Housing Briefs - August 3, 2010
State Updates
2009-2010 Legislative Session Comes to a Close
The legislative session came to a close on Saturday, July 31st with a flurry of bills sent to the Governor for his signature. The date marked the last day legislation that requires a roll call vote or may be controversial can clear the Legislature this year. Bills that were not enacted will need to be re-filed in January, 2011. The Legislature will hold informal sessions to consider noncontroversial matters during the next several months while most lawmakers spend time campaigning in the districts.
CHAPA would like to offer our appreciation to the Legislature for their leadership and support in advancing critical affordable housing and community development priorities this session. While casinos and other controversial issues consumed the majority of media attention, the General Court enacted legislation to preserve expiring use affordable housing, address foreclosures, clarify ambiguities in mixed-income condominium law, bolster the State Low Income Housing Tax Credit, and maintain funding for MRVP and public housing, and other critical affordable housing programs. Advancing each of these initiatives was a collaborative and bipartisan effort and we appreciate the support.
What follows is a brief summary of CHAPA’s priorities that were enacted or that moved forward.
Legislature Unanimously Approves An Act to Stabilize Neighborhoods; Foreclosure Relief Legislation Awaits Governor Patrick’s Approval
On July 28th, the Legislature enacted An Act to Stabilize Neighborhoods by unanimous votes in both chambers.
The bill does the following: 1) Delays a foreclosure by an additional sixty days if the financial institution neglects to consider a loan modification, 2) Provides eviction protections to tenants in foreclosed properties who are in good standing and continue to pay rent, 3) Requires counseling in order for a low income senior to receive a reverse mortgage. The provision would take effect in August, 2012; 4) Creates a local option for municipalities to exclude nonprofits from property taxes during the term that the nonprofit rehabilitates a foreclosed home and 5) Criminalizes mortgage fraud.
This CHAPA priority is aimed at addressing various impacts of the foreclosure crisis. The Commonwealth has experienced 7,431 foreclosures through the first six months of 2010 – this represents a 56.7% percent increase over the same time period in 2009. We would like to thank Speaker Robert DeLeo, Senate President Therese Murray, Chairman Charles Murphy, Chairman Steven Panagiotakos, Chairman Kevin Honan, Chairwoman Sue Tucker, the entire Legislature, and countless advocates for supporting this critical legislation.
Governor Patrick Signs An Act Relative to the Determination of Condominium Common Area Interest into Law
Legislation clarifying how condominium percentage interest may be determined in mixed income condominiums has been signed into law. Ch. 183 of the Acts of 2010 provides options for new and existing mixed income condominiums to set percentage interest according to square footage instead of “fair value”. This somewhat ambiguous term has led to unnecessary litigation. For existing condominiums, 100% of the unit owners would have to agree to the change. For new developments, the condominium fees could be allocated more evenly among all owners, but the selling price for affordable homes would have to be reduced.
We would like to thank Senator Cynthia Stone Creem, Representative Alice Peisch, the Boston Bar Association, Community Associations Institute, and many others for partnering with us on this initiative.
Legislature Passes Economic Development Legislation; Bill Includes Several Housing Provisions
On July 31st, the Legislature approved sweeping economic development legislation. The 134 page bill includes the following provisions:
• CHAPA was successful in advocating for language to remove an archaic State Low Income Housing Tax Credit (LIHTC) requirement that an investor in State LIHTC also has invested in Federal LIHTC. This change is designed to attract additional investors to the State LIHTC market. (See Sections, 116, 117, 123 and 124).
• Grants two-year extensions beyond the original expiration date for permits granted between August 15, 2008 and August 15, 2010. Comprehensive Permits granted under Ch. 40B would not receive the benefit of the extension. (See Section 173).
• Codifies a definition of Community Development Corporations under CH. 40H, a top MACDC priority. (See Sections 86, 87, and 98).
• Adjusts the Board of CEDAC to insert the Secretary of Housing and Economic Development as chair. (See Section 90).
• The Legislature included several provisions to spur investment in Gateway Cities. These include:
o Recapitalizes the Growth District Initiative with $50,000,000. The program would be paid for through general obligation bonds. (See Section 2B).
o Creates a new $5,000,000 per year tax credit “Housing Development Incentive Program” for market-rate housing costs, codified as Ch. 40V. Developers and individuals conducting substantial rehabilitation of buildings to create housing with no more than 50 units, at least 80% of which must be market rate could apply to DHCD for tax credits to offset rehabilitation costs. In order for housing to qualify for the incentives, municipalities must designate areas of the municipalities to prioritize development and apply to DHCD. The municipality must also give a 10% - 100% property tax break to homeowners living in the constructed units in order for the development to qualify for the market rate tax credits. The tax credits could only go to developments in municipalities that have median incomes and post-secondary degree attainment rates below Commonwealth averages. The cities must also have populations between 35,000 and 250,000 people. (See Sections 17, 105, and 129).
