The city of Boston “requires” (it’s not a law) that private real estate developers set aside 13% of new residential developments as “affordable housing” units, available only to those who qualify based on a set of criteria, including income levels (say, limited to 80-100% of median household income). The idea is, this gives those of moderate means an ability to own a home in otherwise-out of reach neighborhoods.

The city administers the programs through the Boston Redevelopment Authority (BRA). Actual sales of the condos, however, are handled through local real estate agents. These transactions are almost always done without the assistance of a buyer’s agent, since no commission is offered by the listing agent.

Someone contacted me by email, yesterday, asking about affordable housing units in the new 691 Massachusetts Avenue project, located in the South End. I told her that I didn’t know anything about the affordable housing sales, so she should contact the BRA to find out more.

An employee at the BRA sent me this email, this morning:

John,

I received a call today from a person who contacted you in regards to the affordable units at 691 Massachusetts Avenue. She indicated that you directed her to call the BRA. The affordable units in this property are not owned or marketed by the BRA, in the future if you receive any inquiries regarding this or any other affordable unit please direct the prospective buyer to the agent handling the marketing and sale of the affordable units. In this case the affordable units for 691 Mass Ave are being handled by Stephen Thornton at Coldwell Banker.

Thank you.

To which I responded:

Since I didn’t know who was marketing it and the BRA appears to know this, I guess she made the right call?

amiright?

The Modern is a chic, stylish condo problem near the corners of Massachusetts and Columbus avenues, in the South End neighborhood of Boston.

Phase I was completed four years ago. Now, Phase II is under construction and the developer is now advertising several ‘affordable housing’ condo units.

Details are below. For more information, please contact the sales team, directly.

The Modern 2.0, 265 Northampton St., Boston

Seven affordable 1-bedroom units:

4 units at $172,800 for applicants earning less than 80% of median income
3 units at $222,100 for applicants earning less than 100%* of median income.

In order to qualify your household income must not exceed:

HH size – Up to 80% – Up to 100%*
One person – $51,400 – $64,250
Two people – $58,750 – $73,450

*Minimum income limits apply

APPLICATIONS ARE AVAILABLE: APRIL 13 ˆ MAY 6

Online, at www.baileyboyd.com/projects, by e-mail to lzola@baileyboyd.com, by phone at 508-430-4499×3; in person at Info Sessions (see below) and at New Boston Ventures, 540 Tremont St., Suite 8, Boston on the following dates:

Wed April 13, Thu April 14, Thu May 5 from 1 pm ˆ 6 pm;
Sat April 16, Wed April 27, Mon May 2 from 11 am ˆ 4 pm;
Tue April 19, Fri May 6 from 4 pm ˆ 8 pm.

INFO SESSION: FOR MORE INFO PLEASE JOIN US

265 Northampton St, Boston, either Thursday April 21, 2011 at 6 pm
- or- Saturday April 30, 11 am; or call for more info 508 430-4499 x3

APPLICATIONS DUE FRIDAY MAY 13, 5 PM

Applications may be mailed to Bailey Boyd Associates, PO Box 215, West Harwich, MA 02671 (must be postmarked on/before May 13). Application may be dropped off in person at New Boston Ventures, 540 Tremont St, Suite 8, Boston between 9 am and 5 pm weekdays.

Selection by lottery. Asset Limits, Use & Resale Restrictions apply.

Preference for households requiring an accessible unit for 3 units, for South End Urban Renewal Displacees for 4 units, for BRA Certified Artists, for Boston residents and for first-time homebuyers. For reasonable accommodations, call: 508 430-4499 x3

Image above an artist’s rendition of a unit in The Modern, Phase I

From the Boston Redevelopment Authority:

The Signal Building is an exciting new residential development with a mix of artist live/work units and regular loft-style residential units in South Boston, just next to the Fort Point neighborhood. The units are now being marketed for sale.

From the developer’s website:

The Signal Building is newly constructed community of 75 condominiums at 154 West Second Street in South Boston’s West End.

The building will enjoy low monthly condo fees, a roof deck with spectacular city views and kitchen & bathroom. Other amenities include two elevators, private courtyard, gym, bike storage and recycling center.

