Four windows a metropolitan perspective on affordable housing policy in america 2004 by Thoughtbox

A Metropolitan Perspective on Affordable Housing Policy in America, 2003

A Review of NHC Roundtables in Charlotte, Columbus, Houston and Portland, Maine

NAT I O NA L H O U S I N G C O N F E R E N C E

APRIL 2004

Four Windows:

Four Windows: A Metropolitan Perspective on Affordable Housing Policy in America, 2003 by

Jennifer Lavorel

April 2004

AT I O N A L

O U S I N G

O N F E R E N C E

The purpose of NHC’s Senior Executive Roundtable Series is to explore innovative methods being used to meet affordable housing needs around the country and what might be done at the national level to encourage this activity. These invitation-only sessions include the local area’s key business, government and community leaders, some of whom may never have been involved in housing policy discussions but have an enormous impact on the communities in which they live and work. The Senior Executive Roundtable Series is an important means for reaching decision makers around the country, sharing with them NHC’s latest housing research and policy analysis and, in return, receiving valuable input on viable solutions to the affordable housing crisis. Copyright® April 2004, National Housing Conference The Library of Congress, United States Copyright Office

All rights reserved. No part of this report may be reproduced or transmitted in any form or by any means without the written permission of the National Housing Conference. Requests should be sent to the address below.

1801 K Street, N.W. Suite M-100 Washington, DC 20006-1301 Phone: (202) 466-2121 Fax: (202) 466-2122 Web Site: http://www.nhc.org

About the National Housing Conference The National Housing Conference (NHC) is a nonprofit 501(c)(3) membership association dedicated to advancing affordable housing and community development causes. A membership drawn from every industry segment forms the foundation for NHCâ&#x20AC;&#x2122;s broad, nonpartisan advocacy for national policies and legislation that promote suitable housing in a safe, decent environment across the nation. NHC members consist of nationally known experts in affordable housing and housing finance, including state and local officials, community development specialists, builders, bankers, investors, syndicators, insurers, owners, residents, labor leaders, lawyers, accountants, architects and planners, and religious leaders. NHC is the United Voice for Housing.

About the Author Jennifer Lavorel is a freelance writer and consultant specializing in housing and community development. Prior to forming her own business, she served as director of operations for the congressionally appointed Millennial Housing Commission. She has worked for a broad range of housing and community development organizations, from the Local Initiatives Support Corporation to a large government contractor, where she managed a multimillion dollar HUD contract, to a community development corporation in Ann Arbor, Michigan. Her clients include developers, nonprofit organizations, foundations, universities and publications. Ms. Lavorel holds a masterâ&#x20AC;&#x2122;s degree in urban planning from the University of Michigan.

iii

Acknowledgments The National Housing Conference gratefully acknowledges the National Housing Endowment, the philanthropic arm of the National Association of Home Builders, for their financial support of all the NHC Senior Executive Roundtables and this report. The National Housing Conference also gratefully acknowledges the following organizations for their financial support of these roundtables. Bank of America Bank One Corporation Boston Capital Partners, Inc. Charlotte Regional Realtor速 Association City of Houston Housing and Community Development Department Coffee By Design Fannie Mae North Carolina Partnership Office Fannie Mae Northern New England Partnership Office Federal Home Loan Bank of Boston First Union/Wachovia Community Development Finance Group FleetBoston Financial Corporation Houston Association of Realtors速 Maine State Housing Authority Neighborhood Reinvestment Corporation Nixon Peabody LLP Ohio Capital Corporation for Housing Portland Regional Chamber of Commerce Simpson Housing Solutions, LLC

The author wishes to thank John Bohm, Conrad Egan and Maria Fiore for providing the opportunity to write this document and for their thoughtful comments along the way. In addition, she wishes gratefully to acknowledge the contributions of several roundtable participants who made themselves available to address specific questions and engage in helpful conversations: Caroline Allam, Shad Bogany, Hal Keller, Amy Klaben, Mary Allen Lindemann, Jeff Lubell, Patrick Mumford and David Zappasodi.

