Mayors Release Latest report on “Ready to Go” Jobs and Infrastructure Projects; Other Groups Call for Stimulus Funds

The United States Conference of Mayors (USCM) released its third report on a list of ready-to-go jobs and infrastructure projects which it says will help to jumpstart the economy once President-elect Barack Obama and Congress make stimulus funds available.

The report claims in 641 cities of all sizes there are 15,221 local infrastructure projects representing a $96.6 billion investment which will produce 1.2 million jobs in 2009 and 2010. The report includes a summary of the types of projects entailed in these sectors. The mayors’ claim the projects cited in this report does not adequately reflect the true potential impact of the stimulus on local projects and job creation since the list is compiled from “only” 642 cities. The US Conference of Mayors represents 1,200 cities with populations over 30,000. By contrast, the National League of Cities (NLC) represents, either directly or indirectly, more than 19,000 cities, towns and villages of all sizes. The report is the latest installment of the Mayors’ Main Street Economic Recovery plan. The plan calls for investments in 10 sectors:

1. Community development block grants (CDBG) for infrastructure;
2. Energy block grants for infrastructure and green jobs;
3. Transit equipment and infrastructure;
4. City streets/metro roads infrastructure;
5. Airport technology and infrastructure;
6. Amtrak infrastructure;
7. Water and wastewater infrastructure;
8. School modernization;
9. Public housing modernization; and,
10. Public safety jobs and technology.

The mayors are one of a number of groups calling for increased spending for local initiatives. The National Low Income Housing Coalition (NLIHC) is seeking $23.6 billion to provide assistance to 800,000 people and create over 200,000 new jobs. NLIHC is seeking funding for building or rehabilitation of 100,000 rental homes for extremely low income households; they seek to add 40,000 new vouchers; provide an additional $2 billion to the Department of Housing and Urban Development’s (HUD) Emergency Shelter Grant (ESG) program for homeless prevention; and, the organization seeks an additional $8 billion for the renovation and greening of public and assisted housing.

A coalition of organizations entitled the National Foreclosure Prevention and Neighborhood Stabilization Task Force sent a letter to Congress in mid-December calling for an additional $5 billion in funding for neighborhood stabilization. The group seeks these funds to supplement the $3.9 billion Congress appropriated as part of the Housing and Economic Recovery Act (HERA) for the Neighborhood Stabilization Program (NSP).

According to the task force, these funds will only assist less than 100,000 homes nationally which his is less than 10 percent of the one million homes projected to be vacant by the end of 2008. In its letter, the task force claims “many communities are expected to run out of NSP funds shortly after the monies are made available to localities in February 2009”.

The group estimates the additional funding will assist over 125,000 properties which will be purchased and rehabilitated. According to the group, those properties will:

• Create in excess of 100,000 jobs;
• Pay in excess of $210 million in property taxes annually;
• Generate an additional $10.7 billion in economic activity nationwide; and
• Save localities nearly $1.3 billion in costs ranging from trash removal, grass cutting, and boarding up vacant properties to more serious problems of vandalism, increased property and personal crime rates and arson.

The groups also call for a five percent set-aside for capacity building for local community development corporations, community land trusts, housing authorities and other nonprofits that are implementing the stabilization activities. They also call for funds to be set-aside to create a risk capital fund to allow local communities to level NSP funds.

These are the members of the National Neighborhood Stabilization Foreclosure Prevention Task Force which signed on to the letter:

ACORN
Center for American Progress Action Fund
Citizens’ Housing and Planning Association
Enterprise Community Partners, Inc.
Habitat for Humanity International
Housing Assistance Council
Local Initiatives Support Corporation
Low Income Investment fund
Mercy Housing, Inc.
National Alliance of Community Economic Development Associations
National Association of Affordable Housing Lenders
National Coalition for Asian Pacific American Community Development
National Community Land Trust Network
National Council of La Raza
National Housing Conference
National League of Cities
National NeighborWorks Association
National Vacant Properties Campaign
NCB Capital Impact
New Jersey Community Capital
Non-Profit Housing Association of Northern California
PolicyLink
Self-Help
Wisconsin Partnership for Housing Development, Inc.

Interesting Read

Silver Lining of Subprime Slips Away in Calif. Suburb
By Karl Vick
The Washington Post

Firms Charge Thousands to Modify Mortgages
Nonprofits Offer Service For Free, Advocates Say
By Renae Merle
The Washington Post

Homebuilders Will Start '09 with "Guns Blazing"
National Journal Magazine

Census Estimates Show Clout Again Likely to Go West and South
By Michael Teitelbaum
Congressional Quarterly

Read more »

HUD Nominee Faces Challenges

Shaun Donovan’s selection as the Secretary-Designate for the Department of Housing and Urban Development (HUD) was met with praise from a number of advocates for affordable housing but many challenges lay ahead for the secretary-designate.

The National Association of Housing and Redevelopment Officials (NAHRO) called Donovan’s selection “an asset at HUD”. According to NAHRO Executive Director Saul N. Ramirez, Jr said Donovan “is an outstanding choice to lead HUD" and contains the “abilities and experience will allow him to bring about responsible change in a difficult time."

Sheila Crowley, President of the National Low Income Housing Coalition (NLIHC) called his selection a “brilliant choice for HUD”. She said Donovan “enjoys high regard across the spectrum of housing interests, from low income housing and homeless advocates, public officials, developers, and financiers alike.”

Zunia Zaterman, Executive Director of the Council of Large Public Housing Authorities (CLPHA) called Donovan’s selection an “excellent pick for HUD”. Michael Kelly, Executive Director of the Washington DC Housing Authority (DCHA), said Donovan “has experience in full spectrum of issues and enjoys the support of the public housing community.”

Conrad Egan, President and CEO of the National Housing Conference (NHC), said, “Without question, Shaun will restore and elevate HUD to the principal domestic agency that advances the preservation and production of affordable homes and the vital development of communities.” Donovan is a trustee of NHC.

John A. Courson, Chief Operating Officer of the Mortgage Bankers Association (MBA) said Donovan’s “work in the private, non-profit and academic sectors gives him a unique perspective on the current turmoil in the housing market and he has been widely hailed during his time as New York City’s Housing Commissioner. We look forward to working with him to solve the ongoing crisis in the U.S. housing market.”

This range of support is going to be critical as Donovan, assuming he is confirmed as HUD Secretary, takes the helm of a department which has faces a number of challenges in the near future. Here is a list of some of the principal challenges facing the new secretary:

HUD structure: President-elect Barack Obama is calling on HUD to take the lead in solving the current housing crisis. But HUD’s structure needs to be reevaluated before it can effectively address the mortgage crisis and lack of affordable rental housing. Many recipients of HUD dollars consider the department to be too rigid in its rules, lacking muscle to secure the resources grant recipients need to administer its programs and facing retirement from a number of key staff resulting in a “brain drain” of institutional experience.

The department needs to be streamlined with more decision-making authority delegated to regional offices. HUD should follow the lead of Health and Human Services (HHS) Secretary-Designate Tom Daschle has expressed a desire to restructure HHS similar to the structure of the Federal Reserve Board. The department is not structured to react quickly enough to address local needs. The current economic crisis offers the ideal opportunity to radically change the structure of the department with an emphasis on delegating authorities to the regions, reducing regulation and allowing for greater local flexibility by housing providers to respond to local needs.

Affordable Housing Finance magazine has drafted a white paper entitled, Unfinished Business: What President-Elect Obama Must Know About Housing and HUD, which includes a recommendation for the new secretary to hold a “national conversation” in the form of public hearings. The paper calls for these hearings to explore a variety of issues including the notion that homeownership should be the de facto housing policy of this country; housing and transit should be better integrated; infrastructure needs must be addressed; and housing and health care for the aged should be integrated as well. This makes sense and should form the foundation for a newly structured department.

Access to, and funding for, affordable housing: The mortgage crisis has been well publicized; however, its impact on low income renters has received very little attention. The federal government has focused so much attention on helping homeowners in distressed it has failed to offer assistance to renters. While Congress has held hearings on the matter, Fannie Mae and Freddie Mac’s contribution to the mortgage crisis eliminated money for the National Housing Trust Fund which would have created badly needed resources to build affordable housing for people with the fewest resources to pay for adequate housing. The new secretary is going to need to find a way to ensure there are resources to develop affordable housing for those most in need. This will require increased funding for HUD programs particularly for public housing, vouchers, and new construction.

Increased funding for HOPE VI could be the vehicle to jump start production of affordable housing while also revitalizing distressed communities. Low-income housing advocates are adamant in ensuring changes to the current program. They want to ensure tenants have a right to return to the new units and that the one-for-one replacement rule is reinstated. The new secretary will need to balance the desires of both entities while acknowledging the need to ensure mixed financed deals are financially viable. Greater incentives must be provided to the private sector for developing multi-family units. Without private sector involvement, there simply will not be enough resources for more affordable housing units.

