Housing Briefs - April 16, 2010

State Updates

House Ways and Means Committee Releases FY’11 State Budget Proposal

The House Ways and Means budget proposes funding at least level to what was provided in FY’10 for every CHAPA priority. Given that the proposed budget includes $1.4 billion in cuts to other state programs, we are very pleased with this result. We are very appreciative that the House Ways and Means Committee prioritized affordable housing but we have a lot more work to do to protect these programs and their beneficiaries through the entire budget process.

• MRVP is funded at $35.4 million. This reflects maintenance spending from FY’10 spending levels.
• Public Housing Operating Subsidies are level-funded at $62.5 million. This is $4 million less than the FY’09 appropriation and CHAPA request, but more than expected. Representative Robert Fennell is expected to file an amendment to raise the appropriation to $65.3 million, equal to the appropriation public housing recieved last year prior to a gubernatorial veto.
• RAFT is funded at $260,000. The program was cut 97% in FY’10 ($5 million reduced to $160,000) after the Governor vetoed part of the appropriation and $2,840,000 in funding was transferred to MRVP to meet a shortfall.
• The Mass Access Affordable Housing Registry is level-funded as its own line item. The program was consolidated and potentially eliminated in the Governor’s FY’11 House One budget proposal.
• Housing Consumer Education Centers, the Alternative Housing Voucher Program, Division of Banks Foreclosure Prevention Counseling Grants, and the Tenancy Preservation Program are level funded.
• The Soft Second Loan Program is not funded for the second year in a row. Chairwoman Linda Dorcena Forry is filing an amendment to restore $500,000 for Soft Second.
• Funding for shelters is slightly less than the Governor’s House One budget request, significantly greater than the initial FY’10 appropriation, but less than what is anticipated to be spent due to increased caseloads. The House Ways and Means budget also sets aside $4 million for a new rental assistance program to transition families in shelter to housing. The details of the initiative are forthcoming.

The House budget will be debated during the week of April 26th and the Senate will take up the spending plan in mid-May. We would like to thank Chairman Charles Murphy, Vice-Chair Barbara L’Italien, Assistant Vice-Chair Steve Kulik, the members of House Ways and Means, and Chairman Kevin Honan for their strong advocacy and support.

Senate Advances Economic Development Bill

On April 8th, the Senate passed legislation to promote economic development and small business development. The bill streamlines and coordinates the various state and quasi-governmental agencies involved in economic development and business assistance. In addition, Section 122 of the bill allows projects that have received state and local permit approvals but have stalled due to temporary financial difficulties to retain approvals for three years beyond their current statutory expiration. The provision applies to permits in effect or existence from January 1, 2008 through January 1, 2011. The bill also modernizes the Commonwealth’s statutory definition and recognition of community development corporations. The legislation is now before the House Committee on Ways and Means.

CHAPA Holds Regional Meetings Across the Commonwealth; Members and Public Encouraged to Attend

CHAPA will hold 9 regional meetings from Pittsfield to Hyannis this May to discuss the latest information on state and federal housing policy changes and to hear suggestions for CHAPA’s priorities in 2011 and beyond.

Key topics will include: state budget priorities; pending state legislation; responses to the foreclosure crisis; homelessness prevention; Community Preservation Act; preservation of expiring use properties; Chapter 40B; public housing revitalization; and other pressing issues.

We invite you to attend and to bring your colleagues.

Fourth Annual MA Housing Institute: Affordable Housing Training for Local Officials on June 9 and 10

Sponsored by the Massachusetts Housing Partnership (MHP), Citizen’s Housing and Planning Association (CHAPA), the state Department of Housing and Community Development (DHCD), and the Massachusetts Chapter of the American Planning Association (MA APA), the event will take place on Wednesday and Thursday, June 9-10, at the Marriott Spring Hill Suites and Conference Center at Devens. Click here for a schedule of the two-day program and a list of scheduled presenters.

The two-day intensive workshop is designed for local officials, planners, housing committees, community preservation committees, housing trusts, and others who are working to provide housing options for their community. MHP is pursuing AICP Certification Maintenance (CM) Credits for the Housing Institute and anticipates receiving at least 10 credits.

