Tuesday, November 26, 2013

Sequestration cuts threaten to undo gains in ending homelessness

by Liza Getsinger, National Housing Conference

It’s not often that we get to shine light on positive housing news coming out of Washington, but the Department of Housing and Urban Development’s (HUD) recently released Point-in-Time (PIT) Estimates of Homelessness for 2013 are certainly something to celebrate. HUD’s recent estimates revealed nationally, homelessness declined 4 percent between 2012 and 2013, and a 9 percent decline since 2007. Since 2010 there has also been a 24 percent decline in homelessness among veterans. This steep decline is likely directly linked to the HUD-VA Supportive Housing (VASH) program which funds housing and clinical services for homeless veterans. The concerted push by the federal government to prevent and end homelessness appears to be working. But as the nation continues its slow and uneven recovery from the recession there is so much more work to be done.

These positive national numbers obscure some distressing local trends where, in places like the District of Columbia and New York, homelessness numbers increased. The most startling increase is in the state of North Dakota where homelessness increased by just over 200 percent between 2012 and 2013. The percentage is so high because of the state’s relatively low homeless population, which increased from 688 to 2,069 this year, but the increase is dramatic nonetheless. The state’s oil and gas boom has contributed to housing shortages, with the demand for affordable housing far outpacing the supply. Other states that saw increases over the last year are California, South Carolina, and Massachusetts, while Florida, Colorado, and Texas saw substantial declines. Check out HUD’s state tables to investigate trends in your own state.

The differences in state counts are driven by a combination of local factors such as population distribution, funding sources, and prioritization of housing and homelessness issues. For example, localities with a more robust shelter system may have higher counts because it is easier to count the sheltered rather than unsheltered. And with the number of sheltered homeless increasing slightly nationally as the overall count declines, this points to an emergency shelter and transitional housing system that is increasingly serving more people.

On the other hand, in states with a larger rural population there may be some undercounting, as it is more difficult to count people who are dispersed. Furthermore, with federal resources dwindling, cities and localities have stepped up as they can by stretching resources and implementing innovative strategies to combat homelessness. But as localities have had to make tough decisions to shift (or cut) resources away from homeless services in response to the recession, there are real and immediate implications for the homeless and near-homeless populations in these communities.

Continued year-over-year cuts to valuable housing programs risk undoing the positive gains we are making. If we are serious as a nation about ending homelessness we must support the full spectrum of housing programs, programs designed not only to re-house those who have become homeless, but to prevent homelessness altogether. Crucial programs such as rental assistance can lessen the burden of rising rents and prevent displacement, while funding for supportive housing can provide needed shelter and services like job readiness and addiction and recovery programs. As need rises it is critical to continue to provide strong funding for HUD programs that help individuals and families avoid homelessness. Otherwise, we risk undoing years of positive gains.

Monday, November 25, 2013

Growing regional economies by increasing the supply of housing

by Lisa Sturtevant, Ph.D., National Housing Conference and Center for Housing Policy

I led a panel at the Virginia Governor’s Housing Conference last week, where the conference theme was “Housing: Building Strong Economies.” In Virginia, along with most of the rest of the country, local
Housing affordability should be a key component of local
and economic development strategies. 
jurisdictions are tackling challenges associated with rebuilding their economies in the aftermath of the recession. Housing—as evidence by the emphasis of the Virginia conference—is often talked about as being critical to promoting economic growth.

At the local level, there has been a great deal of analysis of how the development of affordable housing spurs local job growth and economic activity. Building affordable housing does, in fact, create jobs and encourage spending and local revenue both during and after the construction period. So, too, does building market rate housing or commercial development projects.

Is there another perspective on how housing is important to economic growth? This question was the basis for my conference panel at the Virginia housing conference. Without discounting the direct and induced economic impacts of affordable housing development, I propose a shift in the focus of the discussion. The availability of housing affordable to people along the income spectrum is an important building block of strong, resilient regional economies. Along with a robust transportation network, good schools, sound government, and an open business environment, housing affordability should be a key component of local and economic development strategies.

