Affordable housing is protected, The Boston Globe North, December 29, 2011

By David Rattigan, Globe Correspondent  

Doris Nelson, 83, enjoys Pigeon Cove Ledges in Rockport, where she’s lived for nine years.

It’s a very nice, clean place,” she said. I’m very glad to not have to be packing up.”

When the 30-unit senior housing property on Curtis Street changed owners on Dec. 1, it was something more than a typical real estate transaction.

With the building’s affordable housing restriction set to expire, the purchase by a Beverly-based nonprofit developer and operator protected the homes of the 34 elderly residents on fixed incomes who live there.

For affordable housing advocates, the Rockport transaction represented a positive outcome from a new threat. Mortgages are expiring on a large number of privately owned, publicly financed affordable housing developments, giving owners the option to instead offer rental housing for market rates, or sell the property to another entity that would do the same.

According to a report last spring by the public-private Community Economic Development Assistance Corporation, the situation will be repeated for thousands of units of affordable housing in the state over the next decade.

Starting in the mid-1960s and continuing through the late 1970s, almost a million affordable rental housing units were produced nationwide through federally assisted mortgage programs that tied affordability restrictions to below-market-rate 40-year mortgages,” Bill Brauner, the corporation’s housing preservation program manager, wrote in the report.

Already in Massachusetts, over 3,800 affordable apartments have reached the end of their 40-year mortgages with no other affordability restrictions,” he wrote. Another 13,200 apartments in 110 projects will reach year 40 by the end of the decade.”

There are examples in area communities. For instance, at Salem Towers in Malden, a $17 million recapitalization deal between for-profit New England Communities Inc. and nonprofit Beth Israel Senior Citizen Housing will preserve 80 units, and rehabilitate the building to provide better accessibility for elders with disabilities. In Beverly, 100 units at Jaclen Towers are being preserved through purchase by the for-profit Beacon Communities LLC.

Meanwhile, the 56-unit Fort Heath apartment complex in Winthrop ended its 40-year mortgage in October, and the owner has said it will become a market-rate building. In that scenario, as units become available, they can be rented as either subsidized or market-rate housing.

In addition to protecting the residents at Pigeon Cove Ledges, the Rockport property’s purchase by Harborlight Community Partners Inc. also protected a large percentage of the town’s affordable housing stock; the 30 units represent 22 percent of all affordable housing in Rockport.

With just 3.7 percent of its housing deemed affordable,” Rockport is below the 10 percent threshold that protects a municipality from developers that seek zoning waivers under Chapter 40B, the state regulations governing affordable housing development.

By maintaining 10 percent, a town can more easily control its future and avoid unwanted development, but, as Rockport Housing Partnership board member Robert Visnick noted, there are other benefits.

We’re looking to have diversity of property in Rockport,” he said. We’d hate to see people who grew up here, or worked here, not be able to live here.”

To preserve affordable housing stock, communities have turned to a variety of solutions, armed with regulations from Chapter 40T, passed into law in 2009, that provide procedures for owners considering selling their property – including notices to the local community starting two years before putting it on the market – and penalties for those who don’t.

The passage of 40T was really a milestone goal” for preserving affordable housing in the state, said Deborah Goddard, chief counsel for the Department of Housing and Community Development. I think we have a unique tool to put the value behind preservation.”

Meanwhile, the Community Economic Development Assistance Corporation has created a database of information about the state’s 110 privately developed affordable-housing projects. The organization, which provides technical assistance, predevelopment lending, and consulting services, has facilitated communication and partnerships among those who have sought to preserve affordable housing.

Vigilance alone won’t get it done,” said Roger Herzog, the organization’s executive director. You need both vigilance and the ability to go and negotiate a new agreement with the owners.”

Tina Cassidy, Beverly’s director of planning, said the city has worked to bring and maintain affordable housing at 11.14 percent.

An early example of a community trying to protect affordable housing stock came from Salem when the owner of the 10-story, 227-apartment Salem Heights complex decided to prepay its mortgage, with the intention of turning it into market-rate housing. The city went to court against the owner, and helped negotiated a 2003 deal that led to the property’s sale to the Preservation of Affordable Housing Inc., a Boston-based nonprofit, with an agreement to maintain affordable housing at Salem Heights for 100 years.

I remember them being the first one around here,” said Cassidy, who since then has dealt with similar expiring-use issues at Apple Village and Fairweather Apartments, which between them have about 300 units. In the most recent case, Fairweather was also sold to Preservation of Affordable Housing.

While we’ve come close to the bullet two times, we have not been shot,” said Cassidy, noting that Beverly continues to monitor its affordable housing projects.

The Pigeon Cove deal took 2 1/2 years to complete, said Andrew DeFranza, executive director of Harborlight Community Partners, with the nonprofit receiving financial support from a variety of sources including Rockport’s Community Preservation Act program, the Rockport Housing Partnership, the North Shore HOME Consortium, and the federal Department of Agriculture. Including the purchase price, a planned rehabilitation, and other costs, the deal will cost $5 million, he said.

At one point, residents worried that Pigeon Cove might be redeveloped as market-rate condos, according to Louise Andersen, 91, who lives in a second-floor unit. When DeFranza told residents that the new owner would continue to operate as they had been, but rehab the building and install an elevator, Andersen was one of those residents who applauded.