How does the LIP process work for local zoning efforts?

Local Initiative Program, Local Action Units

The Executive Office of Housing and Livable Communities (EOHLC) sponsors the Local Initiative Program (LIP), which provides the regulatory framework for affordable or inclusionary units to register them on the state’s Subsidized Housing Inventory (SHI). 

This means that developments with an affordable component that are permitted through local zoning – inclusionary housing, MBTA/#a, overlay districts, and other such mechanisms – can utilize the LIP Program to regulate their units and register them on the SHI.  These units are called Local Action Units (LAU) under the LIP Program. 

The LIP LAU cycle has five major steps.

1. Permit

The developer and applicant presents, discusses and finalizes all the specifics of the development including its affordable component during the hearing process.  The final plans and particulars related to the affordable units are ideally contained in the approved plans and permit.  Specifically:

• The number and specific locations of the affordable units
• The size of the units (square feet and number of bedrooms) and their affordability level. 
• Conditions relative to the building permit and/or timing of occupancy relative to the unrestricted units.  Sample conditions:  Submission of LIP LAU application to EOHLC prior to building/occupancy permit.  Occupancy permit for affordable unit/s in line with market rate unit so that the affordable units are not within the last 20% of occupancy. 

When the board permit (usually from the Planning Board or Zoning Board) is issued, the developer is best served to start planning for the LIP LAU affordability component by employing a certified lottery agent. 

All new units to the affordable housing program, whether existing structures or new construction, must be leased/purchased through a lottery as specified through an approved Affirmative Fair Marketing Plan. 

Certified lottery agents are familiar and authorized to prepare such plans and perform the lottery function.

2. Regulate

The LIP LAU application process starts with creating the LIP LAU Application and completes with the recording of the Regulatory Agreement.  This process can take upwards of six months depending on the readiness of the information.

The LIP LAU application package contains the following information, as drafted by the certified agent:

• Project narrative, with demonstrative local municipal action
• Final and recorded Zoning permit (usually from a Planning Board, Zoning Board, or similar permit granting authority)
• Unit mix – market and affordable – in tabular form
• Site plan, with affordable units identified, and floor plans (showing dimensions of rooms)
• Affordable Fair Housing Marketing Plan, including application materials and sample advertisement, including timeline of occupancy, avenues of outreach/advertising, description of eligibility, preferences and priories, fees charged and wait list process.  The AFHMP is prepared in accordance with the guidelines.
• Sales Price/Rental rate calculator, with utility allowance schedule (for rental)
• Local Preference justification (if applicable)
• Condominium details:  Master Deed, Declaration of Trust, Condo Budget
• Draft/redline Regulatory Agreement.

Once complete, the LIP LAU application is signed by the local housing partnership (if applicable) and the Chair of the Select Board/municipal CEO, before submitting to EOHLC.

The EOHLC review may take 3-4 months, depending on the complexity of the project, the completeness of the materials, and other project specific elements.

Once EOHLC approves the LIP LAU application, marketing can begin and the Regulatory Agreement can be executed (applicant, town, EOHLC) and then recorded.

3. Marketing and Lottery

Marketing should not start more than 6 months from occupancy, and with current prices/rents.  Marketing cannot start without monitoring agent approval (municipality and EOHLC). 

Monitoring agent approval (municipality and EOHLC) is required for any changes from the approved AFHMP.   This includes prices/rents, additional charges/fees, or other items.  Often, a final re-pricing is done immediately before marketing starts to incorporate current pricing parameters.

If the marketing is done too early, applicants may no longer be interested.  Applicants needs to be determined eligible 60-90 days before residency. 

Once started, the marketing period is at least 60 days, with an information session held mid-way.  The lottery agent reviews the applications for eligibility, and holds the lottery.  The top ranked households are given a reasonable period to make their decision.

From there, leasing or purchasing occurs.  No contracts (P&S/Lease) can be executed prior to the Regulatory Agreement being recorded.

4. Occupancy

Once all conditions are met and occupancy permits issued, the rental units are leased, and/or ownership units are purchased.  Ownership units have the deed rider/restriction attached to the deed at closing.

The units are then eligible to be added to the Subsidized Housing Inventory (SHI).

5. Monitoring

Rental units:  Annual income recertification by the property owner, submitted to the monitoring agents annually.

Ownership units:  Annual verification by the monitoring agent.