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HomeMy WebLinkAbout2022-10-20-CPC-min 1 Minutes for the Community Preservation Committee 10-20-2022 Remote Zoom Meeting Meeting ID: 872 9148 0234 Committee Members Present: Marilyn Fenollosa (Chair), Jeanne Krieger (Vice Chair), Kevin Beuttell, Bob Creech, David Horton, Bob Pressman, Lisa O’Brien, Mark Sandeen, Melinda Walker Other Attendees: Sarah Morrison (Executive Director- LexHAB), Tara Mizrahi (LexHAB Board member), Jonathan Silverstein (LexHAB Board member and Attorney), Kathryn Roy (Chair, Affordable Housing Trust Study Committee), Gretchen Reisig (Vice Chair, Affordable Housing Trust Study Committee), Liz Rust (Regional Housing Services Office), Carolyn Kosnoff (Assistant Town Manager, Finance), Sandhya Beebee (Capital Expenditures Committee Liaison), Carol Kowalski (Assistant Town Manager for Development), Lisah Rhodes (Capital Expenditures Committee) Administrative Assistant: Christopher Tierney Ms. Fenollosa called the meeting to order at 4:05. LexHAB Transition to a 501(c)(3) Corporation: Sarah Morrison, the LexHAB executive director, presented the benefits of LexHAB converting from a quasi-municipal entity to a completely independent 501(c)(3) corporation. Ms. Morrison also explained the history of LexHAB, beginning in 1983, and its contribution to affordable housing in Lexington. Currently LexHAB is responsible for 78 units housing over 200 people. Throughout the presentation Ms. Morrison emphasized the increased flexibility in funding and in development that a 501(c)(3) would give LexHAB, especially given the post-2018 decision by Town Counsel that made LexHAB subject to public bidding rules. This current situation is currently untenable, especially given the rising costs in construction over the past few years. The Committee was shown that as of 2022 an affordable housing unit’s cost of construction was coming in at over $933,000 per unit. This is concerning, given that the cost of a structure only cost LexHAB $385,000 in 2017, the final year before LexHAB was subjected to public procurement requirements. Simply put, this model is unsustainable, especially in a town with a median home price of $1,600,000 and median household income among the highest in the state. Ms. Morrison also explained that as a result of tax-exempt status, LexHAB would have a far greater amount of flexibility in terms of individual donations and matching state funds. One of the most stable ways of funding a non - profit is donations from individuals. Ms. Morrison also explained that the conversion to a 501(c)(3) could also give LexHAB the potential to become a community development corporation, with the potential of unlocking associated funds from the Commonwealth and the Federal government, specifically the Community Investment Tax Credit Program (a company must be a 501(c)(3) non-profit to apply to this program). The Community Investment Tax credit is a great revenue stream, especially with tax refunds for the public: this program would allow 2 for up to $500 in tax exemptions/refunds for every $1,000 donated by an individual . Ms. Morrison also went into greater detail on the road ahead for the conversion to a 501(c)(3), including changing specific language in the Special Act that governs LexHAB. The process would take an entire legislative cycle to be completed, and that for a most speedy transition, a vote from Special Town Meeting is needed for there to be a “timely file” in the third week of January 2023. Finally, Ms. Morrison explained that the Select Board would still have a power over potential board members for the new LexHAB. Ms. Fenollosa asked what if any effect this arrangement of veto power by the Select Board would affect the status of LexHAB being an independent 501(c)(3). Ms. Morrison and Ms. Mizrahi explained that after speaking with Town Counsel, so long as the Special Act clearly states the independence of LexHAB from the Town, LexHAB would not be affected by this type of Select Board oversight. Ms. Fenollosa also asked Ms. Morrison about the future relationship between the Committee and the “new” LexHAB once the conversion is complete. Ms. Morrison said that LexHAB would continue to ask for money from the CPC, especially for specific projects. Ms. Walker asked Ms. Morrison about the number of non-SHI (Subsidized Housing Inventory) units and what the waiting list for an affordable housing unit was. Ms. Morrison explained that there are currently 29 non-SHI units available but that there is currently a 25-person waitlist for a one-bedroom unit from LexHAB. Ms. Walker then asked Ms. Morrison to clarify what would qualify as an emergency