Transcript The Millennial Housing Commission's Report -- A Vision for Our Nations' Housing

The Millennial Housing
Commission's Report -A Vision for Our Nations' Housing
National Association of Housing and
Redevelopment Officials
June 5, 2002
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Today’s Moderator
• James M. Inglis
NAHRO Senior Vice President and
NAHRO, Inc. Chairman
Executive Director
Livonia Housing Commission
Livonia, MI
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Panelists
• Conrad Egan
Staff Director
Millennial Housing Commission
Washington, DC
• Ophelia B. Basgal
Member, Millennial Housing Commission
Executive Director
Housing Authority of Alameda County
Hayward, CA
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Agenda
•
•
•
•
•
Introduction
Background
Recommendations
• Public Housing
• Section 8
• Other Affordable Housing
Questions and Answers
Wrap Up
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Objective
In today’s AudioShort,
our panelists will
provide you with an a
summary with an
emphasis on public
and assisted housing
as well as a discussion
of the Millennial
Housing Commission’s
Report released on
May 30, 2002.
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Introduction: Background
• In December 2000, Congress pursuant to
legislation established the bipartisan
Millennial Housing Commission.
• The Commission consisted of 22 individuals
drawn from across the country and from
across the spectrum of housing ideologies
and experience.
• The Commission was charged with
examining, analyzing and exploring three
areas:
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Three Areas of Exploration
• The importance of affordable housing to the
infrastructure of the US;
• Possible methods for increasing private
sector involvement;
• Whether existing HUD programs work in
conjunction with each other and how if
needed can these programs be improved to
meet the overall purpose of providing better
housing opportunities.
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Millennial Housing Commission
Sought Answers to These Questions:
• Is the nation getting the housing outcomes it
expects and desires for individuals, families,
and communities? Are there better ways to
meet these needs?
• Are existing housing programs living up to
their potential? Which need reform or
significant restructuring?
• What are the critical housing needs and are
new programs needed to address these
needs?
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Gathering the Answers
• The Commission held five public
hearings, conducted numerous focus
group meetings, commissioned papers
and asked for input on policy positions
and program recommendations from a
diverse group of individuals and
organizations.
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Fundamental Precepts of Agreement
• Housing is linked to access to jobs and
healthy communities. The failure to
achieve adequate housing leads to
significant costs to society.
• A multiple of factors arranging from
community opposition to high-density
development to the fast growth of new
families requiring housing created an
inadequate supply of affordable housing.
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The Commission’s Vision
Produce and preserve more
sustainable, affordable housing in
healthy communities to help
American families progress up the
ladder of economic opportunity.
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Basic Principles
• Strengthen Communities
• Devolve decision-making to states and
local governments, but within a framework
of federal standards and performance
objectives.
– Commission recommends that Congress pay
special attention to assigning appropriate
roles and responsibilities to each level of
government.
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Basic Principles (continued)
• Provide the private sector with effective
incentives to help produce and preserve
affordable housing.
• Design programs to sustain the stock of
affordable housing over the long term.
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Public Housing
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Recommendations
Public Housing
• One of the major reforms recommended
by the Commission is to transform the
public housing program. This should not
be confused with proposals to convert
public housing into a tenant-based
program; but, rather the Commission
affirms the importance of maintaining a
permanent inventory of housing for
people with extremely low incomes.
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Recommendations
Public Housing (continued)
• Specifically the Commission is
recommending a gradual transition to
project-based accounting, with
subsidies flowing to specific properties
based on their rents once restored to
market condition.
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Recommendations
Public Housing (continued)
• Under this recommendation, public
housing’s physical inventory and
population would shift to the projectbased Section 8 model. This would be
converting operating and capital funding
to a long-term Section 8 type contract
linked to the property instead of the
PHA.
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Recommendations
Public Housing (continued)
• Benefits of this Conversion:
– Reliable funding to cover operating costs
– Debt service on loans for capital costs
– Replacement reserves
– Debt Service Insurance
• Subsidy levels would be based on each
property’s market rent.
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Recommendations
Public Housing (continued)
• To be eligible, PHA would pledge to
retain some specified income targets for
the property.
• Timeframe: Voluntary at first, with a
period of 7 to 10 years for completion.
• Transitioning: HUD would still have to
provide oversight on those PHAs who
choose not to convert some or all of
their housing stock.
