Is Massachusetts finally ready to make changes to Boston Harbor and coastal communities?

Bill Golden, former MA Senator, former city solicitor for Quincy, and one of the founders of the EPA, wonders if the time has come for the various political bodies to work together and protect Boston Harbor and 15 coastal communities in MA  from more flooding.In an op-ed in the Boston Globe, Golden details how he used his position as Quincy's solicitor to get the Harbor cleaned up. He believes a Boston Harbor Coastal Resiliency Authority is the answer and urges city and state officials to act now.

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MA home sales volume lowest since reporting began in 2004

The Massachusetts Association of Realtors (MAR) has released the year-over-year data on home sales in the state.While median sale price of single families inched up by $25,000 statewide, condos stayed the same. The huge drop was in the number of homes listed and sold.June 2023 had the lowest number of homes for sale - both single-families and condos -- since MAR started collecting this data in 2004.See the chart below for all the details:7.28.3

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Homeowner lost her paid off house for $2600 in unpaid property taxes

A recent article on MassLive details the saga of a Worcester homeowner who  paid off her home's mortgage in 2015 (after only 19 years) and in 2019 missed one property tax payment. She didn't realize she'd missed the payment and kept paying her taxes normally. Then one day she found that the home had been sold through a foreclosure tax sale to a private lien harvesting company, Tallage, which paid about $20,000 for the house.These companies that buy homes in tax foreclosure love to find houses with no mortgage, as they resell and make a huge profit without having to pay the bank.The Worcester homeowner is fighting the taking and a recent US Supreme Court ruling makes it likely that she will get to keep her home and not owe Tallage the $70,000 they're asking her to pay to get ownership back.Read the whole article here: She lost her home over a tax bill

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Framingham booms again

Framingham is booming again. In the years after WW2, Framingham was a super-suburb and epitomized the optimism of the post-war era. Some of the highlights of mid-century Framingham were the 1951 opening of Shoppers World (the first mall east of the Rocky Mountains), the opening of the Mass Pike in 1957, and then large company's HQs, along with thousands of suburban residents as farmland was turned into single-family subdivisions.But the Pike and subdivisions killed the downtown and around 1990, the remaining major downtown businesses (Avery Dennison, General Motors, and Cushing Hospital) closed.Yet around that time, Brazilian immigrants were starting to flock to the affordable downtown area of Framingham, and they began renovating the city's center.And since the early 2000s, large apartment buildings (some renovations of old factories, most new construction) added about 1,000 residential units downtown. And that has encouraged more businesses, such as the large Jack's Abby Brewing, to locate downtown.There are another 1,200 residential units approved for construction, and in a recent Boston Globe article, the city's Planning Director, Sarkis Sarkisian, said, "Barely a week goes by that I don't hear from a developer interested in building in Framingham."Read a PDF of the Globe article here: Framingham is reinventing itself

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Housing Authorities Combine Financing to Build More Public Housing

