State Roundup
FY 08 Budget in Conference
The Massachusetts House and Senate have appointed a conference committee to resolve differences between the their respective FY 08 budgets, and CHAPA has weighed in with our priorities. The conferees include Representatives Robert DeLeo (D-Winthrop), Marie St. Fleur (D-Boston), and Vinny deMacedo (R-Plymouth) and Senators Steven Panagiotakos (D-Lowell), Steven Tolman (D-Brighton), and Michael Knapik (R-Westfield). The branches agreed on most of the DHCD line items, leaving very little for the conference committee to decide. The administrative account has a $900,000 difference, with the Senate higher. The Senate also provided $250,000 more than the House for the SoftSecond program. Finally, there are two outside ! sections in the Senate budget, but not in the House version, including an allocation of surplus funds, if available, to the Affordable Housing Trust Fund and the Smart Growth Housing Trust Fund and a section that creates a special commission to study Chapter 40A.
Attorney General Announces Emergency Regulations Regarding Foreclosure Rescue Schemes
In another step toward protecting consumers given the high number of foreclosure filings in Massachusetts, on June 1, Attorney General Martha Coakley announced emergency regulations under the Consumer Protection Act to address the problem of so-called foreclosure rescue schemes. The emergency regulations prohibit foreclosure rescue transactions where, in order to delay or avoid a foreclosure, a homeowner is convinced to transfer ownership to another person but maintains a legal or equitable interest in the residential property. Rescue Transactions that are not for compensation or gain that are arranged between family members or by a non-profit community or housing organization are allowed. Additionally, the regulations prohibit the charging of advance fees for foreclosure-related services.
Coakley's office is also considering further amendments to the current mortgage broker and mortgage lender regulations to address unfair and deceptive tactics used by some in the mortgage lending and brokering business. She has requested written comments on the possible regulations. Comments must be received on or before 5:00 p.m. on Friday, June 28, 2007.
DHCD Hearing on Proposed Changes to 2007 Qualified Allocation Plan (QAP)
DHCD will hold a public hearing on proposed changes to this year's QAP for the Low Income Housing Tax Credit Program. The hearing is on June 14th at 10:00 a.m. at DHCD (100 Cambridge Street - 2nd floor - conference room 2B/2C). Copies of the proposed changes will be posted on DHCD's website www.mass.gov/dhcd. The changes relate to green design criteria and 4% credits.
Massachusetts Building Permit Activity Continues to Decline
Recently released Census Bureau building permit data shows a continued slowdown in new private residential construction starts in Massachusetts. The Bureau estimates that permits for 5,056 units were issued in 2007 year to date through April 30th, down 34% from the same period in 2006 (7,679 units) and down 20% from the year to date April unit count for 2005 (6,323). Year to date single family home units permitted fell 37% from 2006 to 2007 , two to four unit properties units fell 46%, and units permitted in multifamily (5 units) properties fell 28%. In addition, while 2006 building permit was stronger than 2005 activity in the January-April period, the total number of units permitted in 2006 (19,580) was 20% lower than the 12 month total for 2005 (24, 549).
Federal Roundup
GSE Bill Passes House
On May 22, the House approved the Federal Housing Finance Reform Act of 2007 (H.R. 1427). The Act would create a new affordable housing fund using contributions from Fannie Mae and Freddie Mac. The Congressional Budget Office estimates the fund will total about $600 million a year. All of the Affordable Housing Fund monies in 2007 would go to Louisiana and Mississippi for affordable housing needs related to Hurricanes Katrina and Rita. After 2007, funds would be distributed by formula to states, the District of Columbia, federal territories and federally recognized tribes. All of the funds must be used to assist households with incomes below 50% of median and must be used for housing (rental, ownership and related public infrastructure). The Act also provides that these funds be reserved for a future National Housing Trust fund if and when enacted (legislation is expected to be introduced this summer). Separate FHA ! reform legislation (H.R. 1852, the Expanding American Homeownership Act of 2007) would provide about another $250 million a year for the Trust.
The bill also creates a new agency (the Federal Housing Finance Agency) to oversee the three government sponsored enterprises (GSEs) - Fannie Mae, Freddie Mac and the Federal Home Loan Banks, replacing the current Office of Federal Housing Enterprise Oversight (OFHEO). The new agency would take over HUD's current responsibility for setting affordable housing goals for Fannie Mae and Freddie Mac.
FY2007 Supplemental Appropriations Bill Includes Section 8 Renewal Provisions
The supplemental appropriations bill for Iraq (H.R. 2006) signed by the President on May 25 includes several favorable provisions related to Section 8 voucher renewals. It permits the renewal or extension of expiring project-based certificate contracts (pre-2001) under project-based voucher rules. This will give assisted households the ability to move after one year using tenant-based assistance. The bill also authorized increases in current year voucher renewal funding for PHAs that spent more than the combined total of their calendar year 2006 allocation, any 2005 undesignated fund balances and 2006 undesignated administrative fees.
