960s, 70s and 80s. MA permits 36% less new housing per capita than the national average, making MA 38 out of 50 states. [Skipped for time]

Some brief information on Somerville:

Per the 2010 census, the population was 75,754. It is the most densely populated municipality in New England, and the 16th most densely populated incorporated municipality in the country. Somerville is 4.1 sq. miles (land area) and has approximately 33,000 housing units. Somerville adopted the Community Preservation Act in 2012. 66% of the units are rental. Sad statistic in light of long affordable housing waitlists for a section 8 voucher: the Somerville Housing Authority issued 50 vouchers last year, 21 were returned (could not find housing in time) and only 6 of the 50 were used in Somerville.

In Mayor Curtatone’s 2018 Inaugural address, he set forth a 10 point housing agenda which we have been focusing on:

1. Establish an Office of Housing Stability – support services to residents to help maintain residency and combat displacement. Case management, help with a housing search (funding for this type of work has really dried up), referrals to community partners for legal services, application assistance. Also a focus on housing policy. A business plan is being submitted to the Board of Alderman for approval and then hopefully we can build out the office. Trying to use Housing Division to focus on production and Housing Stability to assist with services. Boston also created a similar office like this.

2. Transfer Charge on Real Estate Sales –dedicate funding for the creation and retention of affordable housing. A Home Rule Petition passed unanimously in May 2018 and was filed with the state legislature. The legislative session ended with this in committee and we’ll need to refile again. Up to 2% of the purchase; a fee of 1% of the purchase price paid by the seller and a fee of 1% of the purchase price paid by the buyer where non‐exempt (see the final Home Rule Petition for more details).

3. Form a Community Housing Land Trust – A Working Group was established in 2018 and this work is ongoing. Most recently working group members met with members from a VT Land Trust.

4. Revise the Condo Conversion Ordinance – to strengthen protections for occupants of rental units that are being converted to condos. Before the BOA Legislative Matters Committee now. Some of the proposed areas to revise include notification requirements, strengthening right to purchase, relocation assistance and around vacating units prior to sale to a 3rd party (look back period). Approximately 5,359 condo units now, which is approximately 16% of total housing units. FY18 122 rental units removed from the market to be condos and in FY16, 199 units were removed from the rental market to be condos. Between 2010 to 2017, a total of 1,130 rental units were converted to condos.

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5. Relaunch Lead Paint Removal Program – increase the supply of family sized housing stock in compliance with lead based paint requirements $2 million HUD grant for units occupied by low‐mod households. Also considering exploring extending the income eligibility for the program through another source of funds.

Other City Programs include closing cost (up to 110% AMI) and down payment assistance (up to 80% AMI); Housing Rehabilitation Program and Energy Efficiency.

City serves as lead agency for the Continuum of Care (includes Arlington as well). 2018 applied for $2,106,666 in funding for programs including a new DV rapid re‐housing program, permanent supportive housing, transitional housing, HMIS, coordinated entry and a planning grant. All funding goes directly to provider agencies, City manages the planning grant. [Skipped for time].

6. Zoning Overhaul – last update was in the 1990s. Overhaul before the BOA Land Use Committee now.

What’s wrong with the existing code? [Skipped for time]

1. Code structure is unworkable:

 Language is unreadable and subject to wide interpretation  Attempts to describe physical form through words  Answers to basic questions are scattered across sections  Additional districts are cobbled onto code structure

2. Our Residents districts don’t provide a predictable outcome:

 Nonconformity is used as a proxy for design review  Large by‐right lots have no design review  Wide ranges of possible outcomes by special permit  Larger mixed‐income projects require much negotiation

3. Transit station zoning is misapplied on the map:

 Innerbelt and Brickbottom are in old industrial zones  Gilman, Magoun and Ball Square have limited options  Porter and Davis have select areas that are underzoned  New Union Square and Broadway zoning need clarity

Unlock potential in Brickbottom,Boynton Yards, parts of Union and Innerbelt.

7. Create a new emergency rent stabilization program – currently meeting with community partners and other City divisions to identify gaps in current programs. Already existing programs financed through the City:

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 Tenancy Stabilization Program – up to $3000 in one‐time assistance for households at or below 80% AMI for first/last month’s rent and security deposits. Trust funds puts out an RFP for a community partner to administer the program. Currently run by Just a Start.  PASS Program – use HOME and CPA funds to assist households with up to 2 years of housing assistance.

8. Regulate Commercialized Home Sharing – to protect the supply of rental properties for full time tenancies and maintain neighborhood stability. Community discussions/input have been ongoing and the next step will be to present an ordinance to the BOA.

