State Updates
State Legislature Passes Supportive Housing bill; Awaits Governor’s approval
On March 12th, the Legislature finalized An Act Relative to Community Housing and Services, S. 1967, one of CHAPA’s top legislative priorities. This bill will enhance coordination and efficiency among state agencies and promote affordable housing linked to supportive services that enable tenants to be successful and independent. The legislation also establishes a goal of 1,000 new supportive housing opportunities in three years. CHAPA wishes to thank lead sponsors Representative Kevin Honan and Senator Pat Jehlen, the entire legislature, and dozens of partners who were instrumental in advancing the bill. The Governor has not approved the legislation, but we are hopeful he will sign S. 1967 into law soon.
Legislature’s Committee on Housing Takes Action on Several Proposals
As the Legislature nears the March 21st bill reporting deadline, the Committee on Housing and several other legislative committees have taken action on several pieces of important legislation. The Housing Committee favorably reported S. 587, An Act Relative to Statutory Housing Covenants, H. 2117, Relative to Manufactured Housing Communities, H. 369 , Relative to Energy Efficiency in Affordable Housing, H. 2118, Relative to Eliminating Homelessness, H. 2128, Relative to Requiring the Posting of Certain Contact Information of Municipal Housing Authority Commissioners, H. 1271, Relative to Promoting Local Housing Initiatives for Economically Diverse Households, and S. 584, relative to Chapter 40R. CHAPA has seen all but one of our legislative priorities advance from Committee this session: zoning and land use reform legislation remains before the Committee on Municipalities and Regional Government.
Draft Housing Development Incentive Program (HDIP) Regulation Issued
DHCD issued a draft regulation, draft program guidelines and FAQs for the new Housing Development Incentive Program (HDIP) at the end of February. Enacted in 2010 (Chapter 40V), HDIP was created to support the development of primarily market rate housing in existing non-residential properties in “Gateway” cities. The program is limited to developments in which at least 80% of the units will be priced at “market rate” (the level affordable to households at 110% of area median, using a flexible definition of area). Municipalities that participate must offer at least a partial property tax exemption on the increase in value attributable to the market rate units and developers can apply for a state tax credit for to up to 10% of the cost of developing the market rate units. The total value of state credits that can be authorized is capped at $5 million a year, and DHCD is proposing a per-project cap of $1 million. DHCD will hold a program information session on March 27, as well as public hearings. Comments are due by March 29.
House Approves Smoke-Free Housing Proposal
The Massachusetts House has given initial approval to H. 383, An Act Creating Smoke-Free Elderly Housing Units in the Commonwealth. The bill directs DHCD to establish a policy, in conjunction with local housing authorities, to designate at least one residential building within the agency’s portfolio as smoke-free. Any housing authority with more than 100 units would be required to designate 20 percent of the units as smoke-free and local housing authorities with less than 100 units would be exempt from the regulations. The bill requires one more vote by the full House before it would be sent to the Senate for consideration.
LEAN Multifamily Energy Efficiency Program Now Available to Larger Pool of Developments
The Low Income Multifamily Energy Retrofit Program (LEAN) provides energy audits and grant funds to support cost-effective energy efficiency measures in accordance with the Green Communities Act. Through 2011, only non-profit owners were able to apply for resources. The LEAN Advisory Committee changed this policy in January 2012 and now accepts non-profit and for-profit owned developments that meet the program’s income eligibility requirements. LEAN is a national model for multifamily energy efficiency, and CHAPA is very pleased to see a broader portfolio of affordable housing developments now able to access this tremendous resource. We also support increased funding for LEAN in future Energy Efficiency Advisory Council 3-year plans and hope to work with partners across housing and environmental protection to further this goal.
Foreclosure Activity Fell in 2011
According to the Warren Group, 30% fewer foreclosure deeds were filed in 2011 (8,528) than in 2010 (12,233). This represents the lowest annual total since 2007 (7,653). However, there was also a 32% increase in petition filings in January 2012 (1,333) compared to December. Foreclosure deed filings continued to decline (662 in January), reaching the lowest monthly level since May 2011. As of the end of January, 20,517 Massachusetts households had permanent (18,568) or trial (1,949) loan modifications through the HAMP program.
Home Sale Activity Reached Lowest Level since 1990s in 2011; Single Family Median Price Declines
The Warren Group reported in late January that statewide single family home sale activity fell by 5.8% in 2011 compared to 2010, reaching the lowest level since 1990 (38,994 sales in 2011 vs. 35,819 in 1990). The median sales price in 2011 ($286,000) fell 3% compared to 2010 ($295,000). REO properties represented 3.8% of single family sales in 2011, down from 6.8% in 2010. Condominium sales (15,122) fell by 16.7% compared to 2010 (18,048), the lowest level since 1995. However, the median sales price for a condo increased by almost by 2% (to $270,000) compared to 2010. The share of condo sales involving bank-owned properties also fell, from 6.8% in 2010 to 3.5% in 2011.
