Section 24.04 - Eligible Projects(1) The Department may make HSF loans, grants, and, additional, in the case of funding under M.G.L. c. 121F, subsidies, credit enhancements and other financial assistance for alternative forms of rental and ownership housing: (a) to acquire, preserve, rehabilitate, and construct affordable rental and ownership housing, including foreclosed and distressed properties and other properties;(b) to demolish privately-owned buildings as provided in the HSF I, HSF II, HSF III, HSF IV Legislation or M.G.L. c. 121F, and, in connection with such demolition, to undertake, pursuant to a Neighborhood Revitalization Plan pursuant to 760 CMR 24.06, new construction of housing for Low or Moderate Income Families in the area in which such demolition took place, to the extent authorized in the HSF II, HSF III, HSF IV Legislation or M.G.L. c. 121F;(c) to qualify as matching contributions under § 220 of the HOME Investment Partnership Act, Title II of the Cranston Gonzalez National Affordable Housing Act;(d) if funded pursuant to the HSF I, HSF II, or HSF IV Legislation, for Soft Second Mortgage Loans as described in the HSF I, HSF II or HSF IV Legislation, and if funded pursuant to M.G.L. c. 121F, to write down interest rates and related costs for a program for low-income and moderate-income first-time homebuyers administered by MHP;(e) if funded pursuant to the HSF II, HSF III or HSF IV Legislation or M.G.L. c. 121F for the rehabilitation of one to four-family properties owned and occupied by persons of low or moderate income, and for the acquisition and rehabilitation of one to four-family properties by persons of low and moderate income, provided that the Department finds that such a project relies to the greatest extent possible on bank financing and other taxable financing for acquisition and rehabilitation. Funding under M.G.L. c. 121F may include, with out limitation, direct loans, loan guarantees and loan loss reserves. Projects funded under M.G.L. c. 121F shall be subject to the Department's findings that the Project includes the following additional objectives: 1. coordinating the delivery of the financing and related rehabilitation services with cities and towns that provide such assistance using federal community development block grants, federal HOME funds and other resources;2. expediting and simplifying the process by which home buyers may obtain financial and technical assistance for acquisitions and rehabilitation; and3. ensuring that adequate provisions are in place to assure that rehabilitation is completed in a timely and professional manner and to protect homeowners from excessive acquisition and rehabilitation costs.(f) if funded pursuant to the HSF II Legislation, to preserve the affordability of existing privately-owned housing subject to a state or federally-assisted Massachusetts Housing Finance Agency mortgage where the prepayment of that mortgage would lead or has led to the termination of a use agreement for low-income housing. HSF funds may be used for a capital access reserve to provide loan guarantees to facilitate the purchase of such housing, and the Department may contract with the Massachusetts Housing Finance Agency to administer such a program of loan guarantees;(g) if funded pursuant to the HSF III or HSF IV Legislation or M.G.L. c. 121F, for second mortgage loans for the acquisition and rehabilitation, and in the case of funding pursuant to HSF IV, or M.G.L. c. 121F, new construction, of small multifamily rental properties receiving primary financing from the MHP Permanent Plus Program. Such loans shall be administered through contracts with MHP. All housing acquired, rehabilitated and newly constructed pursuant to 760 CMR 24.04(1)(g) shall meet one of the following minimum requirements: 1. at least 20% of the total units shall be rented to individuals or families whose income is less than 50% of the Area Median Income, or2. at least 40% of the total units shall be rented to individuals or families whose income is less than 60% of the Area Median Income, or3. at least 50% of the total units shall be rented to Low or Moderate Income Persons or Families.(h) if funded pursuant to the HSF IV Legislation or M.G.L. c. 121F, to preserve or restore the affordability of housing that is or was subject to the prepayment of a state or federally assisted mortgage, or is receiving project-based rental assistance under § 8 of the United States Housing Act of 1937 ( 42 U.S.C. 1437f) that is expiring, or has received other project-based federal or state subsidies that are terminating or have terminated, including the expiration of federal low-income housing tax credits, where such mortgage prepayment or expiration of federal or state assistance would lead or has led to the termination of a use agreement for low-income housing. The Department will consult with nonprofit housing organizations, MassHousing and CEDAC, and, if funded pursuant to M.G.L. c. 121F, MHP, to identify those projects at greatest risk of prepayment or payment of state or federal subsidy loans, termination of subsidies and use restrictions, or non-renewal of rental assistance. The Department will give priority to projects based on the following at-risk criteria: 1. Housing at risk of losing affordability restrictions due to the potential for the prepayment of its mortgage;2. Housing in which a project-based rental assistance contract has expired or is expiring; and3. Occupied projects with substantial capital needs.(i) if funded pursuant to M.G.L. c. 121F, to stabilize and promote reinvestment in cities and towns including, but not limited to acquisition, rehabilitation and preservation of foreclosed and distressed properties and any other techniques to achieve reinvestment.(j) for any other purpose permissible under the HSF I, HSF II, HSF III or HSF IV Legislation or M.G.L. c. 121F.(2) The Department shall fund a revolving loan fund in such amount or amounts as it shall determine reasonable and prudent under all the circumstances, including the availability of funding for other HSF needs; repayments of loans from this revolving loan fund shall be retained by the Department and lent to other qualifying borrowers. The Department may make HSF loans from this revolving loan fund for the repair and maintenance of privately owned residential buildings for which a nonprofit receiver has been appointed by a court pursuant to M.G.L. c. 111, § 127I if: (a) the housing is abandoned or severely distressed;(b) the housing is located in a primarily low or moderate-income neighborhood;(c) the HSF loan is necessary to make repairs required for the housing to comply with the state sanitary code and to maintain its habitability;(d) the court that has appointed the receiver enters an order: 1. authorizing the receiver to borrow HSF funds up to the amount of the proposed HSF loan, on the anticipated terms, and to assign its priority lien to the lender to secure the HSF loan;2. stating that the lender, upon the borrower's breach of the conditions of the HSF loan, may foreclose on its interest under the lien and setting forth an adequate process for such a foreclosure; and3. requiring the receiver of the housing to repay any balance of the HSF loan in full upon termination of the receivership, unless the receiver shall have previously repaid the HSF loan in full; In the case of funding under M.G.L. c. 121F, the project may include activities necessary to maintain habitability of the housing units to prevent abandonment and deterioration of the housing in primarily low and moderate income neighborhoods pursuant to the HSF Guidelines. For funding under M.G.L. c. 121F, the Department may administer HSF loans from this revolving fund through contracts with CEDAC and MHP, which may enter into subcontracts to administer the contracts with other for-profit or nonprofit organizations.