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Recommendations
Public Housing (continued)
PHA Inventory Viability
• Converting of public housing would
follow the “Mark to Market” Process:
conduct a market study and marketbased physical and financial
assessment for each property in the
PHA’s portfolio to determine feasibility
of conversion approach.
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Recommendations
Public Housing (continued)
• If the assessment reveals that the
property is severely distressed but is
located in a good area and therefore
warrants investment, then a HOPE VI
revitalization, mixed-income approach
would be considered feasible.
• When the property being revitalized is
completed only then will it move to a
project-based voucher contract.
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Recommendations
Public Housing (continued)
• If the property is severely distressed
and is not well located, not viable, it will
be demolished. A local market
assessment must be completed to
determine what housing resources are
available to any families that must be
relocated.
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Inventory Conversion (continued)
• Once the feasibility stage is completed,
we must ensure that the conversion is
thoughtful and orderly. Transition steps:
– Assess the capital, operating, and asset
and property management needs of each
property to determine the best debt and
reserve structure.
• Prioritize: Convert the properties in the best
condition and location FIRST.
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Inventory Conversion (continued)
• Set up each property as an individually
owned entity with its assets outside the
Annual Contributions Contract (ACC).
– Possibility: You could make each property
or entity a subsidiary nonprofit corporation
of the public housing authority with
freestanding assets to facilitate debt
financing of capital improvements.
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Inventory Conversion (continued)
• Establish clear and widely accepted
standards for redesign, unit and site
amenities, and physical condition so
that the properties are attractive to a
wide range of eligible families.
– Anticipation that this would serve to reduce
the concentration of the very poorest of
families.
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Inventory Conversion (continued)
• Upon turnover, permit PHAs to admit a
percentage of market-rate tenants to
properties when income-mixing is
feasible.
– Use of tenant-based subsidies in areas
with inadequate supply, or project-based
subsidies for units in other locations.
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Inventory Conversion (continued)
• Replace the Annual Contributions Contract
with a Housing Assistance Payment (HAP)
contract as each property moves to the
project-based assistance model.
– This reduces the regulatory burden of the PHA
and HUD oversight requirements and
eventually eliminates the oversight.
– Properties that elect not to seek project-based
assistance would move to a housing choice
voucher-type HAP.
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Inventory Conversion (continued)
• Use a Section 8 administrator to avoid
conflict of interest if the PHA is the
owner/manager, set rent levels, and
perform housing quality inspections.
– Many jurisdictions have this in place
already.
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Inventory Conversion (continued)
• Involve the residents in future planning about the
conversion. Residents and managers must be
aware of each other’s desires, opinions and
goals.
– Throughout this process, input and
participation from public housing residents and
other important stakeholders should be actively
sought and considered. Residents should have
access to training and TA necessary to make
their involvement informed and productive.
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Conversion of Severely Distressed
Properties (continued)
• Utilize the HOPE VI as a preservation
and production tool providing a
comprehensive approach to eliminate
blighted conditions: physical deterioration
of properties, and social pathology
characteristic of high-poverty areas-higher unemployment rates, longer average
tenancy, low education levels, high crime rates,
poor school performance.
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Conversion of Severely Distressed
Properties (continued)
• First, HOPE VI must be utilized to
provide relocation, demolition, site
remediation and construction costs.
HOPE VI leverages non-public housing
costs which make up the larger share of
the development budget.
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Debt Financing of Capital Needs
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Debt Financing of Capital Needs
• Capital Improvements would be financed
through private tax-exempt loans secured by
a mortgage and backed by FHA mortgage
insurance.
• No additional guarantees should be
necessary for the majority of public housing
properties, whose market rents would fully
support the debt service to bring the property
to acceptable quality standards.
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Debt Financing of Capital Needs:
Scenario #1
Properties that potentially have sustainable
rents but do not initially meet quality
standards...
• Would have a limited time to rehabilitate or replace
inadequate units.
• Rents during the planning and rehab period could be
pegged to what the units would command after
renovation.
• Additional credit enhancements/other HUD
guarantees would be necessary in cases where the
property’s condition will require financing exceeding
the property’s market value.
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Debt Financing of Capital Needs:
Scenario #2
PHA decides not to replace or rehabilitate a
property…
• Rents would be based on market value and
replacement reserves would continue to accrue.
