How Will the COVID-19 Crisis Shape the Future of Affordable Housing?
Q&A with Chrystal Kornegay, Executive Director, MassHousing
Written by Adam Tanaka and Amelia Taylor-Hochberg
This article is part of a series of HR&A interviews with urban leaders across the country exploring how the COVID-19 crisis is impacting every aspect of urban life.
The COVID-19 crisis has shed light on long-running housing crises in cities nationwide. While eviction moratoria and rental relief programs have helped temporarily forestall social upheaval, record unemployment threatens to further exacerbate rent burdens for low and middle-income households. The ability for cities to absorb these shocks rests in part on long-standing efforts by affordable housing developers and lenders whose commitment to their work is steadfast through booms and busts.
To hear how the affordable housing industry is weathering the pandemic, we spoke with Chrystal Kornegay, a leader in Massachusetts’ housing and community development arena. As the Executive Director of MassHousing, Kornegay leads the quasi-public agency’s efforts to finance affordable single- and multifamily housing throughout the Commonwealth. Prior to her appointment to MassHousing, Kornegay served as the undersecretary of Housing and Community Development for the Baker-Polito administration and as the President of Urban Edge, one of New England’s largest community development corporations.
How has your day-to-day work at MassHousing shifted since the onset of the pandemic?
Before the crisis, a lot of my work was about external relations — attending ribbon cuttings, speaking on panels, and so forth. As a result of COVID, I am now spending more time with my executive team and I am focused on boosting staff morale. Like many financial services organizations, we were fortunate enough to have the infrastructure in place to work from home. The way real estate is financed has not changed much, so we have been able to pivot quite smoothly.
What role has MassHousing played in helping to stabilize properties that have experienced spikes in operating costs (related to, for instance, heightened cleaning protocols) or problems with rent collections?
By and large, our borrowers have yet to experience significant challenges. Roughly 85% of our portfolio is supported through Section 8 contracts, and that money has continued to flow. Our most challenged borrowers are those with a significant elderly population where cleaning costs are higher.
That said, it has only been two months since the crisis began. April rent collections were a reflection of March, when most people were still working. May collections were a reflection of April, when people got their unemployment benefits and federal stimulus checks. We have not experienced shortfalls yet, but we are being vigilant and cautious.
Have disruptions in the capital markets affected MassHousing’s ability to do business or forced the agency to recalibrate any of its financing programs?
The disruptions in the capital markets were a problem initially. This was partly due to the federal government’s evolving view of how long the crisis would last. The CARES Act, for instance, required us to grant forbearances to our borrowers. Many states also put moratoria on evictions. This left loan servicers like us in the lurch. The way we issue loans is by selling bonds on the capital markets; if one of our multifamily borrowers misses a mortgage payment, we still need to pay our bond investors.
The capital markets are now looking better because the Federal Reserve stepped in to buy treasury securities. We issued our first single-family bond since the onset of the crisis in late May. But people are feeling more confident and we are creeping back into the market.
Given the pressing need for key worker housing and dwindling demand for retail, hospitality, and even office space, do you see any opportunities for MassHousing to advance the adaptive reuse of existing non-residential buildings into affordable housing?
The demand for retail is not dwindling — it is on hiatus. The recovery will take a while, and some businesses will not survive, but I am confident that retail will return in one form or another. I think it is more likely we will see reuse of commercial office space than retail space. No matter where, we will continue to work with our borrowers to finance affordable housing.
Metro Boston has struggled with severe housing affordability challenges in recent years. How do you see the current pandemic reshaping the housing crisis in the longer term?
It all depends on how long it takes us to get back to normal. Here in Boston, there are already signs of stabilization. There will continue to be a demand for housing thanks to our strong medical, technology, and university sectors.
At the same time, the market is not building for middle-income or key workers. That is true now and will be exacerbated in the future. To tackle this challenge, we just approved over $230M in permanent construction and bridge financing to preserve or create 1,900 units of affordable and workforce housing. Affordable housing developers have still got their eyes on the next deal and we are happy to be able to help them.
