State Roundup
House Ways and Means Releases FY 2009 Budget
On Wednesday, the House Committee on Ways and Means released its budget proposal for FY 2009. The House proposal mirrors the Governor's budget (House Two) with two exceptions. First, the Public Housing Operating Subsidy would see a $6 million increase instead of the $13 million increase proposed by the Governor. Second, the House budget includes $7,977,469 for Department of Housing and Community Development Administration, approximately $416,000 less than the Governor's budget that was released in January.
The House Ways and Means Committee budget increases the Massachusetts Rental Voucher Program by $2 million over the FY 2008 appropriation; the same amount proposed by Governor Patrick. While this increase is appreciated, CHAPA remains concerned that it will be insufficient to retain the current amount of rental vouchers for low income residents and will force DHCD to freeze the issuance of vouchers upon turnover. The House and Governor both propose appropriating $8.25 million to fund the Commission to End Homelessness Report implementation. CHAPA remains concerned that the Commonwealth will not be able to make progress in preventing homelessness without additional rental vouchers (both tenant-based and project-based) to make housing more affordable to extremely low income families.
CHAPA is pleased to see that the House budget includes $5,000,000 for the Division of Banks to address the foreclosure crisis; the funds will be used towards a pilot program for best lending practices, first-time homeowner counseling for non-traditional loans, and foreclosure education centers. In addition, the House increased the Alternative Housing Voucher Program by $500,000 over FY08 appropriations. The Soft Second Loan Program, Housing Services and Counseling, Mental Health Rental Subsidies and Residential Assistance for Families in Transition are all level-funded, consistent with the Governor's recommendations.
In assessing the House Ways and Means budget as a whole, affordable housing is certainly a House priority. CHAPA wishes to extend our gratitude to Speaker Salvatore DiMasi, Chairman Robert DeLeo, Vice-Chair Marie St. Fleur, the entire Ways and Means Committee and Chairman Kevin Honan for ensuring that housing programs are secure at a time of economic uncertainty and scarce resources. While we are concerned that we will have less rental vouchers for extremely low income families, elders, and people with disabilities during FY09 than we did in FY08, we hope to continue to work with the House to address this concern.
The House will debate the budget during the week of April 26. The Senate Committee on Ways and Means is expected to release its budget by the middle of May.
Housing Bond Bill Differences Remain Unresolved
During a demanding period of revenue and budget decisions, the legislature is yet to take action to resolve the differences between the House (H. 4594) and Senate (S. 2591) versions of the Housing Bond Bill. The two bills are substantially similar, with the exception of an amendment added by the Senate that would impact the cost of projects funded by bond bill programs and language differences in the Facilities Consolidation Fund and Community Based Housing. Click here for a comparison of the two bills.
Governor Patrick Announces Foreclosure Acquisition Fund; Moves Forward on Growth District Initiative
At a major economic address at MIT last week, Governor Patrick focused much of his presentation on bolstering community development and responding to the foreclosure crisis.
The Governor announced that $20 million will be available for an acquisition fund to purchase and renovate foreclosed properties. Massachusetts Housing Partnership and the Massachusetts Housing Investment Corporation will partner with DHCD to manage and fund a $20 million revolving loan pool to help purchase foreclosed properties. The resources will provide nonprofit agencies with resources to secure properties quickly, reoccupy vacant homes, prevent tenant displacement, and help stabilize neighborhoods.
In addition, the Governor focused on the Administration's Growth Districts Initiative, headed by the Executive Office of Housing and Economic Development. The Initiative focuses investments on selected regional small cities that have pre-planned for housing and economic development. To date, Worcester, Haverhill and Chicopee have been selected for this program and the Administration plans to identify up to 13 more districts.
$2 Million in Foreclosure Education and Homebuyer Counseling Grants Announced
The Patrick Administration recently released $1.5 million in funding for 11 foreclosure regional education centers across the Commonwealth. The goal was to target communities hardest hit by the foreclosure crisis. An additional $500,000 was awarded to non-profit organizations and local entities to be used for foreclosure prevention and first-time homebuyer counseling and loan programs. Click here for more information and a list of awardees.
Busy Spring for Community Preservation Act Votes
This spring, West Bridgewater, Granville and Stoughton have adopted the Community Preservation Act, bringing the statewide total to 130 cities and towns. Three municipalities voted against adopting CPA earlier this spring: Andover, South Hadley and Seekonk. An additional six small towns have CPA votes scheduled between now and June 3rd.