We worry about what will happen to our economy if those other pieces go missing or are insufficient. If we don’t have a strong employer base and a business-friendly environment, we lose jobs and our economy suffers. If our transportation system is a mess, we recognize the impact on quality of life and the region’s attractiveness to businesses. If our schools are deficient and we are not preparing the future workforce, we worry about our competitiveness. When our local government is poorly run, we know that is an obstacle to attracting private businesses. We talk about these things—and sometimes we try to fix them—because we know that they are important to attracting and retaining a diversity of businesses that lead to a robust and vibrant regional economy.

But we seldom talk about how an insufficient supply of housing can serve as an obstacle to economic growth.

What could we expect if there is an insufficient supply of housing that is affordable to workers along the income spectrum?
  • Workers are not able to live close to their jobs so traffic congestion increases, which decreases worker productivity and makes it a less efficient place for businesses to locate.
  • Businesses have a hard time attracting and retaining workers who can’t afford to live in the region, so they seek to locate elsewhere.
  • Resident-serving businesses (e.g. grocery stores, restaurants, dry cleaners) have difficulty hiring local workers so local businesses disappear and prices for everyone in the community go up.
In the session I moderated, housing practitioners and advocates from Arlington, Richmond and Virginia Beach talked about how regional efforts to increase the supply of affordable housing need to bring the economic development and business community into the discussion, and that it is the responsibility of the housing community to help them understand that affordable housing is a “bottom-line” issue. Some of the questions that were raised at the session included the following:
  • How can data and research bring business groups to the table around affordable housing? Specifically, how can we quantify (and monetize) the link between a lack of housing and reduced economic development potential? 
  • What are the specific roles that can be carved out for chambers of commerce or economic development departments in the housing planning process? How can we identify and foster a champion in the business community? 
  • How can models from around the country—including the Silicon Valley Leadership Group—be modified and built up in some regions? 
What are your thoughts on this approach to the link between affordable housing and economic development? Are you having these conversations in your jurisdictions?

Friday, November 22, 2013

Senate Banking examines transition path for housing finance reform

by Ethan Handelman, National Housing Conference 

The Senate Banking Committee held a bipartisan hearing Friday to examine the challenges of moving from the current mortgage finance system to the one being developed by the committee. Witnesses and participating senators alike struck a collegial tone in keeping with the other hearings the committee has held on mortgage finance.

Attendance was thin, perhaps due to the timing of a Friday hearing before the Thanksgiving recess. Chairman Johnson (D-SD), Ranking Member Crapo (R-ID), Senator Corker (R-TN) and Senator Warner (D-VA) all participated actively and drew thoughtful answers from the testifying witnesses:


A recurring theme in the discussion was the choice between a timeline-based transition, which would set a deadline for the wind-down of Fannie Mae and Freddie Mac, and a target-based transition, which would tie the wind-down to achievement of specific objectives around participation of private capital and market functioning. Witnesses were unanimous in support of a target-based approach, citing the many uncertainties surrounding when and how private capital would return and possible exogenous disruptions to the timeline. They also recognized the need for accountability, a point particularly raised by Sen. Crapo, so that the transition would ultimately occur.

Picking up on comments from Prof. Min, Sen. Warner spoke of the importance of rental housing and the proven success of the GSE multifamily businesses even during the crisis. He referenced that much work was being done to fill in the multifamily section of S. 1217. NHC with many allies has called for a multifamily mortgage finance system that builds on the successful Fannie Mae and Freddie Mac multifamily businesses, starting with a transition now to prepare for eventual privatization.

See witness’ written testimony and video of the hearing on the committee web site.

Thursday, November 21, 2013

How a post-nuclear Senate could help affordable housing

by Ethan Handelman, National Housing Conference 

Today the Senate changed its rules to eliminate filibusters on presidential nominees (apart from Supreme Court Justices). The so-called nuclear option invoked by Senate Majority Leader Harry Reid (D-NV), paves the way for nominees to be confirmed by simple majority votes, which means that Senate Democrats can prevail without Republican votes if they remain united.

With the nomination of Rep. Mel Watt (D-NC) to head the Federal Housing Finance Agency (FHFA) still pending, this rule change could have major impacts for affordable housing. FHFA has been pursuing many actions that reduce affordable housing options for America, getting pretty far ahead of a Congress that is finally making bipartisan progress on mortgage finance reform. NHC supports the nomination of Rep. Watt and hopes the Senate will now move swiftly to confirm him.

