Housing Briefs - May 30, 2013

Post date
May 30, 2013

State Updates

Senate Budget Update

The Senate passed their version of the budget last week, which included nearly $20 million in new funds for housing programs. The Senate focused their new housing investments on long-term permanent housing with a $15.5 million increase to MRVP and on homelessness prevention with increases to RAFT, the Housing Consumer Education Centers, and the Tenancy Preservation Program.

The Senate budget also opened up options for families in the HomeBASE rental assistance program, whose rental assistance will soon expire. Through the Senate debate, CHAPA and our Building Blocks Coalition worked with Senator Eldridge to prevent families on the HomeBASE program from becoming homeless by ensuring these families maintain their homelessness preference for subsidized housing, have access to RAFT and HomeBASE household assistance, and if necessary, access to shelter.

Two losses suffered for housing in the Senate budget include $2 million less in funding for public housing and $400,000 less for Home and Healthy for Good than in the House budget.

CHAPA appreciates the efforts of Senate President Murray, Chairman Brewer, and the Senate Ways and Means Committee for their investment in housing and homelessness prevention. CHAPA also thanks Senator Eldridge, Senator Donnelly, Senator Ross, Senator Finegold, Senator O’Connor Ives, Senator Keenan, Senator Michael Moore, Senator Rodrigues, Senator Rush, Senator Kennedy, Senator Spilka, Senator Creem, Senator Brownsberger, Senator Clark, Senator Barrett, Senator Wolf, Senator DiDomenico, Senator Lovely, Senator Joyce, Senator Chang-Diaz, Senator Jehlen, Senator Knapik, Senator Timilty, and other Senators and partners for their sponsorship and support for amendments that address concerns for funding needs for CHAPA’s priorities.

The next step for the budget process is Conference Committee. The following members were named today, May 30: Senator Stephen Brewer, Senator Jennifer Flanagan, Senator Michael Knapik, Representative Brian Dempsey, Representative Stephen Kulik, and Representative Vinny deMacedo.

Housing Bond Bill Update

The Housing Bond bill was reported out of the Housing Committee. H. 1127, now H. 3464, invests the $1.4 billion proposed by Housing Chairs Representative Kevin Honan and Senator Jamie Eldridge in housing and community development programs over the next 5 years. The bill, summarized below, also incorporates language changes from the Governor’s proposal removing burdensome repayment and refinance language that had previously been required of a small number of programs:

  • Extends the Low Income Housing Tax Credit at $20 million per year for 5 years
  • $500 million for Public Housing
  • $305 million for the Affordable Housing Trust Fund
  • $135 million for Housing Stabilization Fund
  • $100 million for Capital Improvement and Preservation Trust Fund
  • $80 million for Housing Innovations Fund
  • $55 million for Home Modification
  • $50 million for Public Housing demonstration program
  • $45 million for Commercial Area Transit Node Housing Program with language to include funding commercial space in mixed use developments
  • $45 million for Early Education and Out of School Time Capital Fund
  • $47 million for Facilities Consolidation Fund
  • $38 million for Community Based Housing

The Housing Bond Bill is now before the House Committee on Bonding, Capital Expenditures, and State Assets. The Committee has scheduled a hearing for Monday, June 3rd from 11:00 am until 1:00 pm in Room A-1 at the State House.

Upcoming Hearings

On Monday, June 3rd, the House Bonding Committee has scheduled a hearing for the Housing Bond Bill, H. 3464, at 11:00 in Room A-1 at the State House.

On Tuesday, June 4th at 10:00 in Room B-2 at the State House, the Housing Committee has scheduled a hearing on bills related to homelessness, expiring use, foreclosure, and manufactured housing. See list of bills here.

