By
Robert O'Malley
Has the federal government been sufficiently involved in recent years in financing
affordable housing?
No, it hasn’t been, and it’s an outrage. In the 1960s, Massachusetts
was a pioneer in advocating for affordable housing. I’ve tried to pick
up some of that advocacy role. In Massachusetts we took advantage of a lot of
federal programs. But many of the affordable programs of the 1960s and 1970s
stipulated that the housing would no longer be affordable after so many years.
Joe Kennedy and I worked very hard to try and keep some of that housing affordable.
But the Republicans came in and repealed all of the legislation we helped adopt
to protect those expiring affordable units. Now many of those units are becoming
market-rate housing. What the Republicans have done is essentially say no more
federal funding for construction of housing except for a small amount for the
elderly and the disabled. All they do is give Section 8 vouchers. That program
is better than nothing, but it doesn’t help the supply. If you increase
demand while holding supply constant you end up raising prices.
Are there any innovative federal programs in the works today to expand the supply
of affordable housing?
Well we’ve got one program that has been pushed by the Democrats but has
also received support from Republicans in the House. We are modeling it after
the Federal Home Loan Banks’ Affordable Housing Program (AHP). I was on
the committee when Henry Gonzales (the late congressman from Texas) pushed through
the AHP legislation. I worked very hard on it and am very proud of what it has
become. The AHP has been very helpful, especially as federal funding has dried
up. I was thinking of that model when considering legislation to redo supervision
of Fannie Mae and Freddie Mac. I pushed very hard to create a similar kind of
affordable-housing program for Fannie and Freddie using five percent of their
profits instead of 10 percent. Five percent of Fannie and Freddie’s profits
would be hundreds of millions of dollars. This would be a new way to get money
into housing production. We are still hoping we can pass the bill. The Senate
is holding it up at the request of the administration, not so much over the housing
provision as over the size of Fannie and Freddie’s retained portfolio.
If we could get that resolved I believe we could get the five percent through.
Young people have started to leave
Massachusetts to escape the high cost of housing. To what do you attribute the
state’s recent affordable-housing crisis?
There are a number of causes. One of the most pressing is restrictive zoning
created by government decision. Combine that with a financing system that puts
a lot of burden on the local property tax and you get resistance to housing being
built anywhere. Some of that resistance is reasonable because it has an economic
cause; some of it is unreasonable because it is based on fear of new people,
especially the people who will live in affordable housing. I think excessively
restrictive zoning is the single biggest problem we have.
Is Chapter 40B an effective tool to build affordable housing in communities across
the state?
Chapter 40B is better than nothing, but it could be better. I think we need a
combination of carrots and sticks. We don’t
have enough carrots. I’m at the federal level so I can’t really give
you as informed an opinion on state issues as I can on federal ones, but I do
think more carrots — more money for schools and other financial incentives
to communities — would be helpful. I think the state has been moving in
that direction.
Are there any noteworthy affordable developments currently underway in your district?
There are a lot of good mixed-use developments that contain both market-rate
and affordable housing. One is the former St. Aidan’s Church initiative
in Brookline [the recipient of a $300,000 grant and a $900,000 advance from the
Federal Home Loan Bank of Boston’s (the Bank) AHP. The initiative includes
59 rental units, 20 of which are affordable, and nine condominiums]. There are
also several developments underway in Newton. The problem, as I said before,
is often local resistance.
What’s your view of the HOPE VI program?
It’s a very promising housing program but difficult to administer because
it is so ambitious. I think you have to make sure you replace the housing that
is lost through the construction of new housing. You don’t want to repeat
the urban renewal model of the past in which poor people’s housing was
torn down without concern for where those people would be living. When done right,
with a real concern for replacement housing, HOPE VI is a really important way
to deal with the affordable-housing problem.
What role should bankers be playing in the development of affordable housing?
Well, a couple of things. First of all, the AHP is a very important program.
It involves taking a percentage of the Bank’s profits and putting it directly
into affordable housing. Low-income housing needs these subsidies. For moderate-income
housing, the banks can accomplish a lot just by meeting their Community Reinvestment
Act requirements. This involves making it relatively easy for housing developers
to get loans on reasonable terms. What banks should avoid are predatory-lending
practices. They need to lend to unconventional borrowers without exploiting them.
Is there a place for both for-profit and nonprofit developers in the construction
of affordable housing?
Yes. There is plenty of room for both. I don’t see them as competitive.
People have different motivations, different goals. In the first Bush Administration,
HUD Secretary Jack Kemp said we don’t want profit-making developers; we
only want nonprofit developers. I like a lot of the nonprofits, but many of the
most talented people in America go into business to make a profit. Why would
we exclude them from housing? Caring about something shouldn’t mean you
don’t make a profit from it. Some of the most innovative housing comes
from the for-profits. I’ll give you an example: In the 1970s, when I was
the state representative for the Back Bay in Boston, housing prices were going
up. Older people who had been living in housing all of their lives were being
forced out. I spoke to the neighborhood association and they agreed to support
subsidized housing. I went to Walter Winchester at State Street Developers, a
very successful for-profit developer with a good track record. I took some of
the neighborhood association leaders to see some of his projects. As a result,
he developed housing in a hotel in Kenmore Square. Both for-profits and nonprofits
are doing a good job. I’ve been working with the Catholic Church’s
Planning Office for Urban Affairs on the St. Aidan’s development. I work
with both for-profit and nonprofit developers. Among the best developers of subsidized
housing in Massachusetts have been faith-based groups. The Office of Urban Affairs
has been one of the best builders of subsidized housing; Jewish Community Housing
for the Elderly has thousands of units in Brighton, Newton, and Brookline. T
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