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By David P. Parish
Mixed-income housing is crucial to the development of vibrant, sustainable
communities. Well-designed, well-managed mixed-income housing provides
financial advantages to the developer and social advantages to the
community where it is located. Mixed-income housing can also help
to break down social barriers and strengthen local economies.
The Federal Home Loan Bank of Boston (the Bank) has extensive experience
assisting in the finance of mixed-income housing. Since 1990, the
Bank has provided financing for over 130,000 units of housing for
families and individuals with a range of incomes. Designed to meet
the needs of both homeowners and renters, these developments range
from specialized infill projects to new neighborhoods consisting
of several hundred units of housing.
Historic New England towns and villages provide a model for mixed-income
housing. Social norms, concerns for security, and limited mobility
led to settlements that were compact and inclusive. The resulting
efficiencies and required social accommodations proved to be highly
competitive in the world economy.
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12
Summer Street
Manchester by the Sea
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By Carmen Seales
An example of a successful mixed-income development built
in an affluent community, the 12 Summer Street initiative
in Manchester by the Sea, Massachusetts, proves that an upper-income
community is amenable to the creation of affordable housing
if it believes the development will bring economic and social
benefits to the community.
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| 12
Summer Street. |
The recipient of a $1.75 million subsidized advance from
the Federal Home Loan Bank of Boston's Affordable Housing
Program, 12 Summer Street was developed by the Manchester
Affordable Housing Corp. in partnership with the Manchester
Housing Authority. The development involved the acquisition
and rehabilitation of an existing three-story building to
create 21 units of rental housing close to transportation
and downtown. Seventeen units were targeted to households
earning below 80 percent of the area median income and four
were available at market rate.
Paying rents that range from $650 to $1,375 per month,
residents include low-income elderly, single individuals,
adult households without children, and young families with
children. The Manchester Housing Authority estimates that
rents for a two-bedroom apartment in town range from $1,000
to $2,400 per month. Real estate prices range from $219,000
for a one-bedroom condominium to $12.9 million for a waterfront
home.
The 12 Summer Street initiative was spearheaded by the
Manchester Resident Association, which acquired the property
from the Manchester Housing Authority via a long-term lease
for $1.00 per year. In addition to providing construction
financing, member Wainwright Bank & Trust Company provided
permanent financing through the Bank's subsidized advance.
Financial assistance was also provided by the state Department
of Housing and Community Development and the North Shore HOME
Consortium.
The initiative is phase one of a larger mixed-use project
to increase the supply of affordable housing in Manchester
by the Sea. Phase two will be a nearby condominium development
that includes commercial and townhouse-style units, five of
which will be affordable for first-time home buyers. The development
is one of the largest ever proposed for Manchester by the
Sea, which is among the region's priciest communities.
Carmen Seales is senior community investment manager at
the Federal Home Loan Bank of Boston.
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Over the years, increased mobility and changed economics and social
norms loosened the bonds of the New England village to the point
where many communities became more homogeneous and less inclusive,
making daily life more difficult and inefficient for residents.
In addition, the cost of land, labor, building materials, and regulations
has made housing unaffordable for a significant segment of the region's
population.
For many reasons, the market has not been able to provide enough
housing to ensure broad affordability in many communities throughout
New England. Interventions in the market to provide affordable housing
have produced both successes and failures. However, recent efforts
at mixed-income housing provide a successful model for community
housing. The following guidelines for the creation and preservation
of mixed-income housing are emerging from these successes.
Understand and anticipate the market:
As with all development projects — particularly with mixed-income
housing — a sophisticated understanding of the market is essential.
While strong housing markets permit the cross-subsidization of affordable
units by market-rate units, weaker markets often require outside
subsidies for the affordable units, and for the development overall.
Understand regulations and expectations:
For the most part, mixed-income housing is both driven and controlled
by regulation. Some federal, state, and local regulations encourage
the development of mixed-income housing, but they are often complex,
vague, and influenced by the varying expectations of those involved.
Taking the time to understand the regulations and expectations can
lead to profitable development opportunities that would not otherwise
be available.
Mixed-income often means mixed-culture:
In a land of immigrants and diverse family structures, a housing
development that mixes incomes often needs to accommodate a variety
of cultures. In order for a development to be successful over time,
it is critical to anticipate and accommodate different attitudes
toward the housing and how it will be used.
Design matters: Quality design
is a key to market acceptance of a mixed-income development. The
four elements of a well-designed development out-lined by the Affordable
Housing Design Advisor (www.designadvisor.org)
- Meets User Needs, Understands and Responds to its Context, Enhances
its Neighborhood, and Built to Last - are particularly important
in the case of mixed-income housing. Experience has shown that it
is critical to apply the same care and standards to the affordable
units as to the market-rate units.
Management is key: Responding
to the needs of a resident population made up of a mixture of incomes
and backgrounds requires thoughtful and experienced management at
all stages of the process.
Anticipate objections: There
is little enthusiasm for development of any kind in many communities
around New England. This is particularly true of housing, and even
more so of housing that contains affordable units. It is likely
that a mixed-income housing development will be met by some objections.
Being able to demonstrate an understanding of the special characteristics
of this type of housing, articulate a commitment to quality, and
provide examples of successful developments can help to counter
the inevitable objections.
Use all available tools: Be
aware of emerging trends such as "smart growth" concerns
and "green building" goals. Thoughtfully located, efficiently
designed mixed-income housing can easily meet both economic and
social objectives. Local agencies and organizations may be willing
to provide support to a mixed-income development that would not
be available to a market-rate development.
Promote success: Successful
mixed-income developments pave the way for future developments.
The accompanying profiles of mixed-income developments funded in
part by the Bank, and publications such as the Citizens' Housing
and Planning Association's The Faces of 40B (www.chapa.org/resources_publications.htm),
provide examples of successful mixed-income housing developments.
Well-executed mixed-income housing can be successful financially
and socially. It can open up new markets and development opportunities,
while responding to concerns about sprawl, regional economics, and
social isolation. Success requires a commitment to communication
and cooperation, and a sophisticated understanding of housing finance,
design, and management.
David P. Parish is member services representative at the Federal
Home Loan Bank of Boston.
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