Most recently, Bloomberg reported FHFA is planning to forge ahead with reductions to the multifamily production of Fannie Mae and Freddie Mac, despite widespread comments that such action reduces affordable housing and hurts the long-term value of the GSEs (NHC’s comment is one among many). A bipartisan group of House lawmakers even wrote directly to FHFA opposing the multifamily reductions.

In the long term, of course, this rule change could come back to bite the current majority party if and when they become the minority party once again. But as John Maynard Keynes said, in the long run we’re all dead.

Monday, November 18, 2013

What the duty-to-serve concept in mortgage finance really means

by Ethan Handelman, National Housing Conference

I’ve had several conversations with Senate staffers recently about the concept of a “duty to serve” in mortgage finance. Often, the idea gets conflated with numerical goals, which misses the fundamental issue: only government can get the intertwined primary and secondary markets to serve a broad range of housing need.

Primary market lenders originate loans and so are the first gatekeepers of access to credit. However, their ability to lend is constrained by the liquidity supplied by the secondary market. Without a capital supply, the primary market cannot originate large volumes of loans. The secondary market, in contrast, focuses on efficiency, using high volumes of homogeneous loans to achieve economies of scale and attract capital. Packaging easily-standardized, lower-risk loans into securities has great benefits, but the business is necessarily constrained to work with the loans that the primary market originates. It therefore becomes difficult for either the primary market or the secondary market to cause the other to broaden its parameters for what loans to provide, since neither can act without the support of the other.

Government is uniquely placed to align the primary and secondary markets to serve as broadly as possible. To the extent that the primary market is serving low-income areas, rural areas, communities of color, small rental properties, subsidized rental housing, manufactured housing, and other underserved market segments, the secondary market should also. That’s what the “duty-to-serve” embodied in the Housing and Economic Recovery Act of 2008 (HERA) was aiming at, and it’s something we need to include in the next iteration of mortgage finance. To read more about this issue and others, see my recent testimony to the Senate Banking Committee.

Friday, November 15, 2013

Planting a Seed to Grow a Movement

by Maya Brennan, Center for Housing Policy

A colleague recently got me thinking back to my days as a landlord-tenant counselor. Answering the phone, I never knew what problems or questions I’d find on the other end. Was it a landlord with a disruptive tenant? A tenant wanting to know if a rent increase was legal? A horrifying rat infestation story? Or my repeat caller who believed that her apartment was under siege due to voodoo? More often than not, it was a call about late rent or a pending eviction due to nonpayment of rent.

For some of the tenants who called us, life was a struggle to always stay just one step away from eviction. Many were so familiar with rent court notices appearing on their doors that they didn’t even read them anymore. They learned a pattern that prevented eviction and kept following it.

Here’s how the process worked when I was a counselor in Maryland more than ten years ago. (This is not intended to describe the current eviction practices there which may have changed.) The tenant doesn’t have the rent money on the due date. The landlord waits out the late fee period and then files in court. If the tenant doesn’t appear in court or hasn’t paid the rent by then, the court will rule in favor of the landlord who can then get an eviction warrant. The landlord calls the office responsible for carrying out these warrants (usually a sheriff or constable) and schedules an eviction date. If the tenant can pay the landlord in full before the eviction starts, they get to stay.

Usually, that is.

For tenants always skirting the edge of eviction, it’s easy to fall into a pattern of rent crises and then paying in front of the sheriff or at some earlier point in this process. (By the way, the rent crisis pattern sounds tough as a tenant, but think about it as a landlord, too. It sounds like a lot of effort to essentially give the tenant an extension on their due date. And then face it again one month or maybe two months later. Would you want to rent to someone you thought was going to be repeatedly behind on the rent? I sure wouldn’t.)

Tenants in perpetual financial crisis can get used to this pattern. And the emergency rent assistance process relies on this process to distribute funds to the people most likely to get evicted. (“Bring in a copy of the warrant when you apply for help.”) But the right of redemption, as it’s called, ends if a tenant has too many judgments over a 12 month period. Then the landlord (at long last, from their perspective) gets the apartment back.

And the tenant’s perpetual crisis gets worse.

This is what happens when wages and housing costs don’t match up. It hurts renters. It hurts property owners. It hurts their neighbors and neighborhoods. And it eats up time and money in the courts and related enforcement offices.

