State Updates
Senate Ways and Means Releases Budget; Provides Increases for Several Key Housing Programs
The Senate Committee on Ways and Means released its FY'09 budget proposal, which raises spending on housing programs by 8.1 percent over FY'08 totals. The Committee proposes an additional $5.8 million for the Public Housing Operating Subsidy, an increase of $3.1 million to the Massachusetts Rental Voucher Program, and a $500,000 increase for both the Alternative Voucher Program and the Mental Health Rental Subsidy Program. The recommendations also increase funding for the Residential Assistance for Families in Transition (RAFT) program by $500,000, the SoftSecond Loan Program by $500,000 and the Housing Consumer Education Centers by $250,000. The budget also includes $8.25 million to fund the Homelessness Commission recommendations and $5 million for the Division of Banks to address the foreclosure crisis.
Despite these appreciated gains, the Public Housing Operating Subsidy proposal is still $1 million less than what the House passed on May 2 and significantly less than the $73 million proposed by the Governor. In addition, DHCD is unlikely to be able to offer the same amount of MRVP vouchers in FY'09 as it did in FY'08 unless funding is raised from the proposed $33 million to $36 million. Senator Tucker is filing amendments to increase public housing subsidy funding to $67 million and MRVP funding to $35 million. Finally, the Senate did not propose funding the Affordable Housing Trust Fund through the Bay State Competitiveness Investment Fund, a Senate initiative which provided the AHTF with $10 million in surplus operating revenues last year. Senator Joyce is filing an amendment to add the Trust Fund back into the Bay State Competitiveness Fund.
In total, the proposed Ways and Means budget is a very strong budget for housing. CHAPA thanks Senate President Murray, Chairman Panagiotakos and Senator Tucker for their support, and looks forward to continuing to work with them to address our affordable housing challenges.
Housing Committee Advances Bill Aimed at Preserving Affordable Housing
The Housing Committee, chaired by Senator Susan Tucker and Representative Kevin Honan, favorably reported Senate Bill 782, which adds a new Chapter to the General Laws ( Ch. 40T) that gives a Right of First Refusal to the Department of Housing and Community Development or its designee to purchase publicly assisted housing that is for sale. DHCD may designate this right to a municipality, non-profit developer or for-profit developer to act on its behalf. However, transactions that take place between owners that preserve affordability avoid having to offer DHCD an opportunity to purchase the property.
The bill also includes early notifications that affordability restrictions may terminate and rent increase limitations for tenants of properties that have the affordability restrictions terminated and do not receive enhanced Section 8 vouchers. Owners that adhere to the process may receive a certificate of compliance to avoid any title issues. The bill is now headed to the Senate Committee on Ways and Means for consideration.
Judiciary Committee Hears Three Bills Tailored to Halt Foreclosures
The Judiciary Committee, chaired by Senator Creedon and Representative O'Flaherty, held a well-attended hearing on three bills related to foreclosures. S. 2664 requires just-cause eviction for tenants in foreclosed properties, S. 2663 provides for a 6-month moratorium on foreclosures of properties financed with sub-prime loans, and S. 2662 mandates judicial review prior to a foreclosure. Undersecretary of Consumer Affairs and Business Regulation Dan Crane testified in favor of S. 2664, while Secretary Bill Galvin praised judicial review prior to foreclosure. Several members of the mortgage, real estate and banking industry submitted testimony against the proposals.
Attorney General Proposes New Regulations for Brownfields Program
The Attorney General has proposed reforms to the Brownfields Covenant Not to Sue program, which offers protection from liability under Ch. 121E for cleaned-up brownfields sites. The goals of the changes are:
- To address timeliness and predictability without sacrificing the Commonwealth's cleanup standards or other environmental goals;
- Issuing new guidance to help people make best use of Brownfields Covenants to solve liability problems;
- Expanding outreach to help identify the Commonwealth's best opportunities for cleanup, economic development and community revitalization; and
- Working with the other Commonwealth agencies to develop coordinated Brownfields policy, development priorities, and targeted technical assistance.
CHAPA commends Attorney General Coakley for focusing on this critical issue to community development. Anyone that wishes to comment on the changes may do so between now and May 21st by contacting Assistant Attorney General Ben Ericson at benjamin.ericson@state.ma.us.
Administration and Finance Begins Capital Budget Process
Secretary Kirwan has initiated the process to receive capital budget requests from agencies and determine the Commonwealth's FY'09 capital budget. Last year, A&F allocated $150 million in bond funds to housing, plus an additional $20 Million in MassHousing funds for the Affordable Housing Trust Fund (the first half of their $40 Million commitment).
This year, the Building Blocks Coalition has requested an increase to $200 million in bond funds for housing. Without the increase in bond cap, the Housing Bond Bill program increases proposed by the Legislature to preserve and create additional housing opportunities will not be able to take place. The Capital Budget is expected to be completed by June 30th.
