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Citizens' Housing and Planning Association: February 7, 2008

February 7, 2008

Publication Date: 
Thursday, February 7, 2008

 

State Roundup

Joint Committee on Bonding Holds Hearing on Housing Bond Bill

The Co-Chairs of the Bonding, Capital Expenditures and State Assets Committee held a public hearing on the Housing Bond Bill yesterday. Undersecretary Jay Gonzalez and Tina Brooks testified on behalf of the Administration and representatives from several housing advocacy organizations and housing authorities urged action on the legislation as soon as possible. Both Speaker DiMasi and Senate President Murray have indicated support for the legislation. Recently, Chairman Flynn indicated that the House hopes to take up the legislation in February, while the Senate President indicated that there will be action in the Senate by March. CHAPA continues to work with the Bonding Committee Chairs to assist the Committee in its diligent review of the legislation in hopes of passage by the late winter or early spring. We thank Chairman Flynn and Chairman Montigny for holding the hearing and for their enthusiastic support of affordable housing.

Request for Proposals for $2 million in Mortgage Counseling and Homebuyer Education Centers Released

DHCD has released a Request for Proposals (RFP) for a total of $2 million in grant money to fund counseling services for subprime mortgage consumers, foreclosure prevention, and first-time homebuyers as well as to fund the creation of Foreclosure Education Centers. The RFP is in connection with the comprehensive foreclosure prevention legislation passed by the Legislature and signed by the Governor last November (Ch. 206 of the Acts of 2007).

Click here to read the RFP or visit http://www.comm-pass.com/. The document number is DHCD2008-05. A Bidders Conference in connection with this RFP has been scheduled for 10AM on Thursday, Feb.14th, in the DHCD Office Building - the Saltonstall Building, 100 Cambridge Street, Boston, MA 02114, Conference Room B on the 2nd floor.

State Announces Final Tax-Exempt Bond Cap Allocations for 2008

On February 4, the Governor's office released its allocation plan for the 2008 federal tax-exempt private activity bond volume cap. This year's cap totals $585.4 million (including $37.2 million in unused authorization rolled over from 2007). Overall, the plan allocates two-thirds of the cap to housing activities, up from 54% in 2007. It increases the allocation for multifamily rental housing by $49 million to a total of $295 million ($170 million for MassHousing, $85 for MassDevelopment and $40 million for public housing). It also doubles the allocation for first-time homebuyer mortgages to $100 million. The plan also allocates $100 million for MassDevelopment economic development loans (same as in 2007) and $90.4 million for subsidized student loans through MEFA (down from $154 million in 2007).

State Supreme Judicial Court Hears Arguments on Seven Housing Cases

On February 4th and 5th, the State Supreme Judicial Court (SJC) heard arguments on seven cases involving interpretations of the state's comprehensive permit law (Chapter 40B). The seven cases relate to five proposed developments and one that is already under construction and involve a number of different issues.

Four involve the counting of subsidized housing units. One (Hingham v. DHCD) involves when and how a municipality can challenge DHCD's calculation of its subsidized housing percentage, a second (Wrentham ZBA v. West Wrentham Village LLC) addresses the procedural question of when a town board can appeal a Housing Appeals Committee (HAC) ruling that the town has not reached 10%, and two (Canton ZBA v. HAC and Taylor v. HAC) raise the question of what happens to pending appeals at the HAC when a town satisfies its 10% obligation during the appeal.

The other three cases involve procedural issues and questions about HAC authority. One raises the question of whether an abutter appeal should be considered moot, if HAC decision supplants the original ZBA decision that is the subject of the abutter appeal. The sixth case questions whether the HAC can treat a local approval that significantly reduces the size of a proposed project as a "constructive denial" (Woburn ZBA v. HAC), and the seventh asks the SJC to consider whether the HAC's authority to stand in for local boards allows it to order a town department to grant an easement.

Over 220 Members Gather to Discuss Ending Homelessness

Over 220 CHAPA members joined the Lt. Governor, Undersecretary Tina Brooks and Rep. Byron Rushing at Suffolk University Law School to discuss implementation of the Commission to End Homelessness Report Recommendations at a Feb. 5 CHAPA Forum. The distinguished panel was moderated by CHAPA Homelessness Committee Co-Chair Mary Doyle, and helped fill in some of the detail of how the Interagency Council on Homelessness and Housing will work to end homelessness. The discussion included:

1) The need for regional advisory councils to the Interagency Council to ensure continued feedback from consumers, service providers and housing agencies across the entire Commonwealth.