for non-SHI units. Ms. Morrison explained that emergencies would include things like Domestic Violence, homelessness or natural disaster. Ms. Walker then asked Ms. Morrison to clarify the definition of “homelessness.” Ms. Morrison explained that she did not have an emergency application on hand but clarified that the Town of Lexington does have a different working definition of homelessness than other agencies. Specifically, Ms. Morrison stated that the shelter system has a much more stringent definition for shelter. Mr. Pressman asked if the current draft of the bylaw specifically states that LexHAB will not be subject to public procurement. He also asked whether it had been determined that this language must be included or would the change of status automatically bring about that condition. This could become unpalatable to those who are firm union supporters. Ms. Morrison and Ms. Mizrahi explained that since the separation of LexHAB from the Town is explicitly stated in the Special Act, any confusion would be avoided. They also explained that the specific reason for moving away from the quasi-municipal nature is to avoid public procurement and not necessarily prevailing wages. Mr. Pressman then asked about the AMI (Area Median Income) status of those in non-SHI units, especially the status once the transition of LexHAB to a 501(c)(3) occurred. Mr. Pressman stated that with Lexington’s high median income and increasing home prices, there was a real danger of those that help keep Lexington going would be unable to afford to live here. Mr. Pressman then reiterated the need to protect those living at the lowest AMI and that more very low AMI units needed to be constructed. Mr. Pressman than stated that he would abstain from voting on the motion. Ms. Morrison asked if Mr. Pressman was concerned about non-SHI units being rented to those with a more moderate- income AMI. Mr. Pressman agreed with this and again stated that he needed to know if this was going to be the case and that the continued answer of “I can learn that after LexHAB is independent” is not an acceptable answer. Ms. Mizrahi stated that there is no requirement to 3 meet people at every income level. There are currently no deed restrictions in place but that LexHAB has rented to people of all AMI ranges. Mr. Horton asked what was the timeframe for the implementation of LexHAB as a 501(c)(3), and Ms. Morrison responded that the transition takes place with the legislative cycle, and as the State Representatives have made it clear that the process would take approximately two years, she would be “pleasantly surprised if it didn’t.” Mr. Horton followed up by asking if there are any other towns with relevant experiences. Ms. Morrison explained that LexHAB is unique in terms of affordable housing organizations. Ms. O’Brien asked how LexHAB’s fundraising goals have changed with the possible transition to a 501(c)3. Ms. Morrison stated that nonprofits’ (even affordable housing nonprofits’) most reliable source of income is individual donations. Ms. Morrison went on to explain that currently LexHAB’s budget is $800,000.00 and $35,000.00 come from private donations. Ms. Morrison also explained that residents have in the past offered to donate their homes to LexHAB, and that she would like to see that expanded. Mr. Creech stated that he had previously sent Ms. Morrison questions regarding her presentation and that those answers should help save a great deal of time at Town Meeting, especially for those members who may not have been able to view this presentation. Mr. Sandeen added his support and those of several other Select Board members and he said that he can’t wait to see this motion passed. Mr. Beuttell also added his support to the Article, as did Ms. Krieger, who also asked if there were any concerns about the home rule petition , given Lexington’s shaky recent history of passing those petitions. Ms. Morrison said that LexHAB is not taking anything for granted and that this motion could pass but could very well also die at Town Meeting. Ms. Walker commented that she supports the Article “500%,” but also added that there needs to be a differentiation of terms, especially when AMI levels are concerned. Ms. Walker went on to say that the public is largely unaware about how much a person needs to earn to afford a one-bedroom apartment in Massachusetts and that the term “affordability” is being used in a way that could be counterproductive. Mr. Pressman commented that LexHAB can retain the emphasis on those at the lowest levels of AMI and that LexHAB could seek a support grant from the CPC to help it in a fiscally sound way. He also stated