Table of Contents Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Housing as an Essential Element in the Community: Balance and Scale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Barriers to Housing Production: Funding, Flexibility and Local Obstacles . . . . . . . . . . . . . . . . . . . . . . . . . . .14

Barriers to Housing Preservation and Rehabilitation: Funding, Flexibility and Local Obstacles . . . . . . . . . . . . . . . . . . . . . . . . . .21 The Importance of Partnerships: Across Boundaries, Sectors and Functions . . . . . . . . . . . . . . . . . . . . . . . . . . .27 The Federal Role: An Exclusive Perspective, a Compelling Opportunity . . . . . . . . . . . . . . . .33 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40 Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41

Four Windows: A Metropolitan Perspective on Affordable Housing Policy in America, 2003 Executive Summary The act of looking through a window can create a false impression. Windows have frames, and the frames may appear to be boundaries. The 2003 NHC Senior Executive Roundtable participants remind us, however—with their broad impressions of what they see when they look at local housing challenges—that our communities may be bounded, but the forces that have shaped and will continue to shape them are not. Such forces include population growth, job and income growth (or lack thereof), and the dynamic local, regional and even national markets that arise in response to growth. Growth management is a challenge for cities, towns, counties, regions, states and the nation as a whole. According to the U.S. Census Bureau, the population reached 281.4 million in 2000, up more than 13 percent since 1990. By 2010, projections indicate that the population could reach 305 million. The National Association of Home Builders projects that approximately 1 million more households will be formed between 2001 and 2010 than were formed in the 1990s, creating a strong demand for new housing. Longer term projections put the population at 344 million by 2025, with almost half of the growth projected to occur in three states where immigration exerts a strong influence: 1 California, Texas and Florida. Growth will happen. Our ability to manage it will affect the physical environment as well as the social health and economic viability of individual communities and entire regions. The effects of growth have been felt in the four communities that hosted National Housing Conference Senior Executive Roundtable meetings in 2003: Charlotte, Columbus, Houston and Portland, Maine. The responses to growth vary noticeably from one community to the next, but the roundtable participants’ perceptions regarding what is needed in order better to shape growth going forward are strikingly similar. Despite the many unique elements in each of this year’s “four windows” communities, the common challenges suggest a new framework for policy action in Washington, D.C.—a framework that places housing at the center of a broader discussion of economic growth and community vitality. In order to harness the forces of growth in the interest of promoting balanced physical and economic development, housing professionals face three common challenges. First, they must step purposefully across professional and jurisdictional boundaries to form partnerships with actors who may be new to them. The challenge is to walk, literally and figuratively, into unfamiliar territory prompted by the knowledge that the task of providing affordable housing will not necessarily be made easier if we do so, but that it will certainly be made more difficult if we do not. A second challenge is to be specific and vocal about the strengths and weaknesses of existing housing resources. As we evolve in our approach to planning and implementation, we must work to make sure that the resources evolve with us. Involving the private sector in this ongoing process will be essential. A final challenge is to continue to make the case for affordable housing. Roundtable participants point to a need for strong management, thoughtful design and persistent advocacy. Key issues and concerns from the roundtable sessions are summarized below. 1

Housing in the Twenty-First Century: Achieving Common Ground, by Kent W. Colton, pp. 290-91.

Housing as an Essential Element in the Community: Balance and Scale Federal support for communities flows through many “silos.” Transportation funding flows through metropolitan planning organizations across the nation. Economic development funds come from several federal agencies and flow through states or directly to communities. States may also target their own revenues to particular economic development activities. Schools derive little support from the federal government, relying primarily on local property taxes for their operations. Some jobs that are essential to community vitality simply pay too little for employees to afford housing within the local market. Roundtable participants recognize that, in the past, too little attention was paid to the effects of non-housing federal investment on housing supply, demand and affordability. Economic development funding brings jobs, but no housing. Old models of transportation funding facilitated suburbanization and urban disinvestment. In part, due to the new model for transportation funding—a model in which community input is required—participants recognize the importance of getting housing on the agenda when decisions are made regarding non-housing investments. They recognize that failure to broadly advance the cause of housing will likely contribute to housing need, while success could result in the mutually beneficial leveraging of public and private resources.

