Several Newton elected officials and candidates for local office take the position that housing in Newton should only be developed by nonprofit developers. Nonprofits are important housing providers and in theory that sounds great. But this platform is not a viable solution to Newton’s housing affordability crisis. Here’s why:
- Both nonprofits and for-profits develop housing that is 100% affordable using public funding. \
- There are limited funds available for such housing, nowhere near the amount needed.
Nonprofit and for-profit developers alike build housing, all or most of which will be affordable to individuals and families with incomes below 80% of the area median income (AMI) and typically lower. The cost of building and operating housing affordable to such lower income individuals and families – especially when factoring in the high cost of land in Newton – means that substantial public funds are needed to subsidize the cost of such housing. The state’s housing department, the MA Department of Housing and Community Development or “DHCD,” funded approximately 1,450 new construction units of such housing statewide in 2021. If Newton was to receive a pro rata share of such funds based on population, only about 18 units would be created in Newton annually. Even if Newton receives four times its share due to its proximity to services, transportation and jobs, it would only result in 72 affordable housing units annually.
Those promoting the nonprofit-only model seem to think that only nonprofit developers create deeply affordable, publicly-subsidized housing. In fact, DHCD funds both nonprofit and for-profit developers of affordable housing and without significant cost differentials. For-profit developers generally have much greater financial capacity, which is required by the lenders and investors that fund affordable developments. In 2021, of the approximately 1,450 new affordable housing units funded by DHCD statewide, 1,039 (almost 72%) were sponsored or co-sponsored by for-profit developers.
Given the high cost of land in Newton, it’s not surprising that the only new publicly-subsidized affordable projects to move ahead in recent years’ involved free land: the Newton Housing Authority’s Haywood House and the expansion of the Golda Meir House by non-profit 2Life Communities. This type of housing is sorely needed, especially to address the housing needs of extremely low-income households (incomes below 30% of AMI), for which substantial public subsidies are needed. The West Newton Armory and other City-owned sites present opportunities to create this deeply affordable housing.
According to the US Census Bureau (2019 ACS 1-Year Estimates), approximately 2,700 Newton renters and approximately 2,300 Newton homeowners whose income is less than $75,000 are considered rent or housing cost burdened because they spend 30% or more of their income on rent/housing costs. Relying exclusively on housing subsidized with public funds to produce the thousands of units of affordable housing needed will not meet the need in our community.
- Proponents of the nonprofit-only strategy are confusing publicly-subsidized development with development that has an internal subsidy.
- Mixed-income developments have provided most of the affordable housing in Newton with internal subsidies and without the need for substantial public funding.
The elected officials and candidates promoting the nonprofit-only model also malign for-profit developers, ignoring the fact that for-profit mixed-income developments are providing the lion’s share of the housing affordable to individuals and families with incomes below 80% of the area median income in our community. Yes, these developers are making money on the unrestricted market-rate units in their development. That’s a good thing because that is what makes the affordable units possible. The profit from the market units subsidizes the affordable units. This is an internal subsidy, needed to supplement the limited public subsidies that are available to support affordable housing. Both state law (Chapter 40B) and Newton’s inclusionary zoning ordinance harness this internal subsidy to create affordable housing without the need for public subsidies. Chapter 40B also mandates a developer profit limitation so that a developer does not unduly profit from developing mixed-income housing. Moreover, these internally subsidized units are subject to long-term affordability restrictions just like publicly-subsidized affordable housing.
Without the internal subsidy from the market units, the 140 affordable units at the Northland project on Needham Street would require approximately $60 Million in public funding. Similarly, the 111 affordable units at Riverside would require approximately $50 Million in public funding.
While the elected officials and candidates promoting the non-profit-only strategy like to harken back to a smaller non-profit proposal for the Austin Street site, that smaller project would have required millions of dollars in public subsidies though a multi-year funding process. The current development provides substantial affordability made possible largely by an internal subsidy. Frequently overlooked is the fact that the affordable units at developments like Austin Street are an important resource for very low-income (50% of AMI) and extremely low-income (30% of AMI) households with Section 8 rental assistance who otherwise would not be able to find an apartment in Newton. Currently 43% of the affordable units at Austin Street are occupied by lower-income households with rental assistance. Similarly, 34% of the affordable units at Trio in Newtonville are occupied by such lower-income households.
