Wednesday, August 17, 2016

No time for nostalgia: Why both parties must focus on housing and opportunity

by Chris Estes, National Housing Conference 

Despite the efforts of many organizations, including at the Republican and Democratic conventions, the shortage of rental housing affordable to lower-income households has not made its way into either of the presidential candidates’ campaign speeches. It seemed during the primaries there was a fair amount of attention on people who are struggling, but only glancing attention paid to housing issues. Last week, the New York Times took both campaigns to task, pointing out their lack of attention to poverty and housing.

It strikes me that when confronting issues of poverty, the default position for campaigns often seems to be to talk about bringing back manufacturing jobs using a model of large-scale production that is not now the norm in the U.S. Today’s American manufacturing is smaller-scale, higher-tech and higher-skilled. Yet somehow this seems to be the only way many candidates address poverty and opportunity. As a field and a movement we must continue to challenge these ideas and educate candidates and policymakers on the central role of housing quality, affordability and location to economic and social success. Imagining that we are somehow going to solve all of our economic and housing issues by bringing back large-scale manufacturing is incredibly irresponsible and unrealistic.

I certainly understand why campaigns, and both parties, resort to this frame. It is much easier to give a simple, nostalgic answer than to more directly confront the problems of poverty, low wages and the systemic barriers that keep people trapped economically. Matt Desmond’s book “Evicted” shines a light on some of these barriers. And as the Washington Post reported recently, these struggles with housing are everywhere, and thus are something the affordable housing community has to be ready to engage in if we are going to get the level of investment and support we need to meet our communities’ housing challenges.

The presidential campaign has featured some attention to these issues. In this CNN op-ed, Democratic vice presidential candidate and senator from Virginia, Tim Kaine, details the Clinton-Kaine plan to address affordable and fair housing. Kaine frames the op-ed around his personal experience as a young fair housing lawyer representing Lorraine, an African-American woman who was denied housing at a similar point in her life as Kaine. Highlights from the policy proposals include expanding LIHTC, increasing rental assistance, funding public housing along with economic development, adding homeownership help and expanding fair housing enforcement. 

While this is encouraging to see, the housing movement should advocate for both parties and both presidential candidates to take leadership on these issues. NHC believes that to be successful, we need both Republicans and Democrats to understand and support the investments and changes needed to improve housing outcomes, and in turn, improve outcomes in economic mobility, health and education.

Wednesday, August 10, 2016

The potential impact of the small-area fair market rents methodology

by Brian Stromberg, National Housing Conference and Jonathan Zimmerman, Public Housing Authorities Directors Association

HUD recently announced a proposed rule that would use Small-Area Fair Market Rents (SAFMRs) to address high levels of voucher concentration instead of 50th percentile Fair Market Rents (FMRs). This change would also shift the geography from Metropolitan Statistical Areas (MSAs) to ZIP codes. Using a finer scale is meant to give voucher-assisted households the means to move into higher opportunity neighborhoods by providing them with enough subsidy to afford rents in such areas. In the process, HUD believes that SAFMRs will reduce the number of voucher-assisted households that reside in areas of high poverty concentration. A preliminary analysis of this change in methodology suggests that it would produce significant variations in funding availability from year to year.

Since 2006, the subsidy funding for voucher programs has been determined by a budget-based renewal formula which uses Public Housing Authorities’ (PHA) Housing Assistance Payment expenditures from the previous year and an adjustment for inflation. This means that even relatively small annual fluctuations in SAFMR calculations (five or 10 percent), may have implications for how the various stakeholders will be able to achieve the goals of the voucher program.
A substantial number of communities served by PHAs stand to be affected by this rule change: HUD estimates that approximately 300 PHAs serving more than 550,000 voucher-assisted households (28 percent) are likely to be affected by its proposed SAFMR rule. Given the potentially wide impact of this rule change, it is important to analyze the ultimate impact of the SAFMR methodology on the affected jurisdictions.

