Housing Briefs - December 10, 2010

State Updates

Administration Releases FY2011 Capital Budget

Last month, the Patrick/Murray Administration released the Commonwealth’s FY2011 capital budget. The capital budget for affordable housing is level-funded at $168 million.

The major policy change is that the Housing Innovations Fund (HIF) was cut by $3 million, a 33% decline, five months into the fiscal year. This program provides assistance to non-profits building housing for low income people, with a particular focus on supportive housing for formerly homeless families and individuals. As a result, there are five developments that will be unable to receive their allocations in FY2011 and other proposed developments in the pipeline will be pushed off even further. CHAPA is advocating for restoration of this funding.

Public Housing Modernization sees a $3 million increase in FY1011, raising the total from $82 million to $85 million. This increase will provide some assistance in meeting the tremendous backlog in deferred maintenance at state public housing developments.

In addition, the Plan directs significant resources to the Commonwealth’s new coordinated infrastructure investment program, Mass Works. Last year the total budget for the 6 grant programs was $53,200,000 (Public Works Economic Development (PWED) Grants, Community Development Action Grant (CDAG), Growth District Initiative (GDI) Grants, Massachusetts Opportunity Relocation and Expansion Program (MORE), Small Town Rural Assistance Program (STRAP), Transit Oriented Development (TOD) Grant Program). In FY2011, applicants will be able to seek $67,710,000 in a coordinated application process to seek infrastructure funds.

CHAPA sets FY2012 Budget Priorities

CHAPA recently established FY2012 state budget priorities. The organization will prioritize securing increases in MRVP, Public Housing Operating Subsidies and RAFT to off-set the loss of $44 million in ARRA Homelessness Prevention and Rapid Rehousing funds. Click here for the full list of FY2012 affordable housing and homelessness prevention priorities.

We encourage CHAPA members to contact Governor Patrick and request that these funding priorities be adequately prioritized in the Governor’s FY2012 budget. The Governor’s budget will be released on January 26, 2011 and it is critical that the Administration hears from both organizations and individuals. This year’s budget process will once again be difficult as the Commonwealth manages a $1.5 - $2 billion budget gap due to the loss of ARRA stimulus funds.

Hearings on Governor’s FY2012 Budget Scheduled for December

The public hearing on the FY2012 budget for affordable housing and homelessness prevention programs is tentatively scheduled for Monday, December 20th at 10:30 am on the 21st floor of One Ashburton Place in Boston. Parties interested in testifying should check www.mass.gov/dhcd for updates on the hearing specifics and to confirm the exact date and time.

The Executive Office of Health and Human Services has scheduled its hearing for Monday, December 13 and the Executive Office of Energy and Environmental Affairs has set a date of Thursday, December 16 to hear budget testimony.

Affordable Housing and Homelessness Prevention Organizations to Hold Briefing for New Legislators

CHAPA is coordinating a briefing for new state legislators on issues and resources related to affordable housing and homelessness prevention. The informational event is tentatively scheduled for January 25 in the State House. We will include more information on the event on our web site as the information becomes available.

Emergency Assistance Diversion Program Halted

On November 16, DHCD’s Division of Housing Stabilization announced that they are suspending enrollment in the Emergency Assistance (EA) diversion program due to a lack of funds. The diversion program provided funding to help families find alternatives to entering shelter, including up to $12,000 each for a 12-month subsidy. DHCD will continue to work with families already enrolled in the diversion program and with those already promised funds. The Flexible Funds Program (Flex Funds), which helps families to exit shelter with short-term assistance, is still in place.

Gateway Cities Housing Development Incentive Program Guidelines Released

The State Economic Development Reorganization bill created a market-rate housing program targeted for the Gateway Cities. This $5 million tax credit program is designed to increase residential growth, expand diversity of housing stock, support economic development, and promote neighborhood stabilization in designated Housing Development Zones within Gateway municipalities. DHCD has released program guidelines and identified 24 cities and towns that are eligible to participate in the program.