• Some properties may not need new capital
investment while other properties do not warrant any
additional investment and are good candidates for
demolition -- these units can be replaced with hard
units or vouchers.
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Advantages of Debt Financing
• Long-term costs of this capital
improvement approach would likely be
lower than the current approach.
• Improvements can occur quickly.
• Debt financing provides another level of
operational oversight from lenders;
thereby, substituting standard real estate
practice for HUD oversite and regulations.
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Debt Financing Not For Everyone:
Small Properties
• For small properties, the ratio of
transaction costs to overall debt makes
this type of financing impractical.
• More suitable approach would be to use
existing capital grant programs or to
front-load direct grants.
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Debt Financing Not For Everyone:
Capital Needs Exceed FMRs
For properties whose capital needs require
rents substantially above market levels, you
can:
– Use the HOPE VI program to revitalize the
properties that are well located but in poor
condition or otherwise obsolete.
– Grant PHAs full access to all housing
development tools including debt financing and tax
credits, as well as new loan and grant programs.
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Challenges
• Alternative approaches may add to the
already tight competition for tax credits.
• Success of endeavor depends on the
credibility of the PHA and its partners as
asset and construction managers.
• Congress should consider increasing the
allocation of the Low Income Tax Credit so it
can be used to revitalize the public housing
stock without diminishing its availability for
other uses.
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Challenges (continued)
• Congress should direct HUD through the
PHA to work with the private sector and
different bond-rating agencies to structure
a guarantee based on the proposed
Section 8 project-based appropriations.
Such a guarantee would enable PHAs to
leverage private-sector investment for
constructing or rehabilitating units.
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Simplify the Rating of PHAs
KISS,
please?!
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Simplify the Rating of PHAs:
Current Situation
• HUD uses various systems to assess
PHAs that focus on process compliance
rather than outcomes.
• Evaluation systems have become
pointlessly complex.
• System needs to be simplified.
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A Simplified Rating System Should
Must:
• Related to the quality of housing that
residents experience and be simple enough
to enable PHAs or other administrators to
judge how they are doing.
– Past public housing assessment systems
provide insight to design an approach that
accurately gauges quality of housing and
its management.
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A Simplified Rating System Should
Must:
• Prevent PHAs that do not meet
minimum standards from converting to
the proposed project-based program.
– If such a PHA owns some properties that
do meet standards, those properties could
be converted under some form of
ownership that provides opportunities for
resident participation and does not give the
PHA complete control.
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A Simplified Rating System Should
Must:
• Require agencies with competency problems
to accept alternative management.
– Such as other PHAs acting as administrators,
state or procured competitively from the public,
nonprofit, or for-profit sectors.
– If alternative management measures do not work,
troubled PHA would have to report to an
administrative or judicial receiver.
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Rent Model
Incentives
$$ Threshold
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Test New RentSetting
Approaches
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Test New Rent Approaches
• Congress should consider funding a research
demonstration of alternative rent models.
– Rigorous research is necessary to ensure
that public housing residents who are
elderly or disabled are not forced to pay
too high rents in the name of simplicity.
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Test New Rent Approaches
(continued)
• The rent structure should incorporate
incentives for residents to seek economic
opportunities.
– Establish an income threshold below which
residents are subject to full verification and pay a
simplified income-based rent.
– Families with incomes above the threshold would
pay a higher fixed rent based on their unit size and
subject to annual adjustment. Such an approach
creates real economic incentives.
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Test New Rent Approaches
(continued)
• Another approach would be to set rents
at 30 percent of income for the first year
and then “step up” the level every year
thereafter. This creates an incentive to
work, but gives families a full year to
access services and achieve some
stability.
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Exempt Small PHAs ...
• From
unnecessary and
burdensome
reporting
requirements.
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Exempt Small PHAs (continued)
• The Commission recommends that PHAs
with fewer than 250 units have a simplified
contract that establishes basic standards for
physical conditions and operations, but
strictly limits paperwork and reporting.
Thereby, freeing the PHA to concentrate on
physical management.
• PHAs geographically isolated or face high
staff turnover will need ongoing technical
assistance.
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Streamlining the Housing
Choice Voucher Program
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Recommendation
• Expand and strengthen the housing choice
voucher program to improve the access of
extremely low-income households to the
private housing stock.