Many public housing projects were in bad shape in the late 20th century. Crime was often rampant and the dense concentration of very poor people brought many social ills. Many municipalities felt they couldn't absorb more housing projects and in 1999, a federal law, the Faircloth Amendment, went into effect capping the number of public housing units in any city or town at the number of units that existed that year.For a deep dive into affordable housing vocabulary, see our previous blog here. Affordable housing continued to be built, as the Faircloth Amendment covered public housing projects - all-affordable developments that are operated by local housing authorities and that continue to sometimes have a bad reputation. These are technically known as Section 9 housing. The funding for construction of these units comes exclusively from the Federal Government (HUD) and per-unit funding is low, which is why they are shoddily constructed and frequently fall into disrepair.Section 8 housing, however, is more flexible and allows developers building such units to access bank financing (not exclusively HUD funding) for capital projects.Activists have tried to repeal the Faircloth Amendment and unit cap to no avail, but as the years have gone on, the number of very-low-income units has decreased due to demolition and redevelopment into market-rate units. Federally financed affordable units must be guaranteed to be income-restricted for 30 years, but after that they can come out of the affordable pool.So even though cities could have built more public housing to get back up to 1999 levels, the available funding from HUD (the required, exclusive funding source) was scarce and wasn't enough to build really good housing.In 2017, HUD itself created a workaround to allow Section 9 units to be converted into Section 8 units, which don't have a cap in numbers and which can be built using private financing, and which reimburse housing authorities at a higher rate.For an excellent and detailed overview of how the Section 9 to Section 8 process works, see this 2017 article from the Fulton County (NY) Daily Gazette. Cambridge and Holyoke's housing authorities are two communities that are taking this route to put together multi-faceted financing using the Section 8 vouchers to build more units. Holyoke is now 189 units under the 1999 level and is about to build 30 units to get closer to that upper limit, after adding 9 public units to an innovative development in South Holyoke that contains public (Section 8) units, 3 moderate-income units (up to 50% of the AMI) and that will contain 19 shared-equity townhouses, where the resident owns the building and the housing authority owns the land and the house is preserved as permanently affordable.Cambridge is about 1,500 units shy of the 1999 cap on public housing. Unlike Holyoke, residential real estate is in high demand in Cambridge, so more units that reached their 30 year affordability cap were turned into market rate units.Cambridge is currently in the process of building 124 new public housing units using the Section 8 conversion process. Cambridge's housing authority is also talking to neighboring Medford to build units there, according to the Boston Globe. Local housing authorities are allowed to operate anywhere in Massachusetts, so if the Cambridge-Medford deal goes through, Cambridge public housing tenants may live in Medford, where construction costs are lower.Boston is 2,900 units below the 1999 cap, but has not yet devised a plan to rebuild the units, per the Globe article.

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High home prices don't equal a homebuying boom this Spring

Spring is often considered the peak homebuying season and sellers who can, wait until Spring to list their houses, knowing they'll usually get a higher price and faster sale.Not this year. According to Larry Edelman of the Boston Globe, 2023 marked the slowest May for condo sales since 2015 and the slowest May for home sales since 2011, at least in Greater Boston.The average interest rate on residential mortgages was 6.5%, which certainly is making some buyers consider waiting, and for sellers who will need a mortgage to get into a new home, they don't want to trade a 3% rate for double that.In May, median sales prices dropped by 2%, for the first time in a long time. Inventory is starting to rise, so perhaps a Summer upswing will come.

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Holyoke's cannabis industry moving from big players to smaller craft businesses