Deregulation: This is an issue which causes advocates and housing administrators, particularly public housing authorities, a great deal of angst. The Public Housing Authorities Directors Association (PHADA) has been the most aggressive in seeking deregulation of small housing authorities (agencies with fewer than 500 units). The report, completed by TCG International LL which was under contract with the IBM Business Consulting Services, stated among its recommendations that the risk of problems with small housing authorities was minimal compared to the burden of monitoring these agencies.

Regional approach to housing and community development: The Housing Finance Magazine white paper endorses an approach favored by the Brookings Institute in calling for a regional approach to solving the housing problems in the country. There is hope that the White House Office of Metropolitan Policy will support funding for regional approaches to solving the housing and community development challenges in the country. It will be fascinating to watch this issue develop. Local governments and housing authorities will resist this. There are tons of questions which must be resolved before implementation of this type of initiative can be tried.

For housing and community development initiatives to be successful all interested parties must think outside of the box. This may include agreeing to policy approaches which drew opposition in the past. Given the current housing crisis, the department will be forced to produce in a more substantive way than it ever has. For the secretary-designate, this is a double-edged sword. The department will either meet the challenges it must face or it will demonstrate it is ill-equip to handle its basic responsibility. The new secretary-designate seems to have the support of President-elect Obama which seems different from past administrations.

Interesting Reads

Stimulus

States, cities spar over stimulus money
By Stephen C. Fehr,
Stateline.org Staff Writer

States Squeeze Cities, Spreading the Economic Pain
Recession Hits Both Levels of Government, but Some Local Bodies Push Back and Take Fight over Funds to the Courts
By Connor Dougherty and Amy Merrick
The Wall Street Journal

Housing

White House Philosophy Stoked Mortgage Bonfire
By Jo Becker, Sheryl Gay Stolberg and Stephen Labaton
The New York Times

White Paper Defines Viability of Affordable Projects
Affordable housing market analysts adopt guidelines on determining market and project demand fundamentals.
By Chris Wood

Views Diverge on How To Recast Fannie, Freddie
By Zachary A. Goldfarb
The Washington Post

In Downturn, Build Up Stock of Affordable Rental Housing
By Roger K. Lewis
The Washington Post

Cool Is the Rule When HUD Is in the House
By Joe Davidson
The Washington Post

Moving On Out: Apartments See Renters Flee in Fourth Quarter
By Les Shaver
Multifamily Executive News Service

Tax Break May Have Helped Cause Housing Bubble
By Vikas Bajaj and David Leonhardt
The New York Times

When foreclosure limbo becomes a lifestyle
Like millions in U.S., Florida woman lives with housing uncertainty
By Mike Stuckey
Senior news editor
msnbc.com

U.S. homes lose $2 trillion in value in '08
Home prices have been hit hard, yet there is still no end in sight to the foreclosure crisis, according to Zillow.com.
By Les Christie, CNNMoney.com staff writer

HUD Chief Calls Aid on Mortgages A Failure
By Dina Elboghdady
The Washington Post

Homelessness

USCM homelessness/hunger survey shows continuing increase in need
American City and County Magazine

Read more »

Donovan Chosen as HUD Secretary: Reports Say Bronx Borough President to Head White House Office

Shaun Donovan, the current Commissioner of New York City’s Office of Housing Preservation and Development (HPD), has been nominated to be the next secretary of the Department of Housing and Urban Development (HUD).

HPD is the largest municipal developer of affordable housing in the nation. Since 1987, HPD has provided over $6.3 billion to support the repair, rehabilitation and new construction of hundreds of thousands of units of housing. HPD protects the existing housing stock and expands housing options for New Yorkers as it strives to improve the availability, affordability, and quality of housing in New York City. HPD has made a decisive shift away from City ownership of properties and has developed innovative community revitalization initiatives that promote private investment and productive public-private partnerships. HPD works with its governmental, community; non-profit and for-profit partners to strengthen neighborhoods increase the availability of well-maintained, affordable housing and enable more New Yorkers to become homeowners.

In his current position, Donovan is credited with helping to develop the city’s Acquisition Fund which combines public and private funds to encourage developers to include more affordable housing in their buildings. He went to HPD in 2004 after serving in HUD as part of the Clinton Administration where he was the Commissioner for the Federal Housing Administration (FHA) and headed the department’s multifamily office.

An architect, Donovan is expected to lead the efforts to restore some sanity to the current housing crisis. Obama is calling for a “bold plan that will dramatically increase the number of families who can stay in their homes. But this plan will only work with a comprehensive, coordinated federal effort to make it a reality,” he said in announcing Donovan’s appointment on You Tube.

One of Donovan's primary tasks will be to shore the FHA’s financial situation and seek to secure increased funding for HUD programs particularly public housing and the voucher programs.
Donovan is certainly highly regarded. He has been universally praised for his intellect, knowledge of issues and ability. As far as New York Mayor Michael Bloomberg is concerned, Donovan “walks on water” for his success in running HPD. Sheila Crowley, president of the Washington, DC-based National Low Income Housing Coalition, is quoted as saying Donovan “is a brilliant choice” and someone who is "highly regarded across the spectrum of those interested in affordable housing".

Donovan is 42 and has an undergraduate and graduate degree from Harvard University. He has also studied public administration at the Kennedy School of Government and architecture at the Graduate School of Design at Harvard.

Obama is also expected to appoint Bronx Borough President Adolfo Carrion as the director of a soon to be created White House Office of Urban Policy. This is according to various newspapers in New York City. Carrion was considered to be one of individuals under consideration for HUD secretary. If true, Carrion’s appointment would be a surprise to many in Washington who expected Bruce Katz, currently Vice President and Director of the Metropolitan Policy Program at the Brookings Institute. Katz, along with former HUD Secretary Henry Cisnero, wrote a paper which recommended the creation of this office. (See the December 8 posting). Carrion has an urban planning degree and worked for a period of time in the New York City planning department’s Bronx office. Carrion is also president of the National Association of Latino Elected and Appointed Officials (NALEO).

Interesting Read

New York Housing Chief Is Chosen for Cabinet
By Jackie Calmes
The New York Times

Foreclosures a Fair Housing Problem
By Bendix Anderson
Affordable Housing Finance Magazine

Internal Warnings Sounded on Loans at Fannie, Freddie
Executives Were Told of Subprime Risk
By Zachary A. Goldfarb
The Washington Post

Foreclosure Epidemic Infecting Rental Market
Tenants, Lenders Are Exposed to Various Scams
By Nick Miroff
The Washington Post

New York City Growing More Diverse, Census Finds
By Sam Roberts
The New York Times

Kimball Hill Shuts Its Doors
By Jerry Ascierto
Affordable Housing Finance

Read more »

New Publication Calls for Increased Role for HUD

A new publication to be released in January calls on President-Elect Barack Obama to create a White House Office on Metropolitan Policy and an increased commitment to housing within his first 100 days in office.

The publication, Change for America: A Progressive Blueprint for the 44th President is being published by the Center for American Progress. The group was founded by John Podesta who is serving as head of Obama’s transition team. The book includes a chapter on the Department of Housing and Urban Development (HUD). The chapter’s authors, former HUD Secretary Henry Cisneros and his former Chief of Staff Bruce Katz, call HUD a “legacy government – an overly compartmentalized agency administering programs and policies more suited to an earlier era, with information systems that impede rather than facilitate customer service and accountability.”

The authors suggest the new HUD Secretary focus on four key tasks in his/her first 100 days in office. They are:

1. Recruit the “best and the brightest” to work at HUD particularly for the positions of deputy secretary; assistant secretary for housing/FHA, public and Indian housing, fair housing and equal opportunity, and community planning and development;
2. Respond aggressively to finally address the mortgage crisis and restoring the Gulf Coast destroyed by Hurricane Katrina;
3. Aggressively establish budget priorities in fiscal years 2009 and 2010; and,
4. Establish a White House Office of Metropolitan Policy.

They argue HUD has not been a central player in the mortgage crisis. To address the mortgage crisis they argue that the new president should create a mortgage-crisis working group headed by the secretaries of HUD and Treasury to review all actions related to the current financial situation. They argue this group should offer a series of recommendations in three areas: regulatory and counseling; restoring the positive role of FHA, and recommending actions to address the fallout from the foreclosures. Second, they feel correcting the situation in the Gulf Coast is a major issue the HUD secretary should address.

