The proposed housing bank bill replaces the direct democracy of the municipal assembly with a central committee, consisting of seven commissioners, one elected from each town and a seventh commissioner elected from across the island. This central committee has broad powers to buy real estate, lend money, guarantee private loans, finance developers and incur debt – which freezes the revenue generated by taxpayers to pay this debt service even if one city subsequently withdraws from the housing bank. The only check on their power is a disproportionately strong City Advisory Council that will likely set public policy in closed-door executive sessions. This is a far cry from the very public process that developed the 60 affordable homes in Morgan Woods and voted on the 40 affordable homes in the future Meshacket development. A direct democracy requires a full and transparent process for any proposal that could have a significant impact on every capacity issue, from schooling to traffic in the Triangle.
Assuming real estate sales were similar in volume to 2021, the housing bank would generate $13-14 million in fees on an annual basis. It should be noted that approximately 58% of these fees would come directly from Edgartown. This amount of money, coupled with leveraged borrowing, is substantial and likely to be politically unstoppable. If you consider an individual or family eligible for housing bank financing if they earn up to 240% of the Dukes County median income, or up to $250,000 per year for a family of four , and up to $175,000 for an individual; the demand could be unlimited and goes well beyond meeting “affordable” housing needs.
Similarly, another popular idea is that housing initiatives funded by the housing bank will only go to those who reside on the vineyard, or essential workers who have employment contracts to work here. We understand that lengths of residency or terms of employment are not permitted under current fair housing laws. Although preferences may be allowed in certain circumstances, there is no guarantee that the accommodation, or even the majority of it, will go to current residents of the island who have spent time on the vineyard. The current Covid-19 “teleworking” paradigm has made any possible preference even more convoluted. Ultimately, anyone from anywhere earning up to $250,000 a year could qualify.
It seems to us that we should wait until we have a better idea of the capacity of our unique source of aquifer, of our sewage systems and of other natural resources (data which will be published within the framework of the study on the carrying capacity of Martha’s Vineyard Commission and lower island towns) comprehensive sewage management plans) before spending several million public dollars to create housing that by law must be open to all eligible people, whether they currently live on Martha’s Vineyard or not.
The developers claim that 75% of the funding will go to properties that have already been developed, implying that housing density will not increase. This is misleading as the Housing Bank Bill allows Chapter 40B subdivision funding – allowing developers to override our City Assembly-approved zoning bylaws and dramatically increase housing density if a quarter of the project is designated as affordable.
The Housing Bank Bill proposes that any beneficiary’s property be subject to year-round permanent residency requirements and allows the Housing Bank to purchase residency restrictions from owners regardless of income limits. We wonder how this can be applied, especially over a long period. What if a beneficiary qualifies for funding but retires later and moves to Florida for part of the year? Will this person be forced to sell their house? Will this property be another seasonal rental? We think not, nor do we think cities will want to inherit that kind of enforcement responsibility when the housing bank sunset clause kicks in after 30 years. If each individual city wishes to have affordable housing, let the city have full control of the form of restrictions and enforcement from the start, as it is now.
The Housing Bank, under its bill, is given broad powers to make loans to developers and loan installments to income-eligible beneficiaries, and to guarantee those loans. We question the qualification of the housing bank to grant loans or guarantee loans granted by individuals. And will loans be subject to fair lending and insider trading requirements similar to those that banks are required to follow? We don’t need another government bureaucracy to make and administer the loans.
We believe there is a better solution. Two bills are currently pending before the Massachusetts State Legislature: House Bill 1377 and Senate Bill 868. Martha’s Vineyard Housing Bank), would allow each individual city to impose fees on real estate transfers between one-half percent and 2 percent on sales above the state media sale price, with all proceeds directed to affordable housing . These bills provide an income limit of 175% of median income. The funds would be administered by our already existing Affordable Housing Committee (which also receives funding from the Community Preservation Act). We support this legislation because it retains power and control with the cities. There is no need to create an entirely new government bureaucracy: we already have one in place. Affordable housing money should be spent on housing, not the onerous operating costs of a new government entity.
In our view, housing banking is not just an “imperfect” solution – but fatally flawed with serious unintended consequences.
We invite you to vote no.
Margaret Serpa is a member of the Edgartown Board of Directors and Leslie Baynes is a member of the Edgartown Finance Committee.