Patrick holds federal loan program up to public view
BOSTON --Each year Massachusetts doles out hundreds of millions of dollars in federal low-interest loans to quasi-public development and education financing agencies in a selection process that takes place largely out of public view.
Now the Patrick administration says it wants to open up the process to public scrutiny and is holding what it says is the first-ever public hearing on where the money goes, and how it is spent.
"It's a huge economic engine that the state is investing in that hasn't gotten a lot of attention," Administration and Finance Secretary Leslie Kirwan said in a recent interview with the Associated Press.
It's Kirwan's job to decide how to divvy up the federal loan dollars -- this year totaling $547 million.
The money goes to three quasi-public state agencies -- the Massachusetts Housing Finance Agency, the Massachusetts Development Finance Agency, and the Massachusetts Educational Financing Authority -- which turn around and make the loans available to private developers and individuals.
Kirwan said the distribution of the funds has historically been done largely out of the public eye. She said the decision to hold a public hearing is in keeping with Gov. Deval Patrick's pledge to encourage more participation by citizens in government. She emphasized that there was no suggestion that funds were missued.
The low-interest loans are federal and pose no financial risk to the state, according to Jay Gonzalez, an undersecretary to Kirwan.
Aaron Gornstein, executive director of the Citizens' Housing and Planning Association, said he welcomes the public spotlight. He said he and other affordable housing activists want to see more of the federal loans going to pay for multi-family rental housing.
He said developers of the multi-family rental units not only get access to federal tax exempt bonds, but can also apply for housing tax credits, meaning the state can get a bigger housing boost from the federal dollars.
Gornstein said housing activists are also hoping that the Patrick administration puts more of a focus on preventing affordable housing from being turned into market rate housing -- something he said the Romney administration showed little interest in.
"We're asking for a change to allow these federal funds to go toward preserving existing use properties and other at-risk affordable housing," he said.
The three quasi-public agencies that receive a portion of the federal loan dollars have distinct goals.
The Massachusetts Development Finance Agency, known as MassDevelopment, helps finance redevelopment projects across the state. During the past three fiscal years, the agency has helped financed or managed 589 projects, including the former Fort Devens military base redevelopment.
The Massachusetts Housing Finance Agency, or MassHousing, lends money at rates below the conventional market to support affordable rental and home ownership opportunities for low- and moderate-income residents.
The Massachusetts Educational Financing Authority helps students and families apply for and choose college financing options including low cost loans and college savings plans.
The hearing is scheduled for Thursday at the Statehouse. Representatives from all three agencies are scheduled to testify as well as activists and members of the public.
Kirwan said a decision about how to distribute the money must be made by the end of the month.
