CHATHAM — Like other towns in the region, Chatham has a lack of affordable housing. But it also has a scarcity of available housing for families capable of paying a mortgage, since properties under $500,000 often sell immediately after going on the market.
A group of citizens and stakeholders hope to start addressing that problem using a novel approach: a private entity that quickly buys up a property that’s well-suited for year-round families, then holds it until the town’s affordable housing trust can provide funds in the form of a buy-down program.
“What started this, quite frankly, from my perspective, was the Eldredge Garage,” organizer David Oppenheim told selectmen Monday. In that case, Oppenheim and other stakeholders arranged to purchase the property and hold it until town officials could resolve concerns about potential pollution and obtain funding from town meeting. The experiment worked, and the town purchased the property for parking, public rest rooms and open space.
In this case, a group of housing advocates and private citizens – in talks and conducting research for more than a year – propose to purchase and hold properties for affordable housing.
“The private sector is very aware of this problem and wants to help,” Oppenheim said. The group visited Nantucket and studied the workings of their housing trust, hoping to develop a similar model for Chatham. And when a suitable property became available at 466 Crowell Rd., the Chatham group took action. Oppenheim, who has experience as a real estate developer, walked through the building. “The house was under agreement in less than 24 hours,” he said.
The property was on the market for $385,000, but the sellers agreed to a $355,000 price. A careful inspection of the property shows that it needs around $19,000 worth of work, but members of the housing initiative expect to reduce that figure by leveraging relationships with contractors and nonprofits. If the property is made available by lottery to a qualifying family that makes about 80 percent of the area median income, that buyer would be able to obtain a $200,000 mortgage at around 5 percent interest. The balance, around $180,000 would represent the town’s contribution – less a 25 percent additional contribution by members of the housing initiative. In the end, the town’s affordable housing trust would pay around $135,000, “to have a deed-restricted-in-perpetuity affordable house. A pretty good deal,” Oppenheim said.
The town created its affordable housing trust in order to purchase properties more quickly than it could if it had to wait for town meeting approval. The trustees include the board of selectmen and two at-large members, and the trust is expected to have a balance of more than $1 million after it receives an appropriation at the next annual town meeting. Most recently, the trust purchased property off George Ryder Road South for construction of affordable housing. But increasingly, properties put on the market are purchased even before the trust has a chance to act.
Selectman Jeffrey Dykens said the public-private partnership that purchased the Eldredge Garage property “was remarkable. The private sector did what the public sector couldn’t,” he said.
For the housing initiative’s system to work, the town’s affordable housing trust needs to update its guidelines to allow contributions for housing buy-down programs. The trust supports those changes and is expected to finalize them early next year.
Oppenheim said the members of the housing initiative expect to take ownership of the Crowell Road home in about two weeks, and are willing to hold it for six months or longer until the trust decides whether to accept it as a buy-down project. If it decides against doing so, the initiative will come up with an alternate plan, but he said the sole reason for purchasing the property is to make it available as affordable year-round housing. Other than a potential tax write-off for their donations, the members of the initiative will not profit from the arrangement, Oppenheim said.
The shortage of affordable and available housing in Chatham is driven by its robust real estate market, with many single-family homes being purchased by seasonal residents. But Oppenheim said both developers and summer residents understand the need for year-round housing and are eager to pitch in. If the first few purchases go as planned, the initiative might seek to form a nonprofit organization through the Cape Cod Foundation, possibly using the name Friends of Chatham Affordable Housing, he said.
“This has been a heck of a learning process,” he added, and some details have yet to be determined. The lottery to choose a recipient of the home would likely be carried out by the Housing Assistance Corporation or a similar group, and it may be possible for the group to have more flexibility in setting higher income qualifications or a stronger preference for applicants with local ties.
Selectman Shareen Davis, a supporter of the initiative, said the group is not unlike the Chatham Conservation Foundation, which has partnered with the town on open space purchases in the past, sometimes buying and holding the land until town meeting acts on an appropriation.
“This is extremely similar work,” she said. “This sort of program with the trust could be an equal success story for the town.” The partnership is a creative one, “and engages the community in the process. Therefore everybody has a little ownership of it,” she said.
“This entity would be able to act much quicker than the town could ever do,” Selectman Cory Metters said. But he asked whether, by scooping up potentially affordable properties right away, the organization might actually preclude local working families from making their own purchase. “How do you balance that?” he asked.
The question is a good one, Oppenheim said. “I think these are the things we talk about as we evolve,” he said. “I don’t see us going out and buying 10 in a row and affecting the market.” The public-private partnership certainly will not solve the town’s affordable housing shortage, but it can make a meaningful contribution, he added.
Though the affordable housing trust took no vote, it expressed its support for the initiative. It cannot take action on the Crowell Road purchase until it amends its own guidelines to allow property buy-downs. But the purchase remains on track, Oppenheim said.
“We’d love to see a family moving into this house in April or May,” he said.
In related news, selectmen voted unanimously Monday to adopt the latest revision of the town’s housing production plan and to send it to state officials for approval.
Email Alan Pollock at alan @capecodchronicle.com