State Updates
Massachusetts House Debates FY’14 Budget: Housing Programs Hold Steady
The House recently passed its FY’14 budget, which provides a $4.5 million increase for MRVP, a $400,000 increase for Home and Healthy for Good, a $250,000 increase for DMH rental subsidies, and the extension of the Brownfields tax credit through 2018. The budget provides level funding for RAFT, Public Housing, the Alternative Housing Voucher Program, the Housing Consumer Education Centers, and Tenancy Preservation Program.
As expected, the House budget includes a $30 million cut to HomeBASE to account for reducing the temporary rental subsidy program from three years to two years, despite CHAPA’s best efforts to pass an amendment to extend HomeBASE. CHAPA would like to thank Representative Byron Rushing and Representative Kevin Honan for their assistance in filing this amendment.
CHAPA appreciates the efforts of Speaker DeLeo, Chairman Dempsey, and the House Ways and Means Committee for holding housing programs steady through a difficult budget. CHAPA also thanks Assistant Majority Leader Rushing, Chairman Honan, Representative Fox, Representative Donato, Representative Campbell, Representative Golden, Chairman Kocot, Representative Toomey, Representative Mark, Representative Brady, Chairman Cabral and many other representatives and partners for their support for filing amendments that address concerns or funding needs for CHAPA priorities.
The Senate Ways and Means Committee is expected to release its FY’14 budget proposal soon, which will be debated in late May. The final proposed FY’14 state budget will then be sent to the Governor for approval before the start of the new fiscal year on July 1st. We urge members to contact their Senators and request that the Senate increase funding for housing programs in the FY’14 budget, including our top priorities, MRVP, HomeBASE, and Public Housing.
Housing Committee Announces May Hearing Dates
On May 7th, the Housing Committee will hear bills related to housing production and manufactured housing. The hearing will be held from 10:00 am until 1:00 pm in Room A-2 at the State House.
CHAPA’s bill H. 1153, An Act Promoting Local Housing Initiatives for Economically Diverse Households, sponsored by Representative Carl Sciortino, will be heard at the hearing. Under the bill, cities and towns may establish large lot zoning, but must also address the exclusion of families, persons with disabilities, and seniors with limited incomes by designating places to develop homes on smaller parcels in multifamily settings.
S.601, Senator Jehlen’s bill intended to establish a commission to evaluate the need for visitable and accessible homes for the elderly, returning veterans with disabilities, and families that include persons with disabilities, will also be heard at the hearing.
On May 14th, the Housing Committee will hold a hearing on legislation relative to the Department of Housing and Community Development. The hearing will be held in Room B-2 of the State House from 10:00 am until 1:00 pm. S. 595, An Act Relative to Statutory Housing Covenants, sponsored by Senator Eldridge will be heard. The bill would standardize and simplify elements of affordable housing restrictions in order to protect long-term affordability restrictions.
DHCD Sets May 15 as Pre-Application Deadline for 2013 Rental Housing Round
DHCD has announced a pre-application deadline of May 15, 2013 for all developers seeking low income housing tax credits in the August funding round. Sponsors can file their pre-application online. DHCD has also created a user manual for the process. Additional details on DHCD’s requirements can be found in the 2013 Qualified Allocation Plan.
DHCD Updates Chapter 40T Guidelines, Proposes Regulation Revision
DHCD issued revised guidelines this month in connection with Chapter 40T, the 2009 law that requires owners of properties with expiring use restrictions to give notice to tenants, municipalities and the State two years and again one year before the expiration. The law also requires owners to give DHCD (or its designee) a right of first offer or first refusal to purchase if the owner intends to sell. The revised guideline adds more detail to the process for selecting designees. DHCD also filed notice of a proposed revision to the 40T regulation on April 12 (the public comment period is expected to start in May). The revision changes the requirement that owners file a notice of their intent to sell before they can begin negotiations with potential preservation buyers, in light of the statutory exemption of sales that preserve affordability from the notice requirement. The revision creates a new “Notice of Intent to Sell to a Preservation Purchaser.”
Three Massachusetts Entities Receive $130 Million in New Market Tax Credit Allocations
On April 24, the U.S. Treasury's Community Development Financial Institutions (CDFI) Fund announced the award of $3.5 billion in New Markets Tax Credit (NMTC) authority to 85 organizations nationwide. Three Massachusetts-based community development entities received a total allocation of $130 million. MassDevelopment received $40 million for investments in Massachusetts and the Massachusetts Housing Investment Corporation received $65 million for investments in New England. The Community Builders received $25 million for investments nationwide, with a focus on six states (including Connecticut and Massachusetts) plus the District of Columbia.
Housing Appeals Committee Affirms Its Authority to Enforce Orders
On March 28, the Housing Appeals Committee (HAC) rendered its decision in the Delphic Associates (Middleboro) matter. The Committee adopted the view that the HAC has the power to endorse comprehensive permit plans suitable for recording and to take other steps necessary to enforce its orders. CHAPA and the Greater Boston Real Estate Board submitted an Amicus Brief supporting the Committee’s authority to do so.