Section 8 Voucher Reform (SEVRA and FY2008 HUD Appropriations bill)
Efforts to improve the voucher program, fix funding problems and fully fund replacement housing assistance are underway on two fronts - through broad-based legislation (the Section 8 Voucher Reform Act or SEVRA) and through language in the FY2008 HUD appropriations bill. As detailed below, the House Financial Services Committee completed mark-up of SEVRA on May 24th - with some significant changes- and sent it to the full House, where it is expected to be taken up in June or July. Senate legislation may be introduced by August. To ensure key voucher reforms are passed into law this year, CHAPA is also urging Congress to include four key provisions (including some from SEVRA) in the 2008 appropriations bill:, that would
- Restore one-for-one replacement vouchers Starting in 2006, HUD dropped its long-standing policy of providing replacement housing assistance for all units lost when federal public housing or private assisted housing is demolished, sold or converted to market rate housing and instead began providing replacement funding only for units occupied at the time of demolition or conversion. CHAPA supports including restoration language from SEVRA which would require replacement vouchers for all lost units, including vacant units not funded in 2006 and 2007 under the recent change.
- Continue funding for Section 8 portability costs When voucher holders wish to move, the PHA that issued the voucher can either let the receiving PHA "absorb" the voucher (the issuing PHA then loses that voucher from its allocation) or it can retain the voucher and negotiate a split in administrative fees. Either choice can impose costs and sometimes lead PHAs to restrict portability. To eliminate this barrier, the FY2007 budget for the first time included special funding to reimburse PHAs for portability costs; CHAPA urges continuation of that funding in the FY2008 appropriations bill. SEVRA goes a step further by requiring receiving PHAs to absorb vouchers (it would use recaptured unused funds from other PHAs to ensure receiving PHAs have the funds needed to cover the cost of absorption).
- Establish permanent voucher renewal formula Using the approach adopted in the FY2007 appropriations bill, SEVRA would establish a stable formula until 2012 that provides renewal funds based on actual leasing rates and costs from the prior calendar year rather than the older cost data HUD used in recent years. It would also allow PHAs to use allocated funds more fully by permitting overleasing. CHAPA is working to include the SEVRA language in the FY2008 appropriations bill.
- Rationalize funding mechanism for Family Self-Sufficiency (FSS) Coordinators Funding for FSS coordinators has been unpredictable in recent years and has failed to consider the number of families participating in local programs; as a result, many PHAs with active programs lost their coordinator funding. SEVRA would fund these positions through a Section 8 administrative fee, using a formula based primarily on local program enrollment. CHAPA is urging inclusion of formula funding in the FY2008 appropriations bill.
As noted above, the version of SEVRA (H.R. 1851) passed by the House Financial Services Committee included several additions to the original bill language, including an authorization for new incremental vouchers, changes to the project-based voucher (PBV) program and renaming and revising the Moving to Work program. In addition to the portability, FSS and renewal funding provisions outlined above, the bill:
- Revises the project-based voucher program, in part to make it easier to use with Low Income Housing Tax Credit (LIHTC) projects, by increasing the maximum initial contract term to 15 years (up from the current 10 year maximum) and allowing owners to pre-commit to offered extensions of the contract term. It also restores a former HUD policy allowing PBV rents in LIHTC projects to go above tax credit rents in high FMR areas and allows housing agencies to agree not to reduce PBV rents below the initial rent regardless of later FMR changes. It also allows owner-managed site-based waiting lists, subject to PHA oversight, and allows PBV use in co-ops and elevator buildings..
- Raises allows PHA use of project-based vouchers to 25% of voucher funds (up from current 20%) plus another 5% for units housing homeless individuals and families (as defined under the McKinney Act). The extra 5% will help localities carry out strategies to reduce homelessness.
- Revises inspection requirements for units rented by voucher holders and adds flexibility. In addition to reducing the inspection requirement from annually to at least once every two years, it also allows PHAs to permit families to move into units prior to a voucher program inspection if the unit has been inspected under a federal program in the prior 12 months (vouchers payments can be made retroactively, once unit passes voucher inspection). In addition, it allows PHAs to use inspections carried out under other federal housing programs with at least comparable standards to meet the biennial inspection requirement. It also extends the length of time owners have to cure non-life-threatening defects to 90 days (up from 30 with optional PHA extensions) and allows PHAs to use withhold voucher funds to fund repairs.
- Expands the Moving to Work pilot program (which allowed 25 PHAs to combine voucher and public housing funds in carrying out their programs and gives them flexibility regarding a number of program rules, including rent-setting, time limits and work-related occupancy policies), renaming it the Housing Innovation Program (HIP). It would expand to program to 60 PHAs, giving them similar flexibility for ten years and allow another 20 agencies to participate in more restricted version of the program ("HIP Lite") that gives them access to funding fungibility but much less flexibility regarding rules and statutory requirements. All 80 agencies would be subject to evaluation.
- To reduce rent burdens and increase housing choice, it requires HUD to track of rent burdens and voucher use in areas of concentrated poverty. It requires HUD to set Fair Market Rents (FMRs) for smaller geographical areas.
Upcoming Events
June 12, Central Massachusetts Regional Meeting, 9:30 a.m. - 11:00 a.m., Homeownership Center of Worcester
June 22, Chapter 40B Training, 7:45 a.m. - 2:15 p.m., Bentley College, Waltham
