A new financial architecture for developing mixed-income housing in Massachusetts

The need for affordable housing is as critical now as it has ever been. Mixed-income housing has been adopted by federal policymakers and many state housing agencies as a means to address this pressing issue. Two mixed-income programs with contrasting results are examined and the strengths and weaknesses of each discussed. Based upon the lessons learned, the authors use a variety of financing mechanisms to create a new financial architecture for the development of mixed-income housing in Massachusetts. The thesis begins with a general overview of the history of U.S. housing policy and the current need for affordable housing. It follows with a detailed description of the various mechanisms used to finance and promote the supply of low-income housing. Two mixed-income housing programs, the SHARP Program and the 80/20 Program, are examined. Using a variety of financing mechanisms, a new financial architecture is advanced based upon a new public/private partnership. Current construction and operating costs from the greater Boston area are used to simulate the development and operation costs of an 80/20 project. Growth rates extracted from a portfolio of 23 mixed-income properties financed by the Massachusetts Housing Finance Agency (MHFA) under the SHARP Program are superimposed on a baseline scenario to subject it to the same financial stresses that the SHARP properties experienced during the recession of the early 1990s. The risks and potential returns to the public/private partnership are analyzed and recommendations made so the returns to each party are commensurate with the risks that party bears when investing in mixed-income projects. The Model is run through a variety of sensitivity analyses to measure the impact of changes in key variables on the resulting returns of principle partners. The conclusion drawn is that the long-term viability of mixed-income projects can be tenuous, but with the proper alignment of interests and through the use of carefully interwoven finance mechanisms and public policies, mixed-income projects can help address the affordable housing crisis while successfully meeting the goals of each party to the partnership.

Department dc:contributor.department

Massachusetts Institute of Technology. Dept. of Urban Studies and Planning.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2000

Authors dc:creator

• Adnani, Mecky (Adnani-Rofougaran), 1960-
• Crabtree, Peter D., 1959-

Advisor dc:contributor.advisor

• W. Todd McGrath.

• Urban Studies and Planning.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/8836

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/8836