2) Further delineation of how the Homelessness Implementation Reserve Account proposed in the Governor's budget will be spent. A preliminary estimate is that up to $4,000,000 will be spent on assessment and coordination efforts, while the remaining $6,000,000 will be spent on rental assistance and services.

3) The Lt. Governor reiterated that no new bureaucracies will be created to serve as regional entities or other roles outlined in the report. There was no indication which organizations will be selected to serve as the regional coordinating entities but organizations interested in this work should express that interest and begin to work with stakeholders in their region to coordinate as soon possible.

To help achieve the Commission's goals, CHAPA continues to advocate for additional housing resources for low income families, and has prioritized the Massachusetts Rental Voucher Program in budget discussions with legislators.

Governor Files Surplus Land Legislation

On January 30th, Gov. Patrick filed legislation to reform the process to dispose of the Commonwealth's surplus state land. The expedited process would increase opportunities to return these properties to productive uses, including affordable housing. The legislation is very similar to the bill that several organizations, including MAPC, MACDC and CHAPA helped craft in the 05-06 legislative session. However, one key difference is that a municipality's right of first refusal to purchase surplus land would not be assignable to a CDC or other nonprofit. Proceeds from the sale of surplus land would also not benefit regional planning, instead going to municipalities, the Smart Growth Housing Trust Fund, and a Capital Projects Fund. CHAPA commends the Gov. for advancing this piece of legislation and looks forward to working with the Legislature to pass an expedited surplus land disposition process.

DHCD Announces Tax Credit and Other Funding Awards for 23 Rental Developments

On January 24, DHCD announced funding awards for 23 affordable and mixed-income developments in 21 communities across the state to create or preserve 771 affordable housing units.Eleven projects, including at least five non-profit projects, received state and federal tax credits, along with other state funds. Ten will produce 394 units of affordable housing and one project that will preserve an existing affordable elderly housing complex (38 units).

Another 12 non-profit projects were awarded funding under a variety of state programs, including the Affordable Housing Trust Fund, HSF, HIF, CBH, to develop or upgrade 339 affordable units. The 12 winners include five developments for frail elders (238 affordable units) in which the state funds will supplement HUD Section 202 grant awards.

State Median Single Family Home Prices Fell 4.6% in 2007; Sales Volume Fell 8.4%

Banker and Tradesman reported on January 28th that the median single family home price in Massachusetts fell to $310,000 in 2007, down 4.6% from the 2006 median of $325,000 and down 10.1% from the record high median of $345,000 reported in 2005. Single family home sales activity also fell statewide. A total of 50,435 sales were reported in 2007, down 8.4% from the 55,054 sales reported in 2006. Overall, the 2007 figure was the lowest reported in Massachusetts since 1992, when 45,850 homes were sold.

The paper noted that single-family price and sales volume declines hit some areas harder than others. Prices in Middlesex and Norfolk County fell 2% and 3% respectively and sales activity by less than 5%, while prices in Bristol and Plymouth County fell 7.2% and 8.5%, and volume fell by 12% and 11% respectively.

The paper reported smaller declines in condominium prices despite a larger falloff in sales volume. The median sale price for a condo in 2007 was $268,000, down 2.6% from the 2006 median of $275,000 and down 3.7% from the 2005 median of $279,378. Total condo sales fell as well, totalling 27,316, down 9.7% from 2006 when 30,324 units were sold. As with single family homes, declines varied by region, with bigger declines experienced in areas with large inventories of unsold units. Prices dropped 3.8% in Worcester County, for example, in 2007 and sales fell by 28.5%. Sales of age-restricted condos have also been affected as potential buyers have had more difficulty selling their current homes.

Census Reports Massachusetts Issued Building Permits for Only 14,874 New Housing Units in 2007

Recently released Census Bureau data on building reports for new private residential construction finds Massachusetts issued permits for only 14,874 units in 2007, down 25% from 2006 (nationwide the decline was 25%) and down about 40% since 2005. This is the lowest number of units permitted in Massachusetts overall since 1991 (when the figure was 12,672) and only the third year since 1980 when total units permitted fell below 15,000 (1990 was the other year). Permits issued for single family homes in 2007 totalled 8,703 units - fewer than any year from 1980 forward.