(3) For loans or grants made pursuant to the HSF I Legislation, at least 30% of the HSF funds expended in any year shall be used to provide homeownership opportunities to Low or Moderate Income Persons or Families.(4) The Department shall provide funds pursuant to the HSF III and HSF IV Legislation and M.G.L. c. 121F for loans to nonprofit developers for predevelopment assistance to Eligible Projects including loans for acquisition, financing or other holding costs, and capitalized carrying costs in accordance with the HSF Guidelines or to secure other financing obtained by CEDAC to support such costs. Such predevelopment assistance shall be administered by the Department through contracts with CEDAC.(5) For HSF III Projects and Projects funded under M.G.L. c. 121F receiving such predevelopment assistance, at least 50% of the total housing units in the Project shall be deemed HSF-assisted and shall meet the requirements of 760 CMR 24.05(2) as follows: (a) For the first 40 years after the HSF loan is provided, at least 50% of the units in the Project shall be rented to or owned by Low or Moderate Income Persons or Families, and of such 50% of housing units at least 50% (that is, 25% of the total housing units) shall be rented to or owned by Extremely Low Income Persons or Families.(b) After the first 40 years, 50% of the units in the project shall meet the affordability requirements of 760 CMR 24.05(2)(b).(6) For HSF IV Projects receiving such predevelopment assistance, at least 50% of the total housing units in the Project shall be deemed HSF-assisted and shall meet the requirements of 760 CMR 24.05(3) as follows: for a minimum of 50 years after the HSF loan is provided, at least 50% of the units in the Project shall be rented to or owned by Low or Moderate Income Persons or Families, and of such 50% of housing units at least 50% (that is, 25% of the total housing units) shall be rented to or owned by Extremely Low Income Persons or Families.(7) The Department shall provide funds pursuant to the HSF III and HSF IV Legislation and M.G.L. c. 121F in the amount of at least $5 million in the aggregate (for each of HSF III, HSF IV and M.G.L. c. 121F) for the production or preservation of housing for persons 60 years of age and older, which may include housing developed pursuant to 12 U.S.C. 1701q (Supportive Housing for the Elderly ("Section 202")).(8) The Department may provide funds pursuant to M.G.L. c. 121F in an amount not to exceed $10 million to stabilize and promote reinvestment, through homeownership, in areas in which the Department has found that a Weak Market exists and has identified the boundaries of the particular Weak Market and the information supporting the finding in accordance with the HSF Guidelines. For such a Weak Market, the Undersecretary of the Department may waive provisions of 760 CMR 24.00, HSF V, HSV VI, and M.G.L. c. 121F. The Undersecretary of the Department, for such a Weak Market, may also subsidize the purchase price, borrowing costs, or costs of renovation or new construction, of a one to six unit residential building, provided that a restriction is recorded with the registry of deeds or registry district of the land court providing that the owner receiving such subsidy shall occupy a portion of the property as the owner's primary residence for at least five years from the date of purchase, and that if such owner sells any interest in the property after five years, but before ten years after the date of purchase, the new owner shall occupy a unit in the property as a principal residence for the difference between the first owner's period of occupancy and ten years. If the owner receiving such subsidy fails to own and so occupy a portion of the property for at least five years, the entire subsidy shall be repaid to the Department. Further, ten years after the first owner takes ownership of the property pursuant to this section, all restrictions on the property established by 760 CMR 24.04(8) shall be void. In connection with a Weak Market, the Department may otherwise take action pursuant to 760 CMR 24.09(2).(9) The Department shall provide funds pursuant to M.G.L. c. 121F for projects to stabilize and promote reinvestment in cities and towns including, but not limited to, acquisition, rehabilitation and preservation of foreclosed and distressed properties and any other techniques necessary to achieve reinvestment.(10) In reviewing applications for HSF IV and M.G.L. c. 121F funding, the Department will give consideration to the needs of urban, suburban, and rural areas for affordable housing with an emphasis on local and regional needs for such housing.Amended by Mass Register Issue 1275, eff. 12/5/2014.Amended by Mass Register Issue 1466, eff. 4/1/2022.