DHCD Announces New High Leverage Asset Preservation Program (HILAPP) for Public Housing

On May 20, The Department of Housing and Community Development (DHCD) announced the launch of a new program to preserve units with high capital needs that cannot be met through formula funding.  Applicants must identify additional resources equal to at least half the DHCD award. DHCD expects to award approximately $20 million over the next three years (primarily for pre-development due diligence and technical assistance), then increase award totals to $20 million or more a year thereafter.  The 2013 funding round is limited to modernization of developments with a facility condition index of at least 15% (the value of expired components relative to replacement cost) in communities with the highest need for such housing (see eligible developments). Interested authorities must submit a one page letter to DHCD by May 31 and a longer application by June 19.  Given the importance of LHA leadership and initiative, the instructions specify that the application must be completed without the aid of a consultant.  DHCD expects to announce finalists in August and final selections in October.

DHCD Issues Updated Comprehensive Permit Guidelines

DHCD published updated guidelines for activities related to comprehensive permits and Chapter 40B this week.  The update adds clarifying language and includes parenthetical notes describing the May 2013 changes. Among other things, it clarifies Affirmative Marketing requirements and adds an Appendix with Additional Guidance on Income.

DHCD Updates Subsidized Housing Inventory

The Department of Housing and Community Development (DHCD) published an update of the Subsidized Housing Inventory this month.  As of April 30, 2013, the number of units that count toward the 10% goal is 247,059 statewide, up 2,496 units from the count published a year ago (May 2012).  Forty three cities and towns are at or above 10%, three more communities (Lynnfield, Stoughton and Wilmington) than in May 2012.  Another 73 communities have SHI percentages at or above 7%, including 20 between 9 and 9.95%, 20 more between 8 and 8.95% and 30 between 7 and 7.95%.  Overall, the 113 communities at or above 7% are home to 64% of the state’s population.

Federal Updates

Friday Deadline for Sign-On Letter to Senator Warren Urging Support for Rental Assistance Reform Bill

The National Low Income Housing Coalition is asking organizations in states with Senators on the Senate Committee on Banking, Housing and Urban Affairs, including Senator Warren, to sign onto letters urging passage of housing assistance reform legislation this year.  The deadline for signing on is Friday, May 31. 

The Section 8 Voucher Reform Act and the Affordable Housing and Self-Sufficiency Improvement Act (most recently known as AHSSIA, formerly known as SEVRA and SESA) have been in development since 2005. In February, national organizations sent a letter to the Senate Committee on Banking, Housing and Urban Affairs urging swift enactment of the areas of broad consensus in the proposal.  If passed, the reforms would save more than $2.5 billion over a five year period and help offset funding cuts.  To sign on to the Massachusetts state-specific letter, go to http://www.clpha.org/rar_sign_on_letter_ma.

Section 8 and Public Housing Funding Cuts Lead to Layoffs and Voucher Freezes and Retractions

A number of Massachusetts housing authorities are beginning to take steps to deal with the funding reductions imposed by the FY2013 budget and sequestration, including no longer issuing vouchers - or even rescinding vouchers issued to new households that had not yet signed a lease (Boston, DHCD).  While Congress provided $100 million in the FY2013 budget to help PHAs avoid voucher terminations, HUD interim guidance issued on April 26 requires PHAs to take the following steps before HUD will consider providing extra funds:

  • Work with HUD’s Shortfall Prevention Team
  • Stop Issuing vouchers to applicants (except for Tenant Protection Vouchers, homeless vets under a recent VASH allocation, or vouchers issued to a household to move to a different unit)
  • Rescind vouchers issued on or after April 1 and stop leasing (with same exceptions as above)
  • Stop absorbing portable vouchers
  • Stop issuing vouchers to those voluntarily moving from a project-based unit.

HUD also stated that it will not approve requests to reduce payment standards or utility allowances, as it believes it has sufficient funds in the $100 million set-aside to cover those costs. 

The Center on Budget and Policy Priorities (CBPP) reports some impacts in other Massachusetts housing choice vouchers and public housing programs, including rent increases in Marlborough and rent increases and layoffs in Worcester.  The Boston Housing Authority has posted further proposed changes to its Section 8 Administrative plan on its website which will go into effect on July 1 if adopted (it is accepting comments through June 19). The proposed BHA changes include: requiring persons of the same sex to share a bedroom regardless of age; requiring that any increase in income be reported as it occurs; implementing a minimum rent of $50; and implementing a change in utility allowances for participating families based on decreased utility costs.

