Thursday, September 29, 2011

If Partnership is the New Leadership – the YLAH Perspective

by Carolyn Reid, Young Leaders in Affordable Housing

Young Leaders in Affordable Housing (YLAH) members gathered on Tuesday for a discussion with a distinguished panel of mentors as part of the Solutions for Sustainable Communities" 2011 Learning Conference on State and Local Housing Policy agenda. Rick Cohen, National Correspondent for The Nonprofit Quarterly guided the discussion based on findings from his recent “New Voices in Community Development” article (subscription required). The piece is based on commentary from a dozen young people working in community development from all over the US.

We all nodded when Rick summarized the reasons that we get into this field in the first place: we believe in working for social change that will make the world a more just place; we want to apply creative solutions to real problems; we want a meaningful career. While the discussion turned into a frank dialogue of generational hubris – “we are educated and we have ideas, just give us a shot” versus “we started this movement before you were born, put your head down and learn something” – the content of the conference itself spoke directly to our aspirations for creative work.

If there was one overriding theme in the conference, it was that collaboration is the way forward; we need to cut across agencies, institutions, and administrative boundaries to progress toward sustainability. The point was underscored in the Federal Policy Plenary, where members of the Partnership for Sustainable Communities explained the challenges of silo-busting (or perhaps silo cracking?) at the federal level, to the Town Hall Plenary where DC region leaders from state jurisdictions expressed frustration in overcoming de jure boundaries that don’t reflect the de facto region.

I spoke with a few attendees about the fact that, while there was a housing connection in every session, this was not just a housing conference. Here’s just one example, from the Tuesday session, Meeting Community Needs for Services and Education. During the session, Justin Walker shared the Rainbow Housing Assistance Corporation’s unique approach to stabilizing affordable multifamily housing communities by providing resident services. In his description, Justin emphasized a phrase that is quickly reaching the viral tipping-point “partnership is the new leadership,” attributed to the President of the Rockefeller Foundation, Judith Rodin.

A quick example of Rainbow’s Work: Haverstock Hills, a 700-unit development in Houston, had high-turnover and obvious gang problems. When Rainbow came in, they partnered with the District Attorney’s office to create a safe zone that encompassed a nearby elementary zone, and even put a DA office onsite. This partnership, along with the opening of a community center with a computer lab and continuing education resources, has been critical to turning Haverstock Hills around.

What’s my point? If collaboration and holistic thinking are part of this new normal we keep hearing about, then YLAH members should be encouraged that continued work in community development will allow us to engage our creative potentials to initiate social change. In other words, our lofty dreams of self-actualization in the workplace are alive and well (despite the economy, cough).

Secretary Donovan draws Solutions for Sustainable Communities to a close

As an outstanding end to a successful Solutions for Sustainable Communities: 2011 Learning Conference on State and Local Housing Policy, Secretary of Housing and Urban Development Shaun Donovan addressed participants and asked for their help in vocalizing the benefits of sustainable planning and development to federal leaders.

Donovan discussed the already successful work of the Partnership for Sustainable Communities, particularly HUD’s Sustainable Communities Regional Planning and Community Challenge grants. He highlighted the strong work being done in metropolitan areas like Austin and rural communities like a Native American tribe that is using the funding to create their first zoning code. He also showed the strong need for federal support by announcing that HUD had 500 applicants for their second round of Sustainable Communities grants and that the winners will be announced in the coming weeks.

Donovan pointed out that we are able to predict the life expectancy of a child by the neighborhoods in which it is born. To correct such injustice, he highlighted the need for programs, including the Sustainable Communities Initiative, Choice Neighborhoods, the Rental Assistance Demonstration program and Project Rebuild, a new initiative in the President’s jobs-agenda to stabilize neighborhoods building off the successes of the Neighborhood Stabilization Program, that will help advance the goals discuss throughout the conference to create strong, vibrant and diverse communities.

Finally, he re-echoed the need for state, regional and local partners to share their successes and express the need for additional federal support for these initiatives. He asked participants to support the recently reintroduced Livable Communities Act as well as legislation authorizing the Choice Neighborhoods Initiative, both sponsored by Senator Robert Menendez (D-NJ). He also asked participants to stay engaged in the ongoing appropriations discussions and to support additional funding for these critical programs.