To do this analysis, Jonathan Zimmerman from the Public Housing Authorities Directors Association (PHADA) collected the hypothetical SAFMRs calculated by HUD from 2011 to 2016. Brian Stromberg of NHC then mapped these by ZIP code across 28 of the MSAs that HUD has proposed (excluding the current SAFMR demonstration cities of Dallas, Chicago and New York). These maps show the hypothetical Small-Area FMRs that had annual changes (either increases or decreases) of between five and 10 percent, or greater than 10 percent. The underlying data are for two-bedroom units within the same ZIP code because two-bedroom units are considered the baseline unit size for HUD’s FMR and SAFMR adjustments and calculations.

The data used in our analysis reveal that many of the 1,852 ZIP codes affected by the proposed SAFMR rule would have experienced significant changes in FMR for two-bedroom homes from year to year, had the SAFMR methodology being proposed by HUD been in place since 2011 for the proposed areas. Between 2011 and 2012, 665 ZIP codes would have seen SAFMR changes between five and 10 percent, while 968 ZIP codes would have changed by at least 10 percent. From 2012 to 2013, 858 would have changed between five and 10 percent and 709 would have changed more than 10 percent. The table below shows the full analysis.

5% to less than 10% decrease
More than 10% decrease
5% to less than 10% increase
More than 10% increase
2011 to 2012
2012 to 2013
2013 to 2014
2014 to 2015
2015 to 2016

The analysis presented here is only preliminary and has some limitations to it. A combination of HUD’s SAFMRs along with census tract data would help further identify other possible effects among voucher program constituencies. The purpose of the analysis presented here is to help interested parties get an idea of how annual percentage changes in SAFMR values in the same ZIP code and bedroom size play out over time.

We hope that these data and the maps made from them will inform any comments made on HUD’s proposed rule. While a finer-grain geography would allow for more a targeted implementation of the voucher program, it may also have the unintended consequence of destabilizing the finances of public housing authorities around the country.

HUD’s proposed SAFMR rule is available here. Comments are due Monday, August 15, 2016 and can be submitted on the Federal Register website.

Jonathan Zimmerman joined the Public Housing Authorities Directors Association (PHADA) as a Policy Analyst at the beginning of 2014.  Prior to joining PHADA, Jonathan worked in federally funded rental housing assistance programs for twenty-three years. Jonathan works on legislative, regulatory and administrative matters relating primarily to the Section 8 tenant-based and Section 8 project-based voucher programs.

Tuesday, August 2, 2016

Education, advocacy and action

by Chris Estes, National Housing Conference 

In case you missed it, last week NHC and the Urban Institute released a new rental housing data visualization, “The Cost of Affordable Housing: Does it Pencil Out?” This tool was developed with real construction data from the Denver metro area and is designed to demonstrate the challenges of financing rental housing affordable to households at below-median income levels. We hope it will be a useful resource in your work to educate elected officials, local and state government staff and the public on why programs like the LIHTC and operating subsidies are needed to bring rents to a level low to moderate income households can afford.

Thanks to the Urban Institute for their partnership on this effort and to Ethan Handelman, Rebekah King and Amy Clark of NHC for their work on the project.

We’ve received great feedback from NHC members, Hill staff and affordable housing allies on this tool. People see it as a way to introduce concepts of affordable housing to legislators, community members, students and anyone else just stepping into this policy issue. We hope you will share with us your thoughts on the data visualization and any experiences and impact you have in your education efforts.

