• Lisa Peterson

Some additional info related to the Lee Fort Terrace re-development project

Updated: Oct 5, 2021

We have received some great questions related to the Lee Fort Terrace project since we posted about it earlier this week. In response, there are a few points we would like to further clarify:

  • Questions related to specific details about “what has been proposed”:

The Salem Housing Authority has selected Beacon Communities to develop this property. The development team has not formally submitted a Comprehensive Permit application at this point, and therefore there is no official proposal on the table at this time. Some initial draft ideas were presented to the public in March of 2021, as an early step in engaging the public in the process (you can learn all about what was shared with the public at that time at the Lee Fort Terrace Housing Development project website). The project is currently in the phase in which the developer is gathering public input, and there will be further opportunities to participate and help shape the project.

  • Concerns about affordability expiring after some time once the redevelopment happens:

Subsidized income tenants have to go through income qualification every year and pay no more than 30% of their income (utilities included). As long as they continue to qualify based on their income, they can continue to receive the housing subsidy that enables them to live at Lee Fort Terrace. The relocation agreement very clearly states that existing tenants have the option to return following the re-development. The income-restricted units will be affordable in perpetuity.

  • Concerns about whether or not this property will continue to fall under Salem Housing Authority and its state oversight:

The new Lee Fort Terrace will be co-owned by the Salem Housing Authority and Beacon Communities and managed by Beacon Communities. As an affordable housing development using Low Income Housing Tax Credits and various forms of operating subsidy from the state and federal government (such as Section 8), there will continue to be much oversight of Lee Fort Terrace on the state and federal level.

  • What type of SHA Housing is this exactly? Section 8? Disabled Housing?

Lee Fort Terrace is currently a form of State Public Housing (state chapter 667) that is restricted to people who are elderly or disabled. It is not currently for families. Residents pay 30% of their income to rent and the state provides an additional amount. The operating subsidy for elderly or disabled state public housing is extremely low and the total rent that Salem Housing Authority receives per unit from the residents and State equates to approximately $375/month. Salem Housing Authority pays all utilities at Lee Fort Terrace, which makes that $375/unit/month rent particularly low given operating and maintenance costs. This creates an operating deficit that is covered to some extent by the state. Housing Authorities all over Massachusetts, including SHA, have to figure out creative ways to fund the operations and further repairs needed at their sites. They do that through a number of creative ways including grants, partnerships, special incentives, energy conservations and entrepreneurial opportunities, like partnering with a private developer to re-develop much needed repairs. This helps explain why SHA is exploring the redevelopment with Beacon Communities.

  • Suggestions that the North Shore CDC, other non-profits or the Salem Housing Authority itself, should re-develop this site as 100% affordable:

In Salem, we have seen non-profit organizations, like the North Shore CDC, build development projects that are 100% affordable, and as a result, it makes sense for us to assume that the NSCDC could or should always be involved when an affordable housing development is proposed. However, even for a non-profit developer like the NSCDC, developing housing that is 100% affordable is not possible without significant Federal funding that does not exist at this point. Tax credits are difficult to get and the application process to get them is very competitive.

Alternatively, the Salem Housing Authority, an agency of the Commonwealth of Massachusetts, exists right here in Salem to oversee many of the affordable housing properties in the city. Many of the Salem Housing Authority properties were actually built by the SHA many years ago. We may wonder why they haven’t built any new affordable housing in so long, when such a need clearly exists, and the answer is that it is no longer legal for them to use their funding to do so. A Federal Law, Section 9(g)(3) of the Housing Act of 1937 (commonly known as the "Faircloth Amendment") limits the construction of new public housing units. The Faircloth Amendment states that the Department cannot fund the construction or operation of new public housing units with Capital or Operating Funds if the construction of those units would result in a net increase in the number of units the Public Housing Authority owned, assisted or operated as of October 1, 1999.

With these obstacles and restrictions in place, the City of Salem must primarily lean on the private development market to address its housing related challenges. Most typically, this means that any multi-unit housing development proposed for Salem will require some percentage of the units to be rented at a more affordable rate in order for the property to be allowed to be built in Salem. Additionally, in recent years, the City of Salem has attempted to add a number of options to its city planning toolbox so that we can address affordable housing in a number of different ways. Despite several attempts to provide additional options to address affordable housing in the City of Salem, on multiple instances, the City Council failed to adopt said measures.

We have plans to explore the topic of affordable housing in Salem in some of our future research, so stay tuned for that info, still to come.

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