Holyoke has many vacant big, solid old warehouse and manufacturing buildings, excellent infrastructure with municipal hydroelectric and gas service, freight train service right through the industrial district, and is minutes from I-91. Many blue-collar workers live in the city and it sits along the "Knowledge Corridor" of colleges and universities with their researchers and such.Holyoke is also a "Gateway City" which gives it priority status for all sorts of economic development grants and initiatives funded by the state.And yet... Holyoke has gone through many things billed as the answer to the city's economic depression off the ground. Take the cannabis industry. When recreational marijuana became legal in Mass, Holyoke actively courted businesses to set up shop in the city, and many businesses took Holyoke up on the offer.In a recent MassLive article, Aaron Vega, the city's director of planning and economic development (and former state representative) says that the city issued 36 special permits related to growing and selling marijuana and today only 10 companies are in business.This isn't just a Holyoke problem. Massachusetts was the first state in the region to legalize recreational marijuana, so big cannabis grow/sell operations flocked to the state and set up shop. As Connecticut, Vermont, New York and Rhode Island all made retail marijuana legal,  Massachusetts stopped being a destination for legal pot and the cost of the product has dropped - a lot. An ounce of cannabis flower sold for $400 in 2021 and is now priced at $170.Statewide, gross sales revenue from cannabis sales since November 2018 has been $4.5 billion and the amount to cities and towns has been $912 million, which is terrific overall and which has brought real revenue into municipalities such as Holyoke - which collected $3.75 million in cannabis impact fees and which is expected to net $590,000 in 2024 from the cannabis sales tax. And lots more went to the state - $165.3 million this fiscal year, most of which goes to the Bureau of Addiction Services and is supposed to fund housing and recovery services for people with substance addictions. You can read the 2023 Cannabis Control Board's annual report here.As a result of the growing competition and regional availability, according to the Boston Globe, individual operators are seeing their profits plummet, even as the overall "pot pie" continues to grow. "It's a race to the bottom," said Kobie Evans, one of the owners of Pure Oasis in Boston.Shops in Boston, Northampton, and Easthampton have gone out of business, which is a normal market correction when one product becomes oversaturated. A grow facility that wanted to open in Agawam's old Chez Joseph pulled out because they couldn't get financing. Lenders said there wasn't enough potential return.Holyoke, however, didn't just plan on retail sales. The city issued permits for several indoor grow facilities, one of which said it would "supply the whole Northeast" but few of those remain today.Pleasantrees bought the old Sonoco packaging plant at 111 Mosher Street in 2020 and never built it out. They closed their Easthampton retail shop and sold the Holyoke property to investors in 2023 for a profit of $2 million. The new investors are betting that they will lease the site out for manufacturing or warehouse space. With industrial space now leasing for $7/SF, it's hard to see how the investors will recoup their investment.Rebecca Rivera, a broker with B&B Real Estate said investors today are looking to convert industrial space to residential. One such deal, which has been a long time in the making, is happening at 216 Appleton Street. Winn Development, favorite of historic preservationists for their sensitive work with old buildings, is converting the former Farr-Alpaca Mills into a 55+ affordable housing project which will contain 88 one and two-bedroom age and income restricted units. The project is estimated to come in at $35 million. Winn is accessing affordable housing tax credits, Gateway City funding, and MassDevelopment money along with a conventional loan from Bank of America.Trulieve was one of the first to invest in Holyoke for a grow site. They bought the massive block of mills at 56 Canal Street (most recently home to Conklin Office Furniture) for $3.2 million in 2019. They invested about $30 million in outfitting the building as a growing facility, which included installing steel supports for the heavy equipment in use. In addition to a growing operation, they offered testing and packaging.In 2022, a 27-year-old employee died at the Trulieve plant and the Florida-based company with facilities nationwide paid a $14,000 fine to OSHA for safety violations that resulted in her death. In 2023, Trulieve announced that it was closing all wholesale operations in Nevada, several retail operations in California, and the growing operation in Holyoke.Aaron Vega says that Trulieve is going to spend six months trying to find another cannabis grower to take the space and after that it will go on the market. Trulieve seems to be doing fine overall, with a reported $1.24 billion revenue in 2022 and new shops and facilities opening in other states.Around the corner at 1 Cabot Street, a Pot Mall is being built that will be a co-working space for small marijuana businesses that can share some of the major expenses that make the barrier to entry too high for small businesses.The mill is being redeveloped by owner Thomas J. Cusano and Sweitzer Construction. Cusano also owns mills in Turners Falls and Rochester, NH. If the Holyoke venture is successful, he'll replicate the plan in those locations.An employee who was laid off from Trulieve as it closed up shop said the profit in the business is now from small, craft growers, much like in the craft beer business.With Trulieve gone, there are still two cultivators (GTI and Milltown), four retailers, and one testing lab in Holyoke.

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Worker co-ops: A way for small business to outlive their founders

The Boston Globe reports on small Massachusetts-based businesses that are becoming worker owned co-ops as their founders retire; (read a PDF of the article here: Worker Co-ops).Small businesses, especially sole proprietorships, don't necessarily outlive their owners unless a succession plan is in place. Without family members interested in taking on the business, many simply go out of business when the founder/owner retires or dies.An alternative is to structure an employee buy-out that lets the employees form a co-operative ownership model. The Mass Center for Employee Ownership (MassCEO) says there are currently 57 co-operative employee owned businesses in the state and they are largely clustered in Boston and the Connecticut River Valley.There is currently a bill in committee (House 2962) that would offer tax breaks to business owners to sell to their employees and Boston gives co-ops priority status for the SPACE grant program trying to fill empty storefronts in the city.

