Trust Fund Board Navigates Complicated Path To Affordable Housing

By: Ed Maroney

Alan McClennen, recently appointed by the board of selectmen, was voted in as chairman by the affordable housing trust fund board last week. Also last week, the selectmen named affordable housing committee chair Katie Wibby as the ninth and final member of the trust fund board. CHRONICLE FILE PHOTO

ORLEANS The town created an affordable housing trust fund board to move quickly when likely properties come on the market, but members are looking carefully before they leap.

The board, with approval of the selectmen, funded the purchase in May of a half-acre lot at 15 Quanset Road on which Habitat for Humanity of Cape Cod will build a two-bedroom affordable home. It has backed analyses of the housing potential of the Cape Cod Five Cents Savings Bank Operations Center and the former Masonic Lodge, both still ongoing.

Those actions were unanimous. But on Aug. 7, the board split 5-2-1 in endorsing the purchase of a condominium unit at 24 Old Colony Way for $235,000. Members debated whether the unit should be sold to a homeowner at a subsidized price to make it affordable or rented, finally settling on not specifying the ultimate outcome.

Members Matt Cole and Alexis Mathison voted against the action. “Purchase and resale, I'm against that,” Cole said. “There's a high potential of (stranding) the affordable buyer with a special condo assessment. If we choose to buy it and rent it, the risk is ours. We can calculate that risk through the reserve study that the condo will have on file.”

The suggested numbers for mortgage payments, plus condo fees, were out of reach “for someone my age who has a job and works,” Mathison said. “I have a profession, and I can't afford that. My fear is that this would be sold to someone using it to retire down here. I don't feel that this is attracting the young population, the young families that are working here. I see every day on social media people looking for year-round rentals. They're all over $1,200 a month. They can't afford it.”

“If it's acquired by us and sold, it'll be deed-restricted affordable forever,” trust board chairman Alan McClennen said. “The other alternative is that we buy it and we lease it, then we decide how much we want in a subsidy to get the rent down lower. In either case, we have to control the unit.”

McClennen said Director of Planning and Community Development George Meservey and he had visited the unit and run some numbers. With a subsidy from the trust lowering the price (already below what's being asked for a similar unit at the complex), a homeowner could finance the purchase with a mortgage of $150,000 at 4 percent, making his or her monthly principal and interest payment $716 a month. Condo fees at the location have been “fairly stable over the years,” McClennen said, and amount to $392.22 a month. That adds up to $1,108.94 in carrying costs.

“We make this work,” McClennen said, “because the trust would write down the financing from $235 (plus minor improvements made before the sale) down to $150,000, so in effect we end up with an affordable unit at $85,000 to $90,000, affordable in perpetuity. That's a pretty good value considering what we paid for some other things,” such as $200,000 to acquire the Quanset Road lot on which Habitat will build a two-bedroom house.

“Is this really gonna be an affordable unit?” Mathison asked. She wondered whether a further subsidy from the trust would make the difference. “The concept of the paydown still works,” Selectman Mefford Runyon, a trustee, said. “The affordable housing committee wants to historically track what it's costing to create an affordable housing unit... Is a paydown of $125,000 reasonable? I don't know.”

“Should we proceed to purchase this unit as a test unit?” McClennen asked. “We can try different ways to do this and we can learn a lot in the process.” Member Henry Brehm suggested creating a subcommittee of trust and affordable housing committee members to “determine the best way to rent it year-round.”

Vice chairman Duane Landreth, who is an owner at the condo complex on Old Colony Way, did not participate in the discussion or the vote.