We have also learned of other more detailed tools serving related needs. We hope you find them useful, too:
  • NHC Board Member Carol Galante and the Terner Center at the University of California Berkeley produced a Housing Development Dashboard to calculate factors affecting the likelihood of new housing development, and a Policy Gauge showing how much housing will be built. This is a great way to bring land use and regulatory barriers into the affordability conversation. 
  • Our New York affiliate, the New York Housing Conference, showed us a tool created by the Citizens Housing and Planning Council. Inside the Rent, a web-based game that explores why New York City rents are so high, is a great resource for folks working on housing issues in that region. 
  • NHC member Cornerstone Partnership has an Inclusionary Calculator that allows you to create simple, online pro formas for development to show how features of an inclusionary housing program will impact the number of units produced and at what prices. 
I wrote last week in the Wire about the Make Room campaign’s effort to generate one million contacts with members of Congress on affordable housing issues. NHC is proud to join many other national affordable housing and community development organizations in support of this effort. Yesterday the campaign formally kicked off with a national discussion lead by “Eviction” author Matt Desmond.

If you have not visited the Make Room website, please do so. It is a great resource on the shortage of rental housing affordable to below-median income households, and has a convenient “Take Action” section that allows you to send messages to your members of Congress as an individual or on behalf of an organization. See below from Radiah for more details on how to get involved in the campaign.

As we close the books on this year’s gala, we are pleased to announce that 2017’s Housing Visionary Awards Gala will be held June 8 at the National Building Museum. We hope you will mark your calendar and join us in continuing to make this a must attend event each year.

Is gentrification a conspiracy?

News from NHC
by Amy Clark, National Housing Conference

Last month I joined some of my NHC colleagues in St. Paul for a meeting of our Inclusive Communities Working Group. The topic of the all-day meeting was “Gentrification without Displacement,” and I helped launch the day’s discussion with a presentation of an informal analysis of how gentrification is portrayed in local and national media. What stood out for me in these news stories was both the common frame of gentrification as inevitable, and the pain and helplessness expressed by many residents, particularly Black and Latino residents, as they watched their communities change around them.

An anonymous leaflet I found in my neighborhood one recent morning brought these observations to mind. My husband and I rent in a majority Black, middle-class neighborhood in Washington, D.C., and it doesn’t take a gentrification calculator to tell me that yes, we’re gentrifiers. We also love our neighborhood, have become close with many of our neighbors and wouldn’t dream of living anywhere else in this city. The flyer in question reached too deeply into the politics of D.C. neighborhoods to describe in detail here, but it included some lightly substantiated allegations of wrongdoing against formal and informal neighborhood leaders who happen to have been part of the neighborhood’s first wave of gentrification.   

One of the flyer’s specific arguments regarded the leaders’ advocacy for a new dog park in our neighborhood. Americans at all levels of income own dogs, and one imagines the desire to get a dog out of the house and into a fenced area where it can tire itself out crosses racial and ethnic lines as well. But dog parks, like bike lanes and other urban quality-of-life improvements, are powerful symbols of gentrification. It should not be surprising when long-time residents of gentrifying neighborhoods question the motives of city leaders when dog parks and other neighborhood upgrades seem to follow closely the arrival of new, higher-income neighbors.

This type of observation can easily develop into a belief in a greater conspiracy. According to research on the psychology of conspiracy, conspiracy theories arise when feelings inspired by circumstance—alienation from institutions, low levels of trust, heightened sensitivity to threat, a sense of vulnerability—hyper-activate our brains’ natural processes of pattern-seeking and protective suspicion to turn run-of-the-mill activities like new development or government initiatives into something much more sinister. What’s more, “recognition of historically documented, anti-black conspiracies” among African-Americans makes current anti-Black conspiracy theories more plausible to them than to Whites without the same historical knowledge. So for some, a dog park is just another amenity. For others, a dog park can call to mind the wounds of the past that only deliberate collaboration and trust-building can heal. Toss in rapid redevelopment and out-of-reach housing costs, and you have fertile ground for conspiracies to take root.

I don’t think gentrification is a conspiracy. But I do think it’s vital that local governments, community leaders and developers of all kinds understand the symbolic weight of their plans and actions, in addition to the economic impact. As we seek to create opportunity in struggling communities, we must be aware of what our work—not just our words—communicates. 

