City program provides rent relief
City officials announced Monday an initiative that will provide funding for the preservation of low- and moderate-income housing in Boston.
The city has committed $7.5 million to its new Acquisition Opportunity Program, through which real estate investors will qualify for funding to acquire rental properties if they agree to maintain at least 40 percent of the units as affordable to those making no more than 60 percent of the Area Median Income.
“Boston is committed to making our city a home for everyone, no matter their age, background or financial status. This $7 million investment is another leap towards creating affordable housing for all our residents,” said Mayor Martin Walsh. “We are committed to growing our affordable housing stock, and programs like the Acquisition Opportunity Program ensure that Boston residents will not be priced out of their homes and neighborhoods.”
The initiative is designed to stem the displacement of low- and moderate-income renters from Boston’s overheated rental market. Under its provisions, investors will be required to maintain affordable rents for 50 years. If a tenant leaves a unit, the unit will remain deed-restricted as affordable.
“We’re asking developers to acquire existing buildings that are occupied,” said Department of Neighborhood Development Director Sheila Dillon.
To be eligible for the program, developers will have to demonstrate that they have the financial capacity to acquire the rental units and the management experience to maintain them. Developers will participate in a competitive RFP process. The city will certify developers that they qualify for the loans, which can be used in a competitive bidding process.
The program’s $7.5 million in funding will be drawn from the city’s Inclusionary Development Fund, into which developers of large housing projects pay in lieu of including the required 12 percent on site affordable units. The funding will provide $75,000 per affordable unit, for an initial 100 units.
“We’re going to evaluate this program and see how it works,” Dillon said.
The Department of Neighborhood Development currently is pre-approving prospective buyers.
“We’re hopeful that we get a lot of properties under agreement very quickly,” Dillon said.
The average rent for a two-bedroom apartment in Boston currently is $2,815, according to Rentjungle.com. In order to afford that rent, a family would have to earn $120,900 per year, according to SmartAsset.com, which based its calculation on a 28 percent rent-to-income ratio. Families that pay more than 30 percent of their income are considered cost-burdened.
Because half of all Boston residents earn less than $35,000 a year, the city has an unusually high percentage of cost-burdened renters.
The Walsh administration has set a goal of producing 53,000 new units of housing to relieve the pressure on the city’s real estate market. The plan, released in 2014, called for the creation of 20,000 units of workforce housing — housing affordable to middle-income residents. But state and federal funding for such housing has declined in recent years.
Dillon said city officials are exploring a number of options to meet the housing needs of low- and moderate-income Bostonians.
“This is just another tool to get at our housing goals,” she said of the Acquisition Opportunity Program.” We’re going to continue all of our housing projects.”