Donovan’s inspirational words encapsulated the great discussions and debates that have been a part of the last three days and also highlighted the need for continued partnerships and collaboration across all levels of government.

Read the full text of Donovan's address at Solutions for Sustainable Communities

Transforming Tysons Corner

by Emily Salomon, Center for Housing Policy

As part of a mobile workshop offered during the Solutions for Sustainable Communities conference, participants toured Tysons Corner in Fairfax County, Va., to learn first-hand about a massive redevelopment project that aims to transform a currently sprawling job center into a mixed-use center with affordable housing around five planned metrorail stops. Tysons Corner is a 1700-acre area currently consisting mostly of office parks, commerical strip malls, and two large indoor shopping malls. The Tysons Corner redevelopment aims to bring 200,000 jobs and 100,000 residents to the area, balancing out the existing housing/jobs mismatch and providing opportunities for households of all incomes near transit.

Mobile workshop participants survey a scale
model of the Tysons Corner area
During the bus ride out to Tysons, mobile workshop guides, Stewart Schwartz, Executive Director of the Coalition for Smarter Growth and Michelle Krocker, Executive Director of the Northern Virginia Affordable Housing Alliance, provided an overview of the five-year, multi-stakeholder planning efforts to develop and approve a Comprehensive Plan for Tysons. Ms. Krocker spoke of her involvement on the Tysons Corner Affordable Housing Task Force and to ensure affordable housing was considered as an integral part of the redevelopment. The plan requires that 20 percent of all residential development in Tysons Corner serve households within 50 to 120 percent of area median income. To support this goal, the Fairfax Board of Supervisors approved a linkage fee of $3 per square foot of non-residential developent in Tysons, which is also included in the plan.

Passing through the Rosslyn-Ballston Corridor in Arlington County, a nationally recognized example of transit-oriented development, Mr. Schwartz described how Fairfax County is modeling their redevelopment effforts off of the success of the development activity in its neighboring county.

In Tysons, the tour witnessed the construction of the Metrorail extension that already begun, along with the large office parks and surface parking lots that dominate the area. The group visited the Dulles Corridor Metrorail Project offices to view a scaled model of the entire Tysons area to fully grasp the scope of the redevelopment project and location of the future metro stops. There, the group was joined by Linda Hollis of the Fairfax County Planning & Zoning Department, and Jim Edmondson of the E&G Group, a local housing development firm. Ms. Hollis presented on plans to rezone existing parcels of land to fit the overall vision for the area and provided many renderings of what is planned for various parcels within Tysons Corner. Mr. Edmondson discussed the challenges of meeting the County’s affordability requirements, pointing to examples of how partnering with the city and leveraging the linkage fee can overcome some of these challenges.

The Transforming Tysons Corner mobile workshop was information-packed, and provided the opportunity to see first-hand how the key themes of Solutions for Sustainable Communities are being applied on the ground to create a more sustainable and equitable Tysons Corner.

NHC and the Center would like to thank Jim Edmondson, Linda Hollis, Michelle Krocker, Stewart Schwartz, and Emily Shaw of the Dulles Corridor Metrorail Project for their cooperation in this mobile workshop.

Wednesday, September 28, 2011

Live from Solutions for Sustainable Communities: Town Hall Plenary Recap

by Laura Williams, Center for Housing Policy
The National Capital Region, including the District of Columbia and surrounding counties, is a dynamic region where local governments understand the importance of collaboration. At the Town Hall Plenary local officials from the District of Columbia, Prince George’s County, Md., Alexandria, Va., Fairfax County, Va., and Arlington County, Va., discussed the challenges and opportunities in developing sustainable and inclusive communities for the entire region.

All of the leaders agreed that now, in particular, is a time to continue investing in the region, despite financial set-backs; it just requires more creativity. Lost funds can be made up for to some extent with greater cooperation and by leveraging each others’ resources. Local nonprofit organizations, business groups and advocacy groups can also be essential partners when it comes to finding creative solutions. Cooperation also helps the region work together to attract new businesses and develop affordable housing as a whole, rather than competing with one another for new development.