Thursday, July 28, 2016

The Community Builders’ Historic South End Apartments receive honorable mention at Edson Awards

News from NHC's family of members 
by Radiah Shabazz, National Housing Conference 

The Historic South End Apartments, a development run by NHC member The Community Builders (TCB), recently received an honorable mention certificate in the HUD Preservation category at the 2016 Charles L. Edson Tax Credit Excellence Awards presented by the Affordable Housing Tax Credit Coalition. The award recognizes LIHTC developments that do an exception job of creating strong, healthy communities.

Home to 146 families, the Historic South End Apartments consist of 32 buildings in the South End neighborhood of Boston. They make up the largest intact Victorian residential neighborhood in the country, having been founded in the 1850s. The Community Builders acquired property from Ebenezer Baptist Church in 2013 and provided extensive rehabilitation to what became the Historic South End development.

Prior to receiving the award, all apartments received heating and window upgrades while others were given kitchen and appliance upgrades, new doors and other LIHTC-financed renovations. The historic character of the building was kept intact through the year-long revitalization through its outer detailing and facades.

“TCB is honored to be recognized by the Edson Awards,” Bev Bates, The Community Builders’ Senior Vice President of Development, said in a press release. “We’re committed to creating dynamic communities and preserving and developing high-quality housing for people of all incomes.” 

Headquartered in Boston, The Community Builders is one the nation’s leading nonprofit real estate developers and owners. NHC congratulates them on this prestigious honor!

How affordable housing gets built

by Ethan Handelman, National Housing Conference; Pamela Blumenthal, Urban Institute 

A version of this post originally appeared on Redfin.

Financing affordable housing isn't easy.

Our new interactive tool shows that without subsidies, which can be hard to come by, it's virtually impossible for developers to build homes that are affordable to low- or extremely low income families. That’s because lenders loan money for housing development based on the property’s expected income, and when rents are set to affordable levels, there’s a huge gap between the money needed to build and the money lenders and investors provide.

Yet, new affordable apartment buildings—albeit not enough of them—are built. So how do those developers do it? 

The primary source of development funding is the Low-Income Housing Tax Credit (LIHTC), a federal tax credit administered by state agencies. Most affordable housing that gets built receives an allocation of tax credits. (You'll see in our simulation that the LIHTC tax credits are the default for 100-unit buildings.) 

To receive tax credits, a proposed development must dedicate at least either 20 percent of its apartments to people who earn less than half of the area median income or 40 percent of its apartments to people who earn less than 60 percent of area median income. To be affordable, the rent for those apartments must be no more than 30 percent of the target income level. In practice, most properties dedicate most or all of the units to affordable use.

Yet, even if a proposal meets these conditions, tax credits aren't guaranteed. States allocate tax credits through a competitive process that varies by state and in most places has many more applications than available credits. 

And even if you get the tax credit, as our tool shows, it's not enough. This is where developers have to get even more creative. 

Most affordable housing financing deals involve a mortgage, tax credits, and two or three other sources of money. It's not uncommon, however, for developers to rely on upward of 20 financing sources as they try to fill the gap between what it costs to build affordable housing and the money they have available. 

Some of that money comes from federal block grants like the HOME Investment Partnerships Program or the Community Development Block Grant Program. Some of it comes from foundations, local trust funds, or state housing trust funds. Sometimes states or localities will give developers relief from their property taxes. There are also tax credits for clean energy or for using a historic building. In rural areas, the US Department of Agriculture sometimes subsidizes affordable housing. 
And then there's rental assistance; the promise of federal rental assistance can make a big difference in the development stage because developers can confidently tell lenders and investors that they will have renters and those renters will be able to pay (because the government is actually paying much of the rent). Rental assistance allows developers to serve lower-income renters while still ensuring necessary revenue to operate the property and pay debt service. Still, only about one in four people with low enough income to qualify for housing assistance actually receives it.