• The Commission believes housing vouchers
should continue to be the linchpin of a
national policy providing very low income
renters access to privately owned housing
stock.
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Housing Choice Voucher
Program Recommendations
• The Commission recommends
appropriation of additional funds for
substantial annual increments of
vouchers to address the housing
problems of extremely low- and very
low-income families without access to
other housing assistance.
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Housing Choice Voucher
Program Recommendations
(continued)
• The Commission also supports
expanded use of vouchers for
homeownership to help low-income
families build assets.
• The Commission recommends specific
refinements that would increase the
program’s efficiency and effectiveness.
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Improve Utilization and Success
Rates
• HUD needs to diagnose the reasons for
the limited success of the voucher
program at some PHAs and offer
targeted technical assistance.
• Voucher units should be reallocated
from low-utilization PHAs to entities
serving the same geographic area and
households.
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Improve Utilization and Success
Rates (continued)
• Where reallocation is not feasible, the
PHA could be required to contract with
another entity to administer the unused
vouchers.
• In all cases, households on the original
PHA waiting list should have priority for
the unused vouchers.
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Improve Utilization and Success
Rates (continued)
• The Commission recommends that
HUD also make two simple
administrative changes:
– (1) Expand the resources devoted to rent
surveys so that published FMRs do not lag
actual rents.
– (2) Quickly approve exception payment
standards when census data demonstrates
that average rents are at the level of the
exception sought.
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Increase Landlord Participation
• HUD and PHA should develop consensus
standards for shortening the inspection and
lease approval process and for providing better
service to landlords. Standards should be based
on:
– Review of PHA performance
– Feedback from both landlords and voucher
holders
– Review of all standards that affect landlord
participation such as lease approval,
inspections, etc.
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Increase Landlord Participation
(continued)
• The Commission also recommends that HUD
provide technical assistance to PHAs for
improving landlord participation, disseminate
best practices information to program
administrators, experiment with giving PHAs
greater flexibility in applying the HQS to
attract owners into the program, and change
the cap on the family rent contribution for
newly rented voucher units to 40 percent of
gross income.
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Link Vouchers
Housing
Production Programs
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Linking Vouchers to Housing
Production Programs
• The Commission recommends that HUD
strengthen and enforce the requirement that
owners of housing produced under federally
funded programs accept households with
vouchers.
– This effort enables extremely low-income
families to live in rental housing produced
with other subsidy sources which would
otherwise be unaffordable.
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Linking Vouchers to Housing
Production Programs (continued)
• In the interests of promoting mixedincome housing, the Commission also
recommends that owners of
developments of 50 or more units be
able to limit the share of voucher
households to 20 percent or 30 percent,
subject to local market conditions.
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Linking Vouchers to Housing
Production Programs (continued)
• Extremely low-income households would
receive special vouchers for units produced
under capital subsidy programs such as the
LIHTC, HOME, CDBG.
– Payment standards would equal the operating
cost rather than base them on FMR.
– These vouchers could be targeted to places where
the tenant-based voucher program has had little
success.
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Linking Vouchers to Housing
Production Programs (continued)
• In addition state and local housing plans
would be required to take into account
voucher success rates and barriers to
voucher use when determining the use
of HOME and CDBG funds.
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Linking Vouchers to Housing
Production Programs (continued)
• PHAs should be allowed to designate a
portion of available housing vouchers for “first
use” in a particular housing project. This
would supplement the current system of
project-based vouchers, but not guarantee
the owner a specific number of voucher
holders over time.
– Allowed in neighborhoods with access to jobs and
decent schools or as part of a comprehensive
revitalization project.
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Linking Vouchers to Work
Opportunity and Self-Sufficiency
Initiatives
Vouchers
Work
Opportunity
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Self-Sufficiency
Initiatives
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Linking Vouchers to Work
Opportunity and Self-Sufficiency
Initiatives (continued)
• The current voucher program does not
make mobility of tenants a primary goal.
The voucher program is more effective
than any other kind of housing
assistance in improving recipients’
opportunities, long-term self-sufficiency,
employment savings, etc.
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Linking Vouchers to Work Opportunity
and Self-Sufficiency Initiatives
(continued)
• The ability of the voucher program to help
families become more self-sufficient may
depend on its ability to assist families in
moving to neighborhoods with access to good
jobs and good schools.