Topics covered during the workshop include housing finance, building local support, working with distressed properties, and local success stories. The cost to attend both days of the event is $125 per participant and includes meals. The cost to attend one day of the event is $75 per participant and includes meals. Need based scholarships will be made available and we are committed to including all community members who are interested in participating.

To sign-up for this year’s Housing Institute or for more information contact MHP's Dina Vargo at 617-330-9944 ext. 260 or at dvargo@mhp.net.

State Issues Draft Consolidated Plan for 2010-2014

DHCD issued its draft 2010-2014 Consolidated Plan on March 29. The plan describes Massachusetts housing needs and resources and outlines how the State intends to use its HUD formula grant funding (CDBG, HOME, Emergency Shelter Grant, and Housing Opportunities for People with AIDS) over the next five years, as well as state resources. It also sets out state housing and community development priorities, goals and strategies for that period. DHCD will be accepting public comments on the draft plan through April 29 electronically, by fax and mail and will also hold three public hearings for this purpose in Springfield (April 15), Worcester (April 20) and Boston (April 22).

Federal Updates

Low Income Housing Tax Credit Legislative Efforts Continue

As reported last month, both the House and Senate approved legislation in March to extend the tax credit exchange program for 9% credits through 2010, though it has not yet been signed into law. Efforts to pass an exchange program for 4% credits continue. The House approved a narrow exchange program (limited to properties placed in service in 2010 by for-profit owners) as part of H.R. 4849, the Small Business and Infrastructure Jobs Tax Act of 2010, but the Senate version of the bill is still in committee.

Advocates are also trying to line up support for a five year carryback, which would attract investors who may have little income now but had more income in recent years. One bill has been introduced (S. 3141) and another is expected.

House Committee Holds Hearing on the Future of Housing Finance and the GSEs

The House Financial Services Committee held two hearings recently on the future of housing finance and the role of the government-sponsored enterprises (Fannie Mae and Freddie Mac and the Federal Home Loan Bank system). The hearings were held on March 23 and April 14.

Treasury Secretary Geithner testified on March 23rd, outlining the Administration’s basic goals for a new system, including promoting the development and occupancy of affordable ownership and rental housing, and the process the Administration will use to seek public input (see below). HUD Secretary Shaun Donovan reiterated those comments on April 14th, but also discussed the importance of supporting rental housing development in more detail, as well as the role of the Federal Housing Administration and Ginnie Mae in housing finance.

Administration Seeks Public Input on Future of GSEs and Federal Role in Housing Finance

On April 14, as part of its process for developing a GSE reform proposal, HUD and the Treasury Department released seven questions for public comment on the role of the federal government in housing finance and housing policy. A formal notice will be published in the Federal Register as well.

In addition to accepting responses online at www.regulations.gov, the Administration plans to hold a series of public forums across the country to obtain input. Below is a summary of the seven questions (the notice includes further discussion of each).

1. How should federal housing finance objectives be prioritized in the context of the broader objectives of housing policy? (e.g. homeownership, rental and affordability goals)
2. What role should the federal government play in supporting a stable, well-functioning housing finance system and what risks, if any, should the federal government bear in meeting its housing finance objectives?
3. Should the government approach differ across different segments of the market, and if so, how?
4. How should the current organization of the housing finance system be improved?
5. How should the housing finance system support sound market practices?
6. What is the best way for the housing finance system to help ensure consumers are protected from unfair, abusive or deceptive practices?
7. Do housing finance systems in other countries offer insights that can help inform US reform choices?

HUD Issues Transforming Rental Assistance (TRA) Discussion Draft

On March 31, after informal discussions with stakeholders, HUD issued a discussion draft of its Transforming Rental Assistance proposal. HUD is asking stakeholders to comment on the draft in general as well as on specific policy questions (such as criteria to use when selecting PHAs and developments, terms of rental assistance contracts and mobility provisions, etc.).

