The Unlocking Housing Production Commission created by Governor Healey analyzed and reported on the challenges driving this crisis across the Commonwealth and presented promising solutions to those challenges in its report, “Building for Tomorrow: Recommendations for addressing Massachusetts housing crisis.” The challenges and potential solutions identified by “Building for Tomorrow” also apply to housing affordable to households with extremely low incomes (ELI Housing). As they are deployed, these solutions will help to reduce costs and increase the pace of ELI housing development. However, ELI housing development also faces unique challenges that these broad, market-based solutions identified in the “Building for Tomorrow” report cannot resolve on their own.
Residents with ELIs, who earn no more than 30 per cent of area median income (AMI), experience disproportionate housing cost burden, housing instability, homelessness, and a variety of other non-housing challenges which both exacerbate, and are exacerbated by, the inadequate supply of ELI housing which meets their needs. The demographic trends illustrated in “A Home for Everyone: A Comprehensive Housing Plan for Massachusetts 2025 – 2029,” and its accompanying Statewide Housing Needs Assessment, indicate that 8 the number and proportion of residents with ELIs in Massachusetts will continue to grow, largely driven by an aging population and the increased rates of disability that come with that shift. High overall housing costs continue to rise as wages for households with ELIs remain low and relatively stagnant (or, in the case of older residents, drop sharply at retirement). As a result, demand for ELI housing will likely increase sharply over the coming years. This will require the Commonwealth to allocate funding to meet increased demand, prioritizing programs which serve households with ELIs, improving targeting within these programs, and increasing their efficiency to ensure that the Commonwealth’s finite resources can support as many households as possible.
The Special Commission on Extremely Low-Income Housing worked to identify these challenges and develop solutions which will ensure that the Commonwealth preserves and expands housing supply and increases affordability for residents with extremely low-income, whom the market often fails to serve. The Commission is thus tasked with recommending administrative, regulatory, and legislative changes which would allow the Commonwealth to better and more efficiently provide for these residents’ housing needs.
The Commission’s recommendations are organized into three primary focus areas:
Production
ELI Housing is harder to produce than other housing types because of the large subsidies and complex, multi-source financing required to build a project while guaranteeing affordable rents for these households over the long term. This financing structure is necessitated by the fact that rents affordable to households with ELIs fall far short of covering operating costs. This limits a project’s ability to borrow for capital costs and necessitates significant operating subsidies. ELI Housing also faces greater resistance in the development review process because of pervasive misconceptions about its quality and neighborhood impacts. The Commission identified strategies to provide enhanced, expanded, and more predictable project subsidies for developments affordable to households with ELIs, and to increase the dollar-for-dollar efficiency of these subsidies.
Preservation
It is critical to ensure homes currently affordable to households with ELIs stay that way, much in the way we cannot expect a bathtub to fill if we turn on the water but neglect to close the drain. Preservation opportunities often offer a significantly lower cost per unit than new development, making preservation not only a necessary strategy to prevent net losses, but also a more cost-effective way to provide affordability. The Commission identified strategies to ensure that units which are currently habitable and affordable to households with ELIs remain affordable to them over the long term.
Supports & Services
Ensuring that housing meets the needs of residents with ELIs requires operating subsidies to keep rents affordable and support financial feasibility. It also entails providing supportive services which help residents with ELIs climb the housing and income ladders. The importance of these supports has grown given current federal priorities and requirements placed on Continuum of Care (CoC) funding for individuals and families experiencing or at risk of homelessness.3 While these supportive services improve the lives of residents with ELIs and enable some residents to transition out of ELI housing, they also come at a considerable cost. This cost is extremely difficult for many developers and operators to bear without substantial subsidy, especially in regions of the Commonwealth with lower rents. The Commission identified strategies to enhance operating subsidies and more efficiently provide supportive services so residents with ELIs can afford to live in ELI housing and also benefit from resources which make ELI housing a springboard for upward economic and housing mobility in as many cases as possible.