@the horizon

Community Developments - April 26, 2013

A daily roundup of news affecting housing and  communities

By Allison Charette

 

• Thursday’s House Ways and Means Committee Hearing on Tax Reform and Residential Real Estate featured strong support for the Low Income Housing Tax Credit (Housing Credit). Robert Moss of Boston Capital testified on behalf of the ACTION Campain on the need to protect and strengthen the Housing Credit. Members of the committee spoke positively of the program as well, including Rep. Erik Paulsen (R-Minn.) and Rep. Pat Tiberi (R-Ohio), who called the program the best example of public-private partnerships incentivized through the tax code.
  
  In addition, Robert Dietz from the National Association of Home Buildings expressed support for the Housing Credit, stating that “the solution is not to eliminate the most successful affordable housing program in the country, but to provide it with the resources necessary to address the shortage of affordable housing options in our cities and towns.” Other tax reform topics discussed included the mortgage interest deduction and real estate tax deductions.(Housing Wire, April 25)


• The Senate unanimously voted yesterday to give the Federal Aviation Administration the flexibility to avoid sequestration-related furloughs that have caused flight delays (NBC News, April 26). Earlier today, the House approved the bill, sending it to President Obama for his signature. This action is in stark contrast to the lack of Congressional activity to mitigate the impacts of the sequester on the most vulnerable Americans. As previously reported in Community Developments, public housing authorities are furloughing employees in order to pay for all current Section 8 voucher holders, but many expect to cut the number of available vouchers soon. An estimated 140,000 families across the country could lose their Section 8 housing vouchers as a result of sequestration, which could lead to increased financial hardship and homelessness. (CAP, April 22)

• As part of Enterprise’s Policy Innovation Series, Jeanie Shattuck writes about America’s aging population and the increased demand for senior affordable housing. With the elderly population expecting to double in the next 20 years, it is crucial for HUD to implement Senior Preservation Rental Assistance Contracts (SPRACS), which provide rental assistance and long-term security to senior program participants. The Section 202 Housing for the Elderly Program provides much needed assistance to our elderly population, and expansion will likely be needed as America’s demographics continues to change with the aging of the baby boomer generation. Read more Policy Innovation Posts on the Enterprise @the Horizon blog. (@the Horizon, April 25)


• In a bipartisan effort, the Employee Non-Discrimination Act (ENDA) that bans workplace discrimination based on sexual orientation and gender identity was introduced Thursday in the Senate for the tenth time since 1994. Discrimination has been a significant cause of unemployment and financial difficulty for the LGBT community and is not unlawful in 34 states. Among some advocates, there are increased hopes for passage during this Congress given increasing public support – polling shows 73 percent of the country backing such legislation. (ACLU, April 25; CAP; April 24)


• CoreLogic, Inc. announced this week it has acquired the Case-Shiller home price indexes from Fiserv Inc. for $6 million. Case-Shiller is one of the most recognized measures of property values in the US. (Bloomberg, April 25)

 

For the latest housing and community development news and notes, follow the Enterprise policy team on Twitter: @E_Housing Policy and subscribe to the Capitol Express Newsletter. 

Policy Innovation Series: How Can We Best Preserve Affordable Housing Options for an Aging Population?

By Jeanie Shattuck

@E_HousingPolicy

The demographic trends are clear. The number of older Americans grows more rapidly every year, and the elderly population is expected to double from 36 million in 2010 to over 72 million by 2030. Research has shown that housing stability is a critical piece in maintaining health and general well-being. However, housing options that meet the needs of seniors can be limited, and many seniors are living on a fixed income. Increasingly, individuals are voicing their desire to age in place in their familiar homes and communities. To meet the challenge of providing healthy, accessible housing solutions for an aging population, we must prioritize setting up systems that enable people to live affordably, access needed services, and remain engaged with their communities. These efforts will benefit everyone in the long run and result in higher quality of life, reduced health care costs, and a greater ability to maintain dignity and choice. One such effort is meet this challenge is the creation of Senior Preservation Rental Assistance Contracts (SPRACs).