In particular, leaders mentioned the Washington Metropolitan Area Transit Association (WMATA) as their “golden egg”. The connectivity and opportunity it provides are essential to keep the region moving and developing, but it is often difficult to make essential funding decisions at the local level for the regional service. While Arlington, Fairfax and Alexandria make their funding decisions at the local level, in Maryland the state controls the funding for WMATA on behalf of Prince George’s and Montgomery Counties. And the federal government, which brings hundreds of thousands of residents into the District every day on Metro to work, provides no direct support to the system.

This theme of negotiating between different levels of government was recurring – the NCR not only involves several local governments working together, but two different states and the federal government. It can be a difficult endeavor, but is the key to this vibrant region.

Tuesday, September 27, 2011

Agencies highlight progress and challenges in collaboration

by Ethan Handelman, National Housing Conference

Today’s Federal Policy Plenary brought into sharp relief the progress made and challenges still to face in collaboration among key federal agencies. The panel, held during the luncheon session of the Solutions for Sustainable Communities conference, brought together John Frece of the Environmental Protection Agency, Beth Osborne of the Department of Transportation, and Stockton Williams of the Department of Energy. Their moderator was Julia Stasch from the John D. and Catherine T. MacArthur Foundation, one of the presenting sponsors of the conference.

Panelists highlighted the progress made at an operational level to build cross-agency collaboration into the culture. Stockton Williams observed the by building capacity within agencies, we’re creating an “institutional understanding of what we’re trying to achieve.” John Frece pointed out the cost effectiveness of the collaboration. As his agency has tracked costs, they’ve found that they’re “not doing additional work, just doing it arm-in-arm with the other agencies.” Beth Osbourne highlighted that collaboration has made clear the need for competitive, rather than formula, grant programs, because “the way you really innovate is engage the competitive spirit of this country.”

Challenges remain, as acknowledged by the panelists and highlighted by some questions from the audience. From statutory incompatibilities (e.g., the HUD grant requires something that the DoT grant forbids) to the pace of action, there is much work yet to be done. There was a clear consensus among audience members, however, that they are pleased with the direction of change and hope for more, even in an environment of shrinking federal resources.

Indeed, the TTHUD appropriations bill that came out of the House Appropriations Committee explicitly excluded funding for new sustainable, livable, or green community development programs. We need to reinforce with all of our legislators the concrete benefits that come from sustainable communities across America: better health, more affordable housing, less traffic congestion, better environment and overall more livable communities. Nothing speaks louder than proven benefits in the home state or district.

Monday, September 26, 2011

Mayors discuss key themes for creating sustainable communities

by Sarah Jawaid, National Housing Conference

Solutions for Sustainable Communities: 2011 Learning Conference on State and Local Housing Policy kicked off today, Monday, September 26 with a conversation between former mayor of Meridian, Miss., and president of Reconnecting America, John Robert Smith; and current mayor of Nashville, Tenn., Karl Dean.

Smith moderated the panel and shared a statement that being mayor can be the best or worse job as an elected representative because of the direct impact initiatives have on a community. Using his example as mayor of Meridian as a starting point, Smith asked Mayor Dean a series of questions on Nashville's vision, including expanding transit options, infrastructure improvements, job creation, private sector investment, regional coordination, and green initiatives.

Mayor Dean highlighted the importance of transit investments to stay nationally competitive, citing Charlotte and Austin as examples of cities who have built light rail lines in the last two years. He also said that cities cannot wait for federal funding to aid these initiatives. Cities need to figure out how to cobble together resources to make transit projects happen.

Nashville has set a goal to become one of the greenest cities in the Southeast by encouraging biking/walking, green building and a $5 million investment in open space conservation. In addition to this push for environmental initiatives, Mayor Dean stated the importance of increasing density in the sprawling city so people can drive less to get to work and have better access to goods and services. The addition of transit lines will unquestionably bring up opportunities to build more dense around transit stations.

Affordable housing around transit stations is also an area of importance for the Mayor. He said the proposed cuts in federal housing programs such as CDBG and HOME grants could be catastrophic for the creation of affordable housing, stating the need for a dedicated funding source.