Foreclosed Properties Database Available to CHAPA Members

Developed in collaboration with The Warren Group and CHAPA, the Massachusetts Foreclosed Properties Database provides information on foreclosure auctions, petitions to foreclose, lis pendens, and bank-owned properties. A detailed record on the foreclosed property includes assessment information as well as sales and mortgage history. The database also includes the TrendLines Module, which generates statistical reports of foreclosure activity searchable by city, county and state.

For more information about the database and subscription fees, please contact Geeta Rao at grao@chapa.org or 617-742-0820 if you have any questions.

Federal Updates

HUD FY2011 Budget Remains Unresolved, with Risk of Deep Housing Voucher Cuts

The House approved a continuing resolution this week to keep most agencies funded at FY2010 levels for the rest of FY2011 (currently all agencies are operating on a continuing resolution that expires on December 18 as no appropriations bills have been passed). As detailed in the House summary, the resolution provides funding increases for HUD’s Housing Choice Voucher and Section 8 project based voucher programs to keep them at their current sizes and increases homeless assistance grants.  It also provides $25 million to extend tenant protection assistance (enhanced vouchers) to currently unprotected residents in expiring use properties when the subsidized mortgage or rental assistance contract expires.

It remains to be seen whether these funding levels will survive Senate action. The Center for Budget and Policy Priorities (CBPP) reports that the Senate will consider budget legislation in the form of an omnibus appropriations bill that would be a modified version of the 12 funding bills approved by the House and Senate Appropriations Committees earlier this year. (Click here for details on the HUD appropriation bills the Committees approved in July.) If that fails, CBPP reports that the Senate is expected to try to pass the House continuing resolution.

If the Senate and the House cannot reach agreement on full year funding by the end of the year, HUD and other agencies may face deep cuts next year. If Congress passes another short-term continuing resolution, decisions on full year funding will be pushed into the next session.

A new CBPP report notes that incoming House Majority Leader Boehner has proposed rewriting all 12 appropriations bills in order to cut overall nondefense discretionary funding by 21%. If that reduction was implemented across the board by agency and program, HUD would lose funding for over 500,000 housing choice vouchers, and over 250,000 project based Section 8 vouchers. CBPP estimates that Massachusetts would lose 25,000 vouchers under this scenario. Public housing, CDBG, and HOME funding would also be cut.

Key Housing Provisions Not In Tax Extender Legislation

So far, housing and community development advocates have had mixed success in efforts to include several high-priority housing items in the tax-extender legislation being negotiated this week (HR 4853 – the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010). The latest version (Senate Amendment 4753 to HR 4853), released last night (December 9) extends the New Markets tax credit for two years (authorizing $3.5 billion in 2010 and 2011). However, it does not provide funding for the National Housing Trust Fund and does not include language to re-authorize the low-income housing tax credit exchange program for 2010 (and possibly 2011). Advocates are continuing to push for inclusion of these provisions.

Revisions to Section 8 Voucher Reform Bill Continue

Congressional staff continue to refine the revised draft Section 8 Voucher Reform Act (SEVRA) bill circulated in early November (see November 15 Housing Briefs) although its prospects remain unclear.

Recent changes remove language that had required HUD to modify portability regulations that potentially allowed overleasing with reserves. New language clarifies that the HUD provision of utility data is not intended to revise the process for calculating utility allowances and that Moving to Work agencies are exempt from the funding sections dealing with reserves, advances, and fund offset and reallocation.

The latest draft adds back language allowing enhanced vouchers at mortgage maturity but only for properties that would have been eligible for such vouchers upon prepayment. It removes language that would have allowed HUD to establish an annual rent adjustment index for project-based vouchers and adds language making it simpler for PHAs to project-base vouchers for public housing units. It creates nationwide authority for voluntary transfers, instead of just in the same or contiguous area, and clarifies that voucher transfers are at the sole discretion of the sending PHA.

The revisions also change the language regarding FMRs, restoring the October 1 deadline for annual updating, revising notice and comment requirements, and eliminating both language requiring the “smallest area practicable” in establishing FMRs and language providing specified phase-ins of FMR changes related to market area boundary or methodology changes.

