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CAPITAL EXPENDITURES COMMITTEE REPORT TO STM 2022-3 Article 12: CREATION OF HOUSING TRUST Funds Committee Fr Requested Funding Source Recommends Not Not Applicable Approval 6-0 Applicable "To see if the Town will vote to: a. establish a municipal affordable housing trust pursuant to Massachusetts General Laws Chapter 44, Section 55C; and b. add anew Chapter to the Town's Code of Bylaws to govern said municipal affordable housing trust; or act in any other manner in relation thereto." "(Inserted by the Select Board at the request of the Affordable Housing Trust Study Committee)" "DESCRIPTION: This article,Lexington would join 128 Massachusetts towns and cities that have adopted Massachusetts General Laws Chapter 44, Section 55C, to create a municipal Affordable Housing Trust. The Affordable Housing Trust would be a Town of Lexington municipal entity and fund, with fiscal oversight by the Finance Department. The Select Board would appoint the Trust's Board, and a member of the Select Board could be required to be a member of the Trust Board by bylaw. An Affordable Housing Trust is a municipal funding entity that can help fund the construction of new affordable homes,help fund the rehabilitation of affordable homes, increase the affordability of income-restricted homes in new developments,and preserve affordable homes whose affordability restrictions are expiring. The Affordable Housing Trust can also act quickly to acquire or hold land for affordable housing when opportunities arise." (Town Warrant) There is a pressing need for more affordable housing units across the Commonwealth and locally here in Lexington. Despite Lexington's efforts, the Town's affordable housing stock has remained static over the last 10 years. Lexington currently faces several challenges in adding affordable housing. Two principal challenges are the many-month, multi-step process for appropriating money to acquire land or property, and high construction costs due to having to comply with public procurement and prevailing wage regulations.An Affordable Housing Trust(AHT),especially when partnered with an independent-nonprofit housing corporation (see Article 14), is an important tool to address these challenges and is used by 128 towns and cities in Massachusetts. Article 12 concerns the first part of this combination—the creation of an AHT.An AHT would act primarily as a source of funds to (1)buy land, (2)buy housing (buildings), (3) finance construction (for example by providing funds to LexHAB or other affordable housing entity). The Trust can act quickly to purchase property when opportunities arise (typically we miss out on two or three potential purchases each year) since once funds are in the Trust there is no need to go to the Community Preservation Committee (CPC) or Town meeting. The Town will not own the housing. Town funds or AHT funds require an affordable housing deed restriction, as well as Town monitoring and compliance of a project, in addition to AHT oversight.Note the Trust Board has a member of the Select Board and purchases above a threshold—which is yet to be set but is recommended to be the average value of a single-family home in Lexington or approximately $1.6 million—must go to the full Select Board for approval. In addition, there will be significant oversight of the Trust by the Town Finance Department and the Trust statute requires that CPA funds appropriated from the AHT retain all CPA requirements and constraints. Approval of this Article is an important step towards improving the Town's ability to provide additional affordable housing in town. An Affordable Housing Trust will streamline and enable efficient, effective funding of affordable housing and improve the Town's ability to generate more affordable housing units. While there will be reduced Town Meeting involvement, significant Town oversight remains. The CEC believes this is a favorable trade-off to begin to address the pressing need for additional affordable housing units in town. 5