Barriers to Housing Production: Funding, Flexibility and Local Obstacles In most markets, the demand for units of housing affordable to extremely low-income households exceeds the supply. In some markets, the same is true of the demand for moderate-income units. For the former group of households, federal funding is simply inadequate to meet need; for the latter, income restrictions prohibit the use of federal subsidy to increase supply, and the costs of production inhibit a response from the private sector. In addition, there is no one source of federal funding that is particularly suited to the production of mixed-income multifamily housing, the model that is often favored over the development of exclusively low-income properties. Local opposition to multifamily housing production—expressed most consistently through the refusal of local zoning commissions to grant rezoning requests—continues to present a daunting obstacle to affordable housing production. Roundtable participants express strong support for the HOME (Home Investment Partnership Act) and Low Income Housing Tax Credit (LIHTC) programs, two sources of production capital. To varying degrees, however, they decry regulations and set-asides that govern the programs’ use, and they call for increased funding and flexibility. Challenges related to zoning and NIMBYism (Not in My Backyard) continue to frustrate housing practitioners and to create a disincentive for the private sector to bring its resources to the table. Where demand is too weak to support production, participants note the importance of the Housing Choice Voucher program. They call for its increased funding.

Barriers to Housing Preservation and Rehabilitation: Funding, Flexibility and Local Obstacles The stock of public and privately owned, federally assisted housing has never had adequate operational or capital support. On the public housing side, operating and capital subsidies came too little and too late; on the private side, per unit limits on such things as replacement reserves contributed to chronic deferred maintenance. Rent restrictions on both types of properties assured affordability, but at the cost of the long-term viability of the bricks and mortar. In strong and strengthening markets, as affordability restrictions on the privately owned properties expire, the risk is great that units will be lost from the affordable stock. In weak markets, the prospect of continued deterioration is just as great. 2

This year’s roundtable participants see a need for federal support of preservation. Increased support for the public housing capital fund and a restoration of HOPE VI are at the top of the list. On the private side, participants suggest measures to get deteriorating properties into the hands of organizations that will rehabilitate them and maintain affordability. Such measures include some degree of exit tax relief, a source of funds for recapitalization and the application of portability to project-based subsidies. Strong property management is viewed as critical to preserving such properties in the meanwhile. Regarding smaller scale rehabilitation work, participants cite lead-based paint and historic preservation requirements as costly disincentives. Finally, participants acknowledge the importance of preserving with an eye to long-term affordability, cautioning about known indicators of gentrification.

The Importance of Partnerships: Across Boundaries, Sectors and Functions Participants from all four roundtable cities deal with the effects of sprawl—most discernibly the traffic congestion associated with a jobs-housing imbalance. The challenges of developing affordable housing in urban areas, where land costs are high, and in suburban areas, where opposition is often strong, generally drive private developers from the arena, add time and costs to the efforts of nonprofit developers, and place lowwage workers at a disadvantage no matter where they may seek to live and work. Increasingly, participants recognize that their ability to produce and preserve housing depends much on the activities—or inactivity—of adjacent jurisdictions, and they assert that interjurisdictional partnerships provide a means for addressing the dilemmas that arise when markets cross boundaries but policies and programs intended to round out those markets do not. Cooperation, they remark, is key to creating the type of scope, scale and stability that is conducive to the involvement of profit-motivated developers in affordable housing production and preservation. They also note that partnerships are essential to assuring that sufficient resources are devoted to the shelter and social service needs of homeless individuals and families, as well as renters and owners, as needed.

The Federal Role: An Exclusive Perspective, a Compelling Opportunity Increasingly, state and local governments are charged with assessing and meeting housing need. The devolutionary trend has been accompanied by a steady decrease in federal budget authority for housing. Meanwhile, tax expenditures—which mainly subsidize moderate- and upper-income households—have grown tremendously. The limitations of state and local efforts to make up for funding shortfalls underscore the importance of additional federal support for housing, either through increased budget authority or through regulatory reforms to eliminate obstacles that weaken the effect of tax incentives—or both. Roundtable participants point out that housing markets have changed as a result of growth, but that federal resources have not kept pace. They call for increased flexibility in the use of federal funds, decrying a recent set-aside within the HOME program that amounts to a reduction in the overall amount of funding that is available for the full range of activities allowed under HOME. In addition to assuring its continued support for housing, participants state that the federal government should promote policy alignment among the various “silos” through which federal funds flow into a community. Finally, participants suggest that the federal government should help to assure interjurisdictional cooperation on housing policy through a combination of requirements and incentives.