Fiscal Commission Recommends Revising Home Mortgage Deduction, Eliminating LIHTC

The bi-partisan National Commission on Fiscal Responsibility and Reform released its plan to reduce the national deficit on December 1. The Commission was created nine months ago by executive order, with the goal of developing a plan for Congressional approval. However, only 11 of the 18 commission members voted to approve the final report, three shy of the number needed to require Congress to vote on whether to accept the recommendations. The final report, called the Moment of Truth, recommends a mix of strategies, including cuts in discretionary spending, tax reform, and changes in social security rules and health care funding. It recommends enacting tax reform by 2012 to simplify the tax code and make it fairer, in part by eliminating many current tax credits and deductions.

Among other things, it recommends replacing the home mortgage interest deduction with a 12% non-refundable credit available to both itemizers and non-itemizers. It would also cap the amount of mortgage that can be used for the credit ($500,000) and eliminate the deduction for second homes and home equity loans. The report also recommends eliminating almost all tax credit expenditures, including the Low Income Housing Tax Credit and the tax exemption for state and municipal bonds. The Administration has indicated that it may take up tax reform in 2011.

New Transforming Rental Assistance Bill Introduced

Representative Keith Ellison (D) of Minnesota introduced a new bill – HR 6468, the Rental Housing Revitalization Act - on December 1 to authorize the Transforming Rental Assistance (TRA) initiative proposed by HUD earlier this summer. This bill will be re-introduced again in the new session, possibly with changes, as no action is expected this year.

It was developed by HUD and stakeholders and addresses concerns members of Congress and others raised when reviewing HUD’s initial draft bill (PETRA) this summer. The bill allows housing authorities to convert public housing units to project-based rental assistance units, with a long term project based contract (20 years) to make it easier to finance capital improvements. It makes 20 year contract renewals mandatory and also expands and clarifies tenant rights and protections. It would also allow HUD to encourage simpler voucher administration using regional agreements and one-stop application sites.

Recent Research

Massachusetts Housing Shortages Likely to Grow in Most Regions

As part of its Foundations for Growth initiative to determine how state housing policies can avert housing shortages (suboptimal vacancy rates) and support economic growth in Massachusetts, the Massachusetts Housing Partnership (MHP) has issued a new study estimating potential housing shortages by region within the state by 2020. The study assumes current job location, housing location and commuting patterns continue and looks at likely construction activity under two possible scenarios – a baseline scenario of job growth of 2.7% between 2006-2008 and 2010 and a stronger growth scenario with a 9% increase in employment (in line with stronger years in the past decade).

Depending on the scenario, the authors estimate that Massachusetts will need 170,000 or 340,000 additional units to maintain a balanced housing supply. Based on current practice, they project a 30,000 unit housing shortage by 2020 under the baseline scenario. Greater Boston is likely to have the greatest shortage (over 46,000 units). Under the baseline scenario, they project a statewide aggregate surplus of 6,400 single family homes (though some areas would have shortages) and a 34,000 unit shortage in multifamily homes affecting 6 of 7 regions.

Joint Center Examines Longer Term Changes in Housing Tax Credit Program

The Joint Center for Housing Studies at Harvard University has published a new study outlining a range of long-term questions policy makers face as they consider the future of the federal Low-Income Housing Tax Credit (LIHTC) program. These range from how to improve its usability (broadening the investor base, allowing carrybacks and making it more liquid) to whether to change current income targeting requirements and locational goals. The study also examines questions about how to ensure the long-term health and affordability of projects after year 15 and the challenges to recapitalization.

Report Urges Cities to Encourage Responsible Ownership of Distressed Properties

The Center for Community Progress issued a new report by Alan Mallach last month looking at the types of investors who purchase distressed rental properties, their various goals (short term gain or long term gain) and what municipalities can do to discourage bad ownership practices that can further destabilize neighborhoods and encourage responsible ownership.