Over the years, the HUD Section 202 Housing for the Elderly Program has provided affordable housing options for aging adults across the country. Many of these apartments have set rents that are affordable—meaning residents are spending 30 percent or less of their income on housing costs—which is crucial for those on fixed budgets. Unfortunately, there are a significant number of Section 202 properties that were built in the 1970s or earlier that are unable to keep up with the needs of an aging population because they have not been substantially rehabilitated or refinanced in decades. There are often backlogged capital repairs needed, and retrofitting or modernization could improve mobility, access, and health, as well as reduce utility costs.

However, there is a legitimate fear that if owners take on debt to make these repairs and improvements, existing residents will face prohibitively higher rents, effectively forcing them out of their apartments. Thankfully, as a result of recent changes in the Section 202 program, HUD is able to take steps to mitigate this risk.

In December 2010, Congress passed the Section 202 Supportive Housing for the Elderly Act, which provided much-needed reforms and updates to the program. The legislation included the authorization of SPRACs, which are specifically intended to preserve affordability and protect elderly residents from displacement due to refinancing or rehabilitation through this new project-based voucher.

HUD identified over 18,000 unassisted Section 202 units across over 200 properties that are eligible for SPRACs. The units are all in buildings built before 1974 with original interest rates below 6 percent. The property cannot have any red flags—it must have a satisfactory inspection score, with no major health or safety issues, and without any fair housing or discrimination violations. Assistance contract terms are 20 years, providing a sense of much-needed security and consistency for units that are awarded SPRACs.

These rental assistance contracts are a viable solution to an increasingly relevant problem. The ability to obtain SPRACs should allow and encourage the owners of older Section 202 properties to recapitalize or rehabilitate buildings, while safeguarding the existing elderly tenants. However, the SPRACs are still subject to annual appropriations, which could put the program in jeopardy in the future.

In fiscal year 2012, $16 million was set-aside for SPRAC funding, but the program has not yet been implemented. In January 2013, HUD released a proposed application and award process, which garnered a robust response from many industry groups, including a joint response from Enterprise, Stewards of Affordable Housing for the Future (SAHF), Leading Age, and other partners. The letter addressed the proposed awards process and eligibility rules, and highlighted concerns regarding the program’s reliance on the already-competitive 9% Low-Income Housing Tax Credits, sponsor capacity, and requirements related to property conditions and vacancy rates.

SPRACs can help preserve affordable housing through direct provision of rental assistance. However, they are only a piece of the puzzle to creating healthy communities for our growing population of senior citizens. Is this program sufficient in meeting its stated goal of protecting elderly residents from displacement as a result of building improvements? What other challenges do Section 202 properties and residents face? What other policies, financial tools and other solutions could we employ beyond rental assistance?

 

A Light at the End of the Tunnel: Congress Passes Sandy Supplemental Relief Package

By Jeanie Shattuck

President Obama signed H.R. 152, the Disaster Relief Appropriations Act of 2013 into law on January 29, providing approximately $50.5 billion for recovery and rebuilding activities for regions impacted by Hurricane Sandy. The funds will go a long way in helping people hit hardest by the storm rebuild their lives and communities.

“The devastation unleashed by Sandy reminds us of the importance of having a safe place to call home, especially during frigid winter months,” said Enterprise Community Partners President and CEO Terri Ludwig in a statement. “The passage and signing of the Sandy supplemental is a large step toward ensuring that there’s a light at the end of the tunnel for suffering families and individuals.”

The House passed the bill on January 15, followed by the Senate on January 28, marking one of the first major actions for both institutions in the 113^th Congress. Together with the $9.7 billion in additional borrowing authority for the National Flood Insurance Program enacted earlier this month, total funding for Sandy recovery exceeds $60 billion. The New York and New Jersey delegations spent considerable time and energy ensuring passage of the bill, despite the current fiscal environment and recent budget debates.

The legislation includes $16 billion in special disaster Community Development Block Grants (CDBG) for states impacted by disasters in 2011, 2012 and 2013. Disaster CDBG funds are particularly useful to communities because of the flexibility built into the program, which allows localities to respond to their most pressing needs. HUD is expected to release significant allocations of these funds as soon as possible.

Enterprise is strongly committed to recovery and resilience as we continue to work closely with our local partners, members of Congress and the Obama administration. We must ensure that communities are repaired and rebuilt efficiently and sustainably, taking their housing and services needs into consideration, particularly those of low- and moderate-income families. Further, we must prepare for future crises and adequately equip local organizations with the resources and skills to respond and protect all residents, especially the most vulnerable, in the event of future emergencies.