Federal Roundup

House-Passed Economic Stimulus Bill Drops Most Housing Provisions; Senate Bill May Raise Tax Exempt Bond Cap

Despite an initial agreement between the President and House leadership that the economic stimulus bill would increase funding for housing counseling and incorporate the House-passed FHA reform bill (H. R. 1852) with modifications, the final version passed by the House on January 29 did neither.

The only housing element in the bill passed by the House - - the Recovery Rebates and Economic Stimulus for the American People Act of 2008 (H.R. 5140) - is a temporary increase in the value of loans the FHA can insure and that Fannie Mae and Freddie Mac can purchase. The bill raises the limit under all three programs in high cost areas to 125% of the area median cost of a single family home. In Massachusetts, this would raise the current single family limits from $417,000 to $538,683 in Greater Boston. The new limit would apply retroactively to all mortages originated on or after July 1, 2007 as well as to all originated by December 31, 2008. (Senator Dodd has stated that he plans to file separate legislation shortly to permanently raise the GSE limits.)

The Senate is working on its own stimulus bill. The Senate Finance Committee reported out a version on January 31 that includes a provision offered by Senator John Kerry that would allow states to use tax-exempt private activity bonds to refinance subprime mortgages and would also increase the 2008 tax-exempt bond cap by $10 billion nationwide. The new authority could be used for mortgages for first time homebuyers and loans for multi-family rental housing as well as subprime refinancings. Each state would receive an increase based on their pro-rata share of the national population as of the 2000 census. CHAPA appreciates Senator Kerry's leadership on this issue.

It is unclear how much of the Finance Committee bill will be approved by the full Senate, which began voting on specific provisions on February 6. Both chambers hope to enact a final stimulus bill before Congress recesses on February 15.

President's FY2009 Budget Request Underfunds Section 8 and Proposes Deep Cuts to Several HUD Programs

President Bush released his FY2009 budget proposal on February 4th. While the total funding proposed for HUD would rise slightly this year, most of the increase would go to renewal costs for Section 8, but still leave both the tenant-based and project-based programs seriously underfunded. As detailed in a National Low Income Housing Coalition budget chart and memo, many other programs would receive deep cuts.

The President's proposal includes funding for about 10,000 new housing choice vouchers for veterans. But a Center on Budget and Policy Priorities (CBPP) analysis reports that the President's renewal funding level would leave at least 100,000 housing choice vouchers currently in use unfunded in FY2009. The plan would also require housing agencies to use most or all of their current reserves to support FY2009 renewal costs; without those reserves, the number of unfunded vouchers is almost 200,000.

In addition, the President would revamp the formula for allocating housing choice voucher renewal funds to housing agencies, basing FY2009 funding on the number of vouchers in use in FY2007 rather than using the current recent-cost based formula. CBPP also estimates that the President's budget underfunds project-based contract renewals by almost $2 billion.

The President's proposal would cut public housing funding overall by 6% compared to FY2008. It proposes a 17% cut in funding for the public housing capital fund and elimination of the HOPE VI program. In addition, while it provides a small ($100 million) increase in operating subsidies, it still provides 15% less than the amount public housing agencies need based on HUD's operating formula.

It also calls for an overall 8% reduction in formula block grant funding. While it proposes a 14% increase ($225 million) in HOME funding, it proposes a much larger cut ($659 million or 18%) in CDBG funding and level funds the Housing for People with HIV/AIDS program. The President's budget also calls for deep cuts in the Section 202 program for elderly housing (27%) and the Section 811 program for persons with disabilities (33%) and level funds homelessness assistance grants (except for a $50 million request for a demonstration program for chronically homeless individuals).

The proposed budget provides a 30% increase ($15 million) for housing counseling but cuts new funding to the Neighborhood Reinvestment Corporation for foreclosure counseling by $155 million (from $180 million to $25 million). It eliminates funding for HUD's Rural Housing and Economic Development program.