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If you're not making $42/hr, you probably can't afford to live in Massachusetts

The Boston Globe reports (PDF: Hard to rent in Mass) that a household income of over $86,000 per year ($41.61/hr) is what you need to rent a two-bedroom apartment in Massachusetts, according to the National Low Income Housing Coalition's annual report on housing affordability. And that's $4 more per hour than last year.The Globe says "The state is a hub for jobs, education and innovation, but living here, especially for renters, costs ever more and is stretching even moderate earners to the limit."Although housing prices have surged, starting before the pandemic but then exacerbated by it, wages have not risen very much at all, which means those earning less will continue to fall further and further behind the higher-wage earners.As all stories about the housing crunch seem to conclude, the answer is to build more housing.

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Haitian and Latin American Migrants Coming to Mass in Record Numbers

Economic and political turmoil in Haiti and Latin and Central America are resulting in a surge of migrants coming to Massachusetts and this influx of new people, many of whom do not speak English and are in need of shelter and medical and social services, is overwhelming shelters and service providers. 900 homeless families have been placed in hotels as emergency shelter and Governor Healey’s proposed FY24 budget includes $324 million for shelters, but that might not be enough, according to a Boston Globe article.

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Maybe Mass isn't heading for a recession after all?

Larry Edelman, business reporter for the Boston Globe recently wrote an article in his weekly newsletter opining that perhaps the news isn't all bad for the New England economy.He did a deep dive into the Fed's "Beige Book", which details housing and employment info and found nothing but stability. Retail prices rose modestly, retail sales were steady, commercial real estate was unchanged. The outlook, per the Fed, was "mostly positive". The one note of caution was on lending. There are worries that banks in New England will curtail lending after what happened in Silicon Valley and Switzerland. The market did take a pause in Q1 2023 as lending abated. 

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Massachusetts’ Q1 Residential Data Points to a Slowdown in Sales 

The Massachusetts first quarter residential real estate data is out from MLS and it shows that homes continue to hold on to their value (good news for sellers), but are only rising very slightly in price and sales are taking longer to happen (good news for buyers).The first quarter of the year (January – March) is usually a slow time for selling or buying a home in snowy Massachusetts. And yet, prices have continued to rise, albeit more slowly than during the peak pandemic years. In Q1 of 2023, the median sale price came down to the list price, after having exceeded it for two and a half years. Pre-pandemic, median sales price was below list price. The median sale price for a SFH in Massachusetts this quarter was $535,000 a 39% increase over 2019’s median price for the same quarter, but only a 1.9% increase over Q1 in 2022. Q1 of 2022 turned out to be the fastest of the past five years for sales to happen, and in 2023, the average time for a home to sell is now well over a month statewide.The news is about the same on the condo front. Median sales price for the first quarter of the year were $1,000 above asking price, which is negligible. The median sales price of condos in Mass is now $500,000 which is an increase of 36% since 2019 and an increase of 6% from the same time last quarter.The days on the market for condos is also longer than the rush in early 2022, with condos also taking more than a month to sell now.With mortgage rates still very high (and more than double what they were until September 2022), sales are slowing. The sales volume has decreased markedly in Q1 compared to the pandemic year and is only slightly higher than Q1 of 2019. The residential real estate market in Massachusetts seems to be stabilizing in terms of time on market, offer prices and volume of sales. The prices, however, are remaining at the heights they reached during the pandemic, which makes it hard for first-time buyers to enter the real estate market. Lending rates are a further impediment to new buyers.

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Will Housing Prices Fall in Massachusetts in 2023?

