Sarah Morrison in her LexHAB office
Sarah Morrison, executive director of the Lexington Housing Assistance Board (LexHAB), supports the Yes In My Backyard (YIMBY) pro-housing movement. (Sophie Culpepper / LexObserver)

(You can read a refresher about what Town Meeting is and how it works here.)

Lexington’s Fall Town Meeting begins next Tuesday, Nov. 1 at 7:30 p.m and could spill over into Wednesday and Thursday evenings.

Fall Town Meeting will be conducted remotely, like Lexington’s past few Town Meetings; however, this time the Town is offering in-person technical support at Battin Hall, so members have the option to bring their laptops or tablets to the traditional location for Town Meeting in the Cary Memorial Building.

Members of the public who wish to comment on an article can either submit their remarks online, as with the past few Town Meetings, or attend in person and speak into a microphone in Battin Hall, where their remarks will be broadcast into the remote meeting.

This year, affordable housing is likely to dominate the Fall Town Meeting discussion. 

Two articles, if passed, could improve and expand Lexington’s tools to address the affordable housing crisis squeezing individuals and families on the local, state and national levels. One would create a new trust consolidating funds for affordable housing in Lexington; the other would transform an existing quasi-municipal organization into a nonprofit, which would make it eligible for new funding streams and allow more cost-effective development of affordable housing. Though the articles could complement each other, they are separate tools that will be debated and voted on independently. As of Oct. 24, the Select Board unanimously supports the passage of both articles.

A shortage of affordable housing in Lexington

The current median home price in Lexington is about $1.6 million – an alarming figure to many community members, including Sarah Morrison, executive director of the Lexington Housing Assistance Board (LexHAB). 

LexHAB’s mission is to develop, manage and preserve Lexington’s affordable housing stock. The organization currently houses 212 people across its 78 units. About 20 people are on its waitlist for one-bedroom units, which are in the highest demand of any LexHAB housing type, Morrison said.

But subsidized housing isn’t the only type of affordable housing where demand exceeds supply in Lexington. The community also needs additional smaller, “starter” homes, which are “being torn down at a really rapid pace,” Morrison said. “And once those are gone, they’re gone.”

Lexington has had about 1,320 Subsidized Housing Inventory (SHI) units since 2011; because that number has stagnated while the total number of houses in Lexington has grown to more than 11,800 today, Lexington’s percentage of affordable housing has dwindled. If Lexington’s SHI falls below 10%, the Town could lose some local zoning control to developers as stipulated by Chapter 40B.

What’s more, Lexington’s real number of affordable units is much lower than its SHI – about 663 homes are at or below 80% of Area Median Income – because Chapter 40B has a loophole that allows a complex with just 20-25% of affordable units to count all of its units as affordable. 

Supporters of Articles 12 and 14 say both articles will help the Town achieve its goal of increasing affordable housing.

Article 12: An Affordable Housing Trust

Proponents of Article 12 hope that Lexington will become the 129th Massachusetts community to establish its own Affordable Housing Trust. As a flexible funding entity, this trust should make it easier to consolidate affordable housing funding from multiple sources and make that funding more quickly accessible, which is important in a white-hot real estate market where affordable properties disappear off the market overnight. 

If established, the trust will be able to distribute its funds to entities like LexHAB, the Lexington Housing Authority, other nonprofits and even private developers working to build more affordable housing. It could take actions including selling, acquiring or leasing properties, entering contracts with third parties and making grants or loans. Trustees would be appointed by the Select Board, and the trust would be overseen by the Town Finance Department. Select Board approval will be required for purchases or sales that exceed the average price of a single-family home in Lexington.

Kathryn Roy chairs the Affordable Housing Trust Study Committee, which was appointed by the Select Board to develop a proposal for this trust and has been meeting since January.

Massachusetts law has allowed communities to establish Affordable Housing Trusts since 2005. Within the Regional Housing Services Office of nine neighboring communities, Lexington is currently the only member town without an affordable housing trust.

“We’re years behind on affordable housing trusts,” Roy said. “We’re really behind the eight ball when it comes to property in Lexington.”

Without an affordable housing trust, Lexington is stuck with a cumbersome process for purchasing properties to develop into affordable housing. Town Meeting currently has to approve most expenditures of Town funds to purchase a property for affordable housing; most of these funds come from the Community Preservation Act (CPA). That means there are typically only two opportunities per year, during the fall and the spring, when the Town can purchase properties for affordable housing, which makes jumping on properties before someone else closes a deal almost impossible. Lexington missed out on at least two opportunities to purchase potential properties for affordable housing last spring alone because it could not access funds quickly enough.

If Town Meeting approves Article 12, multiple steps remain before the trust can get up and running. The Select Board will appoint between five and nine trustees, including one of its own members. Once trustees approve and record a Declaration of Trust and establish an Action Plan for creating and preserving affordable housing, they can begin requesting funding – trustees will likely request “pre-funding,” or non-project-specific funding. Some funding sources, like American Rescue Plan Act (ARPA) funding, could be granted by the Select Board within a short time, while others, like CPA funding, will require Town Meeting to consider a separate request in the spring. 