As envisioned in the draft, TRA would offer public housing agencies (PHAs) and a limited number of private owners of federally assisted housing the option of converting their current subsidies to a long-term project-based rental assistance contract (20 years) with a mobility component. Owners of small properties would also have the option of converting to a project-based voucher contract model (with some changes possible). The rental assistance contracts would provide more income to these owners, enabling them to obtain debt financing for capital improvements.

Conversions would be limited to public housing, federally assisted housing owned by PHAs and privately-owned housing with rental assistance under the RAP, Rent Supplement and Section 8 Moderate Rehabilitation program. Neither income targeting requirements nor rents (30% of income) would change as a result of conversion (project based voucher contracts would still require that 75% of admissions be extremely low income households). PHAs that do not currently administer Section 8 programs would receive priority for TRA. PHAs that administer Section 8 could also compete for an allocation and would receive priority if they join with other PHAs to administer their voucher program on a multi-community basis.

Increasing housing choice is a key goal of TRA and the $350 million proposed for it includes $50 million for planning and administrative costs, including organizational costs for PHAs to set up multi-community HCV administration, outreach to landlords and programs to expand tenants’ housing choice. HUD also plans to make additional policy changes to support its mobility goals including developing small area FMRs, revising the way it measures HCV program performance and supporting portability, and seeks public comments on how it might structure the competition for use of that $50 million.

HUD Expands Eligible Properties for Neighborhood Stabilization Program (NSP)

On April 2, HUD issued notices expanding the definition of “foreclosed and abandoned” properties under the NSP1 and NSP2 programs, effectively immediately.

As summarized by Nixon and Peabody, the definition of “foreclosed” is no longer limited to properties that have completed the foreclosure process. It now includes properties where the owner is at least 60 days delinquent on its mortgage or 90 or more days delinquent on taxes or where foreclosure proceedings have been initiated.

The definition of “abandoned” now includes residential properties on which no mortgage or tax payments have been made for at least 90 days, properties found not habitable by code enforcement if no corrective action has been taken within 90 days, and properties subject to a court-ordered receivership or nuisance abatement or meeting a state law definition of abandoned. States planning to adopt the new definitions will have to submit an NSP1 substantial plan amendment. NSP2 grantees will also need HUD approval in advance.

Administration Revises HAMP Loan Modification Program

On March 26, the Treasury Department announced changes to the Home Affordable Modification Program (HAMP) and to FHA refinancing programs to expand assistance to homeowners at risk of foreclosure. Lenders and servicers will receive TARP-funded financial incentives to offer temporary forbearance or to write down loans and second liens.

Many housing advocates praised the improvements as did the Congressional Oversight Panel in a report issued on April 14. The Panel noted, however, the serious limitations of the program as a long-term solution to the foreclosure problem as households continue to struggle with high debt burdens. In addition, many households still will not benefit from these initiatives, as a recent HAMP report noted that only 1.7 million of the 6 million households at least 60 days delinquent in the fourth quarter of 2009 are eligible for HAMP.

The new HAMP initiatives offer help for the unemployed and for households underwater and participation is voluntary for both servicers and homeowners. To help the unemployed, HAMP will provide financial incentives to servicers to offer temporary forbearance (3-6 months) by reducing payments to 31% of income. After that, borrowers will be considered for a HAMP modification or helped to transition to other housing through a short sale or deed in lieu of foreclosure.

To help underwater borrowers, the Administration is requiring servicers to consider principal writedowns when evaluating loan modification applications and increasing the financial incentives for servicers who agree to forbear payment on some or all the portion of a mortgage that exceeds 115% of the property value and to permanently forgive the agreed-upon amount over three years (one-third a year) if the borrower stays current on the modified loan.

The House Financial Services Committee held a hearing on these new initiatives and a hearing on the related issue of second liens on April 13 and 14. At least one prominent HAMP servicer/bank opposed broad second lien forgiveness because they hurt bank balance sheets.

Administration Releases March Data on HAMP Loan Modification Activity

As of March 30, Treasury/HUD reported that HAMP is currently helping 1 million households - an estimated 30% of potentially eligible households since the program began – including over 23,000 households in Massachusetts.