that the CPC has a large reserve of funds that can be used to help those at the lowest AMI spectrum. After a motion was duly made and seconded, the CPC conducted a roll call vote (8-0-1) to support Article 14. Establishment of an Affordable Housing Trust: Gretchen Reisig and Kathryn Roy introduced Article 12, the establishment of an affordable housing trust in Lexington. Ms. Reisig explained to the Committee what exactly an affordable housing trust is and specifically how it could benefit the Town of Lexington. Ms. Reisig also described the extent of the affordable housing crisis in Lexington. Ms. Reisig explained that in the past decade Lexington created 41 affordable units, while losing 41 group home units, and that since 2011 there have been no additional SHI units procured. Ms. Reisig also explained that of the over 11,800 homes in Lexington , only 663 are “affordable,” underlying the need for a dynamic funding entity like an affordable housing 4 trust. Ms. Reisig went on to explain that as Lexington currently operates, funds for affordable housing are appropriated at Town Meeting, once or possibly twice a year. Unfortunately, with the real estate market being as fast- paced as it is, this puts the Town at a huge disadvantage when attempting to purchase property to increase subsidized housing stock. An affordable housing trust, by contrast, can react to the market in real time and can make purchases on a rolling basis. The current system has already cost Lexington the chance to make two property purchases. Ms. Reisig also stated that the housing trust model is well established in the Commonwealth and that if adopted, Lexington would become the 129th municipality to adopt this model since the law allowing such trusts passed in 2005. The 128 current municipalities represent an increase of 18 communities since 2019. Ms. Reisig went on to explain what an affordable housing trust can use its funding for, including creating affordable housing either by new construction or renovation, preserving affordability of rental units, establishing down payment or rental assistance, and advocacy for more affordable housing. Ms. Reisig further explained how the trust would be funded, including transfers from the CPA, municipal funds and private donations, ARPA funds, fees from the sale of affordable homes and federal fu nding among others. Ms. Reisig also explained the concept of “prefunding” to the Committee and how that would benefit the trust once it is established. Prefunding is non-project specific funds that can allow the trust and the Town to remain competitive in the real estate market. Ms. Reisig further explained that most of the trusts are pre-funded and these funds can be allocated for the purchase of properties, hiring consultants to create housing needs assessments, and preparation of RFPs for development. Ms. Reisig explained that the ideal number of trustees would be from 5-9 and would ideally have professional or personal experience in affordable housing, a real estate agent, developer, banker and most importantly a resident in an affordable housing unit. Once the trust was established, with these trustees could be sworn in and begin developing an action plan for the trust and begin its work. Mr. Horton asked if the trust was going to be a Town entity. Ms. Reisig said that it was in fact going to be a Town entity but rather it was LexHAB that was going to become a separate entity. Carol Kowalski also explained that this was the case. Ms. Kowalski went on to explain that one project could move forward without the other, but since both Article 14 and Article 12 are so similar in scope, she describes them as “the dynamic duo”. Ms. Kowalski also explained that in theory any entity could receive money from the affordable housing trust and that it will act like a bank. The difference with LexHAB is that LexHAB would behave like a developer or a landlord. Furthermore, it was explained that both of these entities would exist with their own boards. Ms. Fenollosa noted that every affordable housing project brought to the Committee has been for a project rather than a prefunding, and that currently Town Meeting still has a say over what was being built and where, with taxpayer money. While this has caused past projects to stall as a result of citizen input; once the trust is funded, the input of Town Meeting and the general public is taken away. Ms. Kowalski refuted this point by stating that affordable housing projects are still subject to Lexington’s Zoning laws and that a project, if it includes affordable housing, could still be subject to Town Meeting or the Zoning Bboard of Appeals depending on