Federal Updates
President Nominates Congressman Mel Watts to Head FHFA
On May 1, the President nominated Representative Mel Watts (D-CA) to head the Federal Housing Finance Agency, the agency that oversees Fannie Mae and Freddie Mac. If approved, he would replace the current Acting Administrator, Edward DeMarco. DeMarco has been criticized by many, especially for his unwillingness to allow principal reductions for troubled homeowners with mortgages owned or guaranteed by the GSEs, even as studies continue to show it would benefit the budget and the economy as well as owners. Despite Watts’ qualifications, observers expect significant Republican opposition to the nomination.
Advocates Urge House and Senate Appropriations Committees to Increase HUD Funding
National housing and community development organizations are circulating a sign on letter to the House and Senate Appropriations Committees this week urging them to increase the “302(b)” allocation for the FY2014 appropriations bill for Transportation, Housing and Urban Development and Related Agencies (THUD). The 302(b) allocation is the share of the total spending allocation for the coming year given to each of the twelve appropriations subcommittees.
President’s FY2014 Budget Request for HUD includes Funding Increases, Cuts and Policy Proposals
The President released his FY2014 budget request on April 10. The request would increase funding for a number of programs for low income households (including HUD programs) and replace sequestration with a deficit reduction strategy that includes more revenue increases and reduced spending cuts. As detailed by the Center on Budget and Policy Priorities (CBPP) and the National Low Income Housing Coalition (NLIHC), the request provides a 10% increase overall in funding for HUD discretionary programs compared to FY2012 to partially restore deep cuts made in FY2013 and to fund several new initiatives, but also cuts HOME and Section 811. If Congress rejects the proposal for an alternative deficit reduction approach, it appears unlikely that it will approve the funding levels in the President’s request for HUD.
In many of the accounts, HUD proposes cost saving measures as well, including full fungibility for public housing operating and capital funds, the right to require PHAs or owners to tap excess reserves for voucher and project-based renewal costs, new regulatory flexibility such as redefining extremely low income, and a phased-in minimum for flat rents charged in public housing. Some of these changes will require legislative authorization.
President’s FY2014 Budget Proposes Changes to Low Income Housing Tax Credit Program
The President’s budget proposes several changes to the Low Income Housing Tax Credit program to potentially expand the number of units that could be assisted under it. These include allowing states to convert some of their private activity bond volume cap into LIHTC authority; allowing developments to qualify using income averaging (40% of units at an average income of 60% AMI); and making preservation of federally assisted affordable housing a mandatory selection criterion. (See the Treasury Department’s General Explanations of the Administration’s Fiscal Year 2014 Revenue Proposals, pp. 47-55)
HUD to Reorganize its Multi-family Programs, including Consolidating/Closing Some Offices
On April 24, HUD announced plans to reorganize its Office of Multifamily Housing Programs, which currently has field staff at 80 offices as well as headquarters staff. Under the reorganization, the current 17 Multifamily Housing hubs will be replaced by 5 regional hubs, each with a satellite office as well. As detailed by the National Low Income Housing Coalition, Multifamily will continue to have at least one office in each state with the closings expected to start this fall and be completed by 2014. Locally, New York will become one of the five regional hubs and Boston will become a satellite office. HUD will also reorganize the way it assigns works to staff and individuals offices and reorganize its headquarter programs. It expects to save $40-45 million a year when all changes are fully implemented in 2016.
HUD Reports Two Thirds of “Orphan” Rental Assistance Properties are in RAD or RAD Pipeline
On April 22, HUD issued a status report on the Rental Assistance Demonstration (RAD) program component created to continue project-based rental assistance to projects currently assisted under older forms which cannot be renewed (Rent Supplement, RAP and Mod Rehab). To continue the rental assistance, owners must apply to convert it to 15 year project based vouchers through RAD. However, due to the limited FY2013 funding for conversion vouchers, HUD had to prioritize projects for assistance. It gave first priority to projects with contracts expiring by September 30 and owners with later expiration dates had to submit a letter of interest by April 1, 2013.
HUD Issues Final Notice on Tenant Protection Vouchers for Households Losing Assistance
After withdrawing two earlier notices due to criticism, HUD issued a final notice (PIH 2013-08) on April 12 detailing how it will implement the provision in the FY2012 budget that authorized using up to $10 million to assist low-income residents at risk of paying more than 30% of income for rent because use restrictions on the property in which they live ended during or prior to FY2012 and the properties were not eligible for tenant protection vouchers. HUD is initially only making $4 million available and owners must apply to HUD for an allocation by June 14. Decisions on awards will be made by the end of August.
HUD Proposed Revised Definition of Chronically Homeless for HEARTH Program
HUD published a proposed revision to the definition of “chronically homeless” for its homeless assistance programs as well as regulations for its new Rural Housing Stability Assistance Program on March 27. Comments are due by May 28. The proposed new definition of chronically homeless is a person who has been homeless and living or residing in a place not meant for human habitation, a safe haven, or in an emergency shelter continuously for at least one year or on at least four separate occasions in the last 3 years, where the cumulative total of the four occasions is at least one year. Stays in institutions of 90 days or less will not constitute a break in homelessness, but instead be included in the cumulative total.