What will happen with housing prices nationwide and in Massachusetts in particular in the next year?Moody’s predicts that home prices will fall across the country in 2023 and 2024, based on the nationwide 12% dip in prices between June 2022 and February 2023. As of February, the median sales price for a single-family was $363,000, down from $413,800 last June. Moody’s predicts a recession in late 2023, no easing on lending rates, and increased unemployment – all of which will keep prices down.Prices are falling most dramatically in large Western and Southwestern cities like San Francisco, Seattle, Denver, Las Vegas, San Diego and Phoenix. The Southeastern and Northeastern states are still holding value.The dramatic chart below shows how mortgage applications have plummeted as the interest rate has risen in late 2022.And while prices are decreasing, Moody’s stresses that this is a market correction, adjusting downwards after the extreme spike of prices during the pandemic, and not a crash. They predict prices will continue to fall by 5 to 10% by 2025, but they will still be about 30% higher than they were in 2020 before the pandemic. An overall increase in value of 30% over five years is a good return on housing investment.Housing need will continue strong, according to Moody’s, as the national market has a 1.5 million unit shortage.What about Massachusetts?The Mass Association of Realtors’ February report showed that sales of existing homes declined for the 12th month in a row and the sales of new homes were lower in January 2023 than in January 2022 or January 2021, but if we look back to pre-pandemic days, sales are up. So the 18 months or so of the pandemic realty frenzy (March 2020 – September 2021) can be considered an anomaly, and probably should be.A March 22, 2023 article on Boston.com by Vivi Smilgius and Eileen Woods on Boston.com gives a deep dive analysis of the Warren Group’s Housing Report and shows us that residential property is still increasing in value in the state as a whole:But in Greater Boston, residential real estate is finally starting to fall in price, showing that market correction that Moody’s suggests is happening across the country:     Although the prices are declining in Greater Boston, they are still much higher than the median prices in the state as a whole.The Warren Group shares a breakdown by county of median prices and volume of single-family sales between February 2022 and February 2023. Only two counties saw a decrease in sales prices compared to the previous year(Norfolk at 3.8% and Middlesex at 0.9%), but all counties had a double-digit decrease in volume of sales – except Norfolk, which had an increase in sales volume of 3.9%. The data is below:                  The condo market shows even larger dips in volume of sales, and has more loss of sales value than gains:              So while prices are up overall in Massachusetts, inventory and number of sales are down and each county is quite distinct in housing market data.Realtors often look to Spring as a time of increased sales. Will more homes and condos come on the market this Spring in Massachusetts? Only time will tell.

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Will Building More Market Rate Apartments Increase the Affordable Housing Stock?

Banker & Tradesman published an article on March 26, 2023 asking "Can Massachusetts Build Its Way to Affordability?". In short, they believe the answer is yes and that more market-rate housing will actually by itself create more affordable housing.It's a commonly-held belief that the construction of market-rate apartments increases the rent in the area where they are built. Existing landlords, it is thought, see how much new units are going for and hike their rental rates, which results in higher rents for older, possibly less well-maintained, units. Another commonly-held belief is that the construction of affordable housing depresses value in the area where it is built, as there is a conception that affordable housing brings with it poverty-related issues such as crime, drugs and violence.This may be a twentieth-century perspective. Low-income public housing was historically built in already economically depressed areas or in otherwise-unoccupied areas of vacant land. Low-income housing also used to be built as large tower blocks (the Cabrini Green project in Chicago springs to mind), where only very low-income people lived in high density with no support services on-site and poor transit infrastructure.In the twenty-first century, many large "projects" of low-income housing (including Cabrini Green) were demolished and new construction tended to be less-dense and less confined only to those considered low or very-low-income; i.e. those earning less than 60% of the Area Median Income are considered low income and those earning less than 30% of the Area Median Income are considered "very low income" and are usually not working for that income. Many states such as Massachusetts encouraged mixed-rate housing development. That meant that in a new housing development (be that a blocky apartment building or more dispersed townhouses), some percentage of the units would be reserved for people earning below the AMI and the rest would be market rate. Developers got preferential treatment and lower-interest loans if they included affordable units in their new builds.And what happened in the neighborhoods? Several studies published since 2000 have shown that building market-rate units actually helps with the demand for affordable (but not subsidized) rents in their neighborhood.The Upjohn Institute in 2019 and the Hudson Institute in 2017 both found that increased availability of market-rate or luxury units actually has a "filtering up" effect that results in more affordable units becoming available as local renters who can afford to do so upgrade their apartments by moving into the newer, more expensive units, leaving their old and now less-desirable units available for renters with a tighter budget.Similarly, a 2021 study by Redfin found that low-income housing developments had either no effect or a positive effect on housing resale values in the immediate area of the development.   Living in a socio-economically diverse neighborhood (or "economically integrated" neighborhoods as they are sometimes known) is beneficial for everyone along the income spectrum. Lower-income children in economically-diverse neighborhoods have better physical and mental health and are more upwardly mobile economically.For the people earning more, it can change their perceptions of poor people - unless the spread of incomes is too great, according to an interesting Urban Institute panel.  Their recommendation was to build more middle-income market rate units, rather than so many "luxury" units.                           However, as the Urban Institute notes, the return for developers is on luxury units. UI asks, what cangovernment do to incentivize new building that contains units that are market-rate but affordable to middle-income earners?