Once the trust is up and running, trustees will have the flexibility to pursue promising properties by distributing funds or making purchases much faster than Town process currently allows.

Article 14: Transforming LexHAB to a nonprofit

LexHAB has existed since 1983 as a quasi-municipal entity. But in the past few years, that status has become an impediment to its mission. As a result, the Select Board also charged the Affordable Housing Trust Study Committee with developing a proposal to turn LexHAB into an independent nonprofit, which has culminated in Article 14.

When Massachusetts public procurement rules changed in 2019, LexHAB suffered a crippling financial blow: Development costs “skyrocketed an additional…40%,” Morrison said. 

While public procurement works for projects like police stations and schools, “for affordable housing, particularly at the scale…we’re trying to do, it just has made it prohibitively expensive,” she said. As a nonprofit, LexHAB would no longer have to develop properties through public bidding.

Examples of LexHAB’s developments over the past few years illustrate just how prohibitive development costs have become. A development at Fairview in 2017 cost LexHAB $385,000 per unit; after public procurement requirements kicked in, a 2019 project cost LexHAB $567,000 per unit. But this spring, an estimate for LexHAB’s next project stopped the organization in its tracks: Developing affordable units at Vine St. was expected to cost about $933,000 per unit. “Those numbers just kind of froze everybody,” Morrison recalled. Conversations begun over the past couple of years took on a new urgency this year, leading to Article 14, because LexHAB reached the conclusion that “we have to figure out another way to do this.”

Though nonprofits have to pay more on some fronts than municipal entities, including for some kinds of insurance, the cost benefit of moving away from public procurement means the status change would be overwhelmingly beneficial for LexHAB, Morrison said.

Additionally, a quasi-municipal entity also has fewer funding options than a 501(c)(3). LexHAB currently relies on its own funds and CPA funds for purchases and development, but faces challenges to fundraising privately, especially due to its status blurring the lines about whether donations are tax-deductible.

“Lexington doesn’t have to be footing the bill for everything,” Morrison said. Nonprofit status would open up additional state, federal and private funding for the organization.

LexHAB is currently an outlier among comparable organizations across peer communities: A nonprofit is a far more common model, according to Morrison. That means that if LexHAB makes this transition, it will have a cohort of other organizations it could consult as models and resources for troubleshooting and brainstorming – something it currently lacks with its unusual structure.

Article 14 could also offer practical benefits similar to Article 12. LexHAB currently has to request funds from Town Meeting and have its purchases approved by the Select Board, so it has also been constrained by a time-consuming public process that often can’t keep up with the real estate market. If Article 12 passes as well, LexHAB will be able to request the funds from the Affordable Housing Trust on short notice instead.

Even if it passes, LexHAB will have to take additional steps to cement its new nonprofit status. It would submit a home rule petition to the state legislature by the third week of January, and plans to collaborate with the Town on a Memorandum of Understanding detailing affordability restrictions on its properties and addressing any other transition concerns.

Last week, the Article 14 motion was amended to add that the Select Board would have veto power over the confirmation of new LexHAB board members. The change will create an additional check on LexHAB’s new organizational independence from the Town.

Taking action on a Town priority

At multiple levels, Lexington leadership and community members have identified affordable housing as a local priority. The Town’s recently approved Comprehensive Plan includes a chapter focused on the goal of “promot[ing] a wide range of housing options that respond to the needs of households, regardless of income and life stage.” Authors noted that while updating the Comprehensive Plan, “housing has emerged as one of the top areas of concern….Goal #2 addresses Lexington’s need to provide a range of housing options to enable more diversity in age, income, physical ability, race, religion, and ethnicity.” The plan even explicitly recommends establishing an Affordable Housing Trust as an “immediate” action.

The Select Board, in its summary of “Strategic Outcome Areas” for Fiscal Years 2022 and 2023, articulated the goal of “actively seeking development of affordable and accessible housing.”

Many Town Meeting Members share this goal.

Jay Luker was elected to Town Meeting for the first time in March. As a Precinct 1 representative, he became involved with the Lexington Cluster Housing Study Group, a cohort of Town Meeting Members primarily interested in increasing Lexington’s supply of denser, multi-family housing. 

“The affordability and diversity of housing options in Lexington should be a priority,” he wrote in an email. “We live in a community that is tremendously wealthy in so many ways…We should be doing everything we can to share that richness with folks from a wider range of incomes.”

“Our proximity to the 10% 40B threshold is a concern that haunts all of these discussions,” he added.

No single solution can resolve the housing crisis in Lexington or elsewhere. To make real progress, Morrison said that “there are multiple things that need to be happening simultaneously.”

She added that Lexington may need to grapple with its identity to create the affordable housing it needs. 

Affordable housing “is for us,” she said. “And we need to kind of redefine who we are in Lexington, and understand that this is us – this is our neighbors, ourselves.” 

Clarification: A previous version of this article stated that the Lexington Cluster Housing Study Group is a cohort of Town Meeting Members “interested in increasing the affordable housing supply in Lexington.” The article has been updated to clarify that the group is “primarily interested in increasing Lexington’s supply of denser, multi-family housing.”

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