They call for the HUD Secretary to submit an aggressive budget which includes 100,000 additional vouchers, creating a new $500 million grant program to preserve older assisted housing, restore funding for the HOPE VI, CDBG, public housing programs, and create an Office of Sustainable Housing to align housing policy with the goals of climate change and energy security.

The White House Office of Metropolitan Policy is envisioned to facilitate local collaboration in areas such as economic and workforce development, transportation, energy and housing. The paper calls for this office to design and implement “a new performance partnership with metropolitan areas.” The authors envision this office working closely with the heads of the departments of HUD, EPA, Transportation, Labor, Commerce, treasury and Education.

Obama has stated he will create an Office of Urban Affairs in the White House. There is speculation Katz will be named director of that office.

Interesting Reads

New Ridership Record Shows U.S. Still Lured to Mass Transit
By Lena H. Sun
The Washington Post

Modifying the Mortgage Giants
Fannie, Freddie Tilt From Profit Goals Toward Public Mission to Buoy Market
By Zachary A. Goldfarb
The Washington Post

Raines Says Company's Woes Not of His Making
By Zachary A. Goldfarb
The Washington Post

Building on Broken Promises
D.C. Developer's Projects Marred by Unchecked Spending and Dubious Deals
By Debbie Cenziper
The Washington Post

Report Links State Gun Laws to Rates of Slayings, Trafficking
By Cheryl W. Thompson
The Washington Post

Home Loan Troubles Break Records Again
By Alan Zibel
The Associated Press

Feud Between City Agencies Delays Moderate-Cost Housing
By Manny Fernandez and Charles V. Bagli
The New York Times

FHA Insurance Fund Has Fallen 39 Percent
By Dina ElBoghdady
The Washington Post

Haste Could Make Waste on Stimulus, States Say
By Lori Montgomery and Michael D. Shear
The Washington Post

Sen. Martinez Won’t Seek Re-Election in 2010

States Want $176 Billion Slice of Stimulus
Governors to Ask Obama to Set Aside Federal Funds to Boost Local Economies
By Ceci Connolly
The Washington Post

Protesters Call for Affordable Housing
Hundreds in City Said to Need Help
By David Betancourt
The Washington Post

Building Slowdown Turns Grand Visions Into Vapor
By Paul Schwartzman and Dana Hedgpeth
The Washington Post

Bush administration ignored clear warnings
Under pressure from banking industry, U.S. government eased lending rules
Associated Press

Read more »

A Number of Players Vying to Become Next HUD Secretary

A number of names are being considered to be selected as the new Secretary of the Department of Housing and Urban Development (HUD). Here is a brief summary of some names being considered according to news reports and rumors circulating in Washington.

Jesse Jackson Jr.: Rep. Jackson (D-IL) is seeking to replace President-elect Barack Obama in the Senate. Jackson has told friends he is interested in becoming HUD Secretary if he is not selected by Illinois Governor Rod Blagojevich to replace Obama. Jackson, son of Civil Rights Activist the Reverend Jesse Jackson, represents Chicago’s Second Congressional District. Prior to his congressional service, Representative Jackson served as the National Field Director of the National Rainbow Coalition. In this role, he instituted a national non-partisan program that successfully registered millions of new voters. He also created a voter education program to teach citizens the importance of participating in the political process, including how to use technology to win elections and more effectively participate in politics.

Shirley Franklin: She has been the mayor of Atlanta, Georgia since 2001. Never having previously been an elected official, Shirley Franklin became the city’s first woman mayor, and the first African-American woman to serve as mayor of a major southern city. On 8 November 2005, she won re-election with more than 90 per cent of the vote. She has drawn rave reviews for her work in balancing the city’s budget in her early tenure as mayor although her decisions did alienate many including some of her supporters. In 1991, Ms Franklin joined the Atlanta Committee for the Olympic Games (ACOG) as the top ranking female executive, serving as senior vice-president for external relations. In this position she was instrumental in the development of such legacies as the Centennial Olympic Park and served as ACOG’s primary liaison with various labor unions, civil rights groups, neighborhood/community organizations, and environmentalists.

Antonio Villaraigosa: Villaraigosa was elected mayor of Los Angeles in a runoff in 2005. He became the first Hispanic elected to be mayor of that city. He has been elected to a number of positions serving as a state lawmaker, a speaker of the California State Assembly, and a Los Angeles City Councilman. He was a co-chair of Hillary Clinton’s campaign and has extensive ties to labor unions. He is a Los Angeles native.

Adolfo Carrión, Jr.: He is currently the Bronx Borough President. He has an urban planning degree and worked for a period of time in the planning department’s Bronx office. If not appointed to a position in the administration, he is expected to run for the City Comptroller’s office. Affordable housing and job creation have been the center piece of his work in the Bronx.

Nelson A. Diaz: Diaz was General Counsel at HUD in the Clinton administration where he focused on reforming public and mixed-use housing programs. He was as judge for the Philadelphia Court of Common Pleas from 1981 to 1983 – the first Hispanic judge in Pennsylvania history. He was appointed administrative judge by the Pennsylvania Supreme Court, where he saved the state millions of dollars annually and used a nationally recognized Pro Tem Judges Program to reform the court’s case flow efficiency. He was a White House Fellow, serving as Special Assistant to Vice President Walter Mondale, and was also the Executive Director of the Spanish Merchants Association of Philadelphia. He was served as City Solicitor of Philadelphia. Both there and at HUD he was instrumental in increasing the number of women and minority lawyers in both organizations.

Saul N. Ramirez, Jr.: Ramirez is currently the executive director of the National Association of Housing and Redevelopment Officials (NAHRO) in Washington, DC. He was the Deputy Secretary at HUD during Andrew Cuomo’s tenure at the department. He is a former mayor of Laredo, Texas and spent over 20 years as an owner of an insurance business.

Manuel A. Diaz: Diaz is in his second term as mayor of Miami. He is currently president of the U.S. Conference of Mayors. He pursued a massive overhaul of the city’s finances at a time when the city was bankrupt, held junk bonds and was under a state oversight board. The city is now sound financially and has an A+ bond rating on Wall Street. The city has also increased its production of affordable housing by leveraging public/private investments toward 3500 affordable units since 2001 at a combined public and private investment surpassing $600 million with a billion dollar investment pledged by 2010. He is an active proponent of green building across the city and this year, presided over a ribbon-cutting ceremony for the City’s first LEED-certified affordable green home.

Frederick B. “Bart” Harvey: Recently elected to the board of the Federal National Mortgage Association, Harvey retired in March 2008 from his role as chairman of the Board of Trustees of Enterprise Community Partners, a provider of development capital and technical expertise to create affordable housing and rebuild communities. He joined Enterprise in 1984, and a year later became vice chairman. He also was Enterprise’s chief executive officer from 1993 to 2007. Before joining Enterprise, Mr. Harvey served in various domestic and international positions with Dean Witter Reynolds, leaving as managing director of Corporate Finance.

White Appointed Leader of S&P’s Public Finance Housing Group

Standard and Poor’s recently announced the appointment of Valerie White, as team leader for Standard and Poor’s Public Finance Housing Group. White joined Standard & Poor’s housing group in 1999, most recently after more than eight years at the New York City Housing Authority, where she served as chief of the Statistics Department, executive policy assistant for the Board of Commissioners and General Manager, and deputy director for Asset Management and Private Market Operations. She holds both a B.A. in Communications and a J.D. from Fordham University, as well as an M.S. and Certificate in Organization Development from New School University.

Interesting Read

Housing

The Fine Print of the Foreclosure Fight
By Kenneth R. Harney
The Washington Post

Blueprint for Boomers
Va. Explores Housing Options for Retirees Who Want to Stay Put
By Fredrick Kunkle
The Washington Post

New York City’s Public Housing Chief to Step Down
By Manny Fernandez
The New York Times

In Housing Slump, Elderly Forgo Assisted Living
By Jack Healy
The New York Times

President of Bronx Could Get Cabinet Post
By Jonathan P. Hicks
The New York Times

Obama Team Is Warned That HUD Needs Work
By Carol D. Leonning
The Washington Post

Fannie, Freddie Halt Foreclosures for Holidays
By Zachary A. Goldfarb
Washington Post Staff Writer

Housing Bets Attract Little Action
By Mary Ellen Slayter
The Washington Post

Homes for the Homeless, Bargains for Everyone
By Marc Fisher
The Washington Post

A Risk worth Taking
Many ethical sub prime lenders still manage to make plenty of money.
By Daniel Gross
NEWSWEEK

Community Development

Obama Vows Swift Action on Vast Economic Stimulus Plan
By Jackie Calmes and Jeff Zeleny
The New York Times

Crisis Hits Values of Commercial Mortgages
By Heather Landy and Dana Hedgpeth
The Washington Post

Campaign 2008

Battle Plans: How Obama won.
By Ryan Lizza
The New Yorker Magazine

Obama's Millennial Marketers
Young Voters Helped Sell Obama to the Nation -- And Now He Hopes To Hold On To Them
By Mary Gilbert
The National Journal

Read more »

Groups Agree on Broad Objectives for Housing

Lost in the furor of the current economic climate is rental housing. Elected officials have marshaled billions of dollars to assist homeowners, banks, other financial service institutions and are now considering assistance to the auto industry. While all this money is being printed and tossed around, low and moderate income households are the forgotten victims of this housing crisis.

