Housing Briefs - December 18, 2009

State Updates

Governor Signs Supplemental Budget

Governor Patrick signed a budget balancing bill into law on November 24th. The bill transfers $2.9 million from Residential Assistance for Families in Transition to fill the shortfall in the Massachusetts Rental Voucher Program. The transfer means that DHCD will not have to remove households from the MRVP program. However, there is now only $160,000 in FY 2010 appropriations for RAFT, which will lead to a significant number of families who will not be able to be served with homelessness prevention assistance.

The legislation also transfers $11 million from the Smart Growth Housing Trust Fund to the General Fund. The remaining balance will be used to make Ch. 40R payments owed to municipalities in 2010.

The Governor also filed a supplemental budget request for $41.8 million for the emergency assistance line item which is moving through the legislature and should be signed into law before Christmas. This program funds shelters for families, which have experienced unprecedented demand this year. Shelter contracts expire on December 31st and the funding will allow new contracts to be signed.

Executive Office for Housing and Economic Development (EOHED) Holds Budget Hearing

Secretary Greg Bialecki held a hearing on the FY 2011 budget in Springfield on December 17th. The hearing is one of several public forums and hearings hosted by the Administration this month. The Administration is currently crafting its FY 2011 budget, which will be released January 27th. It is critical that affordable housing advocates contact Governor Patrick to express your support for affordable housing budget priorities.

Affordable Housing Preservation Fund Launched

Governor Patrick recently announced the creation of $150 million acquisition fund which will help implement Ch. 159 of the Acts of 2009, the Affordable Housing Preservation bill. Non-profits will access the loan fund through the Community Economic Development Assistance Corporation (CEDAC) and for-profits will apply to the Massachusetts Housing Investment Corporation (MHIC). The program is leveraged through state bond funds along with a $3.5 million award to Massachusetts from the MacArthur Foundation, $40 million from private lenders, and $100 million from the Massachusetts Housing Investment Corp (MHIC).

The Affordable Housing Preservation Bill was signed into law by Governor Patrick on November 24th. The law contains requirements affecting owners of covered subsidized properties, including notice of intent to sell and/or of expiring affordability restrictions. DHCD is developing interim guidance and forms for implementation of the statute until such time as regulations are promulgated. A preservation advisory committee to review the draft regulations is expected to begin meeting in January. Please visit the DHCD Office of Chief Counsel’s website for more information.

DHCD Accepting Comments on Proposed LIHTC Qualified Allocation Plan

The Department of Housing and Community Development (DHCD) will hold a public hearing in Boston on December 22 on its draft plan for the use of federal and state low income housing tax credits in calendar year 2010. Written comments will also be accepted.

The 2010 draft is largely unchanged from the 2009 QAP (aside from a more flexible definition of preservation projects). However, DHCD notes that the unpredictability of the market for credits may require changes later in the year. DHCD estimates that it will have a total of $754,365 in 9% credits available for allocation in 2010, as it has already made $15.4 million in binding commitments.

DHCD again plans a 60% setaside for production projects, with 40% for preservation projects. It will also have up to $10 million in state credits to allocate (made in conjunction with federal 4% or 9% credits). Priority for state credits will be given to large-scale neighborhood impact projects and projects that are mixed-income or have a high percentage of units for extremely low-income households.

Cut to Transitional Assistance for Families with Dependent Children (TAFDC) delayed until February 1st

The Patrick/Murray Administration has postponed a $15.8 million cut to the Transitional Assistance for Families with Dependent Children (TAFDC) assistance program until February 1st. The cut will impact a projected 9,100 low-income families.

Emergency Shelter Cut Restored

$2.7 million in funding for the individual shelter line item was restored by Governor Patrick after an October 2009 9C cut. The cut would have resulted in a loss of shelter beds for unaccompanied adults.

Improved Database of Massachusetts Foreclosed Properties Launched

Sponsored by CHAPA and The Warren Group, the Massachusetts Foreclosed Properties Database has recently undergone significant upgrades. Based on subscriber feedback, CHAPA has improved the interface and has enhanced search functions of the database.

A new feature of the database includes the TrendLines Module, which generates statistical reports, charts and graphs of foreclosure activity in your community and the state. For more information about the new features and subscription fees, click here. Please contact Geeta Rao at grao@chapa.org or 617-742-0820 if you have any questions.

10th Annual Affordable Housing Development Competition Underway

The Federal Home Loan Bank of Boston and CHAPA are pleased to announce the tenth anniversary of the Greater Boston Affordable Housing Development Competition. Co-sponsored by the Boston Society of Architects, Kevin P. Martin & Associates and ICON Architecture, the Competition matches graduate students with non-profit developers to propose specific affordable housing development solutions, and will run from February to April, 2010. Interested developers should contact Karen Wiener at kwiener@chapa.org. For more information, click here.

