House 1, the governor's budget proposal for FY 2005, was released today. It includes $70,191,248 in direct state operating funds for the Department of Housing and Community Development. This represents an increase of approximately $3 million from FY 2004.

Public housing was the largest beneficiary. Operating subsidies would increase by nearly $5 million under the governor's proposal, and public housing residents would see the rent escrow program revived and fully funded at $500,000, a level last seen in FY 2001. In the Housing Services line item (includes Housing Consumer Education Centers), the governor's proposal eliminates earmarks in the current language and would increase the account by $120,000.

Despite the good news, rental assistance programs that could provide immediate assistance to low income families continue to suffer reductions. Funding for the Massachusetts Rental Voucher Program is reduced by $2,581,728 as mobile vouchers would not be reissued upon turnover. The Alternative Housing Voucher Program for people with disabilities would receive only $2.3 million, level funding from FY 2004, but well below the $4 million originally promised when the program was to help 800 people and even less than the $2.7 approved by legislature last year before it was vetoed by the governor. Also, the budget does not include any money to replace funding that non-profit, community-based developers lost last year when the CEED program was eliminated.

Similar to last year, the administration has proposed an outside section that would implement monthly minimum rents for public housing residents. The monthly minimum rent would be $50 per bedroom per household. This time, however, the proposal includes language that would require housing authorities to grant exemptions in cases of "severe financial hardship."

MassHousing Announces $100 Million Housing Production Program

Earlier this week Governor Romney announced the creation of MassHousing's Priority Development Fund. The $100 million fund will be used to provide "gap filler," low- and no- interest loans to increase the supply of mixed-income rental housing. MassHousing anticipates that the fund will lead to the creation of 5,000 homes and leverage $1 billion.

Developers (non-profit and limited dividend) who receive first mortgage financing from MassHousing will be eligible for the funds if at least 20% of the homes are affordable to families with incomes of less than 80% of the area median and if the homes are "new production." There will be a preference for developments that comply with the Commonwealth's Smart Growth principles.

The breakdown of the $100 million is as follows:

More details, including a fact sheet, guidelines and list of FAQs, are available at MassHousing's web site: www.masshousing.com.

CHAPA and MHP Release New Housing Study

The state's inability to keep pace with housing demand is forcing more than 600,000 households to spend more than 30 percent of their income on housing, and 250,000 of those are spending more than 50 percent, a burden felt most by lower-income families and young adults, according to a new University of Massachusetts Donahue Institute study.

Entitled "Winners and Losers in the Massachusetts Housing Market," the study-sponsored by CHAPA and the Massachusetts Housing Partnership--uses the 2000 census and other data to quantify the state's housing shortfall and its impact on the population and land use. The study concludes that the state's failure to meet housing demands has created a three-class system of "haves," "have nots," and "hidden homeless," a growing third class of people who live with relatives or friends because they can't find affordable housing.

The "haves" are those who bought their homes previous to the dramatic rise in housing prices over the past four years, and who have benefited from both rising prices and lower interest rates, the study says. The "have nots" are lower-income people and people new to the market who must use more of their income to buy a home, or must pay increasingly high rents for a dwindling supply of rental apartments or seek cheaper housing farther away from job centers.

The third class - the hidden homeless - appears to be the most obvious example of the state's failure to keep up with housing demand as the 2000 census found that this category - referred to as sub-families - has jumped dramatically. The report found that the number of children in subfamilies has grown by 488 percent since 1980, from 26,000 to 52,000.

"There is a widening gap between what people earn and what it costs to rent or buy a home in Massachusetts," said Clark Ziegler, executive director of MHP. "We need to eliminate the barriers that make affordable housing so difficult to build. Otherwise, people will move farther away and commute longer to their jobs, or leave the state entirely in search of housing they can afford."

The study also found that of this total, over 91,000 homeowners and 160,000 renters paid more than 50 percent of their income on housing in 2000. Generally, a household that pays more than 30 percent of its income in housing costs is considered to be paying a burdensome amount.

The increasing cost of homeownership was responsible for the rise in households spending a burdensome amount. The study found that between 1990 and 2000, the amount of owner-occupied households paying more than 30 percent of their income on housing grew by 30,000 to 269,000, or 22 percent of all homeowners in Massachusetts. The study found that nearly one-third of the people paying more than 30 percent had bought their homes in 1999 and 2000.

In terms of income, census data revealed that in metropolitan Boston, more than 41 percent of all homeowner households making below the median household income of $50,515 per year pay over 30 percent for housing. Statewide, 37 percent of those making median income pay more than 30 percent of their income on housing.

The study also found:

The study concludes that the state's failure to keep up with housing demand, especially in multi-family and high density housing, has driven costs of existing housing to unmanageable levels. The study urges the construction of more multi-family and more densely built single-family units, thus relieving the pressure on lower-income people and people new to the housing market.

The study is available on CHAPA's web site at www.chapa.org.

LISC Launches Suburban Housing Initiative

The Local Initiatives Support Corporation (LISC) has issued a Request for Proposals for grants of up to $70,000 to Greater Boston community based non-profits operating in suburban communities with less than 10% affordable housing.

The RFP and application can be accessed on Boston LISC's web site: www.liscnet.org/boston (click on "what's new" page).