Using its own research and a review of state and local studies and news stories, the National Low Income Housing Coalition (NLIHC) reached the following conclusion about the current foreclosure crisis:

• Multi-unit buildings are a significant share of the foreclosures in some areas potentially displacing many households at once;
• A majority of the displaced by foreclosure are renters who find themselves in more tenuous living arrangements in their new environs;
• A majority of the households seeking foreclosure counseling earn less than 80 percent of area median income;
• High-poverty and socio-economically disadvantaged neighborhoods are where a high concentration of foreclosures are located; and,
• No one appears to be immune to the crisis. Communities of all types are being affected the degree to which is determined by their history, laws, housing stock and population.

With this back drop more than 30 organizations met during the summer and agreed to a policy framework on the future of public housing. Public housing is typically considered the housing of last resort. Yet according to advocates for public housing, those programs have been consistently under funded. Making matters worse, public housing authorities (PHAs) have lists in the tens of thousands of families waiting to be selected for an available public housing unit or to receive a voucher. These lists do not include the thousands of others who can not get on the waiting lists because PHAs closed them knowing they will never be able to meet the demand.

The groups (see list below) which met over the summer represent a broad spectrum of the advocates for affordable housing. Brokered by the Council of Large Public Housing Agencies (CLPHA), the groups reached agreement on five objectives to restore public housing to the point where it can provide affordable housing to those who need it. The objectives are:


• Attract new private and public capital investment to ensure safe, high-quality housing for residents by eliminating the substantial capital backlog and providing for future needs;

• Change the program structure to facilitate adequate and reliable revenues, including offering PHAs the option to transition individual properties to other program models;

• Maintain a commitment to decent, safe housing at rents affordable to the current mix of residents for the long term in communities that advance our nation’s fair housing and civil rights goals;

• Redefine the relationship between the Department of Housing and Urban Development (HUD) and PHAs through sensible regulation that achieves both accountability and the flexibility to address local conditions.

• Enable PHAs to expand partnerships with others who share our commitment to serve low-income families, seniors, and persons with disabilities and reframe our mission in ways that attract partners who can provide access to new resources and responsible environmental stewardship, and economic and educational opportunities that enhance choice and the quality of life.

The objectives represent a major step forward in attempting to reach a consensus by groups which at times are on such opposite sides of issues it makes the Hatfield-McCoy feud child’s play. However, there are at least four issues which must be resolved and will test the strength of the coalition.

First, HUD needs to be reorganized. The coalition must agree on how the agency will be reshaped which will determine how programs are structured, funded and implemented. There is a lot of talk about the need to change HUD but how that change occurs will put this coalition to the test.

Second, the discussion is too narrowly focused on public housing. Public housing is a subset of the broader issue – the lack of affordable housing, public and private, for low- and moderate-income households. The National Housing Conference (NHC) and NLIHC have conducted a number of studies which attest to the extent of this problem.

Third, the participants of the group were too narrow. Absent from the discussion were the mayors and community development professionals, and lending institutions to name a few. All of these players need to be at the table to discuss the future of affordable housing and HUD since their opinion will carry a considerable amount of weight.

Fourth, there are substantial disagreement on issues which separate the groups. Resident advocates will campaign strongly for the reestablishment of the public housing one-for-one replacement rule which public housing authorities (PHA) vehemently oppose. This rule requires PHAs to replace every lost unit of public housing with another hard unit. There are some advocates who support the creation of regional housing authorities to address the housing needs of families. PHAs also vehemently oppose this. Without some level of compromise on these and other issues, the spirit of the agreement could unravel quickly.

Organizations signing the Framework for the Future of Public Housing

Abt Associates
American Association of Homes & Services for the Aging
California Housing Partnership Corporation
Cambridge Housing Authority
Center on Budget and Policy Priorities
The Municipal Housing Authority for the City of Yonkers
CityView
Council of Large Public Housing Agencies
Consensus Building Institute
District of Columbia Housing Authority
Enterprise Community Partners
Fannie Mae
Housing Authority Insurance Group
Keene Housing Authority
Housing Authority of the City of Los Angeles
Massachusetts Union of Public Housing Tenants
MIA Consulting
National Association of Housing and Redevelopment Officials
NCB Capital Impact
National Organization of African Americans in Housing
New York City Housing Authority
National Housing Conference
National Housing Law Project
National Low Income Housing Coalition
National Housing Trust
Newark Housing Authority
Oklahoma City Housing Authority
Public Housing Authorities Directors Association
Reno & Cavanaugh
San Diego Housing Commission
US Green Building Council
Urban Institute

Interesting Reads

Housing

Obama Wrote Federal Staffers About His Goals
Workers at Seven Agencies Got Detailed Letters Before Election
By Carol D. Leonnig
The Washington Post

How Hills Tamed HUD
By Bendix Anderson
Affordable Housing Finance

HUD at the Crossroads
By Jerry Ascierto
Housing Finance News

The Foreclosure Fight Gets Streamlined
By Renae Merle
The Washington Post

Beyond the Fat Cats
Bob Herbert
The New York Times

It’s About the Mortgages
The New York Times

A Town Drowns in Debt as Home Values Plunge
By David Streitfeld
The New York Times

Community Development

City Halls call out for help from Obama
'Main Street America' ailing, mayors say in msnbc.com survey
By Bill Dedman
MSNBC.COM

Michael Bloomberg sweetens Willets Pt. deal
By John Lauinger
The New York Daily News

Read more »

Obama Victory No Accident, Offers Many Lessons for the Future

Barack Obama’s victory November 4 marked the end of an era. It signaled the dominance of the World War Two generation and its influence is now over. The victories they won, the conflicts they lived with and the struggles they endured are now part of the past or left to their grandchildren to solve. To the greatest generation, as tabbed by newsman Tom Brokaw, we salute you. But the time has come for your grandchildren and great-grandchildren - the next generation - to assert its greatness.

The accomplishments of our parents and grandparents generation should not be underestimated. This generation survived the Great Depression, won World War Two, ushered in an era of prosperity unmatched at the time in the history of the country, oversaw conflicts in Korea and Viet Nam, endured the upheavals of the sixties, oversaw conflicts in Korea and Viet Nam, saw a president resign due to the Watergate scandal, sent a man to walk on the moon, almost experienced a nuclear war, saw the Berlin Wall come down, witnessed a culture clash which divided the country and experienced a the first attack on US soil since Pearl Harbor in 1941. Finally, this generation saw the rise of the Civil Rights movement which laid the foundation for the election of the first African American man to be President of the United States.

Obama’s election is an accident. It is also not an accident that the first African-American president has an African name. America’s racist past has a pall over its greatness and promises. Anyone who does not believe this country offers a person the opportunity to make the impossible possible was asleep at the wheel on November 4, 2008. God works in interesting ways. Obama’s resounding victory left no doubt that America needs to leave the racial divide behind us. It offers hope for millions – of all races and nationalities – but more importantly lessons all must learn and apply in the future.

First, it is time to stop the hate. This election generated a tremendous amount of pride. Many African Americans of all ages voted for the first time and expressed a pride in America they never felt before. Only a person so extreme callousness does not recognize the special significance of this election. More importantly, it is a time to put aside the racial bigotry and hatred for each other whether it is based on race, religion or ideology. We may take different routes to achieve our dreams but we each have one and should be able to pursue them in an environment based on respect and appreciation for each brings to their community.

Second, the impossible is possible. Obama had the audacity to believe he could become president without catering to the old guards who felt he had to “wait his turn”. Both senators – Hillary Clinton and John McCain – seem to resent the fact this young upstart was challenging what they felt was rightfully theirs. They seemed to have an arrogance of entitlement which reminded me of the mentality of welfare queens before that program was reformed. Both Clinton and McCain belittled his lack of experience but simply could not grasp the depth of his ability to inspire a cross-section of people to his cause. His ability to remain calm during the economic storm – the “October” surprise of this election – demonstrated to the voting public he could be trusted to lead this country during these trying times. After Obama’s victory was confirmed, the tears of so many African Americans said it all. In this country, every one, regardless of race can achieve the impossible. His election is a reflection of the true greatness of this country.