– Moving to Opportunity (MTO)
demonstration -- mobility counseling is
expensive.
– Competes with other program objectives
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Linking Vouchers to Work Opportunity
and Self-Sufficiency Initiatives
(continued)
• Another way the voucher program can
help families is to build in opportunities
for employment and savings.
– The Family Self-Sufficiency (FSS) program
shows particular promise for this initiative.
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Linking
Vouchers to
Non-Housing
Programs
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Linking Vouchers to Non-Housing
Programs
• HUD should allow other agencies to
compete for special allocations of
vouchers for certain populations, but
require the PHA to perform key
operations such as housing inspections,
rent-setting, and payments to landlords.
• The functions of this initiative would be
monitored as part of the PHA overall
voucher
program.
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Linking Vouchers to Non-Housing
Programs
• Housing vouchers can also work effectively
with other types of assistance programs for
special-needs populations.
– States expand community-based housing
options, vouchers will be looked at as the
way to provide permanent housing for
persons with disabilities.
– This will require establishing stronger
partnerships between PHAs and other
providers of supportive services.
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Flexible Use of the Section 8
Project-Based Units
• In addition to expanding the tenantbased housing choice voucher program,
the Commission proposes certain
improvements to the project-based
Section 8 program.
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Linking Vouchers to Non-Housing
Programs (continued)
• Currently treatment of project-based
Section 8 units are inflexible -- subsidies
can not be transferred from deteriorated
properties.
– Though Mark-to-Market can assist
properties in good condition, economically
it is better to demolish and replace some
obsolete or poorly located properties.
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Linking Vouchers to Non-Housing
Programs (continued)
• Better use of funds to transfer projectbased section 8 and other subsidies to
other locations as part of mixed-income
housing development. Companion use
and affordability restrictions would also
be transferred.
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Linking Vouchers to Non-Housing
Programs (continued)
• Benefits
– The transfer of subsidies and resources would
help preserve existing affordable housing.
– Provide new preservation options for property
owners who are considering to opt out of their
contracts.
– Enable other properties assisted by shallow
subsidy programs (LIHTC and HOME) to serve
some very low-income renters.
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Linking Vouchers to Non-Housing
Programs (continued)
• HUD currently has the authority to transfer
project-based Section 8 contracts to other
developments; however, statutory issues
apparently exist in
– existing contracts to new replacement
housing construction projects, and
– in transferring companion use restrictions
in other buildings under the Mark-to-Market
transactions.
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Linking Vouchers to Non-Housing
Programs (continued)
• Commission recommends:
– that the administrators of these projectbased contracts be permitted and
encouraged to allow the transfer of
assisted units to aid in the preservation of
affordable units in high-quality properties
and to improve income diversity.
– Congress remove any statutory obstacles
to using transferred project-based Section
8 subsidies for replacement housing.
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Commission Recommendations:
Other New Tools
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Flexible Tax Credit
• Allocate a flexible new tax credit to
stimulate production of affordable
properties suitable for homeownership.
– A new homeownership tax credit to be
allocated to the state housing finance
agencies to help lift low-income and
minority homeownership rates.
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Exit Tax Relief
• The Commission’s proposed
preservation tax incentive is intended to
reduce the number of project-based
units lost from the affordable housing
stock by giving current owners an
incentive to transfer ownership to new
owners who commit to the long-term
preservation of affordability.
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Exit Tax Relief (continued)
• The Commission cites the risk of rent
escalation within the conventionally
financed inventory as a compelling
reason both to preserve as many
privately held units as possible and to
recognize the preservation of affordable
housing as a critical public policy goal.
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Exit Tax Relief (continued)
• It is critical that the nation adopt a preservation
philosophy to guide its housing policy going
forward.
– A new underwriting standard for long-term
sustainability.
– Efficient use of federal resources and a
recognition of the broader benefits of
preservation
– Recognition of an entity’s unique nature and
needs in expanding affordable units through
preservation
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Exit Tax Relief (continued)
• Because of the immediacy of the
problem, any proposed tools or
approaches that can quickly and
efficiently preserve housing should
receive priority from the federal
government.
– The proposed preservation tax incentive(PTI)
be adopted and enacted quickly.