Mayor Dean also discussed the importance of regional coordination, highlighting an initiative called "The Power of 10" which brings together MPOs to learn from each other on transportation issues, land use, infrastructure, open space conversation, air and water quality/quantity and regional economic competitiveness.

In the Music City, Mayor Dean has a vision to make a compelling downtown area that is both economically vibrant by creating jobs for 50% of the economy based in the hospitality industry and a center for arts and culture. The city secured private financing for the Omni Hotel in downtown which is connected to an expansion of the Country Music Hall of Fame Museum and a convention center funded mostly by hotel and motel taxes.

The opening plenary session was sponsored by AARP Foundation, represented by Vivian Vasallo, who welcomed the crowd and stated the importance of ensuring the aging population has access to healthy and safe communities. The Ford Foundation and conference sponsor was represented by Lisa Davis who concluded the session with closing remarks on Foundation's work through its Metropolitan Opportunity Initiative.

Why we seek Solutions for Sustainable Communities

by Blake Warenik, National Housing Conference and Center for Housing Policy

Today marks the start of NHC and the Center's 2011 learning conference, Solutions for Sustainable Communities. As folks here in Washington file into their chosen session series on the fundamentals of how to build equitable, sustainable and compact communities, it's important to think about why these new types of communities are important.

Transportation Secretary Ray LaHood created a video message encouraging attendees to the conference to explore the ways in which all of us in policy fields related to housing, transportation, environment, planning and government have the same goals for building communities that integrate all the features residents will need to enjoy livable communities in the face of striking economic and demographic trends. Ultimately, LaHood says, we'll have to work together to create these communities. Watch below:




Please keep checking back for more content live from Solutions for Sustainable Communities.

Thursday, September 22, 2011

“Golden Years” Should Not Refer to the Cost

by Keith Wardrip, Center for Housing Policy

In the last week, I have had the opportunity to attend two very different forums dealing with housing for older adults. The first was a small gathering of housing researchers, advocates, and developers asked to identify the most pressing research questions in the field, and the second was a regional conference hosted by a large Area Agency on Aging. The forums and their attendees were very different, but together, they provided a great overview of the current housing issues facing older adults.

Reflecting on these events, it seems to me that as a society, our objectives are four-fold:
  1. to increase the stock of supportive housing affordable to low- and moderate-income older adults;
  2. to modify inaccessible homes that no longer meet residents’ needs but are otherwise affordable and appropriate;
  3. to provide services in existing communities where it is cost-effective; and
  4. to ensure that where services are not provided on-site, older adults have the means to travel to them.
Expanding public transportation is a necessary component of achieving the last objective, but it is not sufficient in and of itself because public transit usage is low even among older adults with access to it. Thus, attention must be given to ensuring that transportation options are appropriate, safe, provide access to important destinations, and are promoted throughout the community.

The greatest challenge to achieving these four objectives is filling the gap between the market-rate cost of supportive housing and the all-too-often minimal resources of those who need it. Roughly 9 percent of adults over the age of 65 live in poverty, and more than one-third earn less than twice the poverty level. Setting aside for a moment the $39,000 price tag for a year in an assisted living facility, even the $18 to $19 hourly rate for receiving services in the home is out of reach for many. Thus, it should come as no surprise that when health care and long-term care costs are considered, fully 65 percent of older adults are at risk of not being able to maintain their standard of living after retiring.

Many of America’s older adults do not have the financial resources to afford the appropriate mix of housing and services that they need to age independently in their golden years. Instead, they must choose either a Medicaid-funded stay in a nursing home or going without the services they need in a home that can no longer accommodate them. They deserve better options.

The Senate FY 12 T-HUD bill by the numbers

by Clare Duncan, National Housing Conference

Yesterday the Senate Appropriations Committee marked-up its fiscal year 2012 Transportation and Housing (T-HUD) budget, following a markup by the THUD Subcommittee on September 20th. The bill includes $55.3 billion for both the Department of Transportation and the Department of Housing and Urban Development (HUD), $100 million less than enacted in FY 2011. The House FY 12 THUD bill provided $55.1 billion for these two agencies, which passed the House Appropriations THUD Subcommittee on September 8. There was one manager’s amendment that passed during the committee mark-up but as of this posting details have not been released.

