For Another Island, Affordable Housing Seems a Virtually Impossible Hurdle

By MANDY LOCKE

NANTUCKET - Walter Beinecke's name is spoken with a sense of awe and an undercurrent of resentment. He's the fellow, people here will tell you, who in the 1960s awoke this sleepy little island. He's the entrepreneur, who, owning much of Nantucket's downtown and practically all of the working harborfront - jammed with more fishing vessels than tourists in those days, did the math. He figured the place could benefit more from 100 people spending $100 each than 1,000 people buying a $10 T-shirt. His theory convinced other business leaders to appeal to the tourist who brought a bottomless pocketbook and an appetite for Nantucket's wares.

"If it weren't for Walter, we probably would have stayed the sleepy resort we'd always been," says Georgia Snell, island minister and former summer kid turned year-round Nantucket activist.

Mr. Beinecke transformed the former harbor of whaling captains into a place fit for moonlit strolls, boutique browsing and extravagant dining. One by one, the fishermen lost their foothold in Nantucket's harbor.

"He envisioned our island for the wealthy. But he didn't anticipate that people would want a piece of this place the way they did," says John Pagini, director of Nantucket's planning and economic development commission.

This is how the story of Nantucket as a playground for the wealthy begins. The chapters, enfolding four prosperous decades, describe a community now struggling to pick up the pieces that fractured during the economic boom.

"Our very popularity threatens to destroy what is so special about this place," says Penny Dey, real estate broker and town official.

The Land Rush

The real storm for Nantucket came just in the last 10 years.

The year-round community increased by 56 percent, to 11,000 residents. Some settled into Nantucket for retirement. Some rode out the dot-com era here; telecommuters turned living rooms into offices.

And real estate values soared - driven by mainland buyers scooping up properties in neighborhoods from Siasconset to Surfside. Successful conservation efforts dating back to the 1960s, bolstered by the creation of the Nantucket Islands Land Bank in 1983, also were part of the picture. Today, 43 per cent, over 13,000 acres, is preserved by a handful of conservation groups.

The inventory of available raw land is nearly depleted. The number of estate properties - unbuilt parcels of more than 10 acres - can be counted on one hand. Little more than 3,000 acres are vacant and unprotected.

So it's been a seller's market.

In 2002, 45 properties sold for more than $1 million, 13 of them for more than $2 million. In the first six months of this year, 114 sales topped $1 million; of these, 45 fetched more than $2 million.

Just last year, the median home price hit $830,000 - more than double that of 1997.

But no one quite anticipated how Nantucket's evolution would strip the year-round community of affordable housing opportunities.

"The real estate boom dried up inventory. Conservation dried up inventory. The 1990s really caught people by surprise," said Edward Sandford, a real estate broker

"We had sheep; we got rid of them. We had fishermen, but we lost those, too. Nantucket doesn't have a very good record of protecting things while we are making money. We don't have a good record of knowing when enough is enough." said Matt Fee, a Nantucket selectman.

The Middle Class, Squeezed

To save its disappearing middle class, Nantucket has got a lot of work ahead. The Nantucket Sustainable Development Corp. affirmed that in a housing needs assessment in 2002. The assessment found:

* Only 20 per cent of Nantucket's 1,365 renter households can afford to buy a piece of land.

* At least 200 of these household shuffle annually, their occupants forced to vacate winter rentals in late spring.

* Nantucket's housing poor is America's middle class. The median four-person household pulls in about $80,000 a year. These families could easily secure a home in the $250,000 to $300,000 range - but homes in this price range disappeared long ago.

* To absorb current needs, the island must provide 400 new affordable home ownership opportunities and 200 new rental units. Even that won't begin to take care of 900 new service workers projected to be needed in years ahead, if retirees continue to flood the island.

"People want a middle class here. There's an underlying fear that we've already let them go. We probably need 400 to 500 units to make a dent in the problem. We've probably got 10," said Mr. Sandford.

Even families lucky enough to secure a spot in public housing - where rents are capped at no more than 30 per cent of wages - can't take the next step into ownership. Only three families have graduated from these rentals into ownership in the last four years, said Renee Ceely, director of the Nantucket Housing Authority.