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Exit Tax Relief (continued)
• The Commission recommends that
states be given the authority to allocate
exit tax relief, via a preservation tax
incentive to stimulate the transfer of
properties to preservation entities.
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Production of New Affordable Housing
• Provide capital subsidies for the production
of units for occupancy by extremely lowincome households.
– Commission recommends that Congress
address the housing needs of extremely lowincome households through a 100 % capital
subsidy for construction, rehabilitation, or
acquisition of units earmarked for extremely
low-income households.
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Attract Private Capital to the Production
of Mixed-income, Multifamily Rental
Housing
• Commission recommends that the limits
be taken off states’ ability to issue taxexempt debt for specific multifamily
properties, with the condition that eligible
properties must restrict rents on at least
20 % of the units to levels affordable to
families with incomes below 80 % of AMI.
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Facilitate Strategic Community
Development
• Commission recommends creation of a
new, more potent community
development tool that builds on the
lessons of successful projects while
unifying funding and regulations.
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Facilitate Strategic Community
Development
(continued)
• This proposal would allow state governors to
reserve up to 15% of their federal block grant
funds (including TANF, CDBG, HOME,
Workforce Investment Act (WIA) funds, Social
Services Block Grants, Child Care Block
Grants and transportation funding) to support
comprehensive redevelopment projects
sponsored by local governments.
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Other Major Reforms to Existing
Programs
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Federal Housing Administration
• Restructure FHA as a wholly owned
government corporation within HUD
– FHA and Ginnie Mae be combined into a
single entity.
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Federal Housing Administration
(continued)
• Provide for more flexible multifamily
operations
– Combine all mutlifamily programs in the
General Insurance and Special Risk
Insurance Fund into a single program
– Permit FHA to vary the terms or other
aspects of its mutlifamily insurance
programs
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Federal Housing Administration
(continued)
– Grant FHA broad authority to pursue pool
insurance and offer adjustable-rate insurance
products.
– Index multifamily mortgage limits to a
construction cost index and give FHA greater
flexibility to increase limits in high-cost areas.
– Allow FHA to insure construction-only loans.
– Build on the success of the 221(d)(4) rental
production program
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Federal Housing Administration
(continued)
• Provide for more flexible single-family
operations
– Expressly authorize FHA to initiate singlefamily risk-sharing demonstration programs
– Authorize FHA to set its own standard for
selecting business partners.
– Expressly authorize FHA to introduce new
products.
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Federal Housing Administration
(continued)
• Urge FHA to use sophisticated privatesector techniques to prevent mortgage
defaults and, when defaults are
unavoidable, reduce their cost.
• Expand FHA’s home improvement lending
activities.
• Expand FHA’s small investor lending
activities.
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End Chronic Homelessness
• The Commission strongly endorses a program to
end chronic homelessness within 10 years
through provision of additional supportive
housing.
– The tools are already in place.
– The Commission recommends that this setaside be made permanent as a way to ensure
the addition of 15,000 incremental units of
permanent supportive housing each year.
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End Chronic Homelessness (continued)
• A related recommendation is to transfer
renewal funding for expiring rent and
operating subsidies to permanent
supportive housing to HUD’s Housing
Certificate Fund.
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End Chronic Homelessness
(continued)
A successful end homelessness policy must:
– Provide sufficient public and private funding for
a full continuum of interventions targeted to
various homeless sub-populations.
– Infuse this continuum of interventions with the
high expectation, incentives and supports
needed to encourage homeless households to
participate in treatment programs, work
productively and engage in constructive
behavior.
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Link Housing Assistance with Work
Requirements
• The Commission recommends that
federal housing assistance programs
encourage and facilitate expanded
economic opportunity, recognizing that
working-age families living in assisted
housing, like other able-bodied people,
have an obligation to contribute to
society as well as accept its help.
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Link Housing Assistance with Work
Requirements (continued)
• The Commission recommends over
time the housing assistance system
require residents who are not elderly or
disabled work as a condition of
receiving aid.
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Streamlining of Existing
Programs
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HOME and the Low Income Housing
Tax Credit Programs
• Both LIHTC and HOME have helped to
build the capacity of state and local
jurisdictions to engage in housing
development.
• The LIHTC and HOME programs represent
a true and strong paradigm shift away from
some of the less effective federal policies
and programs of the past.
