Housing Briefs - May 19, 2011

State Updates

Senate Committee on Ways and Means Releases FY’12 Budget Proposal

On Wednesday, May 18th, the Senate Committee on Ways and Means released its FY 2012 Budget Proposal. Like the Governor’s budget and the House budget, the Senate Ways and Means budget closes a gap of over $1.8 billion created by a revenue shortfall from the slow economy, the repeal of the sales tax on alcohol, and the loss of ARRA stimulus funds.

The Senate Ways and Means FY’12 budget provides small cuts to a few affordable housing and homelessness prevention programs, level-funds other programs at FY’11 funding levels, and boosts funding for MRVP. Highlights include:

  • MRVP would be funded at $35.5 million, plus an additional $8.4 million in funding that the budget requires MassHousing to transfer to the program. The total of $43.9 million in MRVP funding is projected to be sufficient to: 1) ensure every household on the MRVP program will be able to be served in FY’12; 2) allow program administrators to be able to reissue vouchers when they are turned in; and 3) enable a significant amount of new families and individuals to be enrolled in the program.
  • Under the Senate Ways and Means budget, an estimated 1,300 extremely low income households at-risk of homelessness could be provided with housing assistance using the Home Funders model of project-basing new MRVP vouchers together with new Low Income Housing Tax Credits, or approximately 840 households could be provided with rental assistance utilizing the average newly-issued mobile voucher costs.
  • Housing Consumer Education Centers are cut by $118,184. We expect an amendment will be filed to raise this to level funding.
  • Public Housing is level-funded at $62.5 million, a difficult funding level given rising costs and snow and ice spending from the harsh winter.
  • Home and Healthy for Good, a Housing First Program for homeless individuals that is proven to save taxpayer dollars, is cut by $100,000.
  • The Service Coordinators Program for Public Housing is cut by $25,000.
  • RAFT is funded at $260,000, a difficult funding level due to the depletion of ARRA Homelessness Prevention and Rapid Rehousing funds for similar purposes. This represents a 95% cut in the past three years.
  • The Alternative Housing Voucher Programs, the Mass Access Housing Registry, the Tenancy Preservation Program, Foreclosure Counseling Grants, and Department of Mental Health Rental Subsidies are all level-funded at FY’11 funding levels.

The Senate also included the “HomeBase” proposal to make housing assistance, not shelter, the primary response to assisting families that are homeless. The Senate made minor changes to the House language and many of them will be extremely helpful for families assisted with HomeBase. The changes to the House budget language include:

  1. Adding a category of eligibility for families that are at imminent risk of homelessness earning no greater than 115% of the federal poverty level. This category was also in the Governor’s budget proposal for Homebase;
  2. Providing DHCD, not the regional housing agency, with the authority to determine flexibility on the maximum rental assistance payment and making cost effectiveness the sole criteria to determine if flexibility on maximum rental assistance is warranted;
  3. Providing an appeals process for families terminated from HomeBase and allowing families to stay in housing pending the appeal;
  4. Providing that families cannot be terminated from HomeBase for a single violation of a housing stabilization plan;
  5. Mandating clear regulations for how families will be provided with temporary shelter prior to finding a HomeBase apartment;

We would like to thank Senate President Therese Murray, Majority Leader Fred Berry, Chairman Stephen Brewer, Vice-Chairman Steven Baddour, Assistant Vice-Chair Jen Flanagan, Chairman Jamie Eldridge, the members of the Ways and Means Committee, and many other partners in the Senate for their support for affordable housing throughout the budget process.

The Senate is scheduled to begin debate on the budget on Wednesday, May 25th. Following the May Senate deliberations, a conference committee will negotiate a budget to send to Governor Patrick for his approval prior to July 1.

Potential for Group Adult Foster Care Rate Cut Continues

Many of our members have expressed concerns with a potential rate cut to the Group Adult Foster Care program for seniors and persons with disabilities. The Senate Ways and Means budget does not include language protecting GAFC from rate cuts in FY’12. Without that language, the Administration is expected to cut GAFC rates, which will threaten the ability for seniors and persons with disabilities to continue receiving adequate daily services necessary to avoid more costly institutions. Many housing developments rely on GAFC to support their tenants with necessary services and without services, the long-term stability of these developments is threatened.