While federal stimulus funding may soon provide historic increases in public funding for affordable housing, the need is so great that we must have a comprehensive strategy.
Trying to subsidize our way out of the housing crisis is not realistic. Let’s elect local officials who will pursue viable strategies to create the housing that lower-income individuals and families desperately need.
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Judy Jacobson is a 30-year resident of Newton with a long career in affordable housing including almost 30 years in senior positions at Massachusetts state housing agencies. Judy is currently the General Counsel of a national nonprofit that develops, owns and manages publicly-subsidized affordable housing.
Jason Korb is the principal of Capstone Communities LLC, a for-profit affordable housing developer. Jason grew up in Newton and attended Newton public schools. He is a current Newton resident and his children also attend Newton public schools. Jason been involved in affordable housing for almost 20 years, having worked for both nonprofit and for-profit affordable housing development companies.
I didn’t realize v14 have started ‘sponsered’ posts by for-profit developers
@Bugek: Without engaging and learning from experts, all one has is a swapping ignorance festival.
Learning is usually not a moral failing.
I agree this post doesn’t belong here the day before an election and it has already been published numerous times here on V14 and other places on social media.
The thing I don’t understand is that since none of the Newton candidates are advocating using only not-for-profit developers but instead only public/private partnerships what are they arguing for?
Mary,
I agree learning from experts is crucial.. but not from those who clearly have a $$ conflict of interest.
Would I ask the NRA on their expert opinion on gun control?
Capstone communities profits and bonuses are tied to developments LOCALLY in Newton, they are experts but not a neutral party
@Bugek: If you want purity, go to church on Sunday. Allowing that you might be an exception, most of us have self-interests. Just because some of those are emotional doesn’t guarantee that a listener isn’t still being lead down a path to perdition.
Capitalism and profit has been a rather American way of life. Pretty sure that, presented in its proper context, an overwhelming majority of Newton’s current residents would reject a referendum for using municipal debt obligations to fund not-for-profit developers when for-profit developers are willing to do the same work for the same price.
Mary,
The objection was seeking input from a developer who clearly has a $$ conflict of interest..
No matter what the subject/issue/problem.. conflict of interest and $ is a clear NO NO. Anyone who supports a transparent local government would agree
If fine to take advice from capstone if there is commitment to do NO business in Newton for 5 years after policy (they helped craft) is enacted.
No purity, just common sense
This post was co-written by someone at Capstone and someone from “a national nonprofit that develops, owns and manages publicly-subsidized affordable housing” so both private and nonprofit are represented. Both authors disclosed their affiliations and backgrounds.
It would be more constructive to discuss the merits of what was written here than to cast stones.
“Several Newton elected officials and candidates for local office take the position that housing in Newton should *only* be developed by nonprofit developers”.
That is false. What a ridiculous statement.
Meredith,
That “someone” at capstone is the founder, not a random employee. It was clearly disclosed in the post.
Again, would you discuss teen smoking with the founder of philip morris?
Or how about childhood obesity with the founder of a soda company?
I’m simply saying the discussion should be with those who have NO $$ conflict of interest.
Humorous that an anonymous contributor would be so consumed with transparency.
But just like the thread about the Globe op-ed, anything to discredit the source so as to avoid a conversation about the topic at hand.
Greg,
Its great to see you doing your job so well. Advocating and putting business first and second in Newton.
Keep up the great work!
@Bugek – my point was that this is written by two people, both of whom disclosed their affiliations. The second person works for a nonprofit developer of affordable housing. That means that the post represents agreement between people from both sides.
I believe that Village 14 readers are capable of reading the author disclosures and coming to their own conclusions.
Before the comments thread goes too far off the rails I have two observations:
1) Jason doesn’t do business in the City of Newton, which is why he’s commenting at all. He just lives here.
