With each new success the nonprofits expanded their skills and gained the confidence to take on more ambitious projects.

By Robert O’Malley

Samantha Vargas and her son in their Westfield Lofts apartment.

In the 15 years since the establishment of the Federal Home Loan Bank of Boston’s (the Bank) Affordable Housing Program (AHP), nonprofit community development corporations (CDCs) have become central players in the development of affordable housing in the region.

In an earlier era, local housing authorities supported by federal and state funding built the bulk of the region’s affordable housing. But as the federal government reduced its role over the last two decades, local CDCs have stepped in to fill the void.

In a way, these grassroots organizations were better equipped to develop housing in local communities because they understood their needs and had the energy and inspiration to realize their visions. 

“As the federal money began to shrink, nonprofits had to become more creative,” says Brenda Torpy, executive director of the Burlington Community Land Trust. “In a way it allowed for more local control. The federal involvement wasn’t characterized by a lot of self-criticism and innovation.
It tended to be bureaucratic.”

Initially, the CDCs tended to take on modest community projects, such as renovating the most nitty-gritty building on the block, says Bob Van Meter, executive director of the Allston Brighton Community Development Corporation in Boston.

But with each new success the nonprofits expanded their skills and gained the confidence to take on more ambitious projects.  

Property manager Debra Ellis and Sharon Conard-Wells visit a Westfield Lofts apartment.

In the 1970s, Providence’s West Elmwood Housing and Development Corporation was largely dedicated to advocating for better housing and other community improvements.But this year the nonprofit opened Westfield Lofts, a mixed-income rental development in one of Providence’s oldest neighborhoods. The recipient of an AHP grant and subsidized advance, Westfield Lofts is phase one of a multiphase initiative to transform former factory buildings and vacant lots into rental and ownership housing in Providence’s West Elmwood neighborhood.

“We’ve gone from being a grassroots community group to a community development corporation,” says Sharon Conard-Wells, the organization’s executive director and a member of the Bank’s Advisory Council. “Before it was a dream to develop housing, but now we are actually doing
the work.”

A key to the ascendance of CDCs was the establishment of the Low Income Housing Tax Credits program. “By the 1990s the tax credit program was up and running and became a primary source of funding for housing,” says Ms. Torpy, the current chair of the Bank’s Advisory Council.

The shrinkage of the Department of Housing and Urban Development’s Section 8 program and other federally funded housing programs coincided with the emergence of the tax credit program, which transformed many nonprofits into viable developers.

The AHP-funded Park Place apartments in Burlington, Vermont.

“When the tax credits became the major tool, the nonprofits entered a development area on a more equal footing with the for-profits,” says Dana Totman, executive director of Avesta Housing in Maine, the recipient of six AHP awards since 1992.

In the past, he says, funders tended to have a big-brother attitude toward the nonprofits. “The belief was that the nonprofits were not as skilled as the for-profit developers and as a result were less independent,” he says.

“In general, the capacity and expertise of nonprofits have increased significantly,” Mr. Totman says, adding that the skill level of many nonprofits is now on a par with that of private developers. He says the nonprofits are also effective at tapping multiple funding sources and struggling through the extended development schedules required of many of today’s affordable initiatives.

In recent years, many nonprofits have begun to partner with for-profit developers in an effort to share expertise and mitigate risk. In South Portland, Maine, for example, Avesta Housing collaborated with a for-profit developer to develop the AHP-funded Brickhill Cottages. “Seventy percent of our developments involve a partnership with a for-profit developer,” says Mr. Totman.
 
In Boston’s Chinatown, the Asian Community Development Corporation (ACDC) has been using a mixed-income, nonprofit/for-profit model to build a mix of market-rate and affordable housing. In order to increase the number of affordable units, ACDC has been willing to propose denser developments.

“In downtown Boston you can get away with density,” says Katherine Oh Roof, ACDC’s housing director. “I think we’re at the forefront of this approach to developing because we’re downtown, where the land value is so high.”

Don Boniface in his affordable apartment at the AHP-funded Park Place apartments in Burlington, Vermont.

“The mixed-income/joint-venture model is only possible if both members of the partnership know what the other is bringing to the table,” she adds. “Both partners have to choose to be married. It’s a model that works, but it’s not the most intuitive model.”

The recipient of an AHP grant for its Oak Terrace initiative in 1992, ACDC is exploring the possibility of developing future housing without partnering with a for-profit developer. The goal would be to develop a for-profit component in a nonprofit setting. “We need to play the for-profit game,” Ms. Oh Roof says. “I think we have to be more entrepreneurial. We have to exist in the equity world as well as in the debt world.”

Over the years, the AHP has played a key role in helping the nonprofits fill gaps in their funding and helping the Bank’s member institutions “better understand some of the nuances of affordable housing,” says Mr. Totman.

Bankers have been very supportive of nonprofits over the years, contributing loans, expertise, and guidance. “They have helped us develop our expertise,” says Mr. Totman. “Practically every nonprofit board has a banker among its members.”

“I think the banks were helpful in a general way before AHP,” he adds. “But working together on a public-purpose project has nurtured a more formal relationship.” T