Department of Neighborhood Development
On May 13, 1998, Mayor Menino announced the beginning of the City of Boston's newest housing initiative, the Home Again Program. The Program will promote new construction, homeownership housing developments on city-owned vacant land. In response to the growing housing shortage and the continued need for homeownership opportunities throughout the City of Boston, the Mayor and the Neighborhood Housing Trust have pledged $6,000,000 of Linkage funds to the Program. These funds and other City resources will be used to create approximately 200 new homes in various neighborhoods.The Department of Neighborhood Development (DND) will spearhead the program.
DND has identified nine sites for the 1st Phase of the Program, upon which it would be appropriate to construct several single family or two family homes. A 2nd Phase involves approximately six locations. These developments will include the new construction of buildings by a non-profit developer or for-profit developer/contractor. DND will market the homes and identify eligible buyers. The Program will have three types of developments:
Affordable housing developments, 100% of units for sale to households with incomes at or below 80% of median income as set by HUD and adjusted for family size.
Market rate housing developments, with units for sale to households with incomes above 80% of median income as set by HUD and adjusted for family size.
Mixed income housing developments, with units for sale to both household types. This type of development usually involves a specified number thatare designated for sale to low or moderate income households.
The City of Boston may provide many different types of assistance to these developments, such as technical assistance, environmental assessments, site surveys, land acquisition as low as $1, and direct capital subsidies from Linkage or HOME funds.
The Project ProcessDND will meet with community residents and groups, finalize site selection and design plans, conduct environmental tests and establish any necessary plans for remediation. DND will then issue a Request for Proposal (RFP) for the site(s). In Phase 2 Home Again developments, DND will perform environmental tests and surveys at the time of issuance of RFP's. With site design and development packages completed on these selected sites, developers will be responsible for construction bids only.
The RFP will be for a certain parcel or parcels of land and will contain information regarding development objectives and selection criteria, including, but not limited to the number of houses to be built, where the houses should be sited, elevations and building footprints that comply with zoning requirements. Environmental and geo-technical issues will be identified through site tests. Selected developers will use the site test and report to establish a soil remediation plan.
Developers will respond to the RFP. The proposals must comply with the requirements of the RFP and include a development budget that provides estimates for all anticipated costs associated with the project and a development schedule.
DND will review the proposals closely and with neighborhood support select a developer based upon criteria contained in the RFP.
The selected Developer and DND will work with community residents to finalize the development plans. The Developer will complete an application to a bank for construction financing and an appraisal of the as-built product will be obtained. This appraisal will establish the sale prices for the units and the amount of the construction loan. The difference between the total development cost and the amount of the sale proceeds will determine the amount of the gap, if any.
DND and/or the developer may apply for other types of subsidies, such as FHLBB or State HOME & HSF funds that may be applied against this gap.
Finally, DND may fill any remaining gap by combining City funds, Linkage and/or HOME set aside for these projects. The need, the amount and/or the source of the subsidy will help to determine whether the development is market rate, mixed income, or totally affordable.
Depending upon market conditions within a particular neighborhood, the City of Boston may provide an additional subsidy to eligible homebuyers to ensure that that home is affordable to low or moderate-income households. This additional subsidy will be structured as direct assistance to the homebuyer and will not result in a reduction in the sales price of the property.
FinancingConstruction Loans: The developer must be credit worthy and able to qualify for a construction loan. DND has teamed with BankBoston on a construction loan product with favorable rates and reduced, predictable costs. The maximum loan amount will be up to 90% LTV (based upon an as-built appraisal). However, the developer will be required to maintain a 10% equity position in the development until the project is completed. Generally, as each house is sold, 90% of the proceeds will be paid to the Bank to reduce the construction loan and 10% to the Developer.
The developer must be eligible for funding and in good standing concerning RE Taxes, Water and Sewer, and other Loans from the City or State for all property owned. The public funding provided to the project will be in the form of a conditional grant or loan. The Developer will be required to execute various documents securing the required performance of the various funding sources. In addition, the developer will be required to execute an affordable housing covenant, which will be secured by a deed rider that runs with the land.
Each homebuyer is responsible for obtaining financing for the acquisition of the home. However, DND's Home Center will assist buyers by providing information and access to a variety of mortgage products, such as the Soft Second Loan Program. In addition, DND offers downpayment and closing cost assistance to eligible low or moderate income homebuyers.