Third, parents must never dampen their children’s dreams. Obama was raised by the Anglo portion of this family who clearly taught him there are no limits to what he can achieve. If he had been raised by his African father’s family, he would not be standing on the brink of being inaugurated President. He would have been reminded, possibly in rather harsh language, that there are certain positions blacks simply don’t apply for. His election is a credit to his mother and grandparents who loved him, nurtured him and instilled the confidence and belief in his abilities.

Fourth, never underestimate the impact your story has on others. The criticism leveled against Obama for the books he wrote were interesting and uncalled. His critics, particularly conservative pundits, were flabbergasted he had the audacity to write two books under the assumption he had not achieved anything. They dismissed his story, denigrated his work experience and made every attempt to sully his character. Obama does have a story and it clearly resonated throughout the world. As a Christian we call this our testimony and God calls us to testify to the things He has done in our lives. While not explicitly testifying to God’s role in his life, Obama did testify to what shape his life and in turn his story helped to shape the life of others. Everyone has a story tell so tell it. As innocuous and inconsequential you think your story is it will impact some one some where.

Fifth, the African-American community, and all communities of color, can no longer allow racism to be an excuse for the problem which plagues this country. Does it still exist and needs to be addressed? Yes, but Obama’s election demonstrates it can be overcome.

Sixth, the world seems to have gained renewed respect for America. While many challenges lay ahead, the world seems to view Obama’s election as a breath of fresh air and could lead to significant gains world-wide. I am not convinced Obama’s greatest foreign policy challenges will come from the Middle East. Do not underestimate the racial implications of negotiations with Arabs. Many Arabs feel disrespected and demeaned by Americans. Sitting across the table with some one who looks more like them may lead to a different set of dialogues which could be productive.

Finally, Republicans need to take their heads out of the sand. American has changed. It is more diverse and less interested in issues that divide and want to come together to solve the issues facing this country. Republicans need to reach out to Hispanics, youth and African American voters with more respect, tolerance and issues which are relevant to those individuals. True or not, they are perceived as the party of angry, white, sometimes racist, individuals with little interest in those who don’t look like them. This election should be a wake up call to Republicans – business as usual will not work.

Interesting Reads
Housing and Community Development

Working Poor and the Young Are Hit Hard in Downturn
By Erik Eckholm
The New York Times

Check Cashers, Redeemed
By Douglas McGray
The New York Times Magazine

Localities Firming Up Foreclosure Aid Plans
Proposals Due Soon On Use of $22 Million
By Rosalind S. Helderman and Ovetta Wiggins

Focusing On Foreclosures
Now that the election's over, is relief in sight?
Daniel McGinn
Newsweek

Four Steps to Ending the Foreclosure Crisis
By Barbara Kiviat
Time Magazine

Good Neighbors
Editorial
The New York Times

In Mayor’s Plan, the Plastic Bag Will Carry a Fee
By David W. Chen
The New York Times

Mayor Cancels Rebates for Homeowners
By David W. Chen
The New York Times

Politics

President Obama
Now it's our turn to hope.
By William Kristol
The Weekly Standard

Put on a Happy Face, the Republican challenge.
By Fred Barnes
The Weekly Standard

GOP'S Way Back
Undoing the Red-Blue Shift
By Ryan Sager
The New York Post

Curb Your Enthusiasm, Democrats
The winners inherit a mess, and Obama will be hard-pressed to resolve tensions within his own party.
By Will Englund, Kirk Victor, and Brian Friel
The National Journal

Hidden Fissures in Party Could Trip Up Democrats
The Wall Street Journal

The Decency of George W. Bush
By Michael Gerson
The Washington Post

Read more »

Obama Expresses Support for One-for-One Replacement of Units

In an interview published in the September-October issue of the Journal of Housing and Community Development, Presidential candidate Barack Obama expressed support for reinstating the one-for-one replacement requirement. The Journal is a bi-monthly magazine published by the National Association of Housing and Redevelopment Officials (NAHRO).

Obama was the only candidate to respond to questions sent to the offices of each of the presidential candidates in January. Prior to 1996, federal housing law provided that every public housing unit that was demolished had to be replaced on a one-for-one basis with another public housing or equivalent unit. In 1996 this requirement was suspended and later repealed by Congress.

In addition to expressing his support for the one-for-one replacement requirement, Obama said he will restore cuts to the public housing capital and operating funds and community development block grant (CDBG) programs.

The details of Obama’s answers can be found here.

Household Expenses Rise Faster than Income

Findings from a recently released report found all major categories of homeowner expenses increased faster than incomes. The report, Stretched Thin: The Impact of Rising Housing Expenses on America’s Owners and Renters, was released by the Center for Housing Policy, the research affiliate of the National Housing Conference.

The report identified the following increases in household expenses: mortgage payments increased 46 percent; utilities increased 43 percent; property taxes 66 percent; and, property insurance. These increases occurred while incomes rose 36.3 percent. The report also found rental costs increased faster than income. During the same period rents rose by 51 percent while the renters income rose only 31.4 percent.

New York City Losing Affordable Housing Stock

Four percent of New York City’s privately owned subsidized rental housing was lost in 2007 according to a report released by the Community Service Society (CSS). CSS is a 160 year-old institution which utilizes public policy innovations to support poor New Yorkers in their quest to be full participants in the civic life of the nation’s largest city. CSS employs a variety of tools – advocacy, direct service, research and policy analysis, and strategic partnerships – to forge consensus on appropriate policy interventions to facilitate the economic mobility of low-income New Yorkers.

The report, Closing the Door 2008: Subsidized Housing Losses in a Weakened Market, states this loss of housing is slightly less than the average loss of rental units from 2004 to 2006. All of the losses were in low-market areas, primarily in the Bronx with one development located in Manhattan. According to the report most of the units were Mitchell-Lama units. Created in 1955, the Mitchell-Lama program provides affordable rental and cooperative housing to moderate- and middle-income families. There are 101 City-sponsored, moderate- and middle-income rental and limited-equity cooperative developments in New York City, almost 46,000 units.

CSS is calling for a variety of policy recommendations including support for tools to New York City and non-profit organizations to preserve distressed housing; placing Mitchell-Lama apartments under the rent stabilization program; and, preserving and extending the Mark Up to Market program to provide incentives to owners to remain in federally subsidized programs. The Mark Up to Market program allows owners to obtain the comparable market-rate rent levels for all units covered under a project-based Section 8 contract and redistributes the increased cash flow resulting from such rents. These incentives provide owners with an effective tool to recapitalize and preserve their properties as affordable housing

Interesting Reads

Housing

Despite Grand Plans, Prefabrication Still Hasn't Realized Economies of Scale
By Katherine Salant
The Washington Post

Help for At-Risk Homeowners Coming
Uncle Sam will spend up to $50 billion to rescue as many as 3 million mortgages.
By Jerome Idaszak, Associate Editor, The Kiplinger Letter
Renuka Rayasam, Associate Editor, The Kiplinger Letter
Kiplinger Business Resource Center

The Fannie Mae Trap
Two smart and savvy investment icons fell hard for Fannie and Freddie. What were they thinking?
By Fred W. Frailey, Editor
From Kiplinger's Personal Finance magazine, November 2008

Saving Energy In a Return to New Orleans's Lower 9th Ward
State-of-the-Art Designs Help Residents Come Back to Hurricane-Damaged Area
By Eileen Fleming
The Associated Press

Residents suffer as NYCHA lags on fixing elevators
By Juan Gonzalez
The New York Daily News

City Housing Authority to Switch 8,400 Apartments to U.S. Voucher Program
By Manny Fernandez
The New York Times

Foreclosures Open Door To Disorder
Vermin, Crooks Exploit Housing Market Crisis
By Nick Miroff
The Washington Post

Community Development

Restoring Financial Stability
By Eswar Prasad and Brookings
Brookings Institution
Kiplinger Business Resource Center

Hoping for a Green Renewal, Mich. City Will Turn Sewage to Fuel
By Kari Lydersen
The Washington Post

Economic woes mean smaller paychecks
For some, weak economy translates into fewer hours and less money
By Allison Linn
Senior writer
msnbc.com

Up and Down on Main Street
Merchants on a Historic Road in Fairfax City Express Resilience and Show Pockets of Pessimism
By Alejandro Lazo
The Washington Post

Read more »

More Good than Bad from 2008 Presidential Election

Lost in the typical mudslinging and frenzy of the 2008 presidential campaign there were a number of elements to this election year that should not be lost. Apart from its historical significance, a few underlying themes should not be forgotten.

First, Barack Obama and Sarah Palin represent the political version of a “rags to riches” story which defines this country. Their ascendancy reminds all of us impossible dreams are possible. While they each have detractors believing their “inexperience” should be disqualify them, in some respects that really doesn’t matter. Ultimately, the voters will decide if either of them is qualified for the positions they are pursuing. What does matter is celebrating a country where two relatively unknown individuals can run for the two highest offices in the land.