Hurricane Sandy Recovery: Federal Response and Resources

By the Enterprise Policy Team

Updated 12/5/12

Federal Response

There have been numerous federal actions specifically intended to provide relief and assistance to those affected by Hurricane Sandy. Additional actions will be added to this overview, as announced. 

Housing and Urban Development

On October 30, HUD announced a 90-day moratorium on foreclosures and forbearance for FHA-insured home mortgages in New York, New Jersey, Connecticut, and Rhode Island. Further, HUD is allowing and strongly encouraging states to reallocate available federal resources like HOME and CDBG to help the people and communities in the disaster areas. Eligible uses of funds include services for victims and the rehabilitation or replacement of housing. FEMA also temporarily increased the HUD FMR rental assistance amount by 25 percent, enabling more impacted households to access available housing resources and reflecting the higher housing costs of New York and New Jersey.

On November 9, HUD waived restrictions to allow families or individuals under the age of 55 to live in housing for older persons. Developments can choose to admit children and impose time limits for evacuees, but HUD has encouraged operators to be as sensitive and responsive as possible, for as long as needed.

For Public and Indian Housing programs, HUD has provided a checklist for PHAs, TDHEs, tribal or local government officials to utilize to request applicable and necessary waivers. The options include deadline extensions for capital funds, waivers for caps on downpayment assistance or services, and modifications to reporting requirements, among many others. Unless otherwise noted, the waivers are in effect for 12 months.

On November 30, HUD waived certain requirements for multifamily housing programs in order to safely and stably house families and individuals that have been displaced by Sandy as efficiently as possible. Owners may receive vacancy payments for up to 80 percent of contract rent by emailing their Multifamily Hub Director and stating the request for December 2012 and January 2013. Alternatively, owners that have business interruption insurance may opt to receive insurance payments. (The notice clarifies that owners cannot receive both vacancy claims and insurance payments.)  HUD will provide the expected Housing Assistance Payments for November 2012; however, owners are encouraged to refund tenant rental payments received for units that were uninhabitable.

Multifamily owners can further assist Project-based Section 8 residents by signing a temporary lease on behalf of the resident in a building that ready for occupancy, and can begin to voucher for the contract rent for that unit. Residents are still responsible for their portion of the rental payment during this time, and all Section 8 provisions apply when residents return to their original units, once fully repaired and inhabitable.

On December 4, HUD waived certain requirements for public housing authorities (PHAs) around calculating rental assistance. In order to provide greater flexibility for PHAs and options for families in need of housing, HUD increased the payment standard amount a PHA can establish from 110 percent of the published fair market rent (FMR) to 120 percent. Further, HUD waived the requirements that PHAs must justify higher payment standards with rental housing survey data or by other methods. 

Treasury and Income Revenue Service

Treasury and the IRS announced that they will temporarily suspend the income requirements in the Low-Income Housing Tax Credit program in an effort to identify and utilize all possible housing options. Victims of Hurricane Sandy do not need to qualify as low-income in order to reside in Housing Credit units, and may remain in these units until November 30, 2013.  State housing agencies will dictate the applicable period of suspension for each  housing project, but it cannot extend beyond November 30. After the temporary suspension period, a displaced family or individual may continue to occupy the unit if they are eligible under the standard income requirements.

For the 60,000 homeowners in the New York metro area that are participating in the Making Home Affordable Program, Treasury reminded mortgage servicers that the program provides a minimum of three months forbearance for any property or homeowner located in a disaster area. Treasury further encouraged servicers to be understanding and flexible with borrowers in the disaster area who may have missed a payment or need additional time to provide documentation. 

The Treasury and IRS have also implemented a number of tax relief efforts for those affected by Superstorm Sandy, including leave-based donation programs, postponing deadlines for filing taxes, and excluding disaster relief payments as income.

Government-Sponsored Enterprises

GSEs Encourage Servicers to Support Impacted Borrowers: Fannie Mae and Freddie Mac have both issues statements authorizing and encouraging servicers to adopt policies to help victims of Hurricane Sandy with GSE loans. Fannie Mae recommended a 90-day suspension of mortgage payments, regardless of whether a servicer has been in contact with the affected homeowner. Freddie Mac recommended that servicers waive penalties or late fees and should intentionally neglect to report forbearance or delinquencies to the credit reporting agencies for borrowers affected by Hurricane Sandy. Further, Freddie Mac advocated for the suspension of foreclosure proceedings for up to 12 months.