FY'09 Commonwealth Capital Program Changes Proposed
The Administration has proposed making minor changes to the Commonwealth Capital Program, which rewards cities and towns for taking actions that further smart growth and sustainable development. The changes include adding MORE jobs grants to the program and placing greater priority on planning. For more information or to submit comments, contact commcap@state.ma.us.
Get the Lead Out Program Nearly Out of Funding
The Get the Lead Out Program, which gives low-cost loans to low and moderate income homeowners to help pay the costs of deleading their property, is nearly out of funding. The program has relied on loan repayments to recycle funds and make new loans. However, due to an increase in demand for the program and lower repayments caused by market decline and foreclosures, Mass Housing will no longer be able to make loans if they don't receive additional funding by the fall. The program was last supported by the State budget in 2003, and Senator Ed Augustus has sponsored an amendment to the FY'09 budget to provide funding this year.
DTA to Hold Public Forums on Family Shelter/Homeless Services Re-Design
The Department of Transitional Assistance (DTA) has scheduled five regional meetings across the state between May 13-23 to obtain recommendations from consumers, service providers, local officials, housing providers, job training providers and all other interested parties on ways to improve the family shelter and homelessness prevention system, decrease shelter use and help families to increase their economic stability. The meetings will be held in Worcester (May 13), Lowell (May 15), Holyoke (May 19), Boston (May 21) and Dartmouth (May 23). For more information or to RSVP, contact Annette Jackson by email or phone (617-348-5335).
Federal Updates
House Passes Bill to Provide $15 Billion to States and Cities with Foreclosed Properties
On May 8, the full House approved H.5818, the Neighborhood Stabilization Act of 2008, by a vote of 239-188, with all but 11 Republicans voting no. The bill authorizes a $15 billion HUD grant and loan program for States, eligible cities (population of 50,000 or more with a foreclosure rate at least 25% above the statewide rate) and certain urban counties to purchase and rehab foreclosed properties of up to 64 units for resale to homeowners or for use as rental properties. The proposed funding is almost four times the amount the Senate approved in separate legislation in April. The President announced that he will veto the bill if it comes to his desk. It is not known when the Senate will act on the House bill.
HUD would distribute the funds directly to states, and eligible cities and urban counties using a formula based on each state's share of the national total of foreclosed and delinquent (90 days+) single family (1-4u) home mortgages, with a limited adjustment for area home prices. If the amount a city or county would receive by formula is less than $10 million, HUD can choose to distribute the funding directly to the State instead. The Congressional Research Service estimates that Massachusetts would receive approximately $300 million under this bill. States, cities and counties must submit a program plan to HUD within 30 days of bill enactment and cannot receive funds until HUD has approved their plan (must approve/reject within 30 days)
Half of the funding is in the form of loans (no-interest, non-amortizing with fixed terms of 3 years for ownership properties and 5 years for rental properties). Loan funds can only be used for acquisition and rehab. The other half of the funding is a grant. Grant funds can only be used by public agencies and nonprofits and only for demolition, operating, holding and rehab costs, planning and administration. At least 50% of all grant spending must benefit very low income households (of which at least half must benefit extremely low income households), though HUD can approve lower ELI targeting on a case by case basis under some situations. The program is time-limited. In general, states, cities and counties must spend the funding within 24 months of plan approval (HUD can allow a 5 month extension case by case). Click here for more bill details and a side-by-side comparison with the legislation approved by the Senate in April.
House Passes "American Housing Rescue and Foreclosure Prevention Act"
On May 8, the House also passed a major housing bill (H.R. 3221), rolling a number of bills previously approved by the full House or the Financial Services Committee into one large bill. Title I authorizes a new FHA mortgage insurance program to enable homeowners with unaffordable mortgages or negative equity to refinance into affordable loans, as originally approved by the Housing Financial Services Committee earlier this month as H.R. 5830 (see CHAPA's website for a detailed description of the Title I provisions). Title II authorizes a number of reforms to FHA programs and Title II updates current statutes governing Fannie Mae and Freddie Mac. Title IV provides legal protection to servicers in connection with loan modifications, and Title V includes a number of changes to other housing programs, including the LIHTC program. A summary of key provisions is available on the House Financial Services Committee website. It is unclear how much of this legislation will be approved by the Senate, as the President has stated his opposition to Title I.
Recent Research
Study Finds Renters Occupy 45% of Units in Foreclosure in Southern New England
On May 7, the National Low Income Housing Coalition (NLIHC) issued a new study that indicates that at least 45% of the units in properties foreclosed or in the final stages of foreclosure between January 1, 2007 and March 21, 2008 in four New England states were rental units. The authors noted this percentage is likely to rise going forward, as foreclosures of multi-unit properties have been growing more rapidly than foreclosures of single unit properties. The number of multi-unit properties in or near foreclosure rose by 507% between the first quarter of 2007 and the first quarter of 2008, while the number of single unit properties rose 359%).