As with the House FY 12 THUD bill, there’s good and bad news for housing programs (recognizing that in this budget environment, flat funding counts as good.)

The good
  • Tenant-based and project-based Section 8 rental assistance would be fully funded, with $18.9 billion and $9.4 billion respectively
  • Level funding for homeless assistance at FY 2011 levels.
  • $125 million for housing counseling, including $60 million for HUD’s housing counseling  (which was cut in FY 2011) and $65 million for the National Foreclosure Mitigation Counseling program
  • $90 million for the Sustainable Communities Initiative
  • $120 million for the Choice Neighborhoods Initiative
The bad
  • The Community Development Block Grant (CDBG) program and the HOME program would be cut severely from FY11 enacted levels, deeper than in the House FY12 THUD bill, receiving $2.85 billion and $1 billion respectively
  • The Section 202 program would be cut from FY11 enacted levels receiving $368 million, a sharp contrast to the House bill, which would increase funding for the program. The Section 811 program would be funded at the same level as FY11 but is also lower than the House bill, which also increased funding for the program.
  • The public housing operating and capital funds would both be cut from FY11 enacted levels, although not as much as in the House bill.

The House and Senate continue to work to pass these appropriations bills, which will likely be through one omnibus bill.  However, it is unlikely that any of the FY12 appropriations bills will pass both chambers before the end of the fiscal year on September 30, requiring another short-term continuing resolution to keep the government running. For more information, please see the Senate bill summary.

FY 2012 Budget Chart for Selected HUD Programs (in millions of dollars)

FY11 Enacted
House Subcommittee Bill
Senate Subcommittee Bill
Tenant Based Rental Assistance
18,308
18,468
18,872
Project Based Rental Assistance
9,257
9,429
9,419
Public Housing Operating Fund
4,617
3,862
3,962
Public Housing Capital Fund
2,040
1,532
1,875
Homeless Assistance Grants
1,901
1,901
1,901
Section 202 - Elderly
399
600
368
Section 811 - Disabilities
150
196
150
CDBG (formula grants)
3,336
3,501
2,851
HOME
1,607
1,200
1,000
Sustainable Communities
100
0
90
Choice Neighborhoods
65
0
120
HOPWA
334
334
330
Housing Counseling
0
0
60
*green equals higher funding than FY11 enacted and red equals lower funding than FY11

Wednesday, September 14, 2011

Strong Housing Policy is Also Foreclosure Prevention Policy

by Maya Brennan, Center for Housing Policy

As the foreclosure crisis emerged, many in housing policy elevated foreclosures as a separate issue in need of attention. Foreclosures, though, are not truly separate from the broader housing policy landscape. Policies that increase affordable housing, improve energy efficiency, and allow families to afford housing near transit or job centers all are secretly doing double duty for foreclosure prevention. Strong housing policy is all about foreclosure prevention.

Since foreclosures started to rise rapidly in 2007, the national foreclosure rate has gone from less than 1 percent to approximately 4 percent (with much higher foreclosure rates in some parts of the country). While we continue trying to find immediate foreclosure prevention solutions, we can prevent additional loans from becoming delinquent by crafting housing policies that work for everyone.

How is a policy like promoting sustainable development also helping to prevent foreclosure? It addresses some of foreclosure’s root causes–unaffordable housing, lack of employment opportunities, and high combined household expenses. Strong housing policies ensure that working families are not forced to choose between high household expenses and living somewhere with job opportunities, decent schools, and adequate transit. This means that families’ budgets aren’t stretched thin, and they can afford to pay the mortgage or rent each month and may even be better able to withstand a temporary job loss.

Foreclosure prevention policies are hiding all over the housing world. Even rental affordability policies and zoning policies that allow a diversity of housing types help with foreclosure prevention. Studies suggest that more than a fifth of foreclosures involve rental properties. If renters can’t afford housing, then their landlords won’t be able to afford the mortgage either.