Department of Agriculture

USDA Offers SNAP Replacements and Waives Prohibitions: USDA has already distributed millions of pounds of food to households and emergency centers in the affected states, in cooperation with the Red Cross and the Salvation Army. In addition, USDA has lifted the prohibition on purchasing hot foods with SNAP benefits, allowing recipients to purchase ready-to-eat foods. USDA has also extended deadlines to report food previously purchased but lost in the storm and replaced lost benefits to program participants in a wide range of states, from Virginia and Maryland to Connecticut and New York.

Summary of federal resources follows the jump-

POLICY INNOVATION SERIES: “Grand” Designs for “Grandfamilies”

­By Jeanie Shattuck, Senior Policy Analyst

 

Since October 2011, Enterprise has been engaged with five public housing authorities (PHAs) in Atlanta, Chicago, Denver, Milwaukee and New York City to thoroughly investigate barriers to remaining in one’s long-term home or community, also known as “aging in place.”

Given the economic climate in recent years, many of the obstacles we have heard are distressing but unsurprising – seniors experiencing foreclosure or forced early retirement, insufficient funding for service programs and coordination and the ongoing struggle for PHAs to keep up with capital improvements. We have also begun to grapple with unanticipated housing arrangements like the increasing number of “grandfamilies" – where grandparents are the primary caretakers for their grandchildren.

We are working on a number of initiatives to improve the quantity and quality of senior housing, as well as improve the availability and access to services across a spectrum of needs. The concept of grandfamilies, however, requires us to expand our understanding of what services should be included on that spectrum. 

The 2010 U.S. Census reported that nearly eight million children are living with grandparents or other relatives, a number that has increased significantly in the past decade. Further, the Census data show that more than a quarter of grandfamilies live in overcrowded conditions and one in six are severely cost-burdened.

Elderly housing is often unsuitable for children due to size, cost, and age-restrictions, but finding an alternative, affordable housing unit that provides appropriate services and amenities for both youth and elderly is extremely difficult. The needs in these scenarios range extensively – from physical structures like accessible floor plans and bathrooms adapted for persons with disabilities to community-based support for caregivers and children, including tutoring or other after-school activities.

In 1998, Boston was the first city to develop housing dedicated to grandfamilies, and local solutions have been slowly expanding ever since. The stories that have surfaced from developments in New York City, Baton Rouge, Kansas City and others are filled with gratitude and optimism and a “strength-in-numbers” attitude. However, greater awareness of this issue and viable, scalable models are still critically needed. Solutions for rural areas are lagging behind; the majority of grandfamilies are located in urban areas, but the needs and circumstances of rural grandfamilies must also be addressed.

The federal government has provided some encouragement and reinforcements to tackle this issue. The LEGACY Act (Living Equitably: Grandparents Aiding Children & Youth) was passed in 2003 and provided a limited number of grants to develop housing to serve grandfamilies, as well as directives around data capturing and staff training. This program has not been funded again, but research on the demonstration projects will likely help inform future developments.

Many public housing authorities are also working to provide support to this population. Some PHAs have created special tenant-based Section 8 vouchers for grandfamilies, and others have explicitly allowed grandfamilies to use Section 8 Family Unification Program vouchers. Some localities have built new developments, while others are exploring adaptive reuse projects – like Baton Rouge, Louisiana, which rehabilitated and converted a nursing home into grandfamily housing.

This combination of large and small innovations – like the LEGACY ACT or modifications to eligibility requirements for Family Unification vouchers – will go a long way toward building the movement to assist grandfamilies, but we must continue to think creatively and identify best practices in this space. Grandparents caring for grandchildren is a reality in our country, and we should support systems, services and policies that enable non-traditional families to thrive.

Are there other examples of innovative supports for non-traditional families that deserve to be highlighted and/or can be brought to scale?

 

Deciphering the Debt Deal

By Jeanie Shattuck

At the beginning of August, Congress passed the Budget Control Act of 2011, a bill which increases the debt ceiling and requires definitive action to reduce the national deficit. Though the myriad details of the deal are still emerging, we’re going to break down the elements of the plan that we do know and briefly discuss the potential impact on the groups and programs we care about.