Consumer Financial Protection Bureau (CFPB) Proposes Clarifications to Qualified Mortgage Rule
On April 19, the CFPB announced a proposed clarification of certain provisions of the Ability to Repay/Qualified Mortgage rule that goes into effect next year. According to the announcement, the proposed clarifications will be filed in the Federal Register shortly and CFPB will accept comments for 30 days. Among other things, the proposed rule will provide clearer guidance for determining a borrower’s debt to income ratio, including how to treat various types of incomes including self-employment income. (The Qualified Mortgage rule caps allowable debt to income ratios at 43 %.)
Debate Continues over USDA Definition of Rural Areas
The U.S. Department of Agriculture issued a notice on March 28 implementing the new (2010 census) area eligibility standards for most programs starting October 1, 2013. In the case of housing programs, it will allow the use of the pre-2010 Census definitions for applications completed by September 30 and for applications filed in response to NOFAs as long as the funds are obligated by December 31, 2013 or USDA grants a waiver. As reported by the Housing Assistance Council, USDA also issued a report in February recommending a more flexible definition of rural areas so it can serve communities with populations of up to 50,000 for its non-housing programs. Senator Tim Johnson (D-SD) has also introduced a bill (S.766) to raise the population cap to 25,000 (35,000 in some cases). Absent a revision, 933 communities (including a number in Massachusetts) will lose eligibility under the 2010 Census definition.
Recent Research and Reports
HUD Issues Interim Evaluation of Interventions for Homeless Families (“Family Options Study”)
HUD recently posted an interim report on its effort to compare outcomes for 2,300 homeless families in shelters in 12 sites (including Boston and New Haven/Bridgeport) who were randomly assigned to receive one of four interventions. The interventions included (1) project-based transitional housing with intensive services; (2) community-based rapid re-housing with a time-limited rent subsidy (2-18 months) and some case management around housing search and income; (3) permanent housing subsidy (usually a voucher) but no special services, and (4) usual care (emergency shelter with case management). Families were assigned between September 2010 and January 2012 and are being followed for 18 months. Outcomes to be studied include housing stability, family preservation, self-sufficiency and adult and child well-being.
The interim study describes how the experiment was set up, baseline characteristics of the participating families and differences in utilization of the three alternatives to shelter. It found that take up rates for the three interventions (the percentage of households offered an intervention that used it) varied considerably - from 29% for project-based transitional housing, to 46% for rapid re-housing and 72% for a permanent housing subsidy. It also found a high lease up rate (94%) among those issued a voucher.
New Report on Dallas Finds Housing Mobility Programs Work
A new report by the Inclusive Communities Project comparing the quality of neighborhoods in which voucher recipients live by receipt or non-receipt of mobility assistance has found that black families who received mobility assistance were much more likely to live in higher opportunity neighborhoods (and much less likely to live in very low opportunity neighborhoods) than black families who did not receive assistance. The study also found that the more forms of mobility assistance provided to a household, the better the outcome.
CBPP Report Reviews Rationale and Proposals for Mortgage Interest Deduction Reform
A new report by the Center on Budget and Policy Priorities (CBPP) explains why the mortgage interest deduction (MID) is a costly and inefficient way to promote homeownership (primarily because 77% of the tax benefits go to households with incomes above $100,000 that can generally afford a home without subsidy). Given that the MID is the second largest federal tax expenditure, there have been many calls by recent commissions to reform it. The report reviews several reform proposals, including converting it to a credit for low and middle income households to make it a more effective homeownership tool while raising federal revenue, some of which could be used for programs to assist renters.
New Website for Lifecycle Underwriting for Affordable Rental Housing
The National Housing Conference and the Center for Housing Policy recently published research and assessment tools to encourage lifecycle underwriting of affordable rental properties. As detailed in an NHC blog posting, lifecycle underwriting looks at what it takes to finance projects so they are viable for 50 years rather than requiring expensive recapitalization or refinancing every 15 years. The site also includes research on the relative costs of rehabilitating existing properties and new construction.
Upcoming Events
May 7, 2013, 8:00 a.m. – 2:00 p.m. – DHCD Planning & Community Development Conference, Devens Common Center, Devens, MA
May 8, 2013, 12:00 noon – 1:00 p.m. CHAPA Young Professionals in Housing Brown Bag Lunch: Using Tax Credits to Finance Affordable Housing Deals with Chrystal Kornegay, CHAPA, 18 Tremont Street, Suite 401, Downtown Boston
June 3, 2013, 9:30 a.m. – 11:00 a.m. - CHAPA Breakfast Forum: The Housing Market in Today’s Economy: What’s Next?, The Federal Reserve Bank of Boston, 600 Atlantic Ave., The Connolly Center, 4th floor, Downtown Boston
October 29, 2013, 5:30 p.m. - CHAPA 46th Annual Dinner, Boston Convention and Exhibition Center, South Boston
