Commonwealth Housing Task Force Zoning Overlay Districts & State Financing Recommendations May 28, 2003

The current economy  157,000 jobs have been lost in the Commonwealth over the past two years  Unemployment is up by 90,000  Household formation may be negative at this time.  Rental and owner occupied vacancies are up  As a result, housing markets have softened temporarily, especially at the high end of the market – but with low interest rates, prices have remained at historic highs

A return to rising prices and rents when state economy recovers  As soon as the economy begins to recover, price and rents will stabilize  With continued economic improvement, household formation will increase and vacancy rates will fall.  The result will be a return to soaring prices and rents

Continued need for boosting housing supply  Early softness in the Housing Markets contributed to the economic expansion of the 90s.  Economic Expansion in this decade will require a sufficient supply of housing.  Action now is required to avoid a recurrence of what happened in the late 90s the next time the economy expands.

Fueling economic expansion and assuring affordability  The amount of housing required in the future will be a function of the rate of economic expansion.  An effective State sponsored program must allow for an efficient increase of production to meet demand.  Equally important, the program must address the need for affordability.

Overlay districts and increased state funding  High-density Overlay Districts will provide for sufficient land, zoned as-of-right, for increased production.  All projects with over 12 units must have 20% of the units affordable to those at 80% of median income.  Increased State commitments for funding will ensure that a percentage of production is affordable.

Task Force strategy  Incentives will be provided to communities to pass high-density overlay districts.  State funding for affordability must be increased simultaneously.

Funding strategy components  The Bond Cap must be maintained.  State outlays for housing must be doubled  Tax Increment Financing must be made available for housing  Proceeds from the disposition of State Land to be used for housing

State land disposition policy  Prepare an inventory of all underutilized state land  Dispose of a fixed percentage of state land per year  Priority for housing production where feasible and suitable  Sale to highest bidder  Proceeds placed in the state’s Affordable Housing Trust Fund

Anticipated results  The combination of sufficient land zoned for high density housing, plus additional State funds for affordability, will address the basic housing needs of the state.  If the recommendations are fully implemented, it is reasonable to expect housing prices to increase at or just slightly above the general rate of inflation over a 10 year period.