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What Does "Affordable Housing" Actually Mean?

According to the Office on Housing and Urban Development (HUD), housing is considered affordable if it costs 30% or less of what the renter/homeowner earns, utilities included. Many people pay 50% or more of their income to housing costs, which makes them fall into the "housing burdened" category, and means they have little discretionary income to use on savings, retirement, or entertainment, which helps support the economy.Affordable housing may bring up images of public housing "projects", but more often "affordable housing" refers to rental units that are part of a privately-owned apartment building or multi-family. There are also some homeownership models that have deed restrictions to preserve permanent affordability. In this model, the income restriction applies at time of purchase, but the owner may later exceed the income limits with no penalty.Because the most common model of affordable housing is one or more rental units restricted to affordable levels, that is what we’ll look at here.There are tax credits and lower interest loans available to developers who create affordable units within a housing development and some towns may require that some percentage of units (often 10% - 20%) be made "affordable." The rules and regulations about zoning and tax credits are extremely complex and not what we are covering here, but anyone interested in Massachusetts' rules can find information about the Low Income Tax Credit (for developers creating units reserved for those earning up to 40% of the AMI) here and about affordable housing development here. So nestled into a large apartment building may be several apartments that go for a far lower rent than the others.The rent considered affordable is based on the Area Median Income (AMI), which is defined annually by HUD (in mid-April). Generally, “affordable housing” is available to people/households that earn up to 80% of the AMI. Some affordable housing is restricted to those earning up to 60% of the AMI. The median income varies a lot by region in Massachusetts. Some cities have their own AMI and others are regional (by county or by Census area)For example, the FY22 Boston/Cambridge/Quincy area was $140,200 per household.

So for the many, many towns in the greater Boston area, a family of four earning $111,850 is eligible for affordable housing. And the “affordable” rent for that family of four earning 80% of the AMI would be $2,908 per month for a fully privately owned/developed unit. Development that used 40B funding is slightly different and the cap on the rent for a 40B-funded three bedroom unit would be $2,552 per month.

Wellesley, one of the towns in the Boston/Cambridge/Quincy market has a median rental cost of $4,500 for a three-bedroom, so the $2,908 “affordable” rent is certainly less than market rate, but still not what many would think of as “affordable”. For Boston itself, the median rent for a 3 bedroom is $3,222, and in Quincy, it is $2,600 – less than the rent set for those earning 80% of the AMI.So "affordable housing" really means housing costs that are 30% or less of a household's income. Many in Massachusetts wish that there was more of it, so that MA residents could spend their income in other areas besides just shelter.Several current projects include a percentage of affordable units (due to either a shortage of such units in a municipality or the advantageous financing of projects that contain affordable units, even if the municipality has "enough" affordable units). One such project is the new mixed-use development underway at the former Court Square Hotel in Springfield. The once grand hotel and opera house has been vacant for decades. It is being redeveloped to contain 59 market-rate apartments and 12 "workforce apartments" that will be restricted to those earning up to 80% of the AMI, or $73,300 for a family of four, as of the FY22 HUD AMI limits: The favorable financing that comes with the affordable units helps the developers' bottom line. The full cost of the project is budgeted at $49 million and includes financing from the city and state.The architectural rendering shows what the completed facade with apartments on upper levels and storefront retail, including a restaurant that will be run by the prominent Lee family of restauranteurs. 

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