One of many tools available to localities to create affordable housing, the CPA provides state and local funding for affordable housing, historic preservation, and recreation/open space. CHAPA has partnered with the Massachusetts Housing Partnership to publish a guidebook for municipalities to build capacity and increase affordable housing opportunities available through CPA.
State Supreme Judicial Court Upholds HAC in Two 40B Decisions
On April 11, the SJC issued two decisions on cases involving Chapter 40B proposals in Canton and Lexington. Both decisions addressed the question of when a community is considered to have reached the 10% threshold and thus become appeal-proof.
The Court noted that this is a matter of regulation as the statute is silent on this question and upheld DHCD's regulation that sets achievement as the date the ZBA decision is filed with the local clerk. Both cases involved towns that reached the 10% threshold while decisions on earlier projects were before the Housing Appeals Committee (HAC). After the HAC overturned a denial in one case and ordered a revised permit in the second, plaintiffs argued that HAC lacked authority to order the permits because the towns were now at 10%. The SJC found that HAC did have the authority to decide these appeals because the towns were below 10% when the appeals were filed.
In the case of Zoning Board of Canton vs. Housing Appeals Committee, the HAC had overturned the denial of an application by Canton Property Holding, LLC to build 220 units; that case now goes back to Superior Court for consideration of other arguments raised by the plaintiffs.
In the case of William Taylor et al. vs. Housing Appeals Committee, an abutter, rather than the Zoning Board, had appealed the HAC decision to order issuance of a permit for 36 units (rather than the 28 the ZBA approved).
CHAPA Publishes Summary of New DHCD 40B Guidelines
In addition to new 40B regulations issued on February 22, DHCD has released comprehensive 40B guidelines covering affirmative marketing, lotteries, allowable development costs, counting of units on the subsidized housing inventory, the Local Initiatives Program, and other key areas. CHAPA has published summaries of both the regulatory changes and the guideline changes on its web site.
DHCD Issues NOFA for FY2009 IDA Program
DHCD has issued a Notice of Funding Availability (NOFA) for its FY2009 Individual Development Account (IDA) Initiative. Proposals are due by 5:00 p.m. on Friday, May 9. Applications are limited to community-based non-profit organizations. Programs will run for one year starting July 1, 2008. The IDA program supports projects that help low income persons to build assets over several years through post-secondary education or training, small business development and/or homeownership. Participating households establish dedicated savings account to support specific goals (e.g. purchase of a home) and receive matching funds for every dollar saved (the match rates are set by individual programs). Persons residing in state-assisted housing will receive preference for enrollment in FY2009.
The total funding available under this NOFA will depend on the final FY2009 budget (the Governor has requested $600,000). DHCD expects to award 4-10 grants, with a maximum grant of $50,000 for single agency applications and $300,000 for multi-agency applications.
Federal Roundup
Senate Passes Foreclosure Assistance/FHA Reform Bill
On April 10, the Senate voted 84-12 to approve "The Foreclosure Prevention Act of 2008" (H.R. 3221) to partially address foreclosure problems and to update FHA practices. Major housing provisions include:
- $3.92 billion in new Community Development Block Grant funding for states and localities to purchase and rehabilitate abandoned or foreclosed properties for resale or operation as rental housing or other purposes. Funds would be distributed based on state and local foreclosure and delinquency rates. The funds can only assist households at or below 120% of area median income (AMI) and at least 25% of the funds must benefit households at or below 50% of AMI
- $180 million in new funding for foreclosure counseling activities, including $30 million to expand the capacity of counseling agencies to provide necessary legal assistance.
- Adoption of most elements from the FHA reform bills passed by the House and Senate under separate bills except authority to institute risk-based premiums.
- A one-time $10 billion increase in tax-exempt bond authority and authorization to use bond proceeds to refinance at risk subprime mortgages.
The bill also includes significant tax breaks for businesses, a $7,000 tax credit over two years for purchasers of foreclosed homes, and a deduction of up to $500 for property taxes for homeowners who do not itemize their deductions (up to $1,000 for couples) if their jurisdiction does not raise property tax rates between April 2 and the end of the year. See CHAPA's website for a more detailed summary of the bill.
