Funding for affordable homeownership grows, but the forces arrayed against it are growing too

The city’s affordable-homeownership programs face increasing financial pressure from rising prices and costs, eligibility expansion and physical deterioration. The Cambridge Affordable Housing Trust has almost doubled funds available to upgrade and subsidize the resale of affordable homeownership units, to $13 million in February this year from $7.5 million in March 2024.

Another increasingly popular program that helps residents buy homes on the open market, HomeBridge, had received $10 million from 2006 to 2024 and got $5.5 million more in two infusions last year. HomeBridge, which contributes a percentage of the market price, needed more money because of rising prices.

The city’s affordable-homeownership programs get less public attention than do rental housing. Still, there are more than 500 units that are owned by lower-income individuals and families, some bought decades ago. The housing has not always been maintained, according to trust staff, sometimes because low- and moderate-income owners can’t afford it. At an Affordable Housing Trust meeting in January 2024, a number of owners said wealthier condominium owners in their buildings were willing to approve and able to pay hefty condo fee increases or assessments, leaving the lower-income owners behind.

One building with 100 percent affordable units, the Print Shop Condominium at 125 Harvard St. in The Port neighborhood, has presented a special problem. It was redeveloped in 2009 and had problems almost from its start, according to owners. They complained of leaks, improper wiring, elevator breakdowns, missing insulation and a deficient sprinkler system. The trust agreed to lend $3 million last year; some owners wanted to renounce their unit and return to first-time homebuyer status.

The trust is contending with how to draw the line between what the city is responsible for and what the owners are responsible for in the city’s affordable-homeownership programs, according to minutes of the Feb. 27 meeting that quoted city manager Yi-An Huang. Huang chairs the trust.

Trust members said the agency, the major source of city money for affordable housing, needs to address “the upcoming problems that older units in the homeownership program will face,” the minutes said. The issue is “a new challenge that the trust is facing and that will have major implications on the future of the homeownership program,” according to the account of the meeting.

A “sinking fund”

The trust maintains a “sinking fund” for the resale of affordable homeownership units. It pays for temporary loans allowing the city to rebuy the homes; for necessary repairs; and for subsidies that make the units affordable to new buyers. The fund gets repaid in full or partly as there are new buyers of the units.

The fund has been “shrinking” faster than expected, according to a presentation to the trust by housing director Christopher Cotter and Anna Dolmatch, senior manager for homeownership. The homes up for resale need much more work and higher subsidies to keep them affordable to low- and moderate-income buyers whose housing payments are capped at 30 percent of their income. The sinking fund gets infusions when loans are repaid. The $3 million addition approved in February was needed because the “sinking fund” is sinking too fast, trust staff said.

“There are multiple projects where construction costs are significantly more than what can be recouped at sale, requiring a large amount of new subsidy to keep the unit affordable,” the memo said. It added that the big subsidies are worth it because the units originally needed very little city money, especially compared with how much the city invests in HomeBridge properties on the open market.

Net subsidy averaged $15,000 between 2006 and 2023 and increased to $23,000 in 2024, the memo said.  Subsidies took an alarming leap after that – the most recent 10 resales needed an average subsidy of more than $100,000.

Another development that is having an impact is the trust’s decision in 2023 to simplify the formula that determines how much equity owners can get when they sell their units, which resulted in an increase in many cases. Costs also increase when units are held back from sale; in February, 23 units were being held, of which seven were at the Print Shop Condominium.

Rentals also need repairs

Meanwhile, some rentals that serve lower-income tenants also need repairs but there’s no money, even while new buildings for low- and moderate-income residents are under construction.

A leak in March in an apartment at Inman Square Apartments, a 116-unit building for low- and moderate-income tenants in Inman Square, severely damaged the walls, floors and ceilings of the apartment, said Trudi Goodman, a tenant leader who lives in the apartment. The city’s Inspectional Services Department cited the owner, Homeowners Rehab Inc., for the damage and also for nonworking smoke and carbon monoxide alarms.

The unit was repaired, but the building’s plumbing system needs to be replaced, a long-standing problem, Goodman said. In November 2023, city councillors castigated Homeowner’s Rehab after a loss of heat in the building, then walked back their criticism to a request that HRI develop a plan with a timetable to upgrade the building.

Using what’s available

HRI executive director Sara Barcan said that last year the agency used “limited available resources” to upgrade energy efficiency, which “significantly improved tenant comfort.”  

The organization “had few if any heat complaints this winter, including the very cold stretch,” she said. HRI had intended to use money available under the 2022 Inflation Reduction Act to reduce the building’s carbon emissions but those funds have been frozen by the Trump administration, she said.

As for major renovations, she reiterated that the scarcity of federal resources that pay for affordable housing, such as Low-Income Housing Tax Credits, “means that we can’t access the level of equity needed for a substantial renovation of the kind we completed at 808 Memorial Drive.”

HRI did obtain federal tax credits and other funding help to buy and redevelop a much smaller project, 1627 Massachusetts Ave./4 Mellen St., formerly owned by Lesley University, into 29 affordable units. The total cost is almost $32 million, or more than $1 million per unit, partly because HRI paid $7.2 million for the property.

A stronger

Please consider making a financial contribution to maintain, expand and improve Cambridge Day.

We are now a 501(c)3 nonprofit and all donations are tax deductible.

Please consider a recurring contribution.

Donate now