Massachusetts Continuums of Care Receive HUD Homeless Assistance Funding
Massachusetts organizations recently received $4.4 million in homelessness assistance grants from HUD. Many of the recipients will receive funding to bolster supportive housing efforts
Chelsea Housing Authority Exits Receivership
The Chelsea Housing Authority has exited receivership after a thorough review of agency operations and management and a new board has been put in place to manage the agency.
Welcome Home Massachusetts Poised To Launch This Spring
The Welcome Home Massachusetts campaign, developed to support local housing initiatives, is seeking endorsers for the launch of its website this spring. For a detailed description of the campaign, click here.
To date, we have over 350 Welcome Home Massachusetts endorsers. If you would like to endorse Welcome Home Massachusetts and receive updated communications about the launch, the online tools and the campaign, please send an email with your name, your organization (optional), your email address and the community in which you live to cmarine@chapa.org.
Federal Updates
HUD Releases Rental Assistance Demonstration Program for Comment and Partial Implementation
On March 8, HUD published a notice in the Federal Register announcing the release of its Rental Assistance Demonstration (RAD) program notice for comment and partial implementation. RAD is a pilot program authorized in the FY2012 budget that will allow public housing agencies to apply to HUD for permission to convert their federal public housing developments to project-based Section 8 assistance. It also allows owners with certain older project-based rental assistance contracts, including Mod Rehab, to apply to convert to long-term project-based contracts. The program notice seeks comments on all elements of the program, but allows owners of expired and expiring RAP and Rent Supp contracts to apply for conversion immediately. The deadline for comments is April 9.
Senator Reed files bill to create “Project Rebuild” (NSP successor)
On March 6, Senator Jack Reed (D-RI) filed a bill (S. 2162) to authorize “Project Rebuild,” a $15 billion program to redevelop abandoned and foreclosed properties, stabilize neighborhoods and help disaster areas. (The Obama administration initially proposed the program in September 2011 and has included it in its FY2013 budget request.) The bill would provide $10 billion in formula grants to states and localities (with a minimum of $20 million per state) and $5 billion in competitive grants. While modeled on the Neighborhood Stabilization Program (NSP), it would provide more than twice as much funding overall and would allow more uses (up to 30% could be used to rehabilitate commercial properties and up to 10% for short-term property maintenance jobs). It would also allow for-profit entities to participate directly. In 2011, HUD estimated Massachusetts would receive about $40 million under Project Rebuild. Click here for a brief summary of the bill.
House Representatives Begin Effort to Continue and Extend LIHTC Minimum Credit Rate
Representatives Richard Neal (D-MA) and Patrick Tiberi (R-OH) are circulating a letter seeking co-sponsors for a bill filed in December (H.R. 3661) to set a permanent minimum credit rate for federal Low Income Housing Tax Credit (LIHTC) projects using 9% or 4% credits. Under current law, the dollar value of credits awarded to a project is calculated by multiplying eligible costs by a percentage (“credit rate”) set by the IRS based on the federal cost of borrowing. If the cost of borrowing declines, the credit amount also falls, creating a funding gap. Congress approved a temporary minimum credit rate for 9% (but not 4%) credits in 2008 but only for units placed in service by the end of 2013. The impending expiration is creating uncertainty for 2012 applicants. A companion Senate bill (S. 1989) was also filed in December.
CHAPA Signs Letter Urging Increase in HUD Appropriations Allocation; Other State and Local Organizations Encouraged to Sign
CHAPA has endorsed a letter urging Congress to increase the 302(b) subcommittee allocation for the FY13 Transportation, Housing and Urban Development and Related Agencies (THUD) budget. This 302(b) allocation represents the portion of the federal budget that can be spent in these areas for the year. It is anticipated that the House will introduce a budget resolution providing for a funding amount even lower than the cap required by the Budget Control Act of 2011.
The Campaign for Housing and Community Development Funding (CHCDF) and other national groups submitted a letter signed by 178 national organizations, representing transportation, affordable housing and community development groups, faith-based and civil rights organizations, and private enterprise, as well as local officials.
The state and local letter is still open for signers. To show your support for an increased 302(b) allocation for the THUD budget, please sign onto this letter by March 20: https://nlihc.wufoo.com/forms/thud-302b-signon-letter/
CHAPA Urges Increased Funding for HOME Program
CHAPA has asked our federal elected officials to sign a "Dear Colleague" letter urging the THUD Subcommittee Chair and Ranking Member to restore HOME funding to at least $1.6 billion in FY13. HOME is a critically important program for Massachusetts. It is often paired with the low income housing tax credit, and is used as a major tool for preserving and expanding the affordable rental housing inventory. It is a key component of programs which support extremely low-income people, including those transitioning from homelessness, as well as veterans and persons with disabilities. In the past five years, HOME has funded 300 to 400 units annually in our state. HOME funds go to both the state (Department of Housing and Community Development) and 100 cities and towns. Last year, due to a severe budget cut to the HOME program, Massachusetts lost $17.5 million in HOME funding, representing a 41% drop (from $42.5 million to $25 million).
HUD Awards $23 million for Energy Efficiency Initiatives in Older Multifamily Buildings
On March 8, HUD announced grants to 12 organizations nationwide, including two in Boston, to test new ways to reduce energy costs and finance energy efficiency upgrade in existing multifamily properties. New Ecology, Inc. received $989,275 to implement energy conservation measures in about 2,700 affordable units in Massachusetts. NRG Solutions LLC (Winn) received $5.25 million to help establish a Multifamily Energy Loan Fund to retrofit about 1,200 units in low-income property in Massachusetts, Connecticut, Maine, Vermont, Rhode Island and New York City.
CBPP Finds HUD FY2013 Budget Request Could Leave 55,000 Housing Choice Vouchers Unfunded
In a report published on March 14, the Center on Budget and Policy Priorities (CBPP) estimates that the Administration’s FY2013 budget request underfunds the Housing Choice Voucher program by up to $440 million, meaning it may not be possible to renew as many as 55,000 vouchers nationwide. It attributes the funding gap to both an underestimation of renewal costs (due to rent increases and recently authorized vouchers) and an overestimation of likely savings if new minimum rents and other administrative changes are implemented.
Calls for FHFA to allow GSEs to Reduce Principal in Loan Modifications Continue
The Administration has been urging Fannie Mae and Freddie Mac to add principal reductions to the tools they use when modifying loans, but the Federal Housing Finance Agency (FHFA) which oversees the two agencies in their conservatorship has refused to permit principal reductions. In late January, FHFA Acting Director Edward DeMarco released a study to support his position that using principal reductions would increase GSE losses at the expense of taxpayers. The study, however, has been roundly criticized for its methodology, with other analyses finding just the opposite. On February 27, 116 House Democrats sent a letter to DeMarco urging him to allow the principal reductions. This call has been supported by bankers, economists, academics and housing policy analysts, as detailed in a recent article in Atlantic magazine.
Recent Research
HUD Launches New Database on HUD-Assisted Households
HUD recently unveiled a Public Use Microdata Sample (PUMS) database providing household level data on the characteristics of participants in HUD’s largest programs (Section 8 tenant- and project-based rental assistance, public housing, Section 202 and Section 811). The database contains information on a 5% sample and includes both demographic information and characteristics about their places of residence. Registration is required to use the data.
Out of Reach 2012
On March 2, the National Low Income Housing Coalition (NLIHC) released its annual Out of Reach report comparing HUD fair market rents (FMRs) and renter incomes across the country. For Massachusetts, they found that a household must earn $45,675 a year to afford a two-bedroom apartment at the 2012 statewide average Fair Market Rent ($1,142) without paying more than 30% of income on housing. This means a household must earn at least $21.96 an hour, assuming a 40 hour week (vs. $23.25 in 2011) on average. However, the required income varies widely within the state, from a high of $52,911 in Greater Boston to a low of $28,520 in western Worcester County.
The report estimates that the average renter in Massachusetts earns a wage of $16.94, meaning he/she must work 51.8 hours a week (or live in a household with 1.3 workers earning that average wage) to afford the two-bedroom FMR, just about the same as nationally (51.6 hours). A Massachusetts minimum wage worker, however, would need to work 110 hours a week (2.7 minimum wage jobs) compared to the 102 hours required nationwide.
Report Finds Rise in Housing Affordability Problems among Working Households
On February 24, the Center for Housing Policy issued a new report Housing Landscape 2012 on trends in housing affordability problems among working renters and homeowners with incomes at or below 120% of area median. Overall, it found that the median income of renters fell by 4% between 2008 and 2010, while median monthly housing costs rose by 4%. Homeowners experienced a 5% decline in income and a 2% decline in housing costs. As a result, the percentage of households with severe housing cost burdens (paying over half their income for housing) rose to 23.6% nationwide (up from 21.8% in 2008), including 25.6% of renters and 21.6% of homeowners. In Massachusetts, however, it found no change, reporting that the percentage of working households was 24% both in 2008 and 2010.