HUD Announces Changes in FHA Secure Program to Assist More Borrowers
On April 9, 2008, HUD issued a press release announcing that it is adopting less stringent eligibility standards for borrowers seeking to use its FHA Secure program to refinance adjustable rate and interest-only mortgages. HUD plans to establish new risk-based insurance premiums for the program. Previously, borrowers were ineligible for an FHA Secure Loan if their mortgage exceeded the value of their home or if they were late on any mortgage payments in the six months prior to a loan reset. The revised standards:
- Extend eligibility to borrowers who have been late on two or three payments in the past 12 months and will refinance mortgages for borrowers who currently have no equity in their homes if lenders are willing to write down the current mortgage balance. Lenders will be permitted to provide subordinate financing to cover the gap between the current mortgage balance and the new FHA Secure insured loan.
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Borrowers who have been late twice in the past 12 months will qualify for a 97% loan to value (LTV) mortgage, assuming they meet other program requirements in terms of employment and credit history. Borrowers who have been late three times will qualify for a 90% LTV mortgage.
House Foreclosure Bill to be Marked-Up Next Week
Representative Barney Frank held hearings on April 9 and 10 on proposed foreclosure legislation (FHA Housing Stabilization and Homeownership Retention Act of 2008) and announced that the House Financial Services Committee will mark-up the legislation on April 23 and 24. The National Low Income Housing Coalition (NLIHC) reports that the legislation may be broken into two or more bills for floor consideration.
Representative Frank released a draft bill and summary on March 13 noting that the final text could change before introduction, and asking for input and comments over the next few weeks. As initially drafted, the bill would: (1) create a temporary FHA program to refinance troubled borrowers, authorizing the Federal Housing Administration (FHA) to insure up to $300 billion in new mortgages to refinance at-risk borrowers if the current mortgage holder agrees to accept a payment not exceeding 85% of appraised value; and (2) authorize a $10 billion loan and grant program for states to enable them to set up programs to purchase foreclosed properties for resale to homebuyers or for operation as rental housing by nonprofit or government entities.
Financial Services Committee members have since agreed to increase the loan and grant program to $15 billion, divided evenly between loans and grants, and to add income targeting provisions (50% to very low income households, of which half must go to extremely low income (30% AMI) households.
House Bill Filed to Revise LIHTC and Housing Bond Rules
On April 9, Representative Charles Rangel, chair of the House Ways and Means Committee, introduced a bill - H.R. 5720 – the Housing Assistance Tax Act of 2008 - to make changes to Low Income Housing Tax Credit (LIHTC) and tax-exempt housing bond requirements, provide a tax credit to first time homebuyers, and a one-time (2008) standard deduction for non-itemizing homeowners. The Committee marked up the bill the same day and approved it 35-5. The NLIHC reports that this bill is likely to be combined with the foreclosure assistance legislation being developed by Representative Frank.
Major elements of the bill, as marked up, include:
- The LIHTC provisions provide a 20-cent increase in the per-capita allocation of credits for 2008 and 2009 (this would increase Massachusetts' allocation by $1.29 million in 2008)
- The LIHTC provisions allow States to provide a 30% increase in value of credits for projects when needed for financial feasibility, expand eligibility for 9% credits to substantial rehabilitation projects, increase the minimum spending needed to qualify as rehabilitation using 9% credits, and allow Section 8 moderate rehabilitation funds to be used with 9% credits.
- The LIHTC provisions also modify basis reduction requirements in connection with certain federal grants, extend the deadline for developers to begin construction after credits are awarded (to 1 year rather than 6 months), and raise the percentage of eligible basis of a project that can be used for community service facilities to 15%. They also add two new criteria that states must consider in allocating credits: energy efficiency and "the historic nature of projects".
- The tax-exempt bond provisions provide a $10 billion increase in the national tax-exempt bond limit for 2008. As in the foreclosure assistance bills, they allow tax-exempt bonds to be used to refinance subprime loans that meet certain criteria, but unlike the other bills, there is no requirement that the increase be used only for foreclosure-related activities.
- The tax-exempt bond provisions also expand bond authority by allowing the value of repayments of tax-exempt bonds for multi-family rental projects received in early years to recycle as new tax-exempt bond authority if re-issued within six months.