9. Create District Improvement Financing (DIF) for Affordable Housing ‐ designate anticipated real estate tax revenue from a specific project or development area to be used as a funding source to develop housing. Conversations with bond counsel. Had been eyeing the SHA’s Clarendon housing for redevelopment of 216 public housing units, and adding new market rate and middle income housing to the site as well. Using DIF, can pledge all or a portion of tax increments to fund district improvements.

10. Implement Right to Purchase Program – give tenants the option to purchase their unit at fair market value to prevent displacement. BOA has been discussing this, would need a Home Rule Petition. DC has a type of program like this.

Other:

1. Inclusionary Zoning Revisions in May 2016:

 Added a 3rd tier of income eligibility for program – for rental 110%, homeownership 140% AMI.  Used to be 8 or more units, 12.5%, and now it is 6 and 7 units, fractional payment; 8‐17 units 17.5%, 18 units or more 20%.  To date, total of 240 units brought online (have both their CO and occupied – 162 rental and 78 homeownership; doesn’t include permitted and also does not include all affordable purpose built housing). Currently in the process of income certifying households for 56 affordable rental units at Assembly Sq. so while permitted, not all of these units reflected currently in the total now as not yet occupied (already have 56 affordable rental units existing at Assembly and occupied with Avalon Bay; the additional 56 affordable rental units developed by Federal Realty; another 15 homeownership units at Assembly currently being marketed with a Dec. 10th application deadline).  Inclusionary units not counted on Subsidized Housing Inventory. Preference for households who currently live or work full time in Somerville.  New Housing Needs Assessment in 2018 – In the Revision, we required that we had to undertake an economic and housing market needs assessment and financial feasibility analysis prior to June 30, 2018, and then not less than every fifth calendar year thereafter. Last Needs

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Assessment was done in 2015 and usually it is every 5 years. We put out an RFP for this study and are reviewing proposals.

2. Affordable Housing Trust Fund – since 1990. It plays a valuable and important role. Administers both Trust funds and acts as the designed housing arm for the Community Preservation Committee’s housing allocation of CPA funds. Funds housing projects and programs.

Trust Funds – funding through Inclusionary Fractional Payments and Commercial linkage. Linkage for applicable projects over 30,000 sq ft. Rate has moved from $3.19, to $5.15 and as of December 2017, now it is $10. City undertakes nexus study to determine the rate. In 2017 also added Jobs Linkage at $2.46 to be paid to the Somerville Jobs Creation and Retention Trust over and above 15,000 sq ft.

Linkage

 Linkage received to date: $4,870,392.55  To be received under existing agreements: $2,050,748.52  This only reflects 2 blocks at Assembly, rest of blocks moving to written agreement now  powerful tool for financing

CPA

 Adopted in 2012  45% allocation of annual CPA funding since inception. From FY14‐FY18, received $6,121,521.

3. 100 Homes – Partnership between the City and Somerville Community Corp, the City’s Community Housing Development Organization. Designed to be nimble and reach into the real estate market and remove properties from the speculative market and create affordability where none previously existed through restrictions. SCC has a revolving line of credit with Mass Housing Investment Corp ($3.5 million) for the initial acquisition, and then CPA funding flows into the property at permanent financing (with loan from local lenders). 50 units to date secured with a range of affordability from 50% AMI to 100% AMI (maximum under CPA). Largest property purchased was a 16 unit bldg. City to date committed $9,881,608 in CPA to 100 Homes. More than Trust received in CPA funding to date, and the Trust and CPC are pursuing a $6 million bond for 100 Homes.

4. Gov. Baker’s Housing Choice Initiative – reward for municipalities that follow housing best practice and produced certain rates of new housing in last 5 years. With the designation, municipalities get access to apply for funding. 69 communities received the designation in the Program’s first year, including Watertown and Somerville. Somerville was recently awarded $200,000 for preliminary design studies and construction documents for the Gilman Sq. Streetscape and intersection reconstruction, which will help to connect the new green line station with the square with new proposed open space and housing.

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5. Metro Mayors Coalition – 15 communities in partnership with Metropolitan Area Planning Council. Just last month, announced new regional housing production goal of 185,000 units by 2030 to meet growing demand and need with the growing population and economy. Since 2010, the 15 communities added nearly 110,000 residents and 148,000 jobs while only permitting 32,500 new housing units.

185,000= 115,000 new working households + 50,000 new non‐working households + 20,000 new units to achieve a healthy vacancy rate

15 communities = Arlington, Boston, Braintree, Brookline, Cambridge, Chelsea, Everett, Malden, Medford, Melrose, Newton, Quincy, Revere, Somerville and Winthrop.

