207 affordable rental units acquired in Mattapan to protect residents from displacement
Mayor Martin J. Walsh, Avanath Capital Management, LLC., Mirak Properties and CBRE Capital Markets today announced the purchase of 207 rental units at the Morton Village Apartments in Mattapan, adjacent to the Morton Street station on the MBTA Fairmount Line. The acquisition of this property by Avanath will ensure that more than 200 low- and moderate-income families will be able to remain in their homes.
"Guaranteeing long-term affordability for these homes is critically important for families and represents Boston's steadfast commitment to preventing displacement," said Mayor Walsh. "I am pleased that Avanath Capital Management was able to work with the residents and the City of Boston to ensure Morton Village remains their home."
The City's $4 million investment in the purchase will guarantee that these apartments become permanently income-restricted and therefore preserve their affordability for the long term. Morton Village Apartments is the largest property acquired to date towards the Mayor's commitment to purchase 1,000 units out of the speculative housing market and make them permanently affordable as a way to prevent resident displacement. This is one of goals included in the 2018 update to the Walsh Administration's comprehensive housing plan Housing a Changing City: Boston 2030.
The purchase at Morton Village Apartments is part of the City of Boston's Acquisition Opportunity Program (AOP), started in 2016 to support affordable housing developers in fighting displacement by acquiring rental units off of the private market and protecting them with a permanent income restriction. The AOP allows developer partners to act quickly and compete with speculative buyers to maintain rental units at below-market rates for low-income Bostonians, increasing the City's protected affordable housing stock.
"We are thrilled to add Morton Village to our existing portfolio of more than 10,000 units across the country," says Daryl Carter, Founder and CEO of Avanath Capital Management. "Our niche focus is on affordable and workforce housing and preserving affordability for residents across the nation. This was our first acquisition in the Boston market, and it was an honor to work alongside the City of Boston and the Mayor towards a shared mission."
Initially, City financing for this program came from Inclusionary Development Policy funds. The Inclusionary Development Program is a City program that requires developers of properties with more than 10 units seeking zoning relief or on public land to set aside a percentage of those units as affordable or pay into a fund which would be used to create affordable housing. Since 2019, the City's Community Preservation Fund has also contributed funds to the AOP. The Neighborhood Housing Trust approved the funds for this specific transaction. The Neighborhood Housing Trust Fund supports homeownership, rental, cooperative, transitional, and permanent housing developments. The fund provides financing for projects serving households earning at or below 50% AMI and gives preference to special needs populations. Priority is given to projects serving the greatest number of low-income households. The program also has a preference for projects that are near transit, and include family-sized units with two or more bedrooms. Boston's Neighborhood Housing Trust Fund is funded through a commercial project linkage payment fee system. Avanath is funding the project with both long-term debt and an equity fund supported by public retirement funds and socially-motivated investors.
"In order to truly stabilize housing in Boston, we have to take it out of the speculative market," said Steve Meacham, Coordinator of Organizing at City Life/Vida Urbana. "This agreement, for the near-term, will shield tenants from speculative rent hikes - and we hope to see long-term, permanent affordability for all of the brave Morton Village families come out of continued talks with the new owner."
The Mirak family built Morton Village Apartments in 1965 and self managed the community for more than 50 years before the recent sale to Avanath.
"When they built Morton Village, the family voluntarily offered rents to residents at levels well below market rate," said Simon Butler of CBRE on behalf of the family. "When the family decided to sell the property, their goal was to find a buyer that would share the same values and continue to operate Morton Village as budget-friendly housing. The Miraks feel confident in this sale, knowing that Avanath will keep these apartment homes affordable for residents of this community. We're pleased that we were able to help the Miraks achieve their goal by procuring Avanath, who had additional support from the City of Boston. While this sale marks the conclusion of the Miraks' long-term ownership of the community, their legacy lives on in Avanath's commitment to preserving the affordability of these apartment homes well into the future."
Attorneys from the law firm Nixon Peabody represented Avanath as legal counsel in the purchase of Morton Village Apartments, including negotiations on the unique grant and affordability provisions with the City of Boston, special rent protections for existing residents and the financing with CBRE Capital and FannieMae. Greater Boston Legal Services represented the tenants throughout the negotiations with Avanath.
Since the implementation of the City's housing plan in 2014, 23,000 new units of housing have been completed. With an additional 9,700 units currently under construction, the City has secured housing for an estimated 45,600 residents, making significant progress in meeting Boston's rapid population growth.About the Department of Neighborhood Development (DND)
The Department of Neighborhood Development is responsible for housing the homeless, developing affordable housing, and ensuring that renters and homeowners can find, maintain, and stay in their homes. As part of the ongoing coronavirus response, the Office of Housing Stability is also conducting tenant's rights workshops to educate residents about the eviction moratorium and their rights. The Boston Home Center continues to provide down payment assistance to first-time home buyers and home repairs for seniors and low-income residents. The Supportive Housing Division is working with various partners around the city to rapidly house individuals who are experiencing homelessness. For more information, please visit the DND website.About the Community Preservation Act (CPA)
After Boston voters adopted the CPA in November 2016, the City created a Community Preservation Fund. This fund is capitalized primarily by a one percent property tax-based surcharge on residential and business property tax bills that began in July 2017. The City uses this revenue to fund initiatives consistent with statewide CPA guidelines: affordable housing, historic preservation, and open space, and public recreation. The funding of any project requires a recommendation from the Community Preservation Committee and appropriation by the City. For more information, please visit the Community Preservation webpage.About Avanath Capital Management
Avanath is an investment firm that acquires, owns, renovates, and operates affordable, workforce, and value-oriented apartment communities across the U.S. Avanath partners with institutional investors - both domestically and internationally - to deliver quality primary housing in major metropolitan and suburban markets. A primary focus of our mission is to provide hard-working families higher quality, well-maintained, and safe value rental housing - a base for their pursuit of the American Dream. We invest not only in brick and mortar but in on-site services, amenities, and activities that add value to properties and bring our residents' desired lifestyles within reach. Families with incomes of $30,000 to $80,000 represent the largest segment of the rental housing market. We regard the ability to serve this market as a social, cultural, and financial opportunity.