As far as zoning is concerned, the connections to foreclosures are numerous. Communities need a variety of housing types for local workers to be able to access an appropriate home for their needs. If single-family for-sale homes are all that exist, families may strain to buy a house they can’t afford just to be close to work or school. And if affordability becomes a problem, zoning restrictions can prevent a struggling homeowner from renting the home (or part of it) and using the added income to pay the mortgage.

Foreclosures and the broader world of housing policy are so interconnected that it is easy to miss the links. As we think about crafting strong housing policies, we should be careful not to forget that affordability and sustainability do more than help families live better today. They also provide protection for families and neighborhoods in the future.

Later this month, Solutions for Sustainable Communities: 2011 Learning Conference, hosted by the National Housing Conference and Center for Housing Policy, will be the thought center for strong housing policies that can build a brighter future – without straining government budgets. To share and learn about out how states and localities can achieve their housing, transportation and environmental goals while reducing overall government costs, join us in Washington, D.C. from September 26 to 28. We may even reduce some foreclosure risks while we’re there.

Tuesday, September 13, 2011

How you can help save the Low Income Housing Tax Credit

NHC Members and Friends,

It’s time to remind your elected representatives just how important the Low Income Housing Tax Credit is to affordable housing. As stakeholders who work with it every day, you know that it is a singularly successful program that produces essential affordable housing and jobs across the country. But in an era of deficit reduction and looming tax reform, we must reinforce the importance of the program with members of Congress. Your voice is needed.

This sign-on letter, which you can read here at NHC.org, represents a national consensus position from the A.C.T.I.O.N. Network (A Call To Invest In Our Neighborhoods)--a national, grassroots coalition focused on maintaining investment in affordable rental housing. Primarily, it highlights the proven success of the Housing Credit program. It also advocates two small but important legislative changes to set a fixed floor rate for the 9% and 4% credit percentages. These legislative proposals are useful in themselves, and they also provide a concrete ways for Congress to express ongoing support for the Housing Credit program.

Housing groups at the local, state, and national levels, including NHC, are all signing on to show their support for this essential program. Please respond to NHC VP for Policy and Advocacy at ehandelman@nhc.org to add your organization as a supporter.

Friday, September 9, 2011

Obama's jobs bill proposes rebuilding neighborhoods and refinancing home mortgages

President Obama unveiled his $447 billion jobs creation bill yesterday in front of a joint session of Congress. Two elements of the broad-ranging speech relate directly to housing:
  • Refinancing relief for homeowners. Summaries of the bill refer to the Administration working with FHFA, Fannie Mae, and Freddie Mac to remove barriers to refinancing in the existing HARP program. No specifics are yet available, and as presented it is possible this may not require legislative action.
  • Rehabilitating homes and businesses. The bill contains a proposal for Project Rebuild, which would deploy $15 billion to renovate vacant and foreclosed homes and businesses. A summary of the bill refers to innovative solutions like land banks, suggesting that this proposal may build on the success of the Neighborhood Stabilization Program.
Any help for housing is certainly welcome, given the significant challenges we face. It remains to be seen whether these proposals will lead to action.

Thursday, September 8, 2011

The good and the bad of the 2012 housing and transportation budget bill

Today the House T-HUD Appropriations Subcommittee held a mark-up of the fiscal year 2012 Transportation and Housing (T-HUD) budget. The bill includes $38.1 billion for the Department of Housing and Urban Development (HUD), a decrease of $3 billion below FY 2011 numbers and $4 billion below the President’s FY 2012 request. The mark-up reflects the amount allocated to T-HUD in the deficit reduction deal, which allocated slightly more to HUD than the previous 302(b) allocation released by House appropriators.

From a housing perspective, there’s good and bad news (recognizing that in this budget environment, flat funding counts as good.)