The problem with this multitude of funding sources—besides the fact that funds are limited—is the lack of standardization. Most of these tax credits and subsidies are awarded through competitive processes, but those processes often run on different timelines and require different applications. And if you need even three or four funding sources beyond the LIHTC to move forward with a proposed apartment building, winning one grant but having to wait six months for another can be fatal to the project. (Some states, such as Massachusetts and Minnesota, coordinate the state-run grant and tax credit programs to mitigate this problem). 

Funders also change what they want to fund. For example, Illinois recently prioritized housing in areas of opportunity in awarding grants to affordable housing developers. This year, however, they've added priorities for projects that help with community revitalization. Changing allocation year to year is mostly good from a public policy perspective, because it means public dollars flow to highest need. But shifting priorities can pose a challenge to developers looking to build affordable housing, because acquiring land, planning a development, and applying for funds is a multiyear process.

Given that developers must rely on many sources—sometimes as many as 29—beyond a mortgage loan and the LIHTC tax credit to build affordable housing, it's important for states to consider ways to better coordinate the variety of grants and tax relief opportunities available, and it’s important for all levels of government to ensure there are enough subsidy funds available to meet the need. Developers must overcome many obstacles, such as permitting, land acquisition, and gaining community support. Governments should take steps to make sure closing the financing gap is not the obstacle that dooms development.

The Assisted Housing Initiative is a project of the Urban Institute, made possible by support from Housing Authority Insurance Inc. (HAI, Inc.), to provide fact-based analysis about public and assisted housing. The Urban Institute is a nonprofit, nonpartisan research organization and retains independent and exclusive control over substance and quality of any Assisted Housing Initiative products. The views expressed in this and other Assisted Housing Initiative commentaries are those of the authors and should not be attributed to the Urban Institute or HAI, Inc.


Pamela Blumenthal is a senior research associate in the Urban Institute’s Policy Advisory Group, where she and her colleagues work to provide urban policymakers with evidence-based policy recommendations. She is also part of the Metropolitan Housing and Communities Policy Center, with an emphasis on qualitative research and expertise in affordable housing, land-use regulation, and economic resilience. 

Wednesday, July 27, 2016

Could Pokémon Go help affordable housing?

What we're building 
by Ethan Handelman, National Housing Conference

You’ve likely heard about, or even played, Pokémon Go, the new mobile game that overlays imaginary creatures onto a real-time map.  What you may not have heard is that Pokémon Go gives us a new way to think about how and where we live and travel. The map within Pokémon Go highlights public spaces, denser living patterns, transit and other features of places that offer more affordable housing opportunity.

Sure, it’s just a game. It has all the trappings of Pokémon: weird but oddly cute imaginary creatures, a puzzling imperative to collect them in spherical cages, and an undeniable ability to capture the attention of many, many people. By placing all of those features on top of a real-time map that you interact with by actually going places, the game pushes players to engage with the built environment in a way I’ve never seen before in a game. 

Pokémon Go rewards players for visiting Pokéstops and Pokégyms, all of which are pre-marked on the map. In my individual assessment and others’ more thorough review, Pokéstops highlight all sorts of valuable public and private spaces:

There are some businesses, too, including a few bars I won’t mention by name (one is immediately below NHC’s offices). For the most part, though, the game encourages players to appreciate the public spaces that come from investment of public resources.  Near my suburban home, there are just a few Pokéstops: two parks, my transit stop, a church and a hospital.  In downtown D.C., near my office, there are probably five times as many Pokéstops in the equivalent land area. Players will find a lot more Pokémon Go activity, closer together, in more densely settled, walkable communities. Stimulating positive encounters with those environments can help build appreciation for the smarter patterns of development that generate housing opportunities.

And in case you think this is too abstract and disconnected from the world of real estate, know that it’s already becoming a selling point for single-family homes. So, if you play or know those that do, let me know. We’ve already discovered that NHC member CPDC’s Edgewood Commons development is a Pokéstop, but if you find other Pokéstops that connect to affordable housing, please share them with me. I think we’re all curious to see where this goes.