Section 13A Preservation Initiative
MassHousing is working to preserve affordability at rental housing communities financed under the Commonwealth's Section 13A program. On this page, you'll find information about 13A and resources related to our preservation efforts.
Section 13A Background
Modeled after the federal 236 program, the 13A mortgage interest subsidy program was created by the Massachusetts legislature in the 1970's. The program has faced challenges in the past, but none as significant as the current challenge of preserving this valuable portfolio in the face of expiring mortgages.
In the late 90s, owners started to consider prepayment of their 13A mortgage obligations. After an effort extending over several years by members of the Massachusetts delegation, most especially then Congressman Barney Frank, HUD agreed to extend Section 8 rental enhanced vouchers to low income residents of 13A developments, averting the loss of affordable units.
13A: A Preservation Challenge for Massachusetts
Starting in 2004, the Commonwealth began reducing its funding commitment to the program and stopped completely in 2009. MassHousing addressed the appropriations gap by picking up the obligation, absorbing over $47 million in shortfall to date. Now, the 13A portfolio faces the expiration of the affordability for the remainder of the portfolio—43 developments that serve a mixed-income population, including just over 5,000 very low income households (30-50% AMI)—over the next 5 years.
In the wake of HUD's recent position that 13A developments are not eligible for tenant protection vouchers upon prepayment of the 13A mortgage, the preservation of the 13A portfolio presents significant challenges to the Commonwealth. A preliminary estimate of the capital cost to preserve the entire portfolio at the current rent standards is upwards of $300 million. At tax credit rents the preliminary estimates indicate that capital costs shrink to under $100 million; however, without vouchers, this scenario is not feasible given the untenable rent increases that would occur.
MassHousing and DHCD have established a 13A Working Group that includes owners, other public partners, preservation experts and tenant advocates to identify the range of options and tools to meet this preservation challenge. The Working Group has adopted the three goals established by DHCD and MassHousing: (1) to the maximum extent possible, preserve the number of affordable units in the 13A portfolio; (2) to the maximum extent possible, preserve the level of affordability provided by the 13A portfolio; and (3) to the maximum extent possible, minimize the disruption to and dislocation of existing tenants.
More information on our Section 13A preservation efforts will be posted to this page as it becomes available.