6. HUD has issued NOFAs for mainstream vouchers. SHA applied and received funding for 28 new vouchers, with for households coming out of institutionalization or homeless. Collaboration between Somerville Housing Authority, City, Vinfen, AIDS Action, Somerville Continuum of Care (City serves as lead agency) and Cambridge Health Alliance.

Challenge:

High acquisition costs and construction costs. Difficult to cobble together finances for an affordable project.

Somerville project examples : a) WaterWorks: City invested a total of 1.75 million dollars ($1,750,000) through combination of sources for 25 1 bedroom rental units at a historic waterpump house site along Alewife Brook Parkway for young and disabled and those 62 and up (5 30% AMI; 20 50% AMI):

 $507,000 in CPA Housing Funds administered by SAHTF  $500,000 in HUD HOME  $300,000 in HUD CDBG  243,000 Historic CPA administered by the Community Preservation Committee  $200,000 in non‐CPA Somerville Affordable Housing Trust Funds (SAHTF) $1,750,000

Note: project did include Low Income Housing Tax Credits and Historic Tax Credits allocated by the state. b) 163 Glen – The project will incorporate 8 affordable condominiums, and 3 at market rate for a total of 11 condo units. 4 at 80% AMI, 2 at 100% AMI, and 2 at 110% AMI. Total City funds invested $2,893,722:

913,762 – CPA

740,000 – HUD HOME

239,960 – Trust

1,000,000 – HUD Challenge Grant

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H.4536, An Act Financing the Production and Preservation of Housing for Low and Moderate Income Residents

This bill authorizes $1.8 billion in capital spending for the state’s affordable housing programs, and expands and extends several tax credit programs.

*Chart courtesy of the Office of Senator Joseph A. Boncore

Program Description Authorization For development of facilities for early care and Early Education and Out education and out of school programs. To be eligible of School Time Capital 25% of families served must be eligible for public Fund subsidy. $45,000,000 This home modification program provides funds for homeowners or tenants with a household member Home Modification Loan with blindness or a severe disability to improve Program accessibility in their home. $60,000,000 For development of community based housing or supportive housing serving individuals DDS or DMH Facilities Consolidation clients with mental illness and individuals with Fund intellectual disabilities. $65,000,000 For development and redevelopment of community based housing and supportive housing for individuals with disabilities who are institutionalized or at risk of Community Based being institutionalized, and are not DDS or DMH Housing clients. $55,000,000 For development and preservation of affordable and mixed income housing. Projects must benefit families Affordable Housing Trust and individuals with incomes not more than 110% of Fund area median income. $400,000,000 For acquisition, rehabilitation, construction and preservation of affordable housing. 25% of funds must be used for projects that benefit families and Housing Stabilization individuals with incomes not more than 30% of area Fund median income. $150,000,000 For modernization of public housing including capital improvements, renovation, remodeling, reconstruction, redevelopment, adaptations for ADA compliance, day care facilities, learning centers and teen service centers, and the adaption of units for persons with disabilities. $50,000,000 to be used to rehabilitate 1 to 4 unit housing in gateway cities that have been cited for building or sanitary code Public Housing - General violations $600,000,000 Public Housing A pilot program for cost effective revitalization of Demonstration Program state family and elderly and disabled public housing. $50,000,000 For development of alternative forms of rental and ownership housing, including supportive housing. 25% of funds must be used for projects that benefit families and individuals with incomes not more than Housing Innovations 30% of area median income; $10,000,000 to be used Trust for people in recovery. $100,000,000 For preservation and improvement of existing and Capital Improvement and expiring use affordable housing units that are Preservation Fund privately owned, state assisted, or federally assisted. $125,000,000 For development of residential housing units and mixed use developments located in neighborhood or commercial areas. 50% of the housing built in these Commercial Area Transit projects must benefit persons with incomes not more Node Housing Program than 80% of area median income. $50,000,000

In addition to the capital funds above, this bill: - Extends the $20 million per year Low-Income Housing Tax Credit for construction and rehabilitation of low-income housing through 2025 and authorizes an additional $5 million per year in tax credits to support preservation of existing affordable housing. - Extends the $10 million per year Housing Development Incentive Program for development of market-rate housing projects in Gateway Cities through 2024. - Authorizes the use of home modification funding for the construction of accessory dwelling units for seniors and individuals with disabilities. Further, up to 10% of these funds may be used to support modification of units for tenants with disabilities. - Extends Brownfields Tax Credits for cleaning up contaminated property through 2024. - Extends the Community Investment Tax Credit Program for community partners and Community Development Corporations to improve economic opportunities for low and moderate income households through 2025 and increases the annual allocation of credits available. - Expands Historic Rehabilitation Tax Credit for rehabilitation of a historic structure by $5 million to $55 million per year.