the scope of the project and that if it didn’t follow Zoning laws a project would be brought to Town Meeting for approval. Ms. Rust commented that any significant project would more than likely require additional CPA funding and therefore Town Meeting would have input that way. 5 Ms. Reisig also explained that the purchase threshold (based on the average home sale price) was designed especially so that larger scale projects would need approval of the Select Board and that the community would still have its say. Ms. Kowalski also stated that Sudbury, which has a pre-funded affordable housing trust, still requests funding from their CPA and expects Lexington to continue to receive project-based funding requests even though an affordable housing trust is established. After a motion was made and duly seconded the CPC conducted a roll call vote (9-0) to support Article 12. Special Town Meeting 2022-3: Carolyn Kosnoff joined to tell the Committee about the status of the 2022-3 Report to Special Town Meeting. Ms. Kosnoff explained that since the “buckets” are not completely set the final figures for the Undesignated Fund Balance is not yet finalized. Ms. Fenollosa asked the Committee if they were satisfied with submitting the report subject to the new numbers from Ms. Kosnoff. Ms. Fenollosa also stated that the text of the report had been approved by Melissa Battite and Mike Cronin. After a motion was duly made and seconded, the CPC conducted a roll call vote (9-0) to approve the report to Special Town Meeting subject to the new numbers from Ms. Kosnoff Minutes: Approval of minutes from 9/20/22 will be deferred to the next meeting Committee Business: Sections of the Needs Assessment Report were distributed to Committee members to update: Mr. Beuttell is responsible for Open Space, Ms. O’Brien is responsible for Recreation, Ms. Fenollosa is responsible for Historic Resources and Mr. Creech, Mr. Pressma n and Ms. Walker are responsible for Community Housing. Drafts of the revised sections are due by 11/1 so that a public hearing regarding the Needs Assessment Report can be held in a timely manner. During member concerns, Ms. Walker stated that she would like an opportunity to discuss CPA projects for recreation/open space. Ms. Walker commented that the Recreation and Community Programs FY24-28 CPA Project Summary indicated a need for $11,988,000 to meet their long-term plans and that there is a conflict between the interests of the need for recreation projects and the new High School project. Ms. Walker stated that there is a need for leadership in Town for these two interests to work together. These issues are deep- rooted and cannot be resolved in the CPC meetings, but leadership, especially from the Select Board, is needed. Mr. Sandeen agreed with the need for leadership on these issues. Mr. Sandeen also asked if the CPC would consider an application to prefund the Affordable Housing Trust contingent on approval from Town Meeting, and whether the Committee would consider applications for the prefunding the Trust before it is officially voted established. By 6 roll call vote, the Committee agreed to accept applications after November 1 from the Select Board on behalf of the Trust and to waive the deadline on behalf of the Trust for FY 24. Mr. Pressman mentioned the projected costs of the Stone Building and stated that he had heard that the design should be $200,000-$300,000, not $1million. Mr. Pressman also noted that the total project costs were increasing from $1,500,000 to $10 million is unacceptable and that the project application should be withdrawn. Ms. Fenollosa responded that any party is entitled to apply for CPA funding and appear in a public hearing to make their case for a project, and that Committee members could vote to reject any application at their discretion. The Committee’s next meeting will take place Thursday October 27th at 4:00 over Zoom. After a motion was made and duly seconded the Committee voted by roll call (9-0) to adjourn the meeting at 6:10. Respectfully Submitted Christopher Tierney Administrative Assistant Meeting Materials: Community Preservation Committee Report to Special Town Meeting 2022-3 STM 2022 Article 14, LexHAB Reorganization: Motion with proposed changes to Special Act Ch. 521 of the Acts of 1983LexHAB Special Town Meeting Powerpoint Presentation STM 2022-3 Article 12, Creation of Housing Trust: Article, Motion with attached proposed bylaw Housing Trust FAQs “Town Control over an Affordable Housing Trust” Affordable Housing Trust Study Committee Special Town Meeting Powerpoint Presentation Minutes of CPC Meeting 09/15/22 (not discussed) Approved 11/17/2022