Introduction In 2003, the National Housing Conference (NHC) undertook its third year of Senior Executive Roundtable meetings. The impetus for such meetings, which take place annually in four different cities, was the publication in 2001 of a study showing that “in 1999, approximately one out of every seven (13 million) American households had a 2 critical housing need.” In order to better understand how individual communities are dealing with the data behind the findings, NHC decided to engage in conversations with housing practitioners in a sampling of cities from across the nation. In 2001, roundtable meetings in Minneapolis–St. Paul; New Orleans; Portland; Oregon and Seattle revealed that the housing community was concerned about federal and local barriers to affordable housing and the less-than-robust involvement of the private sector. Participants from the four cities were beginning to consider the potential benefits of a regional approach to affordable housing policy. Similar issues were raised in Milwaukee, Philadelphia, Providence and San Diego in 2002; the role of the federal government surfaced as a prominent issue, as well. Discussions in 2003 took place in Charlotte, Columbus, Houston and Portland, Maine. Many of the concerns from prior years were stated anew. Federal rules and regulations that limit program flexibility and local barriers that inhibit housing production remained dominant themes. The daunting challenge of NIMBYism surfaced again and again as a significant obstacle to housing production and, consequently, the revitalization of neighborhoods characterized by concentrated poverty. Participants from the 2003 roundtable cities recognize that all of these issues make it difficult to draw private developers into the production and preservation of affordable housing, and they make it that much more costly for nonprofit developers. A couple of issues that came forth in prior years emerged much more strongly in 2003. The need for multijurisdictional partnerships—including regional approaches—was recognized as being essential. Likewise, the ability of housing practitioners to reach out to professionals in other fields, such as economic development, transportation, employment, education and social services, is given increasing importance. Underlying both of these realizations is the simple fact of economic growth. Participants from each of the four roundtable cities acknowledge that market-driven growth will fashion the physical, social and economic landscape of regions, just as it has, in the past, played a strong role in shaping individual communities. As the nation continues to grow, cooperation between and among cities, towns, counties, regions and states will become essential if we are to prevent the recurrence of some of the counterproductive—and ultimately very costly—development patterns of the past. Where such cooperation is lacking, participants agree that the federal government can play a critical role by requiring meaningful cooperation as a condition of receipt of federal funds, by providing incentives, by conducting and sponsoring data collection and research, and by disseminating results. The 2003 roundtable cities share many challenges, but they are also communities with many differences. The diversity of challenges may be underreported in this summary publication, which focuses on areas of common concern. The National Housing Conference deliberately sought out professionals from many different perspectives as it planned each roundtable meeting, drawing in local elected officials, executive staff from state housing finance agencies, lenders and other businesspeople, county housing and economic development officials, local public housing administrators and, of course, nonprofit and private developers. The breadth of expertise represented at each meeting underscores the significance of the consensus over federal funding inadequacies, local barriers, private sector involvement and the need for greater scope and scale in resource planning and program implementation. 2

Paycheck to Paycheck: Working Families and the Cost of Housing in America (Washington, DC: Center for Housing Policy). The study is part of a series that focuses on the relationship of wages to housing costs.

Housing as an Essential Element in the Community: Balance and Scale A roundtable participant from Houston begins a discussion of housing by posing a question that, to her, gets at the fundamentals: “Do we want to have a world-class community?” From this question follows an exchange regarding how housing relates to a community’s economic development and growth, and how it relates to transportation and schools and jobs. Participants from Charlotte, Columbus and Portland agree that all of these factors are important. They agree, also, on what it means to be a “world-class community.” Housing is an essential element. Such a community is characterized by a range of housing options for people of all incomes, with housing for the lowest income households dispersed throughout the community rather than being concentrated in localized areas. A worldclass community has employers who draw from the local labor pool, and a transportation system that gets workers to their jobs in a reasonable amount of time and at a reasonable cost. The schools in a world-class community provide high-quality education and are funded in an equitable manner. Participants agree that when any one element of a community is planned and built without regard to these other elements, the community can be thrown off balance, either immediately or over time. As they have sought to address their communities’ unique housing challenges, each panelist has confronted the consequences of imbalance. They

CHARLOTTE: THE GABLES OF WINGATE Through its use of Internet technology, this development of single family homes gives low-income families the opportunity to join the digital economy.

PHOTO PROVIDED BY WACHOVIA COMMUNITY DEVELOPMENT FINANCE GROUP AND REECH, LLC.

agree about the need for a proactive approach that considers the big picture and seeks to combine public investments in a mutually reinforcing way. They agree that it is time for a comprehensive approach to community development in which the linkages between housing, economic development, transportation, schools and employment are considered simultaneously as policy and funding decisions are made regarding any one of these issues.

