SAMPAN

LANGUAGE
English
Chinese

NEWS

Front Page
Cover Story
Local
National
Editor's Notes

FEATURES
Interviews
Health
Finance
Living / Art
Travel & Culture
Law

OPINION
Letter
Editorial

NEWSPAPER
About
Contact Us
Advertise



Last updated on 04/04/05


Financing Affordable Housing: A Primer

By Rick Liu

Creating affordable housing for people of all incomes is a challenging undertaking in almost any urban center these days, but the task is especially daunting in Boston's Chinatown. The high density, high poverty rate, lower median income, and increasingly high market value of the real estate, make innovative strategies and strong community support essential to producing effective results.

One of the densest residential neighborhoods in the city, 42-acre Chinatown is home to more than 5,100 residents.  The area median income of Chinatown households is lower than in most Boston households, and the poverty rate is 10% higher than for the general population in Boston. To make matters worse, because of Chinatown's location near high-end neighborhoods such as the South End and Bay Village, the price of housing has shot up tremendously in recent years, and is increasingly pricing residents out.

While for-profit developers see Chinatown's potential for luxury residential buildings, non-profit organizations and government-sponsored affordable housing finance agencies make it their goal to preserve and create affordable housing in the existing neighborhood. Right now, Boston requires developers to set aside at least 13% of their housing units to be affordable. However, if only 13% of the housing in Chinatown were affordable, virtually none of the residents would be able to live in their community. The situation has required the involvement of non-profits in the community -- sometimes partnering with experienced for-profit developers -- to take advantage of the subsidies and loans offered by affordable housing agencies, and create housing developments with affordability levels significantly higher than 13%. Notable Chinatown housing developments with deep affordability include Oak Terrace and the Metropolitan, developed by the Asian Community Development Corporation, and Tai Tung Village, developed by the Chinese Consolidated Benevolent Association.

It is the subsidies and loans offered by government-sponsored agencies, however, that truly makes affordable housing possible. Subsidies reduce the cost to developers -- and increase their willingness -- to participate in such projects. In return for the subsidies, monitoring agencies generally want to see deeper and longer-lasting affordability in their projects. Subsidies in the City of Boston include "linkage" money -- distributed by the Neighborhood Housing Trust -- in which developers of large-scale commercial downtown projects pay money to develop affordable housing elsewhere.

Additionally, money from the national level is passed down to the state and Boston for use in a program called Home Investment Partnerships Program (HOME), which focuses on building affordable housing.  

Loans can also be integral to the development process. Because creating affordable housing is riskier than creating market-rate housing, both for-profit and non-profit developers may have trouble paying off the high interest rates from loans that they take out to pay for building a project. Therefore, loans from agencies such as the Massachusetts Housing Investment Corporation offer lower interest rates, and have more generous loan standards, but in return ask for certain affordability restrictions on the development.

The creation of affordable housing under circumstances such as those in Chinatown requires the goodwill and partnership of a wide range of stakeholders -- from government agencies and community organizations to for-profit partners and neighborhood residents.   It is important to always be mindful of the complexity of the process and to continually advocate for more resources to make deeper affordability a feasible option.

Rick Liu is a staff member of the Asian Community Development Corporation.

 

About   |   Contact Us   |   Advertise

copyright & copy; 2004 Asian American Civic Association