Rural Housing Preservation Bill Passes House

The full House approved the Section 515 Rural Housing Property Transfer Act of 2007 (H.R. 3873) on January 23. The bill seeks to speed up the approval process for transactions that would preserve and rehabilitate affordable rural rental housing developments created using Section 515 financing. It requires State Rural Development offices to approve or deny applications for transfers of ownership for this purpose within 45 days for applications covering a single project and within 90-120 days (for applications covering multiple properties).

The bill, referred to the Senate Banking Committee, also requires the Department of Agriculture to consult with HUD and the Internal Revenue Service to simplify the coordination of rules and transfer requirements governing other subsidy programs that may apply to these properties, include HUD's Section 8 program and low income housing tax credits.

Massachusetts currently has about 900 units of affordable housing in Section 515 properties with prepayable mortgages.

Recent Studies

Study Finds CRA Banks Less Likely to Issue Subprime Loans

A recent study by Traiger and Hinckley LLP of 2006 mortgage loans in the nation's 15 most populous metropolitan statistical areas has found that banks that are subject to the Community Reinvestment Act were two-thirds less likely to originate high cost mortgage loans for the purchase of an owner-occupied home than other types of lenders and were 58% less likely to make high cost loans to low and moderate income borrowers.

In the Boston MSA the difference was even greater: only 4% of loans originated by CRA lenders to low and moderate income buyers were high cost, compared to 18.8% of loans originated by other lenders. The study noted that in addition to offering better terms on average (including lower average interest rates on high cost loans), CRA lenders denied a lower percentage of loan applications overall than other lenders. It noted that these differences may be due to the fact that CRA lenders are more than twice as likely to retain loans they originate in their own portfolio. For example, CRA lenders retained 42% of their loans to low and moderate income borrowers, while other lenders retained less than 19%.

The study also found that the presence of CRA bank branches is strongly negatively correlated with foreclosure rates (the more branches in an area, the lower the foreclosure rate). The authors theorize that the presence of branches makes it easier for borrowers to apply for conventional loans and that the CRA mandate also encourages outreach and good underwriting.

Study Confirms Rental Vouchers Prevent and End Homelessness

A January 2008 study, "Housing Vouchers are Critical for Ending Family Homelessness", by Jill Khadduri of Abt Associates, provides a comprehensive review of recent studies of the impact of providing rent vouchers or subsidized housing on homelessness prevention. Overall, it found that providing housing assistance reduced homelessness and enabled homeless families to attain housing stability, even if it did not solve other poverty-related problems.

It notes a five year controlled study of welfare families in which half (the experimental group) were randomly selected to receive a rent voucher, while the other half (the control group) did not receive a voucher. The study found that the group that had received vouchers had a 74% lower incidence of homelessness in the following five years than those that did not. The report also describes several studies that found that 85% of high-risk homeless families given vouchers remained stably housed 12-18 months later.

Study Finds Preserving Expiring Use Housing Also Preserves Access to Public Transportation

Reconnecting America and The National Housing Trust released a study in January, "Preserving Opportunities: Saving Affordable Homes Near Transit", that indicates that a high percentage of federally assisted properties with expiring affordability restrictions in cities are located within a half mile of public transit. In its study of eight cities, including Boston, it found that 100,000 federally assisted units are close to public transit, but that 63% are covered by rental assistance contracts that will expire by 2012. It argues that preserving this stock is important to preserving access to jobs and services for low-income households.

Study Finds Young Professionals Pay Slightly More to Buy Homes in New England

A policy brief released by the New England Public Policy Center of the Federal Reserve Bank of Boston, "Can Young Professionals Afford to Buy a Home in New England" has found that young professionals pay slightly more to purchase a home in New England, as a percentage of household income than in a number of other areas. In 2005, the median young professional household that owned a home in MA paid 18.9% of their income for housing, while the national median was 17.1% of income. However, the study also noted that unlike middle-income families in New England, young professional households can afford to purchase median priced homes in all New England metropolitan statistical areas.

National Housing Conference Launches Interactive Database on Local Housing Affordability

The National Housing Conference's Center for Housing Policy has launched a new online database called Paycheck to Paycheck that allows users to look up information on many dimensions of housing affordability in over 200 metropolitan statistical areas, based on third quarter 2007 data. It includes a wide range of information, including data on affordability by occupation, the most and least affordable housing markets and recent changes in local affordability.