SalemNews.com, Salem, MA

April 21, 2014

Few affordable units puts squeeze on renters

By Christian M. Wade
Statehouse reporter

---- — When Julie Hill was forced to move out of a relative’s house two years ago, she and her 2-year-old daughter suddenly faced the possibility of being homeless.

Hill, 29, started looking for an apartment to rent on the North Shore, where her fiancé works, but prices were more than she could afford. She tried to get into public housing in several cities, but waiting lists stretched for years.

“There was absolutely nothing,” she said. “There were nights when I found myself curled up in a ball on the floor crying because I didn’t know what we would do. I didn’t want to move into a homeless shelter with my child.”

Apartment hunters like Hill are frustrated by Massachusetts rents, the sixth-highest in the nation, and lack of low-income rentals. Making matters worse, fewer new affordable units are being built now that federal funds for affordable housing have been cut in half, according to nonprofit groups, and cash-strapped communities generally don’t have the money to pay for development.

As a result, rental prices north of Boston are far outpacing income growth, housing experts say.

“We simply don’t have enough money to deal with the needs of the region,” said Kevin Hurley, director of the Peabody-based North Shore HOME Consortium, the main conduit for federal housing funds in the region.

The consortium expects to get only $1.3 million this year from the U.S. Department of Housing and Urban Development to develop affordable housing in 30 towns and cities. That’s less than half of what it has received in previous years.

It will dole out the money to nonprofits, through a vetting process that got underway last week, yielding about 20 to 30 new affordable apartments in the next year.

Hurley said that’s only a drop in the bucket.

“We don’t want to bite the hand that feeds us, but we could use 10 times the amount of funding we get,” he said.

Hill and her fiancé, Shawn Sherillo, eventually found a place at Holcroft Park Homes, a $20 million affordable housing development in Beverly’s Gloucester Crossing neighborhood. The couple pays $995 a month for a two-bedroom apartment, with heat and hot water included.

They’re among the lucky ones.

The waiting list at Holcroft Park is currently two years. When the complex opened last April, with rents from $870 for one bedroom to $1,280 for three bedrooms, more than 300 applicants put their names into lotteries for 58 available units.

Andrew DeFranza, executive director of Beverly-based Harborlight Community Partners, has worked on numerous affordable housing projects across the North Shore and said there is a looming crisis, particularly for senior citizens on fixed incomes.

Two federal programs that historically provided low-interest loans to build housing for the elderly and disabled — HUD’s Section 202 Housing Program and the U.S. Department of Agriculture’s Rural Rental Housing Program — no longer exist, he said.

“We have this massive demographic shift, with all the baby boomers who are aging and living on fixed incomes, and the two major ways that we created affordable housing for those seniors are defunct,” DeFranza said. “That is extremely concerning.”

And the wait to get into a rent-subsidized apartment can take years. DeFranza said a senior housing complex his nonprofit took over in the former Rockport High School has only 31 units — and nearly 130 seniors on a waiting list.

“There are people on that list who will never have a chance to live there,” DeFranza said. “The bottom line is that there just isn’t enough public capital to build enough housing to accommodate the needs of the people.”

Recent studies suggest the gap between affordable housing supply and need is steadily widening.

For every 100 low-income renter households nationwide, there are only 29 affordable and available rentals, according to a report last year by the Joint Center for Housing Studies at Harvard University.

The report found median rents in the United States increased 6 percent during the previous two years, when adjusted for inflation, while renters’ incomes fell 13 percent.

The National Low Income Housing Coalition estimates that renters need to make $18.92 per hour, on average, to afford a two-bedroom apartment at fair market rent. In Massachusetts, tenants must earn at least $24.05 an hour.

Nonprofits short on funds have focused money where they can get the biggest impact, according to DeFranza and others. Projects are often financed through a patchwork of sources including federal tax credits, banks and private investors, and occasionally local governments.

The Gloucester Crossing project, built by the North Shore Community Development Coalition and North Shore YMCA, was funded by a dozen sources, including state and federal housing credits and historic preservation money.

“We usually have 10 different sources of revenue, but that’s the nature of the business,” said Mickey Northcutt, CEO of North Shore Community Development Coalition.

Getting a slice of HUD funding, nonprofits say, gives them leverage to additional financing.

“Even the small amount of funds we are able to contribute to a project can have significant impact,” Hurley said. “If we devote funds toward a project, it greatly enhances a developer’s ability to go to the state or private lenders and ask for larger sums of money.”

Hill, one of the first tenants to move into Holcroft Park, said she doesn’t want to stay more than a couple of years. She’s started baby-sitting part time, and she and her fiancé — who works as a customer service representative — are saving to buy a house.

“We don’t want to stay here forever. It wouldn’t be fair,” she said. “I want someone else like myself who needs affordable housing to stay here. What happened to us could happen to anyone.”

Christian M. Wade covers the Massachusetts State House for CNHI newspapers. He can be reached at cwade@cnhi.com.