The study's finding were based on analysis of detailed data on 14,993 residential properties with a total of 23,440 units in Massachusetts, Rhode Island, Connecticut and New Hampshire that were lender-owned or scheduled for auction. Overall, the study found that one third (32%) of these properties were multi-unit (two or more units, as opposed to single family homes or condominiums) and that these multi-unit properties contained 56% of all units in all foreclosed properties. Using a conservative assumption of one owner-occupant per multi-unit property, the authors estimated that at least 45% of foreclosed units were rental units but noted that the true percentage is probably higher as it is likely that some properties were not owner-occupied.
Harvard Study Examines Impact of Housing Slump on Long Term Rental Affordability
The Joint Center for Housing Studies at Harvard University released a new study on trends in rental housing supply, demand and affordability entitled "America's Rental Housing: The Key to A Balanced Housing Policy". It reports that rental housing demand has been rising, due in part to foreclosures (the number of renter households jumped 2.8% between 2006 and 2007 while the number of owner households fell 0.3%). It also found that rents and rent affordability problems have also grown, despite increases in the rental vacancy rate as more single family homes and condominiums became available for rent.
The study found rental affordability is unlikely to improve without public interventions, as most renters cannot afford to buy the foreclosed ownership units, many of the vacant rental units are high cost, and the supply of private moderately priced units has been declining rapidly in the past decade, due to condominium conversions, demolition and other activities. Foreclosures are likely to increase losses in this older stock, as many investor-owners of small properties have subprime financing and some neighborhoods are at risk of destabilization due to high foreclosure rates and the tendency of lender-owners to hold vacant properties off the market. It concludes, however, that creating a preservation program targeted at this stock could prevent this, and with subsidy targeting, increase the supply of affordable rental housing across a range of lower incomes.
New Findings from HUD Moving to Opportunity (MTO) Program Published
In April, the Urban Institute published a series of new articles on how participation in HUD's Moving to Opportunity (MTO) demonstration program affected families 6-10 years after they began.
MTO was an experimental program designed to test the effect of providing Section 8 voucher to families who lived in subsidized or public housing in high poverty areas in 5 cities. Families were selected and randomly placed into one of three groups. One received vouchers that could only be used in low poverty areas initially, along with mobility counseling and relocation assistance. The other two groups either received vouchers with no restrictions or no vouchers. An interim evaluation of program effects in all 5 cities was published in 2003.
While the 2003 study showed families who moved had higher levels of satisfaction with their neighborhoods and a number of mental health benefits, it found little impacts in terms of school quality and employment. The new articles report the findings of a subsequent Three City Study ( Boston, New York and Los Angeles) which compared outcomes after another 2 years in the program and analyzes why income and school quality differences were limited. HUD has also published some new studies on Section 8 mobility in its most recent issue of Cityscape.
New Study Provides Framework for Localities to Assess Usability of Inclusionary Zoning
Homes for Working Families has released a new study, "Inclusionary Zoning: A Framework for Assessing the Advantages and Disadvantages", to help localities assess the likely effectiveness of inclusionary zoning in producing affordable housing and likely impacts on developers and the local housing market. The study examines the various ways such zoning can be structured and applied (including regionally) and summarizes key considerations.
Upcoming Events
Wednesday, May 21, 6:00-8:00 p.m., Fair Housing Center of Greater Boston 10th Anniversary Celebration, Moakley Federal Courthouse, Boston Waterfront. The celebration will commemorate the 40th anniversary of the Federal Fair Housing Act and feature Governor Patrick as a keynote speaker. The cost is $75.00. See the Fair Housing Center website for Information on registration and discount tickets or call 617-399-0491.
Friday-Sunday, May 30-June 1, MassHousing Community Homebuyer Fairs and Open Houses. MassHousing is co-sponsoring free homebuyer fairs on Friday, May 30 (10 am-3pm), in Boston and on Saturday, May 31 (9 am -1 pm) in Brockton, Cape Cod, Holyoke, Lawrence and Worcester. The fairs will introduce homebuyers to lenders, realtors and community organizations promoting affordable ownership opportunities and will be followed by open houses on Saturday May 30 and Sunday June 1 at affordable ownership programs. Click here for more information.
Monday, June 9th, 9:30-11:30 a.m., CHAPA Breakfast Forum, Developing Affordable Housing in Towns Without Public Sewer Systems: The Challenges and Opportunities", MassHousing, One Beacon St – 29th floor, Boston. Panelists will discuss challenges and strategies for developing affordable housing in communities without public sewer (including 42 towns in Greater Boston). The cost is $15 for CHAPA members and $20 for non-members. Pre-registration is required by June 6th and can be done online or by phone (617-742-0820), fax (617-742-3953) or email.
Monday, June 16, 5:30-7:30 p.m., Lawyers Clearinghouse 20th Anniversary Celebration, Goulston & Storrs, 400 Atlantic Avenue, Boston. The celebration will feature Representative Barney Frank and will honor Stephen Nolan for his years of leadership to the Clearinghouse. Reservations are required by June 9 by email or phone (617-778-1980). Suggested donation: $25