• A requirement that agencies issue regulatory impact statements on small businesses. (See Sections 70, 71 and 168).
• Revamps Tax Increment Financing system. (See Sections 75, 77 and 78).
• Authorizes a new expedited permitting program, Ch. 43E, to speed up state permitting decisions. (Section 107).
• Extends Brownfields environmental responses tax credits. (See Sections 113, 127, and 128).
Please note that this summary is based on a cursory review of the bill. Members are encouraged to carefully review the legislation.
An Act to Sustain Community Preservation Clears House Committee on Ways and Means, Falls Short of Passage
Senate Bill 90, legislation to bolster Community Preservation Act (CPA) matching funds, enable more cities to adopt the CPA, and update the law cleared the House Committee on Ways and Means last Thursday and received initial approval from the House on Saturday. However, the bill did not pass before the session expired.
CPA advocates were disappointed that the bill did not clear the Legislature but are hopeful that the legislature will approve the proposal next session. We are especially grateful for the work of Representative Steve Kulik and Senator Creem, the bill’s chief sponsors.
Senate Passes Supplemental Budget; House Expected to Act in Informal Session
The Senate took action on a FY2010 and FY2011 supplemental budget. The bill includes several provisions, including an authorization to boost appropriations to allow DTA to continue the September clothing allowance for children and authorize enhanced oversight of cost certification for Comprehensive Permit Developments. The House did not take action on the supplemental budget but advocates expect action on the bill this month.
Legislature Overrides Funding Transfer Veto to Support MRVP, Soft Second
The Legislature overrode Governor Patrick’s veto of Outside Section 131 of the FY2011 budget. This override will require MassHousing to transfer $2.7 million to MRVP and MHP to transfer funds to SoftSecond Mortgage Loan Program. While these programs desperately need the funding, CHAPA continues to advocate for adequate funding for these programs through the conventional appropriations process.
The Legislature did not override other vetoes that reduced funding for MRVP, public housing, and RAFT. These vetoes were made to funding amounts that relied on Congressional funds from Federal Medical Assistance Percentages (FMAP) reimbursement authorizations that had not been delivered as of August 2.
Legislature Passes, Governor Signs Land Transfer for Veterans Housing
On July 31st, Governor Patrick signed legislation to transfer state land in Agawam to Soldier On to create 125 units of affordable housing for veterans. This positive use of surplus state land will enable veterans to transition home after military service in quality affordable housing. Soldier On is expected to break ground in the Spring.
Vote No on 2! Potential Repeal of Massachusetts Affordable Housing Law Receives Ballot Number; List of Supporters Grows
The Secretary of State has assigned a number to the Massachusetts Affordable Housing Law ballot question: Vote No on 2!
As we approach the busy fall election season, the Campaign to Protect the Affordable Housing Law continues to gather support as more than 350 diverse individuals and organizations have joined its community advisory committee. Please remember to ask your colleagues, friends, and elected officials to sign up as a supporter at: http://www.protectaffordablehousing.org/cms/home/take-action
Click here for a current list of people that support the Campaign to Protect the Affordable Housing Law. We’d also like to share this bulletin from AARP on the importance of maintaining the Comprehensive Permit Law for seniors.
Federal Updates
House Financial Services Committee Passes Preservation and Public Housing Bills
Last week (July 27), the House Financial Services Committee approved a bill to preserve federally assisted housing (the Housing Preservation and Tenant Protection Act of 2010 - H.R. 4868), sponsored by Congressman Barney Frank.
As detailed in a brief summary by the Committee, the bill provides tools, including grants and loans, to preserve older federally- and state-assisted housing that is at risk of converting to market-rate housing and authorizes a preservation program for RHS Section 515 housing. It does not pre-empt stronger state or local preservation laws. It allows owners to request project-based rental assistance instead of enhanced vouchers, strengthens resident protections and requires development of a national public database on federally assisted properties. The bill also includes reforms to the HUD Section 202 program.