Second, we are witnessing the end of the influence of the World War Two generation. John McCain is the by-product of a generation which successfully fought to protect this country from despicable evil. In the process, it ushered in this country economic opportunities and prosperity unrivaled in our history at the time. As dubbed by Tom Brokaw as “the greatest generation,” it believed in the principles this country stood for and protected them through sacrifice, service, blood, and in some cases, death. This generation was also defined by a society and culture which viewed the world through narrow eyes. As this generation ages and passes on, its influence is waning as a new more diverse generation takes the mantle less encumbered by racial and social strife and more at ease with its diversity. As the economic prosperity of countries like India and China increase and our enemies are less defined by the Cold War, greater sensitivity to the nuances of diversity can only help the United States internally and on the world stage.

Third, the country missed a great opportunity to address the underlying racial tensions which still exist in this country. I understand Obama’s reluctance to discuss race; however, race has been the 800 pound gorilla referred to but not fully addressed. Each side of the political spectrum has accused the other of race baiting. For me the allegations of elitism (uppity); he’s a rock star (no substance) the ad with Paris Hilton (questioning his intelligence); he is not like us (color of his skin) were doing just enough to brush the embers of racism but not enough to be called racist. I would have preferred an honest discussion about race, get it over with and them move on to the issues. But Obama appears to be a modern version of Jackie Robinson, taking these slights with dignity, keep his cool during various crises and now appears to have earned the trust of the American people.

In spite of this missed opportunity, I believe the country will be stronger because of this election regardless of the outcome; it will be improved and more inclusive. Racism will still be a factor in this country, but an Obama election will leave a huge junk in racism’s armor. It also validates Bobby Kennedy’s 1968 prediction that in 2008 a black American will be elected president of the United States.

Fourth, McCain has mistaken service for leadership. McCain’s service to this country is admirable; however, he appears to believe his service should be rewarded with his election as president. There is a difference between serving your country and leading your country. Being a maverick doesn’t necessarily anoint you as a leader. Everybody I know who can be considered a maverick is also reckless. They tend to be impulsive and sometimes irrational. McCain demonstrated his recklessness with the way he handled the bail out crisis: it appeared impulsive and irrational. It may ultimately cost him the election. McCain is a good man and deserves better than he is receiving in the race from his own party, the media and even the Obama campaign. But while his service should be recognized and valued, it is not a guaranteed ticket to the presidency. Just ask Sen. Hillary Clinton (D-NY).

Fifth, Sen. Clinton’s campaign for the Democratic nomination raised the bar for women seeking elected office. She was to women what the Reverend Jesse Jackson was to African Americans when he ran for the nomination in 1984. She forced the electorate to believe it is possible for a woman one day to be president. She will likely never be elected president, but she has paved the way for another woman to hold that office.

Sixth, Alaska Gov. Sarah Palin demonstrated there is a large segment of the female population which does not connect with Clinton. Palin clearly connects with women who previously did not have a voice on the national stage.

Seventh, should Obama get elected the pressure on him will be enormous. Like Jackie Robinson in baseball, Obama will have the weight of all African Americans on his shoulders whether he likes it or not. But unlike Jackie, the entire world will be watching.

Finally, this country suffers from a crisis in leadership. There are too many individuals making decisions to satisfy political needs and self-interest, some fueled by demands from the public, versus making decisions advancing our community as a whole. The challenge for the next president is not to unite the country. The country will continue to be divided by ideology, culture and race. The challenge will be forging a future which benefits everyone in spite of the divisions.

CQ Offers Names of Possible HUD Secretaries

The Congressional Quarterly Magazine offers names of individuals - as identified by its beat writers - who might be considered for the position of Secretary of the Department of Housing and Urban Development (HUD) depending on the candidate who wins November 4. According to CQ writers the names in the McCain circle include J. Kenneth Blackwell, for Secretary of State for the State of Ohio; Stephen Goldsmith, Char of the National and Community Service; and, Michael Steele, former Lieutenant Governor of the State of Maryland and current Chair of GOPAC. A few of the names in the Obama circle include Shirley Franklin, Mayor of Atlanta, Georgia; Valerie Jarret, CEO of Habitat Co.; and, Nicholas Retsinas, Director of Harvard University’s Joint Center for Housing Studies.


Interesting Reads

Housing

EDITORIAL: Whitewashing Fannie, Freddie
The Washington Times

HUD Chief Talks Foreclosures
By Donna Kimura
Housing Finance

Busy Season May Not Be Too Busy
By Jerry Ascierto
Housing Finance News

It's the Housing Market, Stupid
By Barbara Kiviat
Time Magazine


Community Development

Takeover by PNC Heralds Fall of a Cleveland Institution
By Michael A. Fletcher
The Washington Post


The High School Dropout's Economic Ripple Effect
Mayors Go Door to Door, Personally Encouraging Students to Stay in the Game for Their Own Good -- and for the Sake of the City
By Gary Fields
The Wall Street Journal


Mayor Bloomberg: Economic crisis already costing New York $1.5 billion in lost taxes
By Erin Einhorn and Adam Lisberg
New York Daily News


Economic turmoil has New Orleans worried
Businesses uneasy in the Big Easy as the national crisis dampens tourism
Associated Press


Campaign 2008

How Would McCain Govern?
The former Navy pilot thrives on risk, sizes up situations quickly, makes decisions from his gut -- and loves to shake things up.
By Kirk Victor
The National Journal

How Would Obama Govern?
Smart but untested, disciplined but low-key, sure of himself but a careful listener, he would bring a measure of calm to the Oval Office.
By Will Englund
The National Journal


SPECIAL SERIES
Swing States
The National Journal Magazine

International

China Aids Home Buyers to Curb Impact of Slump
By Andrew Batson
The Wall Street Journal

Read more »

Economy Affecting Local Governments and Working Families

Local governments and working families are feeling the crunch of the economic crisis and could be in for some long term pain according to two recent reports. The National League of Cities (NLC) recently released it annual survey of city finance officers which concluded that municipalities’ fiscal condition has decreased dramatically in 2008.

Working in partnership with the 49 state municipal leagues, NLC serves as a resource to and an advocate for the more than 19,000 cities, villages, and towns it represents. More than 1,600 municipalities of all sizes pay dues to NLC and actively participate as leaders and voting members in the organization. The City Fiscal Condition Survey is a national mail survey of finance officers in U.S. cities conducted in the spring of each year. This is the 23rd edition of the survey.

The findings included the following:

Two in three city finance officers report their cities are less able to meet the fiscal needs in 2008 than in the previous year;

Final tallies for 2007 reveal city revenues, when accounting for inflationary factors, remained flat while spending increased by three percent;

As finance officers look to the close of 2008, they predict revenues and spending will decline in inflation-adjusted terms, with revenues decreasing 4.3 percent and spending decreasing by 1.5 percent;

Property tax revenue increased by 6.3 percent in 2007, but is predicted to decline by 3.6 percent by the close of 2008;

Spending pressures stem from rising costs, such as energy and fuel prices, public safety and infrastructure needs, and employee-related costs for health care, pensions and wages;

To balance annual budgets and meet ongoing spending needs, many cities are increasing fees and charges for services; and,

Ending balances, or “reserves,” remain at high levels and will provide a buffer against the current downturn.

Since an overwhelming number of local governments depend on property taxes to raise revenue the current housing crisis has affected local revenue. At the time of the survey, most respondents stated they did not have information documenting the impact of foreclosures in their communities; however, 40 did respond and stated the rate of foreclosure increase by 60 percent from 2006 to 2008. In addition to property taxes, some local governments rely on sales taxes or local income taxes. Most respondents expect revenues to decline from these sources as well. Many of the respondents stated the impact of the national economic conditions will still be felt by local governments in 2009 and 2010.

The current economic climate is also adversely hurting working families. The Working Poor Families Project, Working Hard, Still Falling Short, which states far too many families are working hard but still did not earn enough income to achieve economic security.

The project reviewed U.S. Census data which revealed:

1. More than one in four working families with children, a total of 9.6 million, is low-income;

2. More than 21 million children live in low-income families;

3. The number of low-income working families increased by 350,000 from 2002 to 2006;

4. Income inequality among working families increased by almost 10 percent from 2002 to 2006;

5. These families lack the earnings to meet their basic needs; and,

6. The report states public policies which promote education and skills development, quality jobs, health care and family leave are effective ways to foster family economic security.

