Community Housing
• Acquisition and Creation - Funding for the municipality to acquire condominium units to be rented or later sold to income-eligible persons is 58 allowable, provided the units are made subject to an affordable housing restriction to be held by the municipality. G.L. c. 44B, § 12. The proceeds of any rental or sale would be credited to the CP Fund. G.L. c. 44B, § 7(iv).
• Acquisition and Creation - Funding for the municipality to acquire affordable housing restrictions on properties where restrictions have expired or are about to expire is allowable. G.L. c. 44B, § 12.
• Creation - Funding for the construction of affordable housing units that will be subject to an affordable housing restriction held by the municipality pursuant to G.L. c. 44B, § 12 in a mixed-use development is allowable, provided the community preservation funds are used only for the affordable units and for the proportionate share of costs incidental to creating the affordable housing on the site, i.e., site surveys, environmental assessments, architectural and engineering fees, permit processing fees, legal and accounting fees, and similar expenses that are typically included in an appropriation for a municipal construction project.
• Acquisition and Creation - Funding for a Habitat for Humanity affordable housing project creating housing units that will be subject to an affordable housing restriction running to the municipality is allowable.
• Acquisition and Creation - Funding for a program to assist income-eligible persons make a down payment on a home in return for the municipality’s acquisition of an affordable housing restriction on the unit is allowable.
• Rehabilitation - Funding for “rehabilitation” as defined in G.L. c. 44B, § 2 - capital improvements or extraordinary repairs to community housing, including replacement of kitchen cabinets, flooring, windows, doors and roof, a fire alarm upgrade and improvements to comply with the Americans with Disabilities Act - is allowable provided the property to be rehabilitated was acquired or created with community preservation funds and provided the work is not within the CPA definition of “maintenance.” If the property was not acquired or created with community preservation funds, CPA funding for “rehabilitation” is not allowable. G.L. c. 44B, §§ 2, 5(b)(2). If allowable, but the property is not municipally-owned, then municipal council should be consulted to ensure that the Anti-aid Amendment is not violated, whether an affordable housing restriction should be required and to determine grant agreement terms. (See IGR Section V-C-5 above, for information regarding the Anti-aid Amendment and IGR Section V-B-2-e above, for information on grant agreements.)
• Support - By definition, expenditures in “support of community housing” must be “for the purpose of making housing affordable”. G.L. c. 44B, § 2. As a result, the housing asset itself must be made affordable by the expenditure.
• Support – CP funding is allowable for the following rental assistance program. A municipality enters into an agreement with a nonprofit or local housing authority (LHA) to manage a rental assistance program where the nonprofit/LHA finds landlords with suitable units to participate in the program and income-eligible tenants seeking affordable housing. The program documents include two co-terminus contracts: (1) a housing assistance payment contract (contract) between the landlord and the nonprofit/LHA and (2) a lease between the landlord and the income eligible individual (tenant). The lease requires that the tenant pay the landlord an “affordable” or “reduced” rent for the lease term. The contract requires the nonprofit/LHA to pay the landlord a rental assistance payment while the tenant occupies the unit. When added together, the total amount of the lease payment and rental assistance payment to the landlord will be equal to a fair market rent for the unit. The allowable costs of the program include the management fee to the nonprofit or LHA and the housing assistance payments to the landlords that participate in the program. In this example, the housing unit is made affordable by the expenditure during the term of the contract with the landlord and the lease for the unit. In addition, funding would also be allowable for a last month’s rent and/or security deposit paid to a landlord pursuant to a contract and lease under the above program, both of which are returnable to the CP Fund at the end of the lease/contract term. The payments by the municipality to the nonprofit or LHA to manage the rental assistance program would not be a violation of the Anti-aid Amendment because the payments are in exchange for management services provided by the nonprofit or LHA under the agreement. See Commonwealth v. School Committee of Springfield, 382 Mass. 665 (1981). (Municipalities should seek advice from their local counsel regarding the documentation needed to implement such a program.)
• Funding for an affordable housing needs assessment is not allowable as a CP project expenditure because it does not acquire, create, preserve, rehabilitate, restore or support any particular housing asset. However, the needs assessment is fundable under the CPC’s administrative and operating budget if it will assist the CPC in performing its statutory duties. (See IGR Section V-B-1 above, for more information on annual operating expenditures of the CPC.)
• Funding to a nonprofit to provide housing counseling and foreclosure prevention services to income-eligible individuals would not be an allowable expense as “support” of community housing because a housing asset is not made affordable by the expenditure. Nor would the expenditure be allowable as “acquisition,” “creation” or “rehabilitation” of community housing. It also would not be allowable as “preservation” of community housing because “preservation” is narrowly defined as “protection of personal or real property from injury, harm or destruction.” G.L. c. 44B, § 2.
• An appropriation to a municipal affordable housing trust fund created by a municipality pursuant to G.L. c. 44, § 55C is allowable. Such appropriations, however, are expendable by the affordable housing trust fund only for allowable community housing project purposes under G.L. c. 44B, § 5(b)(2) – acquisition, creation, preservation and support of community housing and rehabilitation or restoration of community housing acquired or created with community preservation funds. G.L. c. 44, § 55C(a),(c)(1). If a community desires to appropriate funds to its municipal affordable housing trust fund for a specific project, for example, the rental assistance program described above, the CPC’s recommendation and the legislative body’s appropriation vote should restrict the use of the funds for that particular project.