CHAPA members interested in protecting Group Adult Foster Care should contact their State Senator and ask them to support Senator Michael Rodrigues' GAFC budget amendment.

State Legislative Committees Consider Several CHAPA Legislative Priorities

The Joint Committee on Housing has held hearings on several CHAPA legislative priorities, including, An Act Relative to Community Housing and Services, An Act Promoting Accessible Housing for Persons with Disabilities, An Act Promoting Community Preservation and the Public Housing Innovations Act.

The Joint Committee on Municipalities and Regional Government also held a public hearing and land use and zoning reform legislation on Wednesday, May 18th.

Click here to access CHAPA’s testimony and additional information on these legislative proposals.

Administration Releases MassWorks Infrastructure Grant Program Guidelines

On May 1st, the Patrick-Murray Administration released guidelines on the MassWorks Infrastructure Program. The new initiative provides grant funding for the construction, reconstruction and expansion of publicly owned infrastructure including, but not limited to sewers, utility extensions, streets, roads, curb-cuts, parking facilities, water treatment systems, and pedestrian and bicycle access by coordinating several existing capital programs.

Administration and Finance Continues to Allocate Housing Bond Volume Cap for MassHousing and MassDevelopment

Tax-exempt private activity bonds are an important component of affordable housing finance. The Patrick-Murray Administration has reserved a significant portion of the state cap on private activity bonds for housing throughout its tenure. This year, the Executive Office for Administration and Finance has reserved $150 million in FY’11 volume cap for MassDevelopment to be used for multi-family affordable housing developments. In addition, MassHousing will be able to access over $342 million of the state cap on private activity bonds, which includes volume cap carried over from 2010. MassHousing will use the funds for both its single-family first-time homebuyer program and for multifamily affordable housing projects.

Annual Housing Institute for Local Officials Slated for June 20 and 21

Housing and community development professionals from around the state will be the featured speakers at the fifth annual Massachusetts Housing Institute for local officials. The event will take place on Monday and Tuesday, June 20-21, at the Marriott Spring Hill Suites and Conference Center at Devens.

The two-day intensive workshop is designed for local officials, planners, housing committees, community preservation committees, housing trusts, local housing advocates, and others who are working to provide housing options for their community.

Topics that will be covered during the workshop include housing finance, building local support, finding a good development site, and a case study. A new addition to this year's Housing Institute is the first annual Local Housing Heroes awards ceremony designed to honor local people who have demonstrated great tenacity and passion for supporting affordable housing in their communities. This year's institute will also include a Funders Roundtable and an "Ask the Experts" session, both designed to give you a chance to discuss your project or community with development experts.

The cost to attend both days of the event is $125 per participant ($75 for one day) and includes meals. Need based scholarships will be made available and we are committed to including all community members who are interested in participating.

Click here for the two-day schedule and here for more information about featured presenters.

2011 Massachusetts Housing Permits at Historic Lows

New U.S. Census data indicates that cities and towns in Massachusetts issued building permits for a total of 1,084 housing units in the first quarter of 2011 (January through March), down 35% from the number permitted in the first quarter of 2010 (1,664) and 40% fewer than the first quarter of 2009.

The 2011 first quarter total is far lower than any reported since at least 1969 and follows three years of very low permit activity (an average of 9,000 units a year in 2008 through 2010). By contrast, a recent Massachusetts Housing Partnership study estimated that the state will need to add 200,000 housing units between 2010 and 2020 to meet projected housing demand under a slow but steady growth scenario.

Massachusetts Foreclosure Activity Continues to Be Slow

The Warren Group reported on April 21 that new foreclosure activity in March rose compared to February but remains dramatically below the levels reported a year ago. A total of 552 foreclosure deeds were recorded and 1,048 petitions to foreclose were filed in March and year to date (January to March) foreclosure deeds totaled 1,593, down 54% from the same period in 2010. Year to date petitions (2,535) were 61.5% below the numbers reported in the first quarter of 2010.

Federal Home Loan Bank of Boston Schedules Sessions for Fall Funding Round

The Federal Home Loan Bank of Boston is hosting eight Affordable Housing Program (AHP) trainings and technical assistance sessions across New England from May 24th through September 8th in advance of the Fall 2011 AHP Funding Round.

The trainings provide an opportunity to network with lenders and other business partners and learn about the 2011 AHP program scoring, feasibility, and other requirements. The funding round will open for applications on August 22 and applications are due September 30. For more information about locations/dates and to register, click here.

