The old and all-too-common story of the developer who snaps up an apartment building only to jack up the rents could get a rewrite if Boston housing officials have their way.
City Hall is looking to recruit white knight developers, investors and housing groups interested in buying rental buildings and offering a substantial portion of the units at below market rents.
The Department of Neighborhood Development is rolling out a $7.5 million loan fund to help fuel acquisition of rental buildings by prospective owners who agree to offer at least 40 percent of the apartments at below-market prices.
And the new owners must also agree to keep the current tenants, agreeing to the requirement that “no tenant in good standing will be displaced from their unit,” according to press release accompanying the rollout by the Department of Neighborhood Development.
The new landlords must also agree to keep the rents on the below-market units at “affordable levels” for at least the next 50 years.
That means rents affordable to families making 60 percent of area median income, or $41,220, according to federal guidelines.
“Boston is committed to making our city a home for everyone, no matter their age, background or financial status,” said Boston Mayor Marty Walsh in a press release. “This $7 million investment is another leap towards creating affordable housing for all our residents.”
The spark for the initiative comes from the fierce competition for rental properties across Boston by investors and developers interested in cashing in on soaring rental rates and booming demand. The competition, in turn, has driven prices of multifamily properties to new heights as well.
Nonprofit housing groups and affordable housing developers have found themselves outmatched by investors with easy access to the cash needed to close a deal quickly.
Under the new Acquisition Opportunity Program, community development corporations and other developers can apply to get pre-approved for funding, bolstering their ability to make offers and compete when rental properties hit the market.
Development teams interested in taking part must compete for funding, submitting proposals under a city-run vetting process. Those selected will be certified by the city and pre-qualified for a certain amount.
The initiative is focused particularly on preserving apartment buildings that already have a significant number of affordable units and that are completely or partially occupied.
“Programs like the Acquisition Opportunity Program ensures Boston residents will not be priced out of their homes and Neighborhoods,” Walsh said in a statement.