Policy Recommendations for Administration of Affordable Housing

Permits by Provincetown Local Housing Partnership

Purpose of these regulations are:

1) To insure fair and equitable treatment of all developments and conformance with federal definitions of income eligibility under 24 CFR.

2) To insure compliance with MA DHCD Local Initiatives Program (LIP) for “counting” of affordable units in the local inventory.

For Home Ownership developments:

1) Selection of Purchasers to be by Lottery process in accordance with DHCD published guidelines for 40B Projects and LIP unless otherwise specified in locally adopted regulations.

2) Eligible purchasers are limited to first-time homebuyers with certain exceptions. “First-time homebuyers” are defined as households who have not owned a residence in the past three years (as evidenced by home ownership deduction on federal tax return). Exceptions to “first time homebuyer” includes:

a) Individuals who owned a home in a documented recently severed spousal relationship that has not yielded cash assets in excess of limits defined below; and

b) Household with all members over the age of 55. Other exceptions include current owners of deed restricted affordable units who occupy a unit that is inappropriate to their current housing needs, subject to approval of LHP.

3) Eligible purchasers are limited to households where at least one member of the household will be in residence for ten months of the year 9excludes seasonal residents and households where all members are students residing elsewhere.

4) Eligible purchasers may be limited to households with special needs, either adaptable units, or housing units that include workspace or artist studios.

5) Eligible purchasers are limited by “appropriate household size” for the available unit. Minimum and maximum household size shall be as follows:

-Efficiency unit: maximum 1 person household

-1 bedroom unit: maximum 2-person household

-2 bedroom unit: maximum 4-person household; minimum 2-person household

-3 bedroom unit: maximum 6-person household; minimum 3-person household

-4 bedroom unit: maximum 8-person household; minimum 4-person household.

6) Eligible Purchasers are limited by 80% of Barnstable County non-metropolitan median household income in effect as of the application deadline for the lottery. Appropriate documentation shall b e in a form as Exhibit A.

7) Eligible purchasers must certify that no other household members are anticipated or intended within one year of application; if there are additional household members anticipated, their income must be included.

8) Eligible Purchasers are limited by an Asset Test (excluding restricted retirement accounts such as IRAs, 401Ks, etc., and restricted educational accounts) to determine reasonable limits imposed by the program on household assets that shall not be so high as to eliminate the need for the affordable purchase (75% of market value of unit minus affordable sale price – recommended $120,000 for a 1 or 2 person household; plus $40,000 for each additional household member).

9) Pricing of affordable units shall be established to achieve affordability to the average household size eligible to participate in the lottery, paying 30% of income for housing costs, including condo fees, real estate taxes, and mortgage P&I at 6%/30 year amortization, with a 5% down payment, that is, pricing of

-Efficiency unit: based on affordability to 1 person household at 65% of median

-2 bedroom unit: based on affordability to 3-person household at 65% of median

-3 bedroom unit: based on affordability to 4.5 person household at 65% of median.

10) Pricing of affordable units that include condo fees or other common charges shall include condo fees assessed at the same rate as comparable market rate units in the development. This is based on the fact that condo fees are for the management, ongoing maintenance, replacement reserves and insurance costs of a property; a condo fee structure should not set up a situation where market rate owners are subsidizing long term maintenance of affordable homebuyers, the developer is subsidizing up front and reasonable condo fees are factored in to affordable sale price calculations. Reasonable condo fees are estimated at $150 per month for 1-bedroom units, $200 per month for two bedroom units, $250 per month for 3 bedroom units. Condo budgets should include adequate replacement reserves.

11) No co-signing of loans is permitted; only income and credit status of household members may be used to qualify for a mortgage.

12) No more than 50% of the purchase price may be cash (50% must be mortgaged);

13) Local Preference shall not apply to individual developments rather Town of Provincetown will determine in the aggregate whether units in a lottery for which Affordable Housing Permits have been granted may utilize local preference in selection.

14) If living situation of an owner of an affordable unit changes and the household needs to relocate but intends to return after a period of time, rental of unit to an income eligible tenant at an affordable rent (based on 30% of 50% of median) may be permitted if approved by the LHP.

15) Lottery process shall apply to median and middle-income units with pricing based on 30% of 80% and 100% of median income, respectively. An exception to lottery process may be approved by the LHP to award median and middle income units to households who occupy Provincetown affordable rental units and exceed the income eligibility limits of that housing, who by receiving priority for a home ownership median or middle income unit will free up a deed restricted rental unit for another income eligible resident. A lottery process shall occur in the case of numerous applicants.