2) Council candidates on both slates (as well as several uncontested incumbent Councilors of various alignments) have mistakenly made reference to “non-profit” development of 100% affordable housing projects (in specific contrast with for-profit development) and the piece is partly intended to clarify for voters and candidates that there is actually also a sub-market of for-profit developers who specialize in 100% affordable projects (distinct from the mixed-market “inclusionary unit” projects, although they’re also arguing certain benefits of those).
This is not to say it has to be done this way. But I believe the authors are sincerely trying to educate people on the various different types of affordable housing, and one that is especially complicated is the world of (federal) Low-Income Housing Tax Credit projects, which are sometimes done by non-profit developers and sometimes done by for-profit companies. In either case, private capital is involved somewhere along the line anyway since bank financing and the sale of tax credits on the market is involved regardless. As a commenter noted above, that’s just sort of how the system exists currently, like it or not.
Meridith,
Readers certainly should come to their own conclusions.. but a few VALID points.
Disclosures are usually place at the start/front of article. Not the very end
Timing of post is horrible. Day before the election so focused on development.
Also, the other poster should have linked to their non profit company. You can view their financials here. 182M in assets
https://nonprofitlight.com/ma/boston/preservation-of-affordable-housing-inc
Breaking my self-imposed exile for a post:
Bugek:
Actually, in newspaper articles it more commonly is at the end. Go look at the Globe’s opinion page. Every guest editorial has similar information at the end. It’s a common style guide.
And I find your conflict issue to be one-sided. Even on this forum we’ve had multiple folks who post about candidates or projects, and only later do we find out that they are opposing that candidate or project because they live next door, or across the street.
And too be honest I’m glad forums like this exist for them to express their opinions broadly, even if they live next door. And they surely have a monetary interest in what happens to the site too. Their own property values and their quality of life could be impacted. Do I always want them to disclose the conflict? Yes. Upfront and honestly. Do they? In my experience, rarely do they, even on Facebook where most folks use their real names.
So the folks with personal self-interest are free to post as much as they want, but the folks who actually do the work are shut out unless they meet a 5 year “do no business” standard. That seems like a recipe for only the speech you want to hear getting any airtime. That certainly seems unfair.
And let’s not forget: the idea that folks with a potential conflict (and to be clear, neither Jason Korb nor Judy Jacobsen has an actual NEWTON based conflict, the conflict is just in what they do generally) can’t speak up on the issue where they are actual experts in that issue because they one day potentially could benefit from future legislation associated with that issue means we lose some of the best expertise our community has to offer. Both individuals live in Newton. They aren’t posting for self benefit. This is what they do, and what they can tell us about what they do.
Also, you post Judy Jacobsen’s non-profit’s financials as if it is a negative. You’ve just proven she is an actual EXPERT in her field, with decades of experience, running a sophisticated non-profit. Again, why wouldn’t we want folks like this giving us their opinions? Don’t like them? That’s fine too. But why are we talking about conflicts instead of the actual article?
Finally my inbox is flooded with emails and PAC ads with last minute surprise attacks on candidates. There seems to be a common thread in those last minute attacks: all of the attacks are against folks on the Engine 6 slate. Those attacks are unnamed and unaccredited, and we won’t find out who funded the PAC ads until weeks later. This is not that. Opinion articles in the Globe and letters to the editor are common. They read exactly like this. I wish we had more of this, not less.
@Greg
When the source is used to legitimize the content, then the source is as much a viable topic for discussion as the contents. I understand that you are former newspaper employee and I would surmise that the decline of that industry is a personal source of professional sorrow. Yes, the background and the position of the author does matter. Let me give you something I wrote back in 2019 well before the Covid19 Vaxx/Anti-Vaxx debate that has a lot to do with the decline of media properties and how people source information and form a bias. If you read it and if you like, I would be happy to discuss privately if you so choose.
https://siwdt.com/2019/07/25/july-2019-essay-how-i-learned-to-stop-worrying-and-love-accountability/
Bill Koss