Economic development policies should take housing into account — and housing policies should recognize the link between housing and economic growth or decline. Generally, economic development policies focus on promoting economic growth. Economic growth can mean many things, from increasing the incomes of current workers to attracting new businesses and creating new jobs. In some areas, economic development activities center on the provision of infrastructure, from roads and sewers to telecommunications services. One participant from Charlotte pointed out that promoting homeownership is important to neighborhood stability, which can provide a foundation for retail and other commercial development, leading to increased job opportunities and tax revenues—in other words, economic growth. Federal, state and local governments provide economic development funds primarily through loans, loan guarantees, and competitive and formula grants. Indian tribes and regional organizations, such as the Appalachian Regional Commission, provide such funds, as well. At the federal level, economic development funds are available from the U.S. Department of Housing and Urban Development, the Department of Agriculture, the Department of Commerce, the Department of Defense and the Department of the Interior. At the state level, various agencies distribute federal monies and provide statefinanced assistance targeted to activities ranging from waterfront development to the promotion of high-tech corridors. Participants pointed out a variety of ways in which “naturally occurring” growth and policies intended to promote growth often run at cross-purposes with desired housing outcomes. In Charlotte, a growing city, the Chamber of Commerce recognized in 1998 that while economic growth is a good thing, it had the potential to erode the quality of life enjoyed by Charlotte residents—in particular, by contributing to sprawl. The Chamber commissioned a strategic plan intended to promote growth while preserving Charlotte’s character. To promote growth, the plan—called “Advantage Carolina”—began with an assessment of Charlotte’s key “industry clusters.” Such clusters “sell products and services outside of the immediate area, thereby bringing in new economic wealth.” An analysis of existing and emerging clusters revealed that in nearly each one, there were critical issues related to workforce inadequacies, meaning for example that businesses simply could not attract and retain workers. In response, one of the 17 flagship initiatives intended to deal with such critical issues is focused on housing. The “Housing our Workforce Initiative” recognizes the importance of providing housing that is “affordable and attractive to [the] workforce,” and it proposes—in part due to the scarcity of land in the urban core—increasing the supply of such housing in areas close to public transit via land-use policies intended to promote increased housing densities. This “smart growth” strategy is designed to curtail sprawl into Charlotte’s suburbs and the traffic congestion that results. The challenges faced by Portland are more typical of those besetting cities across the nation. A roundtable participant from that city pointed out that a scarcity of land in Portland has pushed costs up and driven residential development into the surrounding areas. As a result, rural and farmland areas are being converted to suburban areas at a rate faster than anywhere else in the country. Residential development in these new suburban areas has been a driver of economic development, and this trend has been bolstered by 7

the state’s use of tax increment financing to attract employers to suburban areas. Part of the problem, according to one roundtable participant, is that the state can use tax increment financing without consideration of the effect on housing. “Nearly every municipality pursues commercial development opportunities,” one participant said, “but would like housing to be located elsewhere.” In addition, many of these new employers rely in part on specialized workers who are recruited from outside the state. Such workers typically earn from $35,000 to $50,000 per year, which is not enough to afford rents or qualify to purchase homes. Meanwhile, as services have moved in to serve new residents and businesses, the percentage of low-wage service jobs has increased, exacerbating the shortage of housing for lower wage workers in the suburbs. In Columbus, a different dynamic is in play. Existing housing problems have contributed directly to economic decline in the area of Columbus known as the “older city.” This area is characterized by homes that are either in need of rehabilitation or simply obsolete. For a variety of reasons—including a lack of resources and regulatory inflexibility—the costs of rehabilitation are uneconomic, however, leading to a situation in which the work too often goes undone, contributing to overall decline. As a result, many households have moved to the suburbs. As one roundtable participant noted, “the jobs went with them.” In addition, the public transportation system is “not very good,” making it difficult for city residents to get to suburban jobs. The population decline in the older city and the increased impoverishment of area residents generally has pushed many retail and commercial businesses out, resulting in a loss of jobs and tax revenue. Finally, in Houston, federal funding for public and assisted housing has failed to keep up with the city’s “explosive growth.” With more than 2 million people, Houston is one of the largest cities in the United States. Its growth, according to one participant, has been “entirely developer driven.” A representative from Houston’s housing authority pointed out that “Houston is the fourth largest city in the nation, but it ranks 18th in the allocation of federal funding for housing programs.” He attributed the discrepancy to the means by which units can be added to a housing authority’s stock. Through a Notice of Funding Availability (NOFA), HUD makes limited amounts of vouchers available to housing agencies. They must complete applications and compete for incremental allocations that, throughout the 1990s, totaled approximately 25 units per housing agency per NOFA. Occasionally, HUD issues incremental allocations “under boutique programs,” he noted, such as family unification or mainstreaming programs for persons with disabilities. Despite the effort required to put together an application under such programs, he said, the housing agency “has applied for every voucher NOFA that has become available” since 1990, at least, when he began working there. Since federal funding is not pegged to growth or need, he said, it has fallen far short in Houston.