Federal Updates

House Approves Funds for National Housing Trust including Rental Assistance

On December 16, the House narrowly (217-212) approved a “Jobs for Main Street” bill (H.R. 2847), allowing the use of $75 billion from TARP for a variety of activities. It includes $1.065 billion for the National Housing Trust Fund, including $65 million for new project-based vouchers or rental assistance for use in conjunction with Trust grants. The rental assistance funding would be distributed to states using the same formula as for the basic Trust Fund grants. The bill also provides $1 billion for public housing capital improvements, including energy retrofits. The bill is not expected to be taken up in the Senate until after the first of the year.

HUD Appropriations Bill for FY 2010 Signed

The President signed the Consolidated Appropriations bill (H.R. 3288) for FY 2010 this week. The bill includes appropriations for HUD and related agencies. It provides $46 billion in budget authority for HUD, an increase of $4.5 billion compared to the FY 2009 budget (excluding the $13.6 billion provided under ARRA). It also authorizes a number of new and demonstration programs.

Both Enterprise Communities and the National Low Income Housing Coalition (NLIHC) have posted charts comparing FY 2010 and FY 2009 funding levels by program.

The FY 2010 budget includes $15 million for incremental vouchers under the Family Unification Program and $75 million for incremental vouchers for homeless veterans. Programs receiving major increases include project-based rental assistance renewals (up 21%), Section 202 housing for the elderly (up 20%), Section 811 Housing for Persons with Disabilities (up 33%), CDBG block grants (up 10% excluding ARRA), HOPE VI (up 12%), Housing Counseling (up 35%) and Homelessness Assistance Grants (up 11%). Fair Housing and Policy Planning and Research both also received large increases.

Funding for new programs includes:

• $65 million for a Choice Neighborhood Initiative (CNI) demonstration, with funds to be distributed by a NOFA to be developed by HUD. The bill allows the funds to be used for “the transformation, rehabilitation and replacement housing needs” of both public and HUD-assisted housing, to convert vacant or foreclosed properties to affordable housing and to transform “neighborhoods of poverty”.
• $150 million for a Sustainable Communities Initiative providing grants to improve regional efforts to coordinate housing, land use and transportation planning. Grant criteria and performance measures will be made in consultation with the federal Department of Transportation.
• $50 million for an Energy Innovation Fund to enable the FHA and HUD to promote residential energy efficiency improvements. Of this, $25 million will support the Energy Efficient Mortgage Innovation pilot program and $25 million shall be for a Multifamily Energy Pilot. Both will offer incentives to owners to invest in energy improvements (e.g. free energy audits and underwriting based on anticipated energy savings).
• $80 million to capitalize the Capital Magnet Fund, a new Treasury program authorized in 2008 that provides financing for affordable housing preservation and development and associated economic and community development activities

House Approves Bill to Extend LIHTC Exchange Program

On December 9, the House approved (241-181) a bill (H.R. 4213) to extend a number of tax credit provisions through 2010. It extends the LIHTC exchange program under which States can exchange a portion of their tax credit allocation for a direct cash payment through 2010. Under the bill, the exchange payment to the state is a “refundable tax credit” rather than a grant. The formula for determining the amount that can be exchanged remains unchanged. The estimated cost of the one year extension is $471 million. The bill also extends other special provisions affecting a variety of community assistance programs, including New Market Tax Credits.

The House Ways and Means Committee has posted a summary of the bill and the Joint Committee on Taxation posted a technical explanation of the provisions. It is unclear when the Senate will take up a tax extenders bill.

House Passes Financial Regulatory Reform Bill

On December 11, the House approved a sweeping bill (H.R. 4173 – the Wall Street Reform and Consumer Protection Act) to revise the rules governing financial institutions and products and to create a new Consumer Financial Protection Agency.

As detailed in summaries and explainer documents on the House Financial Services Committee website, the bill creates a new council to identify firms “too big to fail” and regulate them so as to reduce systemic risk to the economy. It also creates new mortgage lending standards and prohibits predatory lending; an amendment to allow judicial modification of mortgages failed.

HUD Issues Draft Allocation Formula for National Housing Trust Fund

On December 4, HUD issued a draft formula for allocating National Housing Trust Fund grants to states. Comments are due February 2, 2010.

As required by the authorizing language in the Housing and Economic Recovery Act (HERA) of 2008, the formula considers four measures of housing need (the shortage of rental units affordable and available to extremely low-income households, the shortage of units for very low-income households, and the numbers of such households living in substandard or overcrowded housing or paying more than 50% of income for rent). It sums each state’s pro rata share of the national need measured by these indicators, weighting the extremely low-income renter factors to account for 75% of need measure, and then adjusts state allocations up or down based on their average construction costs relative to the national average.

The National Low Income Housing Coalition estimates that Massachusetts would receive about $26 million under the proposed formula if $1 billion is appropriated for the Trust. A HUD economic analysis done in August estimated $28 million, but may have used a different construction cost adjustment method.