"There's nowhere to transition them to. There's nowhere to go. This stop becomes permanent," Ms. Ceely said of the 55 families she serves.

The public housing tenants seem to know this. At least a half dozen of those living in public housing have planted elaborate gardens in their backyards, and landscaped the front walkway of their homes.

No Point of Entry

Nantucketers say that there's a difference between hard and impossible. They would know.

"There's no point of entry [into the market] for the next generation. That's the hard reality," said Mr. Sandford.

"Sleeping on a mattress in the garage works if there's light at the end of the tunnel. For most, they couldn't see the light," said Alvin (Toppy) Topham, a native islander who is chairman of the Nantucket Planning and Economic Development Commission.

Practically no young workers, some of whom grew up on Nantucket, entertain the dream of owning a home here. They've understood their dim prospects for quite some time.

"I wouldn't even waste my time looking for a piece of property. I realize I can't be here forever. Since I came back from college, I knew I couldn't make it work. My chances of owning a piece of Nantucket are slim to none," said John Cranston, a third-generation Nantucketer who lives in an apartment above the plumbing supply store where he works.

Many young workers say they'll eventually grow weary of sharing houses with co-workers and friends, craving privacy and enough space to grow the families they hope to have.

"There will be a point in which I do leave. The quality of life argument can only hold me so much. I'll need to move on and grow up. I can't do that here," said Linda Hoskins, who works at Sun Island Delivery and shares a duplex unit with a male coworker.

These days it's not just those stuck in the rental market crunch being tempted to pack up. Joining the exodus are homeowners unable to make the quality of life argument anymore.

Meeting monthly mortgages brings a challenge that often drives owners to work around the clock, or crowd their own homes with renters.

"When you have a $4,000-a-month mortgage, you rent out rooms and create communal, high density living. But they haven't captured the quality living that home ownership was supposed to deliver," said Ms. Ceely.

The affordable housing crunch sparked a domino effect no one could stop. To survive, business owners built employee housing, or hired commuters - jacking up prices on items across the board.

Gasoline costs 41 per cent more on Nantucket than in Hyannis and between 10 to 20 cents more per gallon than on the Vineyard. Home heating oil is also about 40 per cent higher on Nantucket than on the Cape. Groceries creep anywhere from eight to 25 per cent above mainland prices, depending on the item. Federal agencies suggest that Nantucket's rates for essential services are about 20 per cent higher than the Vineyard, where prices are already 15 per cent higher than the mainland.

And small things matter.

"There's nowhere for the year-round resident to buy underwear here since the Five and Ten closed," said Ms. Snell, referring to the often-repeated complaint that Nantucket's "cobblestone Disneyland" of downtown offers nothing essential for the year-round resident.

Warning Signs

Nantucket's breaking point - most agree there is one - will come through unrelenting demands on the island's limited capacity.

"We're hitting a wall," said Christine Silverstein, director of Nantucket Sustainable Development Corp.

The state Department of Environmental Protection is holding more than seven building permits that rely on tie-ins to the wastewater treatment plant because the 20-year-old system often exceeds 80 per cent capacity in peak months. The utility company is planning a second underground cable to bring the island electricity from the mainland. High water demand is forcing the town to make plans for a second water holding tank.

Looming infrastructure problems will force $55 million worth of capital improvements on taxpayers from 2001 to 2006.

"The tax base will need to double by year 2015. That's when we'll break. (Currently), $3,500 a year for taxes on a house in town. When that amount goes up to $7,000, I, like many, am out of business," Mr. Topham said.

Infrastructure challenges are further heightened by one approved and two pending Chapter 40B developments. At least two of these developments would depend on the already strained wastewater treatment plant.

Trying to Hang On

Nantucket is struggling to hang on to essential laborers. The school system, police department and hospital all faced employee crises in the last several years - forcing them to embrace costly solutions.

"Three years ago, the school system had 34 vacancies in one year." said Bob Liddle, a local contractor involved with a committee building a 12-unit rental development for school employees.