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Recommendations to Improve the
Low Income Housing Tax credit
Programs
• Allow sponsors of tax credit properties
in low-income rural areas to set rent
caps based on statewide median
income.
• Remove impediments to the use of tax
credits for preservation.
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Recommendations to Improve the
Low Income Housing Tax credit
Programs (continued)
• Remove the prohibition against
combining LIHTC with assistance under
the moderate rehabilitation program.
• Clarify what project costs can be
included in eligible costs.
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Recommendations to Improve the
HOME Investment Partnerships
Program
• Given the widely recognized success of
the HOME program, enact a substantial
increase in HOME funding for both
states and local jurisdictions.
• Allow the use of HOME funds to
capitalize a long-term project reserve
account.
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Recommendations to Improve the
HOME Investment Partnerships
Program
• Permit Participating Jurisdictions to use
HOME funds to refinance certain low-income
housing mortgages.
• When rental housing is financed with both
HOME and CDBG funds, HOME rules should
govern.
• Improve lead hazard evaluation and control
by incorporating lead safety into general
housing rehabilitation activities.
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Recommendations to Eliminate
Barriers to Combining LIHTC and
HOME and Other Programs
• Make both new construction and
substantial rehabilitation expenditures
eligible for the 9% tax credit.
• Allow a “Basis boost” for tax credit
developments in high-poverty, high-cost
areas, even when they also receive
HOME assistance.
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Recommendations to Eliminate
Barriers to Combining LIHTC and
HOME and Other Programs (continued)
• Delegate subsidy-layering reviews for
tax credit properties to state allocating
agencies.
• Allow states to use Temporary
Assistance to Needy Families (TANF)
funds for onetime grants to existing tax
credit properties.
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Expand State’s Ability to Use the
Mortgage Revenue Bond Program
• The Commission recommends repeal of
the Mortgage Revenue Bond program’s
10-year rule, thereby, increasing the
resources available to states for
homeownership.
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Revise Federal Budget Laws
• The Commission recommends that
Congress make a serious effort to
address the issues raised by the HAP
condition to preserve the existing stock
of government-assisted affordable
housing.
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Supporting Recommendations
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Increase Funding for Housing
Assistance in Rural Areas
• The Commission recommends that
Congress and the Administration should
increase appropriations for low-income
housing in rural America.
• Congress should provide adequate
funding for core RHA housing programs,
including 515 rental housing, Section
521 rental assistance and housing
assistance for farm workers.
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Increase Funding for Native American
and Native Hawaiian Housing
• The Commission recommends that
Congress increase funding for the
Native American Housing Assistance
and Self-Determination Act (NAHASDA)
block grant.
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Establish Individual Homeownership
Development Accounts
• The Commission recommends that the
401 (k) and IRA statutes be amended to
allow financial institutions to monitor
IHDA deposits for Community
Reinvestment Act credit.
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Allow Housing Finance Agencies to
Earn Arbitrage
• The Commission recommends that
Congress repeal or liberalize federal
restrictions on housing agencies’ ability to
earn arbitrage on mortgage bond
proceeds. This measure would increase
the amount of federal assistance available
to support low-income housing without
additional annual appropriations.
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Exempt Housing Bond Purchasers
From the Alternative Minimum Tax
• The Commission recommends that
housing bond purchasers be exempt
from the Alternative Minimum Tax.
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Undertake A Study of the DavisBacon Act Requirements
• Evidence presented to the Commission
suggests that wage levels set under this
Davis-Bacon are higher than actual wages
paid. Hence, the Commission recommends
that Congress undertake a study of the DavisBacon requirements and make improvements
in such areas as the accuracy of the wage
data, the applicability threshold and the
reporting requirements.
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Address Regulatory Barriers
• Address the regulatory barriers that either add
cost of or effectively discourage housing
production.
– Federal agencies to include a housing impact
analysis as part of the rule-making process
– Establish a demonstration program to provide
planning grants to localities committed to
combining land-use regulations into a
comprehensive “balanced growth code” that
has “workforce housing affordability” as a key
ingredient.
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Streamline State Planning
Requirements for CD Programs
• The Commission recommends that
Congress encourage states to develop
plans that establish basic principles
such as the importance of sustainability,
define housing needs and target areas,
list priorities, outline a menu of
resources, and request project
proposals that offer solutions.