Given the level of public investment in transportation and the need for public subsidy to build housing that is affordable to the workforce, transportation and workforce housing policies should be mutually reinforcing. The need to coordinate land-use and transportation planning was recognized in the Highway Act of 1962, which stated that “after July 1, 1965, federal funds for highway construction would be curtailed in urban areas of 50,000 or more population unless such 3 areas had a comprehensive transportation planning process in effect.” In 1975, the Federal Highway Administration published regulations requiring the governor of each state to “designate one organization in each urbanized area...to be the Metropolitan Planning Organization (MPO), a local body responsible for highway planning in 4 cooperation with the state transportation agency.” 3

Regionalism and the creation of the MPO. (n.d.). Retrieved March 17, 2004, from http://www.bhammpo.org/docs/MPOCreation.pdf. 4

Ibid.

By 1991, recognition that development patterns were changing contributed to the passage of the Intermodal Surface Transportation Efficiency Act (ISTEA). This Act changed the transportation planning process, placing “significant emphasis on broadening participation in transportation planning to include key stakeholders who [had] not traditionally been involved, including the business community, members of the 5 public, community groups and other governmental agencies.” MPOs were required to work with such groups to “develop transportation plans and programs for metropolitan areas.” A goal of the Act was to “provide metropolitan areas with more control over transportation in their own regions.” The Transportation Equity Act for the 21st Century (TEA-21), passed in 1998, built upon the processes established under ISTEA, providing increased flexibility in the use of funds. It also changed the federal budget rules, guaranteeing a minimum level of 6 spending ($198 billion) over the TEA-21 period (through FY 2003). Meanwhile, approximately 20 percent of the average American household budget is spent 7 on transportation. Housing is the only category of expenditure that exceeds transportation. For low-income families, transportation costs consume an even larger share of the household budget. According to the Surface Transportation Policy Project, “the poorest 20 percent of American households...spend 40.2 percent of their take home pay on transportation” with 8 “nearly 95 percent of [those] funds...devoted to private vehicle expenses.” The City of Charlotte has taken advantage of changes in federal transportation planning and funding, and it has done so in a way that recognizes the link between housing and transportation—and the costs of transportation for low-income households, in particular. Specifically, the city has implemented a transit-oriented housing development policy with minimum density requirements for affordable units. The process of policy development began with a November 1998 referendum in which voters agreed to a dedicated local sales tax of 0.5 percent to fund transit service. A study the following year showed that light-rail was the preferred alternative. The Charlotte Area Transit System developed a proposal for a light-rail transit line that was eventually authorized for final design and construction under TEA-21. The project is being developed through the “New Starts” program of the Federal Transit Authority (FTA), under which a federal grant covers 50 percent of the total capital costs, with the state and locality splitting the difference (the state’s portion will come from its highway trust fund monies, while Charlotte’s portion will come from proceeds from the dedicated local sales tax). One factor that led to FTA’s high rating of Charlotte’s proposal was the city’s development of a transit-oriented housing policy. The policy specifies minimum housing densities within one-quarter mile and one-half mile of transit stations, and it also specifies the number of units per acre that must be affordable. To support the implementation of this policy, the “Housing our Workforce Initiative” developed a model for such development, recommending, among other things, that the city allocate “$5 million from the Affordable Housing Bonds, the Economic Development Funds, or other sources, to acquire, plan and process two sites for [transit-related] development.” Traffic congestion—particularly into and out of Charlotte’s central business district during the daily rush hours—was a motivating factor in Charlotte voters’ approval of the 1998 referendum. Traffic congestion is an issue in Portland and Houston, as well, and participants from both cities recognize that the lack of affordable housing near work centers contributes to the phenomenon. The two cities also demonstrate that the increased flexibility in federal transportation planning and funding has not necessarily resulted in strengthened connections between housing and transportation interests. 5