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For more information, contact:

Jonathan Diffenbach
Maloney Properties
130 Dartmouth Street
Boston , MA
phone: 781-943-0200 x212
Website: www.bryantlottery.com

Types:
1. Up to 80% of Median Income

Maximum Household Income:
$50,500.00 for one person
$57,750.00 for two people
One Bedroom: 1 Unit, #201
1-bed, 1-bath, 794+/- square feet
Price: $171,600

2. Up to 100% of Median Income

Maximum Household Income:
$63,150.00 for one person
$72,150.00 for two people
$81,200.00 for three people
$90,200.00 for four people
Two Bedrooms: 1 Unit, #202
2-bed, 2-bath, 1,250+/- square feet
Price: $244,100

Preferences are for Boston residents and first-time homebuyers.

In order to qualify, you must pick up an application at 130 Dartmouth Street and return by March 26, 2010.

Pick-up times:

March 12:           Time: 10am – 5pm
March 13:           Time: 12pm – 4pm
March 15:           Time: 10am- 5pm
March 16:           Time: 12pm- 7pm
March 17:           Time: 12pm- 7pm

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According to today’s New York Times:

The owners of Stuyvesant Town and Peter Cooper Village, the iconic middle-class housing complexes overlooking the East River in Manhattan, have decided to turn over the properties to creditors, officials said Monday morning.

The decision by Tishman Speyer Properties and BlackRock Realty comes four years after the $5.4 billion purchase of the complexes’ 110 buildings and 11,227 apartments in what was the most expensive real estate deal of its kind in American history.

There are a lot of lessons here, as well as a couple questions. The first lessons I can think of are:

* Never use debt to make purchases (or, at least, trust your revenue / expense estimates);
* Understand that when you buy something, it may be at the top of the market, not the bottom;

Questions:

* What is the future of similar apartment complexes? These were first built post-World War II by (or for) the government. In return for promising to keep rents low (or, below market-rate), the developers were either given money from the government and/or tax breaks. The apartment complexes were different from “housing projects” in that they were geared toward the middle class – at first, returning veterans.

Thing is, after a certain point (90 years for some), the rent restrictions expired, allowing the properties’ owners to increase rents.

So, the properties were very appealing to investors. Trouble is, obviously, the rising rents would mean many people (no longer veterans, but “regular” folk) wouldn’t qualify, or would have to pay more in rent.

What’s happened here is the worst for everyone. The families that lived there can’t afford higher rents. Meanhwile, the owner, even after investing millions of dollars in upgrades, has been unable to bring in enough in higher rents to cover its loan payments.

There are many similar apartment complexes across the US. What will happen to them?

I like the idea of allowing developers to buy these properties. Doing so keeps them in private hands (my preference) and allows the properties to be given the resources needed to upgrade the apartment units, something (I expect) wasn’t done in the past.

The property owners have fulfilled the terms of their contracts. They should be able to do whatever they want with the buildings. However, the government can get involved and persuade them to continue to offer lower rents in exchange for some other perks.

Meanwhile, the NYC property sits on the books of the complex’s creditors. Bad situation.

I came across this post about the Macallen Building, a new(ish) condo development in South Boston.

From the Xconomy blog:

A 140-unit luxury condominium complex, the Macallen Building has garnered warm reviews from architecture critics, including no less a figure than Pulitzer Prize-winning Boston Globe writer Robert Campbell. It’s also the first residential building in Boston to win a Gold-level LEED rating, something that can only be achieved through serious effort on the part of architects and developers.

… Is it really “sustainable” to use double-flush toilets if you have to bring them all the way from Australia, on container ships that burn huge amounts of diesel fuel? Are bamboo floors still green if you have to bring the wood from China? How much sense is there in using special glues that are free of volatile organic compounds if it means that those bamboo floors buckle and have to be ripped out (and new bamboo ordered from China)?

The author puts a lot on the shoulders of the developer, Pappas Properties. He finds fault with them for building a big building, for charging what the market will bear, and for building something he doesn’t find aesthetically pleasing.