First and foremost, the deal raises the debt ceiling by $900 billion in the short term, avoiding the risk of defaulting on the national debt. To ensure that we do not come this close again, the ceiling will be raised again by $1.2 trillion to $1.5 trillion—depending on how the deficit reduction and balanced budget amendment scenarios play out.

The bulk of the bill focuses on spending and deficit reduction, divided into two stages. The first stage is fairly simple—the bill implements spending cuts and caps, resulting in $917 billion in overall cuts by 2021. The annual reduction will impact both defense and domestic spending, and the amount will increase each year, starting at about $44 billion in Fiscal Year 2012 (FY12). In the end, defense spending will bear about 40% of this reduction at $350 billion.

The second stage is less straightforward. The debt ceiling will be raised by $1.5 trillion if:

A twelve-member bipartisan committee introduces a detailed proposal to achieve at least $1.5 trillion in deficit reduction by November 23, and passes this legislation by December 23, 2011

OR

Congress passes a balanced budget amendment between October and December 2011.

If neither of these occurs, the debt ceiling will be raised by $1.2 trillion, and an automatic $1.2 trillion sequester (or across-the-board cut) will go into effect, impacting defense and domestic discretionary spending equally. This option, referred to as the “trigger,” is designed to motivate the two parties to compromise, as there are unappealing outcomes for each.

What does this mean for housing and community development—particularly lower income households?  In the near term, there is some good news. The bill requires greater balance in the cuts to domestic discretionary and defense spending, but the House budget resolution (passed earlier this year) cut far more from domestic discretionary. Therefore, an estimated $20-30 billion will be restored to the domestic discretionary budget for FY12. The precise amount is yet to be determined, but the allocation for Transportation, Housing and Urban Development (THUD) will receive a bump up, relieving some pressure on housing and community development programs.

In addition, there is comfort in the fact that if a deal cannot be reached and the trigger is set off, a list of critical programs for low-income individuals and families are exempted from the undiscriminating cuts. Included on this short list are Medicaid, Social Security, unemployment insurance and food stamps. Recipients of Medicare will be protected, but not providers. No HUD programs have been exempted.

Stay tuned—every day, we’re gaining a clearer picture of the Budget Control Act of 2011 and how it will impact housing and community development and the people we seek to serve. If you’re hungry for more information now, the Center for Budget and Policy Priorities has done robust, comprehensive analyses of the plan from numerous angles, and we recommend checking it out. 

Incisive Homelessness Report Surveys Road Ahead

By Jeanie Shattuck

In January, the National Alliance to End Homelessness released a comprehensive report on the current state of homelessness in our country. This perceptive, data-driven analysis identifies the causes and implications of homelessness from a broad, national perspective, and also drills down to discuss how Americans are experiencing homelessness on an individual basis. Overall, the number of homeless people and families in the United States has increased since 2008, and without a doubt, the recession has contributed to this rise. The report highlights startling trends, like the increase in cost-burdened households below the poverty line in forty states*. 

Certain economic conditions—high unemployment, low wages, high foreclosure rates and low supplies of affordable housing—naturally augment the incidence of homelessness, and these conditions are concentrated in states like California, Nevada and Florida. Despite technical indications of economic recovery, more Americans will likely be impacted through lost jobs and lost homes in the coming years.  

 
Map created by the National Alliance to End Homelessness   

Signs of hope are found in the 270 communities (and counting) that have implemented strategic plans to end homelessness, with a widespread focus on prevention and rapid re-housing. A concrete example of inspiring work in progress is Common Ground’s 100,000 Homes Campaign, which seeks to help 100,000 chronically homeless people by July 2013. Enthusiastically supported by Enterprise, the Alliance, and other national partners, Common Ground provides tools and resources to communities across the country to address the housing and service needs of their most vulnerable populations.

Read the report and share your thoughts on how housing developers can best use this information to expand the supply of housing for the homeless. There are those who point to the foreclosure crisis as evidence that the housing market is overbuilt and that increasing the supply of housing is unnecessary and even counterproductive. How should community developers respond to this assertion?

* A cost-burdened household spends more than 50 percent of monthly income on rent or a mortgage.