LIP was established by the Legislature in 1990 in response to a report by a special legislative commission which found that state law defined low and moderate-income housing as "any housing subsidized by the federal or state government under any program to assist the construction of low or moderate-income housing."
This definition had previously been interpreted to mean financial subsidies only. As a result, cities and towns had little incentive to undertake housing initiatives which did not require direct state or federal assistance but which are otherwise within the intent of M.G.L. Ch. 40B. LIP allows the Department of Housing and Community Development to provide technical assistance that qualifies as a "subsidy." The LIP may also issue a site eligibility letter for a project, a prerequisite for a developer to apply for a Comprehensive Permit.
Unlike conventional housing subsidy programs, in which a state or federal agency must approve every aspect of financing, design and construction, LIP allows most of these decisions to be made by the municipality. LIP regulations and guidelines address those program components that must be reviewed and approved by DHCD. For example, incomes of households served, fair marketing, profit limitation and establishing long-term affordability for the units which are built.
How It Works
Developers seeking to build single or multi-family homes, condominiums or apartments where a certain percentage of the units are proposed to be affordable work with town officials to obtain approval. Such units must serve households below 80% of the area median income; the units must be subject to use restrictions to ensure that they remain in a community's affordable housing stock, and must be sold or rented on a fair and open basis.
DHCD provides technical support to both the town and the developer. If a development cannot be built under existing zoning, the developer may seek a comprehensive permit allowing the development to be built at a higher density than allowed under existing zoning.
LIP projects are subject to profit limitations. For homeownership projects, profit and developer fees to all partners and owners are limited to no more than 20 percent (20%) of the total development costs. For rental and cooperative housing projects, the LIP regulatory agreement, signed by the community, developer, and DHCD, limits distribution of return to all partners and legal or beneficial owners to a maximum of 10 percent (10%) equity per year during the time when the affordability restrictions are in place.
Who Is Eligible
Both for-profit and non-profit developers may use the LIP program in concert with a city or town, as the municipality and developer jointly submit the application.
LIP applications are available on the DHCD website, or by calling the LIP staff at 617-573-1351. Information to be provided in the application includes the following:
- Documentation of developer's interest in the site (ownership, option purchase, etc.);
- Description of current site conditions;
- Site plan;
- Sample floor plans of the proposed units, units identified by size, type and proposed cost;
- A financial pro forma of the project, and
- Appraisal of the site.
LIP staff review the application, conduct a site visit and evaluate the application. If the project as proposed is approved, DHCD will issue a site eligibility letter so that the developer may apply to the local Zoning Board of Appeals for a Comprehensive Permit.
For more information:
Please click here or call the Division of Housing Development at (617) 573-1300.