The report also seeks to refute myths about low-income families:

1. Seventy-two percent of low-income families work;

2. The average annual work effort for low-income working families is 2,552 hours, roughly one and one-quarter full-time jobs;

3. Fifty-two percent of low-income working families are headed by married couples;

4. Sixty-nine percent of low-income working families have only American-born parents;

5. Eighty-nine percent of low-income working families have a parent between the ages of 25 and 54;

6. Forty-three percent of low-income working families have white, non-Hispanic parents; and,

7. Twenty-five percent of low-income working families receive food stamp assistance.

The report states the federal government should make a commitment to pursue four goals:

1. To increase the number of working adults enrolled in and completing education and skills development programs;

2. Increase the number of good jobs and increase wages and benefits for low-income workers;

3. Increase economic opportunities for low-income families; and,

4. Regularly assess the challenges facing this group and how the government is responding to their needs.

Interesting Reads

The Reckoning
Building Flawed American Dreams
By David Streitfeld and Gretchen Morgenson
The New York Times


SPECIAL FOCUS
2008 ELECTION GUIDE
Who's Better for Housing?
AFFORDABLE HOUSING FINANCE • October 2008
BY DONNA KIMURA AND BENDIX ANDERSON


SPECIAL FOCUS
2008 ELECTION GUIDE
Industry Leaders Speak Out on Candidates, Election
AFFORDABLE HOUSING FINANCE • October 2008
BY AFFORDABLE HOUSING FINANCE STAFF


SPECIAL FOCUS
2008 ELECTION GUIDE
Unfinished Business
AFFORDABLE HOUSING FINANCE • October 2008
What the next president must know about housing and HUD
BY AFFORDABLE HOUSING FINANCE STAFF


THE CRASH Risk and Regulation
What Went Wrong
By Anthony Faiola, Ellen Nakashima and Jill Drew
The Washington Post


Smaller Banks Resist Federal Cash Infusions
By Binyamin Appelbaum
The Washington Post


Birmingham on the brink (of bankruptcy)
By David Whitford, editor at large
Fortune Magazine


Foreclosures, Falling Prices Spur Pr. William Home Sales
By Nick Miroff
The Washington Post


When Fannie and Freddie Opened the Floodgates
By Stuart Taylor
National Journal Magazine

Read more »

Funding Available for Foreclosed Properties

State and local governments have an opportunity to provide some much needed relief to the economic impact of the mortgage crisis in neighborhoods but some obstacles and unintended consequences could mute this opportunity.

As part of the Housing and Economic Recovery Act of 2008, Congress appropriated a total of $3.9 billion to be distributed to state and local governments by the Department of Housing and Urban Development (HUD). Called the Neighborhood Stabilization Program (NSP), provides funds for HUD to allocate in an expedited fashion to state and local governments in need of purchasing foreclosed and abandoned properties to prevent further deterioration in neighborhoods as a result of the current economic climate.

The funds may be used principally for five activities:

• To establish financing mechanisms to purchase and redevelop foreclosed and residential properties;
• To purchase and rehabilitate foreclosed and abandoned properties;
• To establish land banks for foreclosed homes;
• To demolish blighted structures; or,
• To redevelop demolished or vacant properties.

The funds are being provided as an amendment to FY2008 community development block grant (CDBG) funds. The distribution uses variations to the CDBG formula but reflects congressional intent to address foreclosed and abandoned property. In the normal CDBG formula, local governments with a population of 50,000 or more receive a direct allocation from HUD from 70 percent of the total allocation to the program. The localities receiving these funds are called entitlement communities. Thirty percent of the funds are sent to the state which distributes their allocation to non-entitlement communities, those localities with less than 50,000 in population.

The NSP formula is based on need in addressing the aforementioned problems of foreclosure and abandoned properties. As a result, the formula for NSP did not include all entitlement communities. In creating the formula to distribute the funds, HUD determined that every state should receive a minimum $19.6 million. HUD also determined if a locality did not receive at least $2 million it would not be allocated a grant. As a result, more than half of the CDBG entitlement communities did not receive direct NSP funds. They must now join the other localities in applying to the state for funding.

For example, in Georgia, only nine of the 22 entitlement communities received direct NSP funds. The state received $77 million, $37 million more than its FY2008 CDBG allocation. These are the communities which received direct NSP funds:

DeKalb County $18.5 million
Atlanta $12.3 million
Gwinnett County $10.5 million
Fulton County $10.3 million
Clayton County $ 9.7 million
Cobb County $ 6.8 million
Columbus-Muscogee $ 3.1 million
Augusta $ 2.4 million
Savannah $ 2.0 million

The following Georgia entitlement communities did not meet the $2 million NSP threshold (FY2008 CDBG totals in parentheses): Albany ($1.1 million); Athens-Clarke ($1.4 million); Brunswick ($435K); Dalton ($403K); Gainesville ($394K); Hinesville ($296K); Macon ($1.3 million); Marietta ($681K); Rome ($501K); Roswell ($462K); Sandy Springs City ($540K); Valdosta ($586K); and, Warner Robbins ($453K).
Each of these communities must now apply to the state if it wants to receive NSP funds.

As a result of the expedited fashion there are a few issues worth noting:

1. There is a very short time for these funds to be distributed and obligated. State and local plans must be submitted by December 1st. The plans do not have to be complete but must have sufficient information to identify to HUD how these funds will be spent to address the local problem. The truncated time frame will place an enormous amount of pressure on both HUD and the grantees receiving these funds.
2. Funds must be obligated in 18 months. If not, the funds will be recaptured.
3. Non-entitlement communities will receive stiffer competition from entitlement communities when applying for state funds. Those entitlement communities which did not receive a direct allocation of NSP funds may apply to the state for funding.
4. When preparing its plan, a state may not have sufficient data to truly reflect local needs. While HUD has data available to help state and local communities identify their needs, it is incumbent upon non-entitlement communities to ensure it has good data and that the data is submitted to the state.
5. It is important for local communities to clearly identify how it will spend these funds. Local communities may apply to the state for pre-agreement awards to help plan its strategy. Part of the strategy is to clearly identify its local need. For example, some communities may have property owners more than 90 days arrears in payments. Other communities may not have this problem
6. States may decide to administer the program itself.
7. Twenty-five percent of the funds must be spent on those families with incomes at 50 percent or below median income. It is in the localities’ best interest to ensure its housing authority is involved in serving this population. HUD acknowledges this provision lends itself to rental housing more so than homeownership.
8. Properties must be sold at a maximum discounted rate of 15 percent below the most current appraised value. While this may allow for easier selling of the properties it could have the unintended consequence of deflating overall property values.
9. All fair housing laws still apply to this program. HUD is strongly discouraging localities from purchasing owner occupied homes because the Urban Relocation Act (URA) would apply. URA opens the door for lengthy and sometimes contentious actions which could delay implementation of the program initiatives.
10. HUD also encourages localities to seek counsel if it is interested in exercising eminent domain over property.
11. As local governments explore options to use these funds, they may also want to explore ways in which these funds can be leveraged to attract other resources for broader community development projects. One option may be to explore issuing bonds. For those unfamiliar with bonds, the National Organization of African Americans in Housing (NOAAH) has an excellent primer on bonds on its web site.


Interesting Reads

Parties Jockey for Advantage on Economic Aid
Associated Press

Rising Housing Costs Outpacing Income
By Alex Veiga
Associated Press

Blame Game Gets Nasty When It Targets the Poor
By Michelle Singletary
The Washington Post

As Larger Banks Crumble, Local Firms See Rush
By Brigid Schulte
The Washington Post

Detroit’s Ills Symptomatic of a Manufacturing Plague
By Peter Sleven
Washington Post Staff Writer
The Washington Post

Fannie Mae and Freddie Mac must go
We tried privatizing them before, in 1968. It didn't work.
By David G. Oedel
The Christian Science Monitor

McCain Plan Draws Doubts From Experts On Mortgages
By Dina ElBoghdady
Washington Post Staff Writer

A rising tide of ‘underwater’ homeowners
1 in 6 now owe more on their mortgage then their property is worth
By James R. Hagerty and Ruth Simon
The Wall Street Journal

Campaign 2008

THE COOK REPORT
A Tie Goes To The House
Democrats now control 27 states' delegations, but that may not be enough to break an Electoral College deadlock.
By Charlie Cook
The National Journal Magazine

Read more »

CRA: A Tool for Local Agencies

Last week aviewfromdc held the position that local housing and community development organizations needed to explore relationships with local lending institutions to generate additional funds. It is our opinion the bail out and other federal priorities will make it extremely difficult and highly unlikely local agencies will see an increase in federal funds. Nothing has occurred in the past week to change that assessment. In fact, the vents of the past week have reinforced our view that local agencies need to be more creative in seeking additional funds to serve their low- and moderate-income population.