It’s imperative for the housing movement to grow and strengthen. Rent crises are not an isolated problem. More than one in four working renter households – approximately 6 million renter households in total – had severe housing cost burden in 2011. Federal rental assistance programs break the rent crisis cycle for the people they serve, but less than one in four eligible households receives assistance.

Federal funding for vouchers, public housing, project-based rental assistance, and homelessness prevention programs are well below the level needed to prevent rent crises for the working poor, unemployed, elderly, and disabled. In addition, moderate-income households, such as teachers, fire fighters, and even urban planners, face serious challenges with unaffordable housing in many parts of the country.

Fixing this cycle of crises is going to take the efforts of all of us in a strong and united housing movement. Be clear about why housing assistance matters. Join the conversation at NHC about housing solutions that can yield broad support. And, most importantly, spread the word outside of the housing community. The movement to end housing crises won’t grow unless each of us plants a seed.

Tuesday, November 5, 2013

Guaranteed growth

by Michael Rubinger and Terri Ludwig

NHC invites guest blog posters to write on important housing topics. The views expressed by guest posters do not necessarily reflect those of NHC or its members.

Michael Rubinger
Terri Ludwig
Take a moment to push past the shutdown rhetoric and you’ll find some good news is coming out of
Washington after all: The Treasury Department announced a new program to make hundreds of millions of dollars available for development in low-income communities.

We admit the title isn’t flashy: the CDFI Bond Guarantee Program. It sounds as if it’s designed more for Wall Street than Main Street.

For the first time we, community development lenders, have access to long-term, fixed-rate capital that can help breathe new life into economically devastated neighborhoods. And this program brings together two long-time partners and sometimes competitors to make it happen.

After all, it’s not as if community development capital is a new idea. There are nearly 1,000 Community Development Financial Institutions (CDFIs) supporting work all over the country. The Local Initiatives Support Corporation (LISC) and Enterprise Community Partners, Inc. (Enterprise), for instance, have raised and invested a combined $27 billion to help revitalize disadvantaged areas over the last three decades. Significant progress is already being made.

The big news, here, is that until now we’ve never really had access to predictable, affordable 30-year capital—the kind of financing that is pretty common for development projects in more affluent areas. That distinction matters for a whole host of reasons. Without it some projects never leave the drawing board. Others are left to cobble together multiple short-term debt products, which is both expensive and financially unstable. Without a source of long-term capital, CDFIs like Enterprise and LISC simply can’t be as effective as they might otherwise be in helping to lift up low-income communities.

The CDFI Bond Program begins to change that. Treasury is making capital available in a way that costs taxpayers next to nothing, while reducing the risk of long-term lending in troubled urban and rural areas.

With it, affordable housing developers can take on tough challenges: Toxic, crime-ridden neighborhoods can be revived with beautiful new rental and homeowner housing that even very low-income families can afford. Top-quality charter schools can make space for thousands of children languishing on waiting lists. New and expanded community health centers can make sure crowded emergency rooms are no longer the only primary care option available in distressed areas. Overall, people who struggle to get by will have access to more opportunities, and their communities will enjoy renewed economic life.

Here’s an example of how it works: Bank of America has been authorized to issue $100 million in bonds under the program and is working with LISC and Enterprise Community Loan Fund, Inc. to each invest $50 million of the proceeds. The bonds are purchased by the Federal Financing Bank, which is itself part of the Treasury Department, and fully guaranteed by the federal government.

The risk to taxpayers is mitigated by the focused design of the program and the healthy balance sheets of Enterprise and LISC. Treasury extensively evaluates the organizations making the on-the-ground loans, with an eye toward ensuring high-impact investments and limiting losses. Enterprise and LISC have strong track records in this line of work, even in places that many conventional lenders avoid. Community development isn’t a sideline business for us; it’s what we do everyday.

This program has sparked collaboration among the largest, most experienced community development intermediaries in the country. And in the process, it is helping us build a performance history for long-term lending that hopefully will encourage the private market to join us in this effort.

The impact is pretty clear: more commercial and residential development is coming to neighborhoods in need. And with it, new jobs, bigger tax receipts, safer streets, healthier families and—over time—a better quality of life.

It turns out bond guarantees are newsworthy after all.

Michael Rubinger is president and CEO of LISC, and Terri Ludwig is president and CEO of Enterprise Community Partners, Inc.