The author’s jealousy comes through loud and clear.

Well, the 40 years are up and now many housing developments are aging out of the programs. As a result, the landlords have the legal right to raise rents on these units. Obviously, this will put many renters in dire straights. Faced with high-housing costs in many US cities, their options are few and none when it comes to moving into other, low-cost housing developments. (These are all privately owned, have nothing to do with the Section 8 or public housing projects.)

Federal and state governments have been getting involved to help stave off disaster.

In Massachusetts, Governor Deval Patrick has just signed legislation that will help thousands of renters.

From Banker & Tradesman:

Gov. Deval Patrick has signed a law to keep publicly-assisted rental properties affordable, and announced a $150 million loan fund to support and secure long-term affordable housing preservation efforts …

An estimated 90,000 units could be affected, with about 17,000 of those units at-risk of losing their affordability through expiring use over the next three years.

The landlords don’t miss out on anything. They can still, legally, cash out, but the government is hoping to ‘encourage’ them to take advantage of the new legislation, which gives Massachusetts, through the Department of Housing and Community Development, the right of first refusal on any property sale.

It’s not clear what would happen if and when the Commonwealth bought the properties. I think what’s being suggested is that Massachusetts wouldn’t buy it but would find new owners and help them with the purchase through financing new, low-interest loans.

Hurrah!

As reported by the San Francisco Chronicle:

The ruling in the case, Palmer/Sixth Street Properties vs. City of Los Angeles, appears to mean that builders in California would prevail in challenges to local rules mandating that a percentage of units in new apartment buildings be rented at rates affordable to residents earning below the area median income.

It is unclear whether the court ruling also might apply to new condominium projects.

In Boston, Mayor Thomas M Menino has implemented guidelines that require condominium and apartment developers to set-aside a certain percentage of units as “affordable”. I believe the number is now set at 13 percent of total units. Developers have the option to pay into the city’s affordable housing fund instead of setting aside the units and/or can include the units in a development “off-site” (meaning, elsewhere). At some point, there were discussions about increasing the percentage of affordable housing units and/or not allowing developers to have units pushed off-site, but I don’t know the status of those regulations.

Developers, as you can imagine, would probably prefer there not be any restrictions on what prices they can set for their condos or apartments.

As consumers, it matters to us, too. While the concept of “affordable housing” makes sense to just about everyone (and, is something I’ve personally pushed for, in my own neighborhood), just how to make it work is an open question. Does allowing some units to be rented or sold at below-market prices mean the other, market-rate units have to be priced higher, in order to off-set the potential loss in profit? Also, does it actually make any difference to have just a couple units priced below market, when everyone else has to suffer paying full price?

I’m not sure how “legal” the Mayor’s guidelines are, in Boston. Obviously, no developer would want to get on the bad side of City Hall (meaning, the Mayor), so, most likely, no one’s ever questioned it, either in conversation or in court.

Perhaps someone will, now.

UPDATE: On Nov 17, the BRA approved the plans for 691 Mass Ave according to the Boston Business Journal.

First up is public hearing on plans for the Charlesview housing development consisting of 240 affordable rental housing units and 23,000 square feet of commercial & community space located at 355 and 400 Western Avenue and 1256 and 1266 Soldiers Field Road in Brighton.

Next is a public hearing on plans for the construction of the Urbanica 691 Project consisting of forty residential condominium units, of which four will be affordable, located at 691 Massachusetts Avenue.

Photo courtesy http://www.flickr.com/photos/gwirth/ under CC BY-NC 2.0

From the wire:

MassHousing announced loan commitments today of up to $43 million for the renovation and preservation of affordability at the 500-unit Castle Square housing community in Boston’s South End.

Located at 484 Tremont St., Castle Square’s 500 apartments are located in 25 buildings on an 11.5-acre site. Of the 25 buildings, 19 are four-story brick townhouses and four are seven-story mid-rise buildings. Two single-story buildings house maintenance and laundry facilities as well as a community room and daycare centers. There are 145 one-bedroom apartments, 158 two-bedroom apartments, 132 three-bedroom apartments and 65 four-bedroom apartments.