Community Preservation Coalition Launches Updated Website

The Community Preservation Coalition, of which CHAPA is a founding member, launched its updated website this week with many new features, including a detailed searchable data base of local projects, including housing programs, funded using Community Preservation Act funds.

Federal Updates

Senate FY12 Budget Resolution May Stall

The Senate has yet to agree on a budget resolution for FY2012 to counter the one passed by the full House on April 15 (and expected to be voted down in the Senate). The reported target date for the Senate Budget Committee to release its proposed resolution is this week, but that may slip due to dissension within the “Gang of Six” selected to develop a broad deficit reduction strategy.

House Begins Work on FY2012 Appropriations

Despite the lack of consensus with the Senate on a budget resolution, the House has begun work on the FY2012 budget process, issuing 302(b) sub-allocations to the appropriations subcommittees based on the House Resolution. The Transportation, Housing and Urban Development and Related Agencies (THUD) subcommittee allocated $47.6 billion for FY2012, 14% below its total FY2011 appropriation for that subcommittee. The National Low Income Housing Coalition reports that the THUD subcommittee is scheduled to mark up the FY2012 bill on July 14, with full Appropriations Committee mark-up scheduled for July 26. The Appropriations Committee also set a deadline of May 20 for members of Congress to request funding for specific HUD and other programs, in guidance issued earlier this month.

Federal Reserve Seeks Comments on Proposed “Ability to Repay” Rule for Mortgages

On April 22, the Federal Reserve issued a proposed rule to implement the Dodd-Frank Act requirement that creditors only issue mortgages after determining that the consumer has the capacity to repay the loan. It will accept comments until July 22. As described in a Federal Reserve summary, the proposal does not apply to home equity lines of credit, reverse mortgages, time share loans or temporary loans.

It sets up four options for complying with the ability to repay requirement and also limits prepayment penalties. Creditors can comply, under option one, by verifying eight underwriting factors, including income, current employment status, payment amounts, and debt obligations. The second option would grant compliance to “qualified mortgages” (defined here as mortgages that lack certain risky features and have points and fees below 3%) where certain minimum verification procedures have been followed with regard to the borrower’s income. Options 3 and 4 set out the rules for compliance for balloon payment mortgages and refinancing of non-standard mortgages.

Loan Modifications Under HAMP Program Continue to Rise

HUD and the Treasury reported that the number of borrowers with active permanent loan modifications through the Home Affordable Mortgage Program (HAMP) stood at just below 670,200 as of March 31, up by almost 30,000 compared to a month earlier. Over 36,000 new permanent modifications were started, while just fewer than 6,000 active permanent modifications were canceled.

As of the end of February, the agencies reported that 16% of permanent modifications at least a year old are severely (90+) delinquent and another 4% are 60+ days delinquent. In Massachusetts, the number of households with active permanent modifications under HAMP rose by 551 to 14,738 and about 3,200 households have active trial modifications.

Fannie Mae Highlights Its Critical Role in Financing Multifamily “Workforce” Housing

Fannie Mae issued a white paper this month detailing the critical role it plays in financing both unassisted and assisted multifamily rental housing and the importance of that stock to providing homes to renters with a range of incomes. It notes the recent Joint Center for Housing Studies report (see above) on the rising demand for rental housing in the coming years and current affordability challenges.

It notes that its role in financing the nation’s multifamily housing has grown since late 2007 (it financed almost 50% of new multifamily securities in the third quarter of 2010) and that the performance of its multifamily book of business has been far, far better than that of commercial (CMBS) issuers, with a severe delinquency rate of 0.8% compared to 12% for CMBS issuers. It details the large role it plays in financing new subsidized housing as well as financing the preservation of existing subsidized housing and its expertise in underwriting these complex transactions.

Recent Research

Out of Reach Report Finds Rental Affordability Problems Growing as Incomes Drop

The National Low Income Housing Coalition released its 14th annual report on rental affordability (Out of Reach) on May 2. The reports compare renter incomes with the rents paid by new movers, as measured by HUD Fair Market Rents (FMRs), both nationwide and state by state. Nationally, the 2011 report found that while rents remained almost flat (with the national average 2 bedroom FMR rising by $1), renter average hourly wages fell by 6% between 2010 and 2011 (from $14.44 to $13.52 an hour).