The Committee also approved a public housing preservation bill (H.R. 5814) on July 27, to preserve and improve public housing. The bill includes authorizing language for the Choice Neighborhoods Initiative (CNI) which addresses many of the criticisms of the HOPE VI program that it is intended to replace. The CNI language has stronger one-for-one replacement requirements and stricter criteria for waivers and sets 50 year affordability requirements. The bill also reforms other public housing rules by among other things requiring replacement units when HUD permits the demolition or sale of existing public housing.
Senate Efforts to Pass National Housing Trust, LIHTC Extender Stalled
Efforts to win Senate passage of legislation that would fund the National Housing Trust and extend the Low Income Housing Tax Credit (LIHTC) exchange program failed last week. Senator Harry Reid supported efforts to add amendments to the pending Small Business Jobs and Credit Act of 2010 (H.R. 5297) and may try again this week, according to the National Low Income Housing Coalition, but even if successful, no further action will occur before September as the House is in recess until September 14.
House and Senate Advance FY2011 Budget for HUD
The full House approved an FY2011 appropriations bill (H.R. 5850) for Transportation, Housing and Urban Development, and Related Agencies on July 29 that would provide $46.6 billion in budget authority for HUD.
On the Senate side, the Senate Appropriations Committee approved a slightly lower HUD budget bill (S.3644) on July 22. Both bills provide more funding than the President’s request and reject many of the cuts proposed by the Administration. Both bills fund the HOME and Section 202 programs at FY2010 levels. The House proposal also level funds the Section 811 program at $300 million while the Senate bill would cut it to $200 million. The House bill also provides more funding for Homeless Assistance Grants.
Neither bill provides funding for HUD’s Transforming Rental Assistance (TRA initiative). The Senate bill includes $250 million for the Choice Neighborhoods Initiative (CNI), and no funding for HOPE VI, while the House bill provides $200 million for HOPE VI and no funds for CNI.
A budget chart prepared by the National Low Income Housing Coalition compares both bills with the President’s request and appropriations over the past five years.
Third Funding Round for Neighborhood Stabilization Program (NSP3) Signed into Law
The Dodd-Frank Wall Street reform law (H.R. 4173) signed into law on July 21 provides $1 billion, effective October 1, 2010, for a third round of Neighborhood Stabilization Program allocations to states and hard hit localities.
The new funds (“NSP3”) will be distributed by formula as in the first round, but can be used for the purposes allowed under NSP2. The law removes the deadline for spending NSP1 funds. It also now allows vacant properties to count towards the programwide requirement that at least 25 percent of the funds be used for the purchase and redevelopment of properties that will house households with incomes below 50 percent of the area median. HUD must establish the distribution formula within 30 days of the bill signing. Enterprise Communities has posted a summary of the NSP3 provisions in the new law and NeighborWorks has posted a table comparing all three funding rounds.
Administration Collects Input on Housing Finance Reform, House Schedules Hearings
The Obama Administration announced last week that it will convene a conference on August 17 of “leading academic experts, consumer and community organizations, industry participants and other stakeholders” to discuss the future of housing finance and “explore various models of reform”. The House Financial Services Committee also announced that it will hold further hearings on this topic in September.
In July, the Administration received submissions from over 300 persons and organizations, including CHAPA, in response to a request for input on seven key questions on the future of the housing finance system. Yesterday, Treasury Secretary Geithner also outlined this effort and steps the Administration is taking to implement the Dodd-Frank Wall Street reform law.
June Data Shows Continuing Drop in Active HAMP Loan Modifications
On July 21, HUD released its monthly report on loan modification activity under the Home Affordable Modification Program (HAMP). The number of households with active trial or permanent modifications as of June 30 fell to about 753,000, down about 7% from the just over 808,000 reported in May, primarily as a result of the cancellation of over 91,000 trial modifications in June as servicers continued to work through a backlog of very old (six+ months) trials and make permanent conversion decisions. Total active permanent modifications rose by almost 49,000 to just over 389,000. In Massachusetts, the number of households with active modifications (trial or permanent) fell to 17,895, down from about 21,700 at the end of April.
HUD has begun analyzing data on outcomes for borrowers who do not move to permanent HAMP conversions, after determining that previously published information was incomplete.
HUD Launches LIHTC Tenant Data Collection Initiative
On July 1, HUD launched its new initiative to collect annual data on the characteristics of households residing in federal Low Income Housing Tax Credit (LIHTC) units. State allocating agencies will have until September 30 to submit information on demographic characteristics (race, ethnicity, family composition, age, incomes, disability, etc.), the use of Section 8 vouchers and other housing assistance, and other data. As described in a March Federal Register notice, the data collection is required by the Housing and Economic Recovery Act (HERA) of 2008.