ORLEANS – The Housing Assistance Corporation has asked the town to contribute $1,876,624 toward the development of 14 rental units at the former Masonic Lodge at 107 Main St. Town officials are more than willing to do that, but a disagreement has developed over exactly where the money should come from.
HAC needs a commitment from the town for the subsidy amount to apply for a $1.5 million state grant as well as other funding for the project, whose total cost is expected to be about $5.6 million. To secure the town's share, officials want to tap the affordable housing trust fund's existing reserves and place an article on the Oct. 25 special town meeting warrant to borrow the remaining $1 million.
Exactly what form that borrowing will take is currently a subject of contention. Last Wednesday, the select board voted to endorse a special town meeting to bond the $1 million through the community preservation committee. Under that scenario, the first payment of $72,000 would not be due until June.
However, at its meeting the following day, community preservation committee members balked at that plan, saying that the proposal was not following its established procedures and that the appropriation could take money away from other projects. Rather than vote, the committee decided to hold a public meeting today (Sept. 16) at 4:30 p.m. to gather public input on the proposal.
CPC members made it clear that they supported the 107 Main St. project, but were concerned that it was being done outside of their normal yearly funding process.
“This is a big ask,” said member Joan Francolini.
If the CPC doesn't agree to use its authority to bond the $1 million, there are two other alternatives. Officials could ask voters to borrow $1 million through property taxes, which would require a two-thirds vote at town meeting and endorsement at a subsequent election. Select board members worried that the three-quarters vote would be difficult to obtain.
The affordable housing trust could also tap a $2 million line of credit provided by the Cape Cod Five. Finance Director Cathy Doane didn't like that option, however, because of the interest rate, which is based on the prime rate, currently 3.25 percent. CPC or town bonding would be at about 2 percent. The bank could also demand payment of the line of credit any time, she said, and she was not comfortable that the housing trust would have the resources to pay.
“I always feel more comfortable knowing we have a definitive revenue source,” she said. “The CPC is a definitive revenue source,” because it draws funds from a 3 percent property tax surcharge.
The affordable housing trust currently has a balance of $1,635,205, said trust chair Alan McClennen. That will be reduced by $450,000 when its contribution to the Gov. Prence purchase is applied this week. If $876,624 is applied to the 107 Main St. commitment, that would leave $308,581 in the trust's fund.
Trust members had wanted the CPC to add another $200,000 to the fund, since at this year's annual town meeting the community preservation committee had reduced the $500,000 it usually contributes to the fund to $300,000. The additional money would have boosted the fund's balance, after the 107 Main St. commitment, to $508,581, McClennen said. The trust currently has no other projects in sight that might require these funds, he added; if something did come up, the line of credit is available.
On Thursday, however, the CPC voted not to support the additional $200,000, again citing the request as being outside of its usual funding process.
HAC's proposed project differs from the Pennrose project at the former Cape Cod Five operations center on West Road in that it will provide rental housing for people who earn up to 80 percent of the region's median income. The Pennrose housing is workforce housing for higher income residents, said George Meservey, director of planning and community development.
Because the HAC project involves 14 units, with a total of 20 bedrooms, it doesn't qualify for many of the federal and state tax incentives and grants that larger projects are eligible for, McClennen said.
“Big projects get a lot of help, the small ones don't get a lot,” he said. HAC will need to find $3 million outside of the town's funding commitment. The agency's proposal included not only the transfer of the property, at no charge, but the $1,876,624 town subsidy, which will help leverage additional funds. Some of those grant rounds don't open until the spring, so waiting until the annual town meeting to approve the town's share of the funding wouldn't work, said Doane.
While the select board last Wednesday voted to approve the sale of 107 Main St. to HAC, the closing is not likely to take place until next year, McClennen said. The funds under discussion are a commitment, but won't be expended until the project is finalized, including all town approvals. HAC's current timeline calls for final construction loan closing in October 2022. By then the trust expects to receive another $500,000 via the CPC's annual contribution.
“No dollar gets spent on this project until there is a closing,” he said. “And the closing takes place when all other funds are available and then the town comes to the table with its share.”