AFFORDABLE HOUSING DEFINITION CONUNDRUM

Who ends up getting served?

The recently released 2011 Household Income Levels for Massachusetts, and the Boston area in particular, have raised significant questions about who is supposed to be helped versus who will actually be helped, based on the HUD figures and the State’s subsidizing agencies’ interpretation of these income categories. Those of us dealing with households at the ground level, ie., assisting in the application process, recognize the dilemma, as follows:

  • The Area Median Income for the Boston MSA increased from 2010 to 2011
  • The 50% AMI numbers as published by HUD also increased from 2010 to 2011 (because the overall AMI increased)
  • For properties where rents are calculated from the 50% AMI numbers, this means that rents also increased

Now, no MSA can have a higher 80% AMI income limit than the United States 100% AMI number unless the area is designated a “High Housing Cost Area”.  But, isn’t it perplexing that by HUD’s strange methodology, Boston is not considered a “High Housing Cost Area” – even though Boston has some of the highest housing costs in the country?  That means that Boston’s 80% AMI figure for a 4 person household cannot be higher than the United States 100% AMI figure for a 4 person household.  The 100% AMI number for the U.S. is $64,200, so that becomes Boston’s de facto 80% AMI income limit for a 4 person household.  The 80% income limits for households with 1-8 people are then calculated from this new income limit.  And because the Median Income in the United States went down from 2010 to 2011, that means that the 80% AMI income limits for Boston also went down from 2010 to 2011.

As to why the United States Median Income should determine what the 80% Income Limit is for a 1 (or 2-8) person household in Boston, I see no persuasive argument in support (probably because it has been 42 years since I worked for HUD).  I don’t believe the national numbers should be relevant to local Metropolitan Statistical Areas, but they are.

So that is how Boston’s actual AMI can increase and how their 80% AMI numbers can decrease.  It is (roughly) because the 80% numbers are tied to national numbers and everything else is tied to local numbers.

Another problem: the 80% AMI numbers published by HUD (which are capped as I described above) represent actually about 69% AMI  for Boston.  Therefore, a household which earns 70% of AMI in Boston is considered “over income” for a development where they have to make less than 80% of AMI (because the 80% AMI income limits are tied to national and not local numbers).

Another way of looking at is that the “true” 80% AMI numbers for Boston should be approximately:

1 person $54,040

2 person $61,760

3 person $69,480

4 person $77,200

But the numbers published by HUD (the “capped” 80% AMI numbers) are:

1 person $44,950

2 person $51,400

3 person $57,800

4 person $64,200

In conclusion, unless the State agencies change their position, households earning between 70-80% of the Boston AMI – IN REAL DOLLAR TERMS – cannot qualify for housing which is supposed to be targeted precisely for them!

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Inclusionary Housing Bylaws

While 80% of Massachusetts cities and towns voted last November to save 40B, it is clear from my experience that most suburban communities don’t like it and would rather have developers use their own inclusionary bylaws to create affordable housing. Having researched many of these bylaws, I have to conclude that the economic realities of developing mixed income housing has been ignored in drafting these bylaws. In order to stimulate or induce affordable housing development in lieu of any “as-of-right” development options, there needs to be an economic or financial incentive, yet most inclusionary bylaws totally fail in this regard. The Governor’s “Smart Growth Tool Kit” has developed a model inclusionary bylaw which allows 2 additional market rate units to be built for every affordable unit required. This makes sense to me as the economic loss of creating an additional affordable unit can only be offset by adding 2 more market units (in some communities with lower land values and lower market prices, a 1-for-1 ratio might work). I don’t know any suburban bylaws which allow this level of density bonus. Without viable incentives, it is not surprising that so few affordable units have been produced statewide using inclusionary bylaws in the past 10-15 years.

Why are these bylaws weak?? DENSITY rears its ugly head again; the suburbs want single family homes on decent sized lots; sure, you can cluster, they say,  but only by providing the same number of units as allowed by right. It doesn’t work…

We know, based on the MIT study of a few years ago, that the average vacant lot in the Boston suburbs is zoned for 1 acre at a minimum. With home ownership inevitably on the decline because of the tightening of mortgage requirements, we are not going to see single family homes on acre lots in high demand and whatever that demand may be, it will not address the housing needs of the majority of working households.

So, if we are going to be serious about addressing our housing needs, and  if 40B is not viewed as a “friendly” tool, then make the inclusionary bylaws work.  (And making them work for rental housing is another issue entirely)

SHOW ME AN INCLUSIONARY BYLAW WITH PROPER ECONOMIC INCENTIVES!

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