Advocates Urged to Ensure Eligible Multifamily Owners Request Tenant Protection Voucher by June 14

The National Low Income Housing Coalition reported on May 6 that tenant advocates are concerned that $4 million for tenant protection vouchers for households in properties where affordability restrictions have or will soon end may go unused because it is up to the owner to request the vouchers. The National Housing Law Project, the Preservation Working Group and others are  spearheading an effort to reach out to owners and tenants to make sure they are aware of HUD’s deadline to apply for these vouchers (June 14).  NLIHC has posted a list of eligible properties.

Sequester Forces HUD to Close Offices for 7 Days this Summer

In mid-May, HUD announced it will close all of its offices on seven days this summer to stay within its FY2013 budget:  Friday, May 24, Friday June 14th, Friday July 5, Monday July 22 and three Fridays in August (August 2, August 16 and August 30).   Employees will not be paid for those seven days. HUD is taking a number of other steps as well to reduce costs, including hiring freezes and a reduction in part-time employees’ hours. 

Treasury Department Uses GSE Profits to Postpone Reaching Debt Ceiling

While the Federal Housing Finance Agency has not made GSE payments to capitalize the National Housing Trust, GSE profits are helping the Treasury Department live within the current debt ceiling for a few more months. On May 17, Treasury Secretary Lew notified Congress by letter that $67 billion in profits from Fannie Mae and Freddie Mac paid to the Treasury in June, combined with other measures, make it likely that the federal government can stay within the current debt limit until at least Labor Day. 

Massachusetts Projects Win 2013 HUD Housing and Community Design Awards

On May 14, HUD announced the winners of three 2013 awards for design excellence, including two properties in Massachusetts. The Community Learning Center in Leominster, created to offer afterschool programs at the Allencrest state-aided housing development, won the award for Community Informed Design. Four new passive solar housing units in Stoneham added on a state public housing development site won the Housing Accessibility design award.

Several Major Banks Temporarily Halt Most Foreclosures

On May 19, the Los Angeles Times reported that three of the nation’s largest banks (Wells Fargo, JP Morgan Chase and Citigroup) halted almost all of their foreclosures on May 6 to ensure that their procedures comply with revised minimum standards issued by the Office of the Comptroller of the Currency (OCC) handling loans scheduled for imminent foreclosure (within 60 days). The guidelines are intended to avoid wrongful foreclosures.   JP Morgan Chase has since resumed foreclosing.

Senate and House Chairs Solicit Public Comment on Tax Reforms through new website

Senator Max Baucus (D-MT) and Representative David Camp (R-MI), chairs of the Senate Finance Committee and the House Ways and Means Committee respectively, have launched a new website, www.taxreform.gov, to enable members of the public to submit their thoughts and suggestions regarding tax reform. The National Low Income Housing Coalition notes that this provides an opportunity to recommend mortgage interest deduction reform, with redirection of some of the savings to affordable housing assistance (e.g. the National Housing Trust, renter credit).

Recent Research and Reports

HUD issues updated Comprehensive Housing Affordability Strategy (CHAS) Data

On May 14, HUD released its most recent CHAS data in the form of five year (2006-2010) and three year (2008-2010) data sets. The five year data provides information down to the Census tract level, including split tracts, while the three year data is available for states, counties, minor civil divisions and places.  The data provides information on affordability and other housing problems by income level and household characteristics and can be downloaded.

New Study Finds Wealth Disparities by Race Have Grown

An Urban Institute report issued last month found that the racial wealth gap is three times as large as the racial income gap and has increased over the last 30 years.  Less than Equal: Racial Disparities in Wealth Accumulation defines wealth as total assets minus debt and liabilities. It found that the difference between the average wealth of white families and black and Hispanic families has grown from $283,000 in 1983 to over $500,000 by 2010, with an average wealth for White households of $632,000 compared to $98,000 for black households and $110,000 for Hispanic households. It also found that the gap increases with household age. The study attributes some of the growth in the wealth gap to fallout from the recent financial crisis, as homes lost value and lower income families had to draw on retirement savings. The report is part of a larger Urban Institute project investigating wealth trends and disparities. 

