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10/6/2022 AC Minutes 2 funding to any developer, non-profit or for-profit, including LexHAB or the Lexington Housing Authority (LHA). It could also use its funds to create affordable housing in ways that differ from those used in the current development model. The AHTSC has drafted a change to Town bylaws that would allow the Trust to be formed, and a draft Declaration of Trust. Both would govern the formation and operation of the AHT. Additionally, Trust bylaws would be created, which would further control the operation of the Trust. The AHTSC envisions that the AHT would initially be funded by a vote of town meeting to transfer the existing balance and future revenues of the Affordable Housing Stabilization Fund, and/or an appropriation of money from the CPA Affordable Housing Reserve, and/or the annual 10% CPA Affordable Housing set aside. Appropriation of CPA monies would require the approval by the Community Preservation Committee (CPC) as well as by town meeting. Additionally, the AHT may make annual requests for appropriation of CPA funds. The AHT may request funds to be held in reserve awaiting projects, or for specific planned projects. While the CPC may still choose to approve direct requests from developers such as LexHAB or the Lexington Housing Authority, it is possible that the CPC will feel comfortable with having all CPA affordable housing funds flow through the AHT. One primary benefit of the Trust is its ability to use affordable housing monies quickly and respond to real estate that comes up for sale with a limited window of opportunity. The AHT would be authorized to spend up a predetermined annual limit established by the Select Board, after which the Select Board would have to approve further expenditures. The AHTSC has suggested that this spending limit be based on the average selling price of a home in Lexington. The AHT would be able to hire staff, who would be paid from its funds. The proposed Town bylaw and Declaration of Trust do not contain an administrative expense limit, but as yet unwritten Trust bylaws could contain a cap. While the town staff, primarily in the Finance Department, would be available to support the AHT, no additional town staff would need to be hired. The Town could also charge the AHT for services rendered, similar to the way the enterprise funds are charged. Any costs incurred to manage the Trust’s investments would be paid from the Trust’s holdings. STM Article 14 – LexHAB Reorganization Ms. Morrison presented the Committee with background information about Article 14. Prior to the meeting Mr. Michelson had submitted questions to Ms. Morrison. These questions and those from Committee members covered various aspects of the conversion of LexHAB from a quasi-municipal organization to a private non-profit 501c(3) organization and its effect on operations of the organization. Questions were answered by Ms. Morrison, other members of LexHAB, and Town staff. The conversion is being pursued to enable LexHAB to create new affordable housing units more efficiently and to maintain its current housing stock. Founded as a quasi-municipal organization in 1983 by special State legislation, a ruling about four years ago clarified that LexHAB must follow all public procurement regulations. The result has been escalation beyond that of the free market of the per unit cost to LexHAB in constructing housing. The LexHAB organizational close association with the Town is quite unusual; many other towns instead have formed 501(c)(3) non-profits to develop affordable housing. Non-profits are able to develop new housing at costs up to 40% less than municipalities.