Nationwide, 228,000 have active permanent loan modifications and 781,000 have trial modifications. Another 157,000 have had their modifications cancelled. Analysts note that while the number of trial modifications converted to permanent modifications more than doubled, new trial modification starts have been falling – with only about 57,000 started in March compared to over 150,000 in September 2009. This drop is occurring as news reports continue to report increases in foreclosure activity nationwide, including rising petition filings and especially steep increases in foreclosure auctions and bank repossessions.

HUD Issues NOFA for Section 8 Vouchers for Non-Elderly Disabled

On April 7, HUD issued a Notice of Funding Availability (NOFA) for Housing Choice Vouchers for non-elderly households with disabilities. Applications are due to HUD by July 7. The $30 million in funding is expected to support about 4,000 new vouchers nationwide, including 1,000 specifically reserved for households transitioning from nursing homes and other institutions into the community.

Recent Research

New Study Details Housing and Transportation Cost Variations in Greater Boston

A new report this month by Urban Land Institute and the Center for Housing Policy, “Boston Regional Challenge”, examines the combined costs of housing and transportation by community and region throughout Greater Boston and finds significant variation in cost burdens depending on local incomes, local housing costs and local access to public transportation.

The authors note that housing and transportation are the two largest components of household spending and the study found that in Greater Boston, the average household spends 54% of its income for housing (35%) and transportation (19%), compared to 59% in San Francisco and 47% in Washington DC. The authors also created an online calculator to calculate these costs for specific addresses.

A related study by the Center for Neighborhood Technology, “Penny Wise Pound Fuelish”, published in March, examines the combined cost of housing and transportation for 337 metro areas and recommends that future housing affordability definitions include transportation costs, and recommends setting the combined standard at 45% of income. It urges policymakers to consider how to bring transportation costs down as part of housing policy decisions. It notes that while 69% of the census tracts in the 337 metro areas studied are considered affordable using the 30% definition, only 36% meet the 45% combined cost standard.

HUD Issues Report on Costs of First-Time Homelessness

HUD issued a detailed study in March on the costs associated with providing shelter, transitional and permanent housing, and supportive services to homeless individuals and families in four regions.

In “Costs Associated with First-Time Homelessness for Families and Individuals”, it found that “in almost all cases”, these costs exceed “the Fair Market Rent cost” of providing rental assistance without supportive services. It also found that permanent supportive housing (where needed) is also less expensive than transitional housing. Some of the cost differences reflected the higher cost of service delivery by on-site providers at shelters and transitional housing sites.

HUD Publishes New HOPE VI Studies

HUD’s latest issue of Cityscape includes four studies of the impacts of HOPE VI on neighborhoods and current and former HUD tenants and lessons for HUD’s proposed Choice Neighborhoods Initiative. While the studies each look at only one or two cities (two look at Boston), they generally find that neighborhood improvements had little or no impact on individual outcomes in terms of incomes and employment. The findings for households who relocated using vouchers were similar, despite a general finding that families moved to higher quality housing in lower poverty neighborhoods.

Chicago Study Identifies Challenges to Using Vouchers to Promote Poverty Deconcentration

A new report by the Illinois Assisted Housing Action Research Project has found that Section 8 voucher holders are still concentrated in predominantly African American neighborhoods, and that over half live in just 10 of 77 of the city’s neighborhoods. It found that housing authority efforts to encourage voucher holders to move to “low poverty” areas may have contributed to this concentration, because the authority defined low poverty as a community with a poverty rate below 23.5%, even though the citywide average poverty rate was only 17%.

The report includes a number of detailed recommendations to improve mobility incomes, including changing HUD policy to allow the use of small area FMRs, and offering incentives to landlords in high opportunity areas.

Events

DHCD Mixed Use Workshop – “Making Mixed Use Happen: Tools & Resources for Successful Projects”, Thursday, May 6, 9:30 a.m.-noon, Central Mass. Regional Planning Commission (CMRPC), Union Station, 2 Washington Square, Worcester.

Community Preservation Coalition CPA Conference – Saturday, May 8, 8:30 a.m.-2:30 p.m. (free), Northampton Senior Center, Northampton.