Seventy-six thousand residents living within 4.2 square miles make Somerville the most densely populated city in Massachusetts. Though it is adjacent to Cambridge, home of Harvard and M.I.T., Somerville is a mostly blue-collar residential community. Like most of Greater Boston, however, it is beset by skyrocketing housing costs and a declining vacancy rate. It also has a brownfield problem.

The Environmental Protection Agency (EPA) defines brownfields as "abandoned, idled, or under-used industrial and commercial facilities where expansion or redevelopment is complicated by real or perceived environmental contamination." For any community, brownfield properties are a highly resistant form of blight, good mostly for drug activity, late-night parties, and abandoned vehicles. There may be half a million of them nationwide.

In Somerville, which has at least 200 such sites, there is an additional complication: Because of the city's population density and zoning patterns, brownfields often abut residential properties. This tight fit and the relative scarcity of housing make the city all the more eager to clean up these sites, preferably by attracting new development. But developers are reluctant to invest the time and money required for environmental testing on properties that ultimately may not meet their needs.

An Unpromising Prospect
The brownfield at 259 Lowell Street was typical. A former mattress factory, the property had been abandoned for several years, and the signs of vacant-lot pathology were well advanced. Lead and petroleum appeared to be the primary contaminants; the last owner had at one point removed several underground gas tanks.

But the site's relatively large size — nearly two acres — appealed to Somerville's Visiting Nurse Foundation (VNF), which was looking for land on which to build an assisted-living residence. The proposed facility was intended for elderly inhabitants of limited means; it would be the first in the country to be developed, owned, and operated by a visiting-nurse organization, and the first in the state to reserve 75 percent of its units for very low- and low-income occupants.

In the end, an exemplary public-private partnership helped to acquire the land, raze the factory, decontaminate the property, and construct a new, 97-unit assisted-living facility. Key to assembling the final package were three funding components provided by the Federal Home Loan Bank of Boston. A $250,000 grant and a $1.25 million below-market-rate advance from the Affordable Housing Program (AHP), applied for by Wainwright Bank & Trust Company of Boston, made acquisition and construction possible. A $5.4 million Community Investment Program (CIP) advance to Fleet Bank will support the project's permanent financing.

A Crucial Pilot Program
The remaking of 259 Lowell Street actually began with a small but important amount of EPA money held by Somerville's Office of Housing and Community Development (OHCD). The EPA had recently set up a Brownfield Pilot Program to encourage development initiatives in places like Somerville, hoping that successful projects might prove useful models for other communities.

The EPA designed the program to help developers whose claims to brownfield sites were serious enough to let them conduct environmental tests before exercising their option to buy. The program's money is used for site testing and the preparation of "cost-to-cure" estimates, though not for the cleanup itself.

"The pilot-program money gives developers an incentive to take on a brownfield," says Mary Jo Bohart, economic development director of the Somerville OHCD. "It offers the developer up to $40,000 for environmental-engineering services. At 259 Lowell Street, it allowed us to work with the VNF to obtain thorough testing and an engineer's cost estimate for decontaminating the property."

"Obviously, it would have been nice to have found no contamination," she adds, "but the cost-to-cure estimate we received — roughly $250,000 — was an amount the VNF felt it could handle [in its building budget]."

"Because Somerville paid for the environmental testing, we had confidence that we would be able to afford the cleanup," says Linda Cornell, the VNF's president and chief executive officer. In fact, after the VNF purchased 259 Lowell Street, it was able to use left-over pilot-program funds to commission an additional environmental-engineering report on the site, which further detailed the scope of the hot spots and fine-tuned the cleanup analysis.

Meanwhile, Somerville's Environmental Protection Office worked with the VNF to review the information emerging about the property, and helped interpret the impact on cleanup costs in light of applicable laws and regulations. The cleanup itself added approximately three months to the overall development timetable.

