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In East Boston, a big move to keep renters in their homes

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But 36 buildings? It was a long shot.

Then came a barrage of support from other local groups, millions of dollars in nonprofit and city funding, and eventually submitted an offer to buy it all: $47 million for 114 apartments. There was enough support for Amazingly, it worked.

When the seller agreed, “it was a shock,” said Caldarelli, a longtime executive director of the East Boston CDC who has typically seen wealthy investors buy such buildings. “It is difficult to express what this means for our community. We are recovering some of the homes taken by private investors. is regaining.”

The purchase, announced last week by Mayor Michelle Wu’s office, represents a major win for community groups that have seized on a new tactic to combat the housing crisis and evictions: buy existing housing stock from private sellers and pay rent. to keep the property modest and to invest in the property that it gives to the community. But it also highlights how difficult it is to replicate this model during a time when real estate values ​​are high.

Blue Line Portfolio Named by Real Estate Brokers Properties in this group will be owned and managed by the newly formed Mixed Income Neighborhood Trust. It is a community governance model that divides control of housing between non-profit groups and a patchwork of individuals who donated money to the purchase and the tenants of the building itself. This is the first trust of its kind in Massachusetts.

“Those who created the model of buying homes and forming community trusts would never have thought it possible to buy a $50 million real estate portfolio in an overcapitalized real estate market. We will lower the rent,” said Mike Leiva, co-executive director of CityLife/Vida Urbana, the tenant rights group that funded the purchase. “If you talk to your finance people, they’ll say, ‘It’s very innovative.'”

The purchase is especially meaningful for East Boston, which has a long-standing immigrant population and rapidly rising rents displacing families.

Also, unlike when CDC seeks traditional financial investors for its projects, the Blue Line Portfolio acquisition is unique in that it was funded by a number of charities, banks, individuals and municipal endowments. It manages the property and directs what to do with the rent received from the tenants.

As Leiva puts it, “The community now owns these homes.”

More than three-quarters of the apartments (mainly in the older three-story buildings scattered around the neighborhood) have three bedrooms or more, with enough space to accommodate a family, and all are affordable with income limits. designated as reasonably priced housing. Of the 114 units, 28 will be allocated to households below 50% of the regional median income ($70,100 for a family of four), 40 will be 60%, 26 will be 80%, and 20 will be 100%. Set to percent.

Caldarelli’s group has been slowly buying homes in East Boston over the past few years, but had yet to attempt an offer of this magnitude. The raging Boston real estate market makes it a daunting task for the CDC, a community-based nonprofit whose purchasing power is less than that of businesses.

In fact, to secure the deal, we raised millions of dollars in funding from other local nonprofits, including the Boston Foundation and the Hyams Foundation, loans from three banks, and the city’s support to buy a small building. An investment from the Acquisition Opportunity Program was required. Convert them into affordable housing. The city’s programs were recently awarded more than $45 million in U.S. Relief Plans Act funding, of which $9 million was allocated to the Blue Line portfolio. In total, the city contributed approximately $12 million to the purchase.

“In Boston in particular, there are a lot of properties that are changing ownership from long-term owners to new investors,” said Sheila Dillon, Boston’s chief of housing. “In this kind of highly overheated market, securing funding over time can make acquisitions like this even more difficult. I’m trying to help you have it.”

In this case, the competition was fierce, said David Grossman, principal of Quincy-based developer The Grossman Companies, which co-owns the portfolio. Multinationals were vying to grab the property, but the CDC’s pitch – dedicating properties for affordable housing – was persuasive enough to hold off other offers that were generally about the same price. He said he had power.

“We really believed in that mission,” says Grossman. “We were happy to take the risk and get on board.”

In some ways, the longevity of the portfolio and the properties that make it up tell a larger story about the area. A surge in private investment in East Boston has caused longtime residents to move extensively, advocates say. Over the past five years, rents have risen faster than most other Boston neighborhoods, rising about 5% in 2021 alone, according to BostonPads data.

Grossman and his partners purchased one building each in 2014 and 2015, paying about half of what the trust paid this month, according to Suffolk County property records. Many were trimmed and rented out to students, although Trust members expect them to leave sooner or later. The rental turnover rate among student population is much higher than that of general renters.)

Andres Del Castillo, director of development at City Life/Vida Urbana, said residents of some buildings in the portfolio have faced rent increases and eviction notices in the past. Some left the apartment, others managed to stay. According to Del Castillo, thanks to the acquisition, they can stay in the building as long as they like.

“I called the family that still had this portfolio and said, ‘What do you think? You’re part of the community and now you own this too,'” he said.

To contact Andrew Brinker: [email protected]Follow him on Twitter. @Andrewn Brinker.

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