One tool which can be used to generate additional resources is the Community Reinvestment Act (CRA). In this issue we are providing our readers with a summary of the act taken from the National Community Reinvestment Coalition web site. We also encourage our readers to visit the Federal Financial Institutions Examination Council’s web site as well. This week we would like to provide a summary of the act. For more detailed information on how an agency can use CRA for it local purposes, we recommend visiting NCRC’s site for a manual and other resources highlighting the use of CRA.

CRA is an act which was passed in 1977 to establish a framework to monitor the lending, investment and services offered by lending institutions in low- and moderate-income communities. Four federal agencies are responsible for monitoring financial institutions: the Office of the Comptroller of the Currency examines nationally chartered banks; the Office of Thrift Supervision examines savings and thrifts; the Federal Deposit Insurance Corporation and the Federal Reserve Board monitor state chartered banks.

Banks are examined according to size to determine their responsiveness to community needs. For example, institutions with more than $1 billion in assets are reviewed differently from institutions with fewer resources. They are subject to a more rigorous exam which considers the performance context of the lending institution. Those with less than $1 billion in assets but more than $250 million are subject to a streamlined test. Institutions with less than $250 million in assets are subject to five criteria in their examinations: the loan to deposit ratio; the percentage of loans in the bank’s assessment area, the bank’s distribution of loans to individuals of different income levels and businesses and farms of different sizes, the geographic distribution of loans, and the bank’s record of responding to written complaints about its lending performance in its assessment area.

NCRC has a wealth of resources available to local leaders interested in learning more about CRA and how their local banks fair under the law. They also have a section on their web site which refutes the comments of conservative commentators who blame CRA for the current mortgage crisis.

Interesting Reads

Housing and Community Development

Multifamily Bond Market Stalled as Rates Soar
By Liz Enochs
Affordable Finance News

Affordable Housing Feels the Pain
By Donna Kimura
Affordable Finance News

Why This 'Credit Crisis' Hits Everyone
By Dave Kansas
The Wall Street Journal

South Side Story
Starring Barack Obama, Emmett Till, Richard Wright, Mahalia Jackson, Martin Luther King Jr., Muddy Waters, Harold Washington, Richard J. Daley And a Cast of Thousands
By Wil Haygood
Washington Post Staff Writer
The Washington Post

Pressured to Take More Risk, Fannie Hit a Tipping Point
By Charles Duhigg
The New York Times

The End of Prosperity?
By Niall Fergusan
Time Magazine

Viewpoint: Minorities a convenient scapegoat for U.S. financial woes
By Cynthia Tucker
The Baltimore Sun

Campaign 2008

In Ordeal as Captive, Character Was Shaped
By Michael Dobbs
Washington Post Staff Writer
The Washington Post

U.S. Fiscal Crisis Seems to Have Altered Political Map
By Anne E. Komblut and Dan Balz
Washington Post Staff Writers
The Washington Post

Economic Unrest Shifts Electoral Battlegrounds
By Adam Nagourney and Jeff Zeleny
The New York Times

Read more »

Future Increases in Funding for Housing and Community Development Programs in Doubt after Bailout

The final agreement for the largest bailout in US history makes it highly unlikely there will be any significant increases in funding for housing and community development programs in 2009 and beyond. The final cost of the bail out could reach upwards to $1 trillion leaving serious questions about how other critical issues will be funded. These issues include affordable health care, alternative energy, the fight against terrorism, Social Security, Medicare and Medicaid reform. According to The Washington Post, in 2011 the Social Security Trust Fund will no longer be an option for Members of Congress to tap into when they need additional funds. That year is when the first wave of baby boomers will retire. Even thought the bailout is expected to be off-budget, significant increases in public funding will probably not be available.

While details of the bailout are still being finalized we do know it does not include funding for the housing trust fund which was part of the Housing and Economic Recovery Act of 2009. That bill was enacted to assist homeowners who are facing foreclosure. Failure to include funding for this initiative is a clear indication that funding for affordable housing and community development programs may be difficult to secure in 2009 and beyond. Given the way the community development block grant (CDBG) and HOME programs are structured, they are more likely to see increases in funding. A case can be made they can stimulate local economies.

Public housing authorities in particular need to change their relationship with the Federal government and more aggressively seek deregulatory flexibility to pursue private capital. It may seem counter intuitive given the financial situation the country finds itself in, but private money will be available for those agencies with strong financials. This fiscal crisis is a result of mortgages issued to families and individuals who could not afford the homes they were buying. Those with good credit and strong financials should find private money available.

All of this comes at potentially a bad time for housing authorities. If Democrats control Congress in significant numbers, there could be efforts to restrict the ability of housing authorities to act in a timely and appropriate manner to meet their agency’s needs. For example, there could include efforts to reinstitute the one-for-one replacement rule which requires one new unit of public housing for every unit demolished. This provision could increase the cost of funding affordable housing initiatives and in some markets, restrict new production due to the cost of land and buildings. Agency efforts to convert public housing units to vouchers will be more difficult as will efforts to expand the Moving to Work (MTW) demonstration. MTW allows an agency to combine housing funds into a program which better suits its local needs. This new design could be in the form of a block, categorical program or both. Community development agencies could face deeper targeting of local resources which could inhibit community and economic development efforts.

Groups representing these agencies need to rethink their strategies. A predominately Democratic Congress will, by and large, not be hospitable to the agencies; they are more likely to be resident friendly. While there may be a token increase in funds, there will also be an increase in regulations negating local flexibility. These groups need to be more aggressive in challenging Congress and the Department in Housing and Urban Development (HUD) in pursuing deregulation.

In order for housing agencies to function in this current environment, the following needs to occur:

- HUD also needs to be restructured in wholesale way. The department’s current structure is outdated and too slow to respond to local needs. It needs to b restructured in a way which allows quick decisions to respond to local markets.
- The CDBG program should be the model for how programs are administered.
- Current staff needs to be revitalized but more importantly new staff needs to be brought in with the understanding of how public-private ventures operate in real time. Local housing and CD agencies, including public housing authorities, need staff at the Federal level with the knowledge, expertise and experience to oversee mixed finance projects in a timely fashion.
- Local agencies need to learn how the Community Reinvestment Act (CRA) can be used to assist in the acquisition in private capital.
- Agencies need to pursue increases in the low income housing tax credits (LIHTC).
- Local housing authorities should pursue Medicaid waivers to convert properties to assisted living facilities to meet the needs of their elderly residents.

Magazine Offers White Paper on Housing Policy

Affordable Housing Finance Magazine in conjunction with its advisory board is prepared to present a housing policy white paper to each of the presidential candidates soon. The white paper is summarized in the magazine’s October 2008 issue.

Among the recommendations to be presented to the candidates are:

1. To shift decision-making from the central offices of the Department of Housing and Community Development (HUD) to its field offices;
2. HUD, not the Federal Emergency Management Agency (FEMA) should be the lead agency for permanent replacement housing and not emergency housing who people are displaced due to floods, hurricanes and other disasters
3. In disseminating funds from the Housing and Economic Recovery Act of 2009 to assist state and local government efforts to halt foreclosures, HUD should delegate authority to these entities to ensure quick action is taken before marginally healthy neighborhoods decline too steeply.
4. In reviewing regulations, efforts should be made to ensure energy efficiency is achieved through any changes in regulations.
5. HUD should embrace public/private partnerships versus the current model of program administration and implementation. The Low Income Housing Tax Credit (LIHTC) is a perfect model according to the magazine.
6. A homeownership tax credit should be created and directed at homebuilders not buyers.
7. More money should be invested in the rural rental housing assistance program.
8. Finally, there should be a national discussion on a variety of topics including infrastructure improvements, integrating housing and health care for the elderly and creating an intersection between housing and transportation.

Interesting Reads

Bailout Plan Gains Key Support
By Henry J. Pulizzi, Corey Boles and Michael R. Crittenden
The Wall Street Journal

MORTGAGE CRISIS
How Fannie -- and You -- Bought a Hapless House
By Joel Achenbach
Washington Post Staff Writer

How the Rescue Affects Homeowners
By Kenneth R. Harney
The Washington Post

Smaller Banks Thrive Out of the Fray of Crisis
People Shift Money From Wall St. to Main St.
By Binyamin Appelbaum
Washington Post Staff Writer

FROM THE ACADEMICS
Away from Wall Street, Economists Question Basis of Paulson's Plan
By Neil Irwin and Cecilia Kang
Washington Post Staff Writers

A Bailout We Don't Need
By James K. Galbraith
The Washington Post

Affordable-Housing Goals Scaled Back
Fannie Mae, Freddie Mac to Provide Less Support Than in Years Past
By Zachary A. Goldfarb
Washington Post Staff Writer

Read more »