In Massachusetts, it estimated that the average hourly wage for renters fell by 11% between 2010 and 2011 (from $18.20 to $16.17) and that the median renter household income fell by 17% (from $42,555 to $35,532). As a result, an estimated 62% of renters statewide have incomes below the level needed to afford the current average Massachusetts two-bedroom FMR at 30% of income, up from 54% in 2010.

The number of hours a renter earning the average hourly wage would need to work to afford the average Massachusetts two-bedroom FMR rose to 58, up from 51 in 2010. Nationally, the number of hours needed rose to 55, up from 51 in 2010.

Harvard Report Finds Severe Rent Burden at Highest Level in 50 Years

A new report by Harvard’s Joint Center for Housing Studies, with support from the MacArthur Foundation, details the growth in rental housing affordability problems in recent decades and predicts that cost burdens will continue to grow in the next few years.

“America’s Rental Housing: Meeting Challenges, Building on Opportunities” reports that 49% of renters paid 30% or more of their incomes for rent in 2009, more than double the percentage in 1960, and that 26% of renters had severe cost burdens (paying more than 50% of income for rent) in 2009, compared to 12% in 1960. It notes that while the rental housing market is improving, with falling vacancy rates, the number of renters is likely to grow faster than supply in coming years, and the supply of lower cost rental units is likely to fall, both in the assisted and unassisted stock.

These trends, along with rising utility costs, are likely to increase affordability problems both for low and middle income renters in the coming years. Budget problems at the federal and state level, as well as GSE reform and potential tax reform are also likely to create challenges to efforts to expand housing assistance, especially in areas of opportunity, and to preserve the existing assisted and unassisted multifamily stock.

HUD Study Shows Benefits of Family Self Sufficiency Program

A recently released evaluation of the FSS program looks at the characteristics of housing choice voucher families enrolled in FSS 2005, program elements, and the outcomes of a subset of families followed over four years (2005-2009). At the end of the study, 24% of tracked participants had graduated (completed program requirements), 39% were still enrolled, and 37% had left without graduating (in some cases because the program closed). Overall, it found that graduates had a higher rate of employment than the still-enrolled participants.

It also found that graduates had higher incomes both when they enrolled and when they graduated than other participants. Graduates increased their average household income from $19,902 to $33,390 between the first tracking year and the graduation year and had an average escrow balance of $5,294, equal to about 27% of their average household income at the time of enrollment.

AARP Shows Rising Number of Multigenerational Households

A new fact sheet by AARP reports that the number of multigenerational households has grown rapidly since 2000, as a result of the economic downturn. In 2010, there were 7.1 million multigenerational households, representing 6.1% of U.S. households, up from 5 million in 2000 (5.3% of all households). The largest rate of growth was among adults aged 25 to 34; in 2008, 20% lived in multigenerational households (compared to 16% of the population overall), up from 11% in 1980. Twenty percent (20%) of adults 65 and over lived in multigenerational households in 2008, up from 17% in 1990.

NAHB Releases Study on Homeownership Affordability by Race

A new report by the National Association of Homebuilders finds that homeownership prices are much more likely to be out of reach for minority households both nationally and within Massachusetts. The report compared the incomes of various racial and ethnic groups with the income required to purchase a home at the median price in 2010

Upcoming Events

Metropolitan Area Planning Council Annual Meeting, June 1, 8:30 a.m. to 11:30 a.m., Newton Marriott. The Council Meeting will focus on housing trends and topics.
Click here to learn more.

CHAPA Forum: Funding Housing Preservation Transactions in 2011, June 8, 3:00-4:30 p.m., Boston Private Bank and Trust, 10 Post Office Square, Boston.
Click here to register

Statewide Training on Chapter 40B, June 15, 8:00 a.m.-2:00 p.m., Best Western Royal Plaza Hotel, Marlborough, MA.
Click here to register

Great Neighborhoods Summit 2011: Placemaking in Action, June 23, 8 a.m. to Noon, UMass-Boston Campus Center, Third Floor Ballroom, 100 Morrissey Boulevard, Boston. Sponsored by the Massachusetts Smart Growth Alliance.
Register at http://greatneighborhoods2011.eventbrite.com
For more information, contact Ina Anderson at 617-263-7470. To become a sponsor of the Summit, please contact Andre Leroux at 617-263-1257.