The good

  • Tenant-based and project-based Section 8 rental assistance was fully funded.
  • Increased funding for Section 202 and 811 ($200 million and $46 million more than last year respectively). However, these two programs had seen decreases over the past several years, so these are still low levels by historical standards.
  • Level funding for homeless assistance at FY 2011 levels.
  • Level funding for Community Development Block Grants at FY 2011 levels.
The bad
  • Severe cuts in the public housing operating and capital funds.
  • The HOME program was cut by 25 percent, and judging by the release form the subcommittee, this was driven in part by recent negative press, despite the HOME program’s proven record of success in creating more than 1 million affordable homes.
  • Elimination of HOPE VI and Choice Neighborhoods.
  • Elimination of the U.S. Interagency Council on Homelessness.
  • Zero funding for the Sustainable Communities Initiative.
  • Zero funding for HUD’s housing counseling program, which was eliminated in the FY 2011 budget. See this housing counseling fact sheet from the Center for Housing Policy summarizing the strong evidence on the effectiveness of housing counseling.
This is not the final word, as the Senate must still weigh in and a compromise, if one is possible, must pass both houses of Congress and be signed by the President. For more information, please see the bill language and summary.

Creating jobs through higher density

In an article in Sunday’s New York Times, Ryan Avent sums up the thesis of his new book, “The Gated City,” which argues that greater economic growth and job creation can be achieved through higher-density urban development. Avent cites studies indicating that, all else being equal, doubling density results in productivity increases of anywhere from a 6 to 28 percent, and describes how the entrepreneurial opportunities afforded by large concentrations of people promote innovation, competition, and delivery of higher-quality products.

As Lydia DiPillis points out, none of these arguments are new—where Avent forges new ground is in drawing the connection between these trends and the need for zoning and land use policies that support higher-density development. In the absence of a regulatory environment that allows for greater density, “innovative” cities (Avent gives the example of San Francisco) cannot meet the demand for new homes, leading jobseekers to pursue lower-cost homes in lower-density communities and shortchanging the U.S. of opportunities for growth and prosperity.

All of this comes as the Center for Housing Policy releases a new policy guide on HousingPolicy.org. The guide highlights tools that states and localities can use to create or preserve affordable homes in places where transportation costs are likely to be low – generally, higher-density areas where families can walk or bike, use public transit, or drive short distances to meet their daily needs. As Avent points out, communities that allow higher-density growth can accommodate a larger number of workers, who can go on to support a more productive economy. Without additional measures to ensure that the new homes produced in higher-density areas are affordable to households at all income levels, we risk leaving behind low- and moderate-income families. Explore the Promote Sustainable and Equitable Development policy guide to learn more about how this may be achieved.

Tuesday, September 6, 2011

Moving Forward: Stimulating the economy through cost-neutral energy-efficient retrofits

by Jeffrey Lubell, Executive Director of the Center for Housing Policy

Here’s an idea for the President and Congress to consider for creating jobs without increasing federal expenditures: use a federal guarantee to catalyze large-scale energy-efficient retrofits that generate 1.3 to 3.7 million jobs and pay for themselves over time through utility savings. If a guarantee fee is charged to cover any anticipated losses, this program could be administered on a largely cost-neutral basis.

My suggestion builds on the relatively straightforward observation that weatherization (air sealing, insulation, duct sealing, etc.) and other low-cost approaches to improving the energy-efficiency of existing buildings (e.g., upgrading of an outdated furnace in a multifamily development) generate significant annual energy savings. These energy savings accumulate so that, over time, they more than pay for the initial costs of the energy-efficient retrofits.

The Department of Housing and Urban Development has a number of pilot initiatives underway to improve the energy efficiency of housing, including the Energy Innovation Fund, and the FHA PowerSaver Program. The 2009 stimulus bill also included major investments in weatherization grants to assist very low-income families and in improving the energy efficiency of affordable rental housing.

These efforts are all useful, but to really move the dial on jobs, we need to go to scale as quickly as possible. In short, we need an effort that markets energy-efficient retrofits to all U.S. households. We won’t reach everyone, of course, but if we reach even five percent of all U.S. households, we’d generate in the neighborhood of $50 billion in expenditures and 1.3 to 3.7 million jobs.

