Reminiscent of the misguided fleecing of small business owners by collecting “ impact fees” on cannabis shops in Haverhill, which cannot be substantiated on their re-deployment to benefit either business owners or the community, Haverhill’s leaders recently embarked on a similar money grab.
This time the targets are housing developers with a scheme announced by former Mayor Fiorentini known as “ inclusionary zoning.” The proposal, first pitched in March, was approved by the City Council Sept. 26.
As reported in The Eagle-Tribune by Mike LaBella, developers who plan to build at least 10 units of housing will be compelled to include 10% of the stock to be classed as “affordable,” otherwise, they will be forced to pay a buy-out fee of $35,000 per rental unit and $50,000 per ownership unit.
The funds will be placed in a “trust fund” (apologies for the inappropriate use of the word trust) to assist low-income residents with rent and payments. (Sure, let’s see how this works out.)
I’ve volunteered in the homeless community for years and witnessed people living in tents and under bridges with “housing vouchers” guaranteeing first and last month’s rents that could not be exercised because their income was insufficient to maintain an apartment.
Do city leaders envision collecting massive amounts of funds so they can pay rent permanently for qualified applicants? Also do city leaders realize that financing will be seriously impaired by either outright denial or higher interest rates with this scheme? How does a developer justify to a bank that several hundred thousand dollars of a construction loan will have no rate of return — essential for repayment – because it will be committed to a local penalty tax?
To have an incentive to opt out of building affordable housing is both counterintuitive and unproductive. The city – as well as the state — already is experiencing an acute housing crisis with escalating real estate values locking out the most vulnerable residents. and the reality is developers will quickly turn away from Haverhill because of the excessive fees.
Not building anything doesn’t seem to be a pathway to addressing the gap between market rate and affordable housing units.
What city leaders should do is to partner more closely with the Commonwealth of Massachusetts which offers programs substantially supported by federal funding.
The Low Income Housing Tax Credit is a federally authorized program for both nonprofit and for-profit developers to encourage construction and rehabilitation of affordable housing units. There are two forms of tax credits with a 10-year accommodation. As an example, a project with $500,000 of eligible credits can produce $3,750,000 in tax credits over 10 years.
The Local Initiative Program provides localized technical assistance to municipalities and developers to streamline permitting processes to lead to faster development of affordable housing units
As an extension of this, Haverhill leaders should also explore implementing a local property tax credit option to incentivize property owners who commit to building affordable rental units.
Home Investment Partnerships Program is a federally funded program that provides funding to nonprofit or for-profit developers to access funds for use in rehabilitating distressed or abandoned properties and build or rehabilitate existing structures.
Haverhill, like all cities, has a measure of blight in the form of unsightly buildings and homes. This program can deliver solutions where all stakeholders can win: the city, developers, low-income residents and their neighbors.
The funding limits are generous: $750,000 to $1,000,000 is the maximum amount available per project; $50,000 to $75,000 is the maximum available per affordable unit in entitlement/ consortium communities.
Haverhill city leaders should reconsider their doomed policy as surely it will lead to a greater polarization of home ownership in the city.
A continued penchant for excessive taxing, inefficient redistribution of punitive fees and undeveloped visions to comprehensively solve the issues with adequate dollars will transform the city into a localized version of “A Tale Of Two Cities.”
Joe D’Amore writes from Groveland. Reach him by email at damorecos@gmail.com.