- The bill also provides for a refundable tax credit equal to 10% of the purchase price (up to $7,500) for first time homebuyers to help with downpayment requirements, with lesser assistance for individuals with an adjusted gross income over $70,000 ($110,000 for joint filers). Recipients would be required to pay back the credit over 15 years in equal installments. The credit will be limited to home purchases made between April 9, 2008 and March 31, 2009.
- The one-time deduction for property taxes for homeowners who do not itemize would be capped at $350 ($700 for joint filers). Unlike the provisions in the recently passed Senate foreclosure bill, there is no language limiting the deduction to residents in areas with no increase in property tax rates.
A detailed summary of the bill, as introduced, is available on the Committee's website.
House Committee Asks GAO to Assess Fair Housing and Fair Lending Enforcement
On April 11, Representative Frank and 15 members of the Housing Financial Services Committee sent a letter to the Government Accountability Office (GAO), expressing concern about the current quality of enforcement of federal fair housing and lending laws, including the Equal Credit Opportunity Act and the Home Mortgage Disclosure Act. The letter asks the GAO to examine how thoroughly HUD, DOJ and the federal bank regulatory agencies are monitoring mortgage, credit card and small business lending practices for discrimination. It also asks the GAO to review the limitations of current HMDA data in terms of variables tracked and determine whether other data collection methods would further the goal of eliminating lending discrimination.
Recent Research
National Low Income Housing Coalition Releases 2007-2008 "Out of Reach" Report
The National Low Income Housing Coalition (NLIHC) issued its annual Out of Reach on rental housing costs and affordability across the nation by state and region. Using HUD Fair Market Rents as a proxy for the going rent for non-luxury units for new movers, it found that a Massachusetts household renting a unit at the state's average two-bedroom FMR of $1,193 would have to earn $22.94 an hour to keep their gross rent (including utility costs) at 30% of income. This "housing wage" is about 33% higher than the average renter's hourly wage. The authors found that while the statewide average housing wage has risen by 45% since 2000, increases moderated this year, rising by only 1.3% between 2007 and 2008. The Coalition's website includes a lookup system for cost data by region within Massachusetts.
New Study Examines Use of Inclusionary Zoning in Greater Boston and Elsewhere
The Center for Housing Policy and NYU's Furman Center for Real Estate and Urban Policy, released a new study last month looking at how inclusionary zoning (IZ) ordinances in three metro areas affected affordable and market rate housing production and local housing prices. "The Effects of Inclusionary Zoning on Local Housing Markets: Lessons from the San Francisco. Washington DC and Suburban Boston Areas" looked at ordinances in effect as of 2004 (2000 for Washington). It compares key characteristics of IZ programs by region, including incomes targeted, use of density bonuses, the percentage of affordable units required, and the percentage of communities that have adopted ordinances, whether ordinances are voluntary or mandatory and how long units must remain affordable.
It found IZ has had a much more limited impact on affordable housing production in Greater Boston than in San Francisco; while almost all San Francisco communities had created units using IZ, 43% of Boston area communities had produced none and another 33% had no data. The study concluded that the effectiveness of IZ as an affordable housing production tool depends very much on the details of ordinance as well as local conditions and should be viewed as just one part of a comprehensive housing strategy "rather than as a stand-alone policy response."
Upcoming Events
Thursday, May 15, 9:00 a.m. to Noon, Regional Workshop: Affordable Housing Through Reuse and Preservation, Hilton Garden Inn, 420 Totten Pond Road, Waltham. This workshop, sponsored by the Metropolitan Area Planning Council (MAPC), CHAPA and MHP, will focus on ways communities are using existing buildings to meet local affordable housing needs. Registration is required (no later than Friday, May 9). Registration can be made online or by contacting Joan Missick by email, phone (617-742-0820) or fax (617-742-3953).
Thursday and Friday, June 12-13, 9:00 a.m., Massachusetts Housing Institute, Babson College Executive Center, One Woodland Hill Drive, Wellesley. This second annual training, sponsored by MHP, CHAPA and the Massachusetts Chapter of the American Planning Association, is designed for local officials, planners, housing committees, housing trusts, community preservation act committees and others interested in creating housing options in their community. It will feature a number of development and design experts. Pre-registration is required and the cost is $75.00. To register, call or e-mail Carole Spear, 617-330-9944 ext. 286.