In addition, the city has found a way to use money from federal Community Development Block Grants to insure developers against cost overruns connected with brownfield cleanups; it provides coverage up to $100,000 per pilot-program site. "What Somerville is doing is unique," comments John Podgurski, New England brownfield coordinator for the EPA. "I haven't seen any other community in the region that provides this kind of protection." The VNF project, however, experienced no overruns; the conservative cost-to-cure estimates proved accurate, and the project was able to move on to the construction phase.

A Place for Seniors in Need
The new Visiting Nurse Foundation Assisted Living Residence was finished in March and is now fully operational. It represents a significant achievement in the continuing effort to reduce Somerville's brownfield problem; it is also a small victory for affordable housing in the Boston area's increasingly expensive real estate market. The facility has been built to serve not only Somerville's large elderly population but those of surrounding communities, who have been doubly stressed by the rising cost of shelter and the phase-out of rent control in Boston and Cambridge.

Assisted-living complexes are designed for seniors who cannot live alone but wish to avoid moving to a nursing home. Yet, while the care provided in such community residences generally costs 40 percent less than nursing homes, they tend to be built for the seniors with the most money — those who can afford to pay $30,000 to $200,000 in deposits or purchase fees and $2,000 to $6,000 in monthly maintenance payments. Says the VNF's Linda Cornell: "Obviously, the individuals who can afford to live in such facilities do not represent the vast majority of those who require these services."

In fact, almost all of America's elderly population falls within the very low- or low-income range. The VNF project has, therefore, reserved 75 percent of its 97 living units for persons with very low and low incomes, and some 10 percent of the units are intended for seniors who are homeless or at risk of becoming homeless.

The residence was carefully thought out to offer comprehensive services to less-advantaged seniors. It serves residents three daily meals and offers them transportation and social activities. Staff are on hand to help with dressing, bathing, mobility, laundry, and housekeeping, as needed. Ultimately, the facility will create some 60 jobs in such areas as home health care, homemaking, food services, laundry, and security. The VNF also hopes to offer internships in the health-care, hospitality, and accounting fields to students in Somerville High School's vocational programs.

The facility's one-bedroom apartments are well-equipped, comfortable, and large enough to accommodate two people. All units are fully handicapped-accessible as well, with safety and security features and easy-to-reach cabinets and shelving. More than 80 residents were identified through word of mouth alone.

A Sizeable Undertaking
The project's total construction budget eventually totaled some $14.5 million. "In order to achieve the level of affordability needed by the clients we wanted to serve," says Ms. Cornell, "we needed to piece together a very complicated set of city, state, and private funds. We couldn't have done this without the Federal Home Loan Bank of Boston. The Bank's funding set the stage for putting the rest of the financing together — the Affordable Housing Program grant and low-interest loan helped us convince other lenders that the project was worth supporting and funding."

Besides the developer's equity and a $250,000 AHP grant from the Bank, loans from the Somerville and Massachusetts HOME funds, the Somerville Affordable Housing Trust, and the Visiting Nurse Foundation helped to finance the project. Two crucial components were the $1.25 million below-market-rate 20-year AHP advance, which has a 30-year amortization schedule, and the $5.4 million 20-year CIP advance, which also has a 30-year amortization term. (This year, CIP advances were replaced by the Bank's more flexible Community Development advances.) Fleet Bank requested the CIP advance to fund the property's permanent mortgage; Wainwright Bank requested the AHP advance to finance construction costs, and transferred the balance to Fleet to fill in the final gap in the permanent financing.

Although the prospect of transforming a brownfield into an environmentally safe assisted-living community seemed daunting when the project began, the EPA's pilot program and the Bank's commitment to affordable housing helped Somerville and the VNF bring it off with confidence. Having gone through the process, Ms. Cornell now says, "I would never discourage anyone thinking of developing a brownfield, as long as the developer knows what he or she is getting into."

This article appeared originally in the Bank's Tools for Housing and Community Economic Development, Issue 14, Spring 2000.