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Expand Financing Options For Small
Multifamily Properties
• Create an FHA small multifamily pool
insurance program.
• Streamline FHA’s existing small
multifamily whole load insurance.
• Encourage the government-sponsored
enterprises and leaders to make loans
for small multifamily properties.
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Expand Financing Options For Small
Multifamily Properties (continued)
• Fund national data collection on
multifamily lending and promote
standardization of lending practices.
– Commission recommends a national data
collection effort to analyze the risks of
multifamily lending.
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Foster a Secondary Market for
Development and Construction
Lending
• To develop a secondary market for
development and construction loans,
the Commission recommends that
Congress:
– Encourage the Federal Home Loan Bank
System to launch a pilot program
establishing a “private” secondary market
for construction loans.
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Foster a Secondary Market for
Development and Construction Lending
– Urge the Treasury Department to publish detailed
guidance on the use of Financial Asset
Securitization Investment Trusts
– Permit FHA to issue construction-only insurance.
– Grant government-sponsored enterprises express
authority to purchase construction-only loans.
– Require banking regulators to collect, report on
and publish sufficient detail on the activity and
performance of real estate loans.
6/5/2002
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Launch A Demonstration For
Comprehensive Community-Based
Work
• The Commission recommends
combining the interest and resources of
large private foundations with the
funding from the federal government.
– Funding decisions would be made by
representatives of private foundations and
public agencies.
– Localities apply to the board for funding.
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Improve Customer Education About
Home Mortgage Lending
• The Commission recommends that
Congress enact regulatory changes to
educate and protect consumers in
mortgage transactions, as well as
assure loans are made at fair and
reasonable credit costs.
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Improve Access of Manufactured
Home Buyers and Owners to Capital
Markets
• The Commission recommends that:
– Congress (a) affirm that Fannie Mae and
Freddie Mac can purchase manufactured
home loans classified as personal property
(b) encourage support of a secondary
market in such loans if they are determined
to be sound, and (c) establish performance
goals for manufactured home loan
purchases.
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Improve Access of Manufactured
Home Buyers and Owners to Capital
Markets (continued)
• FHA’s Title I and II programs be
promoted and loan limits be increased.
• Ginnie Mae approve more lenders as
issuers/servicers, or instruct current
issuers to make and service loans for
manufactured homes.
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Affirm the Importance of the
Community Reinvestment Act
• Affirms the importance and benefit of CRA to the
goals of expanding homeownership and
producing and preserving affordable housing.
• Acknowledges the need for periodic
reassessment of the rules governing CRA
compliance, assignment and use of grades.
• Acknowledges the need for periodic
reassessment of CRA’s coverage of mortgage
lending activity.
6/5/2002
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Affirm the Importance of the
Government-Sponsored Enterprises
• In light of the demonstrated value of the
GSEs, as well as their potential to help
their partners expand homeownership
opportunities among immigrants,
minorities, and low-income households.
The Commission:
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Affirm the Importance of the
Government-Sponsored Enterprises
• Affirms the ongoing importance of the
GSEs
• Supports the current regulatory system for
Fannie Mae and Freddie Mac
• Recommends that Congress and HUD
support, full, safe and sound GSE activity in
subprime, manufactured housing, home
improvement, small multifamily, and
development and construction lending.
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Roundtable Discussion
• Questions will be taken from
the audience.
• Press 1 on your handset to
enter into the question
queue.
• Questions will be answered
in the order in which they are
received.
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Wrap-Up
• NAHRO’s Network Central for further
discussion and information sharing on this
and other topics at:
http://www.nahro.org/members/connects/index.cfm
• NAHRO’s DirectNews for up to date news on
HUD NOFA’s, regulations, PIH notices,
guidebooks, studies and reports at:
http://www.nahro.org/members/connects/index.cfm
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Wrap-Up (continued)
• Programs and Policies – NAHRO’s
Section 8 programs and policies web page
for a veritable cornucopia of information on
all things Section 8 at:
http://www.nahro.org/programs/rent_s8/index.cfm
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Conclusion
• Thank you for
participating in the
NAHRO AudioShort
Program.
• Remember to fax or
email your evaluation
forms to NAHRO.
• NAHRO’s Summer
Conference will be in
New York City, on July
11-14.
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