A Guide to Metropolitan Transportation Planning Under ISTEA — How the Pieces Fit Together — U.S.D.O.T., U.S. Department of Transportation, Federal Highway Administration, Federal Transit Administration. (n.d.). Retrieved March 17, 2004, from http://www.fta.dot.gov/library/planning/MTPISTEA/424MTP.html. 6 TEA-21 — Transportation Equity Act for the 21st Century: Moving Americans into the 21st Century: A Summary — Investing in Our Future. (n.d.). Retrieved March 17, 2004, from http://www.fhwa.dot.gov/tea21/suminves.htm. 7 Bureau of Labor Statistics, Consumer Expenditures Survey 2001. 8 Transportation Costs and the American Dream: Why a Lack of Transportation Choices Strains the Family Budget and Hinders Home Ownership, A Special Report from the Surface Transportation Policy Project, July 2003.

In Portland, high prices in the city and land-use policies in the suburban areas that hinder affordability combine to push lower wage workers further and further out in order to find housing that they can afford. One participant from Portland noted that many lowwage workers from both the city and the suburbs are having to “leapfrog” into rural areas to find housing that is affordable—and then commute back in. Meanwhile, the MPO’s regional transportation plan through the year 2025 urges a stronger connection between 9 “land-use and transportation decisions,” but it includes only one strategy related to housing: incorporating “the jobs/housing balance into future major...studies.” A similar pattern prevails in Houston. One participant from that city noted that many of the affordable homeownership opportunities in and around Houston are being created on the periphery of the metropolitan area where land costs are low. He went on to note that the “tremendous congestion of the highways and the lack of a strong public transportation system” make it difficult for people who buy such housing to get to the downtown job centers. In the “2025 Plan” of Houston’s MPO, however, neither land-use nor housing is mentioned. In Columbus, a relatively high percentage of people who live and work in the older city area either walk to their place of employment or take public transportation (bus). Approximately 18 percent of residents report that they “have no vehicle available for their 10 household.” Meanwhile, plans for a transit system are under way. In February 2004, the Central Ohio Transit Authority was awarded a “recommended” rating from the Federal Transit Administration for its proposed North Corridor Light Rail Transit Project. The project, which is in the early phases of development, proposes a north-south rail line that will run west of I-71—through some of the lowest income areas of the older city—from the city center. Seven additional rail lines are proposed for future development; all will run from the city center to suburban areas. During public meetings to review the North Corridor plans, concerns about gentrification were expressed, but no specific mention of 11 housing was noted. Participants from all four roundtable cities voiced support for the reauthorization of TEA-21.

New housing development and older housing decline can affect “school district wealth,” defined as “property value per pupil.” Federal aid provides only about 7 percent of the funding for elementary and secondary education nationwide, with the other 93 percent “about evenly split between 12 state and local funding” (the state share of the total varies widely by state). Localities raise revenue primarily through property taxes, though income and sales taxes figure to a lesser extent. As noted above, school districts are mindful of something called “district wealth.” The numerator in this ratio is “property values,” and the denominator is “pupils.” When the number of pupils increases out of proportion to the property tax base, district wealth declines. In growing cities such as Charlotte, Houston and Portland, the ability of the property tax base to support the existing—let alone, new—pupils is a concern. Given how the schools are funded, the relative merit of low-density, higher income housing vis-à-vis higher density, lower income (i.e., lower value) housing is perhaps understandable. A roundtable participant from Houston (see profile of Shad Bogany) noted that school superintendents have spoken out against new Low Income Housing Tax Credit developments in their districts, saying that “the schools are full.” 9

Destination Tomorrow: Linking Our Communities — Advancing Our Region. Portland Area Comprehensive Transportation Committee (PACTS). April 2003. Chapter 5. Retrieved March, 17, 2004, from http://www.pactsplan.org/pdf/Chap%205%20Recom%20and%20Strat.PDF. 10

Housing Rehabilitation in Older Columbus: Background Paper, Community Research Partners (June 2003). Fast Trax COTA: North Corridor Light Rail Transit Project: Scoping Process Report. Federal Transit Administration and Central Ohio Transit Authority. September 18, 2003. Retrieved March 17, 2004, from http://www.cotafasttrax.com/scoping_report.php.