There are three reasons to care about substantially accelerating the energy retrofit process:

1. A dramatic escalation of energy-efficient retrofit activity would generate jobs and stimulate the economy. Estimates from the Department of Energy's Weatherization Program Technical Assistance Center suggest that weatherization activities create 52 direct jobs and 23 indirect jobs for every $1 million invested. So $50 billion in activity would generate 2.6 million direct jobs and 1.15 million indirect jobs. A lower estimate that relies of US Bureau of Economic Analysis modeling would place total job creation from $50 billion in activity at 1.3 million.
 
2. Energy-efficient retrofits save energy, improving the nation’s energy security and reducing emissions of greenhouse gases.

3. By reducing the amount of energy families consume, energy-efficient retrofits help reduce the scope of families’ exposure to rising energy prices, proving an important hedge against future economic distress.

There are many people and organizations that have far more expertise than me on this topic, including the Department of Energy, Efficiency First, Enterprise Community Partners, the Clinton Climate Initiative, and the Energy Programs Consortium. My goal in writing this column is to raise the visibility of this idea and suggest that it warrants a large-scale concerted effort to bring it to scale as quickly as possible.

There are a number of ways this could work. Here’s one idea:

1. Loan Guarantees. The first step would be for the federal government to provide loan guarantees for loans to property owners for energy-efficient retrofits. The guarantee would allow funds to be raised from the private sector to fund energy-efficient retrofits. The government would charge a guarantee fee to cover any projected losses, ensuring cost-neutrality.

New legislation would be desirable and provide maximum flexibility to tailor the program. But a version of this proposal could be implemented using the existing statutory authority of Title I and Section 241 of the National Housing Act. To use existing authority, modest regulatory changes would be needed, such as raising the cap for unsecured Title I loans from $7,500 to $12,000.

2. Large-scale Approach. I’d suggest we think big and aim for providing up to $50 billion in loan guarantees, which would fund energy-efficient retrofits for approximately 6 million housing units nationwide. This back-of-the-envelope estimate assumes that two-thirds of the units are in single-family structures, with an average per-unit cost of $10,000, and one-third of the units are in multifamily structures, with an average per-unit cost of $5,000.

3. Coordinated Delivery. The next step would be for each state to develop a delivery system designed to maximize participation and minimize challenges for consumers. One approach would be to use regional bodies, such as utility companies, to hire and supervise the necessary workforce. Property owners would be offered one-stop shopping, with a single entity doing the work and providing access to the federally-guaranteed financing.

4. On-Bill Financing. The financing would come in the form of a loan that would be repaid through utility surcharges that apply to both the current owner and any subsequent purchasers / renters of the property until the loan is repaid. The term of the loan would extend as long as 20 or 30 years to ensure that the monthly savings from lowered utility payments exceed the monthly costs of repaying the loan. To preserve cost-neutrality, the loans would include charges for interest and (ideally for) program administration.

Among other benefits, on-bill financing would address the split incentives problems that sometimes complicate efforts to improve energy-efficiency by ensuring that the loan payments are made by whomever is benefitting from the reductions in energy use and utility costs.

This approach builds on some existing examples, notably New York’s Green Jobs – Green New York program, which includes many of the features of the system described above, but lacks the federal guarantee needed to take it to scale.

There are of course significant obstacles that would need to be overcome to allow this program to work as desired to stimulate the economy. These include challenges associated with:
  • Authorizing loan repayments through utility bills (though some states have done this already) 
  • Motivating utility companies to act in this unfamiliar role
  • Training and scaling up the necessary workforce
  • Applying consistent, high standards, with appropriate quality control, to ensure that only the most cost-effective retrofit activities are performed and consumers are protected from overcharges
  • Reaching out to consumers and encouraging them to authorize the work
  • Coordinating with the federal weatherization program and energy-efficiency measures funded through ARRA
These are serious obstacles. But with concerted effort and single-mindedness of purpose, they ought to be capable of resolution.

If not now, when?

*    *    *

Join the conversation by commenting on this post.

For information on state and local options for improving the energy-efficiency of existing housing, visit the HousingPolicy.org energy-efficiency toolbox.

To learn more about these and other ideas for improving energy-efficiency and sustainability, come to Solutions for Sustainable Communities: 2011 Learning Conference on State and Local Housing Policy, September 26-28, 2011 in Washington, D.C.