HUD Issues Draft Strategic Plan, Accepts Comments

HUD is soliciting public comments on its draft FY 2010-2015 Strategic Plan. Comments can be submitted and viewed online. According to HUD’s website, the Strategic Plan “is the foundation for HUD's performance planning and management” and “is structured around a one-page strategic framework that defines HUD's mission, strategic goals, and strategic objectives.”

HUD/Treasury Push Banks to Make Trial Mortgage Modifications Permanent

On November 30, HUD and the Treasury Department announced a new “Mortgage Modification Conversion Drive” to increase the likelihood that borrowers who received trial home mortgage modifications under the Home Affordable Modification Program (HAMP) are able to convert to permanent modifications.

Only about 31,000 households have received permanent modifications to date and an estimated 375,000 households have trial modifications due to expire by December 31. The Administration is extending the trial modification period to give owners more time to submit documentation.

It is also requiring servicers to set deadlines for reaching conversion decisions, and will collect data daily from the servicers to track their progress. The Administration will also work with national, state and local agencies to assist borrowers locally with the process. It is unclear what percentage of trial modifications are likely to become permanent (to date, only 50% of trial modifications that have ended resulted in permanent modifications). Many borrowers have reported difficulties getting servicer responses while servicers have reported challenges due to insufficient borrower income and high numbers of loans initially made without income documentation.

On December 10, the Administration released loan modification performance statistics through November 30, showing that only 24% of the 3.3 million delinquent mortgages (60+ days) handled by the 78 servicers participating in HAMP have active loan modifications.

Overall, 728,408 households have either trial (about 697,000) or permanent (about 31,400) modifications. These figures include just over 16,400 households in Massachusetts. The report shows widely varying percentages of modifications by servicers. Bank of America, with over 1 million eligible delinquent mortgages, had modified only 15%. By contrast, among the next three largest servicers, the figures are 43% (Citibank), 31% (JP Morgan Chase) and 30% (Wells Fargo).

FHA Temporarily Eases Financing for Condominiums

Last month, the Federal Housing Administration (FHA) issued temporary guidance to make it easier in some cases for condominium purchasers to obtain low-downpayment FHA insured mortgages. The policy is intended to help sell new vacant units. It went into effect on December 7 and will continue through December 31, 2010.

The temporary rules reduce the presale requirement in new construction projects to 30%. They also raise the percentage of units in a condominium that can have FHA-insured loans from 30% to 50% (and in some cases up to 100%). The FHA also issued an update to its general requirements for condominium mortgages effective December 7 as well.

Recent Research

2009 Consolidated Plan/CHAS and Updated Section 8 Expiring Contracts Data Released

HUD issued updated housing needs estimates (“2009 Consolidated Plan/CHAS data) this month for use in Consolidated Planning efforts. The data is based on 3- and 5-year averages of data from the American Community Survey (ACS). HUD also published updated data for its Section 8 project-based contracts database this month (as of December 1) for the first time since the spring.

Study Finds Rental Assistance Ranks High on Economic Stimulus Impact

A new report by the Center on Budget and Policy Priorities (CBPP) issued on December 15 finds that rental assistance and homeless prevention spending is one of the most productive uses of stimulus funds in terms of its impact on the economy. The author cites the findings of the Congressional Budget Office and others that financial assistance to low and moderate-income households is one of the most effective ways to help the economy, as recipients are more likely to spend any increase in income.

The author estimates that every dollar spent on rental assistance is likely to generate between $1.50 and $2 in additional economic demand. In addition, rental assistance helps shore up the troubled rental market. Given these findings and the fact the $1.5 billion in stimulus funds approved for the Homelessness Prevention and Rapid Re-housing Program (HPRP) cannot meet the current need for housing assistance, the report urges Congress and the Administration to invest another $1 billion in HPRP as part of a proposed jobs bill.

Study Finds Housing Assistance Key to Reducing Childhood Hunger

A new study by Children’s HealthWatch and the Boston Medical-Legal Partnership has found that receipt of housing assistance reduces the likelihood that a poor child will be food-insecure and seriously underweight. The findings are based on a review of 10 years of data from Boston Medical Center’s research site. The study also found that food insecurity rates increased from 14% to 26.5% between June 2007 and June 2009, due to increases in housing costs. It concludes that “housing affordability is a public health issue” and that nutrition programs alone cannot solve childhood hunger and urges the State to expand housing aid.

Brief Recommends Housing Policies to Increase Access of Areas of Opportunity

Abt Associates has submitted a list of housing policy recommendations to the Obama administration detailing how reforms to current housing programs such as the Low Income Housing Tax Credit and Section 8 vouchers could increase the access of low income households to “high opportunity” areas with jobs, strong schools and safe neighborhoods.

Upcoming Event

CHAPA Breakfast Forum: New Tools for Preserving Expiring Use Properties in Massachusetts. Co-sponsored by DHCD, CEDAC, and MACDC. Friday, January 22, 9:00 a.m. to 11:30 p.m., One Beacon Street, Boston. Click here for registration information.