More than 60 school teachers are enduring the Nantucket shuffle, said Jack McFarland, facilities manager for the school system. "We realized we couldn't attract teachers because they weren't willing to live like that. They wanted to be part of the community, and they knew they couldn't without stable housing," Mr. McFarland said.

The police department also faced high turnover rates. From January 2002 to January 2003, the department lost 12 officers, 36 per cent of its force. Two years ago, the town began forcing new officers to sign three-year contracts - a breach of which would force the officer to repay the town about $30,000 for academy training and uniforms.

Nantucket Cottage Hospital had to get into the housing game.

By the year 2001, the hospital already owned between $5 to $7 million worth of housing for employees. Just this year, they upped that capital investment by $2 million, building four duplexes on an acre of hospital land in front of the main building and remodeling a nurses dormitory into 14 efficiency apartments. "We're a minihotel," said Dick Clark, chief financial officer, noting that they now have over 70 beds.

"The first thing we're asked when we recruit off-Island is ‘Do you have housing?'" Mr. Clark said.

A New Look

Nantucket has learned the hard way.

The first and only public affordable housing on Nantucket for families before the mid-1990s came in a single neighborhood made possible through government grants.

Miacomet Village, a clump of housing spread across less than ten acres of land deeded from the town to the housing authority, is shingled, like everything else on Nantucket. Cookie-cutter duplexes and triplexes line paved roads, barren save an occasional Russian olive near the front stoop.

But the last lane of the Miacomet Village complex is different - a patchwork neighborhood of homes trucked in from all over Nantucket.

"We're taking This Old House to an extreme," says Ms. Ceely, director of the housing authority since its creation in 1984, as she ticks through the history of a post-World War I bungalow, explaining it had to be cut in half to make it down the narrow downtown lane from which it was taken.

This is the new face of Nantucket's housing authority.

These days, there's been a good flow of donated homes headed their way - saved from the dump when the housing authority takes them on. Since 1994, a non-profit outfit now called the Nantucket Housing Office has relocated 15 homes for affordable housing.

The town chisels away chunks of land in existing neighborhoods - taken from tax foreclosures or finally cleared of clouded titles, remnants of sheep commons - and deeds them to the authority for house moves.

But the program that island leaders really hope can have an impact on the affordable housing crisis just began in June.

The Nantucket Housing Needs Covenant program could allow as many as 8,000 new dwellings on Nantucket - all aimed at residents earning less than 150 per cent of median income, $120,000 for a family of four.

This new program, three years in the making, allows Nantucketers to sell their guest house or the development rights to build a guest house so long as they sell it to such a qualified household. The guest house would be deeded as affordable - a permanent covenant on homes for Nantucket's middle-incomed family. The state legislature approved the island's permanent deed rider last summer.

Every property owner on Nantucket can build a guest house with only a 20 per cent size differential between the main house and the second dwelling. Advocates say not only can the program boost an inventory of affordable houses, but it will also give long-time homeowners a way to face the current high cost of living.

"If all of someone's wealth is tied up in their home, and they want to send their kid to college, they have no choice but to sell their home. This enables them to stay and earn up to$350,000 from something they otherwise couldn't sell," explains Bob Nussbaum, executive director of the Nantucket Housing Office, the organization spearheading the initiative. Homeowners also have the choice to move themselves into the deed-restricted house, selling the other at market rate.

All of this is expected to happen on the open market - through word of mouth and the direction of local real estate brokers.

Ms. Dey is currently working on one of the first "second home" transactions - the first time she will sell a house to a local first-time homebuyer in more than five years. A few other of these sales were known to be under agreement this summer.

The initiative is expected to create a market within a market - enabling housing activists to secure grants for second loan programs otherwise unattainable for Nantucket because of the nonexistent stock of moderately priced homes.

Still, even if this succeeds, housing advocates acknowledge it is merely one step, like the other programs, toward solving a problem that's stripping their community of qualities they value.

Referring to the house move program, Ms. Ceely said: "I know that 15 houses don't come close to solving the problem, but we did help 15 working families. That's how I have to look at it, or I couldn't come to work tomorrow."