School Finance: Trends in U.S. Education Spending (GAO/HEHS-95-235, September 15, 1995).

SHAD BOGANY Broker, Owner ERA Bogany Properties Houston, Texas Shad Bogany is past chair of the Houston Association of Realtors®, the host of a local radio talk show, a real estate columnist for the Houston Chronicle and a member of the governing board of the Texas Department of Housing and Community Affairs. His real estate brokerage has been active in Houston and the surrounding counties since 1984. “Our biggest challenge in Houston,” Bogany says, “is getting people to realize that the possibility of homeownership exists.” Houston is ranked as the most affordable community for homeownership, Bogany says, but “within the minority community, only 40 percent of households are owners.” The overall rate of homeownership, he says, is “somewhere in the 50s.” The biggest obstacle to making up this gap, Bogany explains, is credit. “It’s the number one barrier.” Bogany elaborates: “If I’m Vietnamese or Hispanic, and I save my money instead of using credit, I don’t have a credit score. I don’t fit the traditional lending system.” Bogany notes that the city has a number of programs for first-time homebuyers, as do the housing authority, county and state, “but,” he says, “nobody’s being strategic about addressing specific problems like credit.”According to Bogany,“some of the banks are beginning to respond, but automated underwriting bumps some people out.You need a real person to review the files and understand the situations.” Bogany notes that the state enacted a law saying that credit-scoring can’t be the top determining factor in lending decisions, but lenders are “still doing it. A state law requiring that credit scores be based in certain situations on insurance only would help.” Another challenge in Houston, according to Bogany, is NIMBYism.“We’re trying to make sure that properties financed with the Low Income Housing Tax Credit are dispersed throughout the community,” Bogany says,“and we’re finding two things. First, we’re finding that people in the more affluent neighborhoods don’t want the housing. Second, we’re finding that people in the lower income areas don’t want it,” he says, adding “they say ‘enough already.’” People go right to their state legislators, Bogany says.“They complain, and the legislators buy right into it.”Bogany notes that even the schools have complained about such projects.“Superintendents come to us and say ‘don’t build any more housing in our district, because the schools are full.’” Bogany thinks the different housing agencies “need to join hands and do a marketing campaign,” and he believes that developers should spend money on public education, too. He thinks it would be helpful, as well, if the credit allocating agency had a say in where the projects were to be located.“Right now,” he says,“the builder gets an award out of a lottery-type system.They put the project together and figure out where it will go only after their name comes up.” Bogany points out that the developer has to substantiate the location with market studies, “ but,” he says, “the state can’t determine the location. There are projects needed in rural and exurban locations,” he adds, “but the state can’t do anything to get them built.” He thinks “the federal government could give the state more flexibility on the qualified allocation plan requirements.” Finally, Bogany says the city and the private sector need to work more closely.“I’ve advocated for a housing advisory board made up of advocates from the city and county—from both the private and nonprofit sectors,”he says.The board would have access to the mayor, the county commissioner and the county judge. According to Bogany,“the real estate economy is driving Houston’s economy,”so,he says,“we need to view the private sector as our partner.”

The issue is complicated. In Columbus, where low property values in the older city have affected the schools, contributing to a situation in which families with school-age children tend to move into suburban areas, the desire to right the schools-housing imbalance points toward a need to raise property values. Again, this is a complicated undertaking, as it would require either a new federal subsidy targeted to the skewed economics of older city neighborhoods or the reversal of a series of trends that have contributed to the decline of the area, including the “jobs flight” described earlier. In Portland, one participant from that city noted, a significant amount of new housing development is being targeted to empty-nesters rather than families with children. The goal of such an approach is to attract new taxpayers without putting a strain on schools—to increase the numerator without adding to the denominator. One of the initiatives in the Advantage Carolina plan of the Charlotte Chamber of Commerce focuses directly on the challenges of achieving public school equity. “CMS Partners for School Reform” involves partnerships between businesses and public schools. The task force overseeing the initiative includes not only members of the business community, but also representatives from civic and nonprofit organizations, and government. This nascent effort bears attention.

Some jobs that are essential to community vitality pay too little to cover housing costs at affordable levels. The Center for Housing Policy (the Center) and the National Housing Conference (NHC) have over the past several years published a number of studies that document a disturbing phenomenon: housing costs are increasing faster than wages. As a result, a growing number of families experience something known as “critical