Federal Reserve Study Finds Limited Foreclosure Effects on Condominium Prices

A new study from the Federal Reserve Bank of Boston, The Role of Proximity in Foreclosure Externalities: Evidence from Condominiums, indicates that foreclosed condominium units have a relatively small impact on resale prices of nearby units, except for other units in the same building. For units in the same building as a foreclosure, the average impact was a 2.4% reduction in sales prices, but higher (6.1% on average) for units in smaller associations (12 units or less, often in a single building). Resale prices for units in the same condominium association but a different building were not generally affected. The authors theorize that the difference is attributable to physical conditions (the foreclosed unit may be poorly maintained and/or the loss of dues may hurt the association’s maintenance budget). They also caution that their study was limited to Boston and that different effects might be found elsewhere. 

“Priced Out in 2012” Study Highlights Severe Housing Affordability Problems of SSI Recipients

The Technical Assistance Collaborative’s (TAC) Priced Out study, issued every two years, analyzes the gap between housing costs and the incomes of persons with disabilities receiving Supplemental Security Income (SSI) as their sole source of income. Its 2012 study finds that nationwide, the average one-person household receiving SSI has an income equal to 19% of Area Median Income and would have to pay 90% of their income to afford a studio apartment renting at the national average fair market rent and 104% to rent a one-bedroom. Massachusetts ranked eighth highest in affordability problems, as recipients would have to pay 107% and 121% of their income, respectively, for a studio or one bedroom apartment. 

Study Examines Mortgage Interest Deduction Use by State and Metropolitan Area

A recent report by the Pew Charitable Trusts, The Geography of the Mortgage Interest Deduction, documents the geographic variation in use of the deduction, both in the percentage of households who claim the deduction and in the value of the deduction. A separate Data Appendix details utilization by state in 2010 and by selected metro area in 2007. In 2010, 31.4% of Massachusetts tax filers claimed the mortgage interest deduction (compared to 25.5% of all filers nationwide). Massachusetts filers claimed an average deduction of $11,366, while the national average was $10,640. The average claimed in Massachusetts varied significantly among the metro areas within the state.

New Studies and Website Examine Potential Uses of Social Impact Bonds (SIBs)

A new McKinsey and Company paper, Social Impact Bonds: Analysis of a Mechanism for Financing Social Program Expansions, has concluded that SIBs are relatively complex instruments and more expensive than direct public funding, but can be useful to scale up proven social programs where expansion is stymied by public budget constraints.

Social Impact Bonds (also called “social innovation financing” or “pay for success”) use funds from private investors (often foundations and other mission-oriented entities) to finance a public program. Investors are repaid by the public agency only if they achieve specific performance benchmarks (frequently one for principal and a higher one for profits). Third parties are often used to develop the benchmarks, monitor performance and raise capital. Six foundations funded the study and a website with tools to assess whether a program is a potential SIB candidate. 

Massachusetts is one of several states and cities working on initiatives now. The Commonwealth hopes to launch  two programs this year, one funding homelessness prevention (housing and supports for 400 to 600 individuals) and one funding services to reduce recidivism for youths aging out of the juvenile corrections and probation systems. The Obama administration has also requested funding for Pay for Success initiatives as detailed by the Center for American Progress in its FY2014 budget request.

Announcement

CHAPA’s Director of Special Projects, Katy Trudeau, will be leaving CHAPA to take a position as the Urban Design and Planning Manager for Goody Clancy, a highly respected architecture and planning firm based in Boston. Katy has had a tremendous impact on CHAPA and the clients we serve during her tenure, managing several programs (including MassAccess, the New England Housing Counseling program and the Massachusetts Homeownership Collaborative) and recently spearheading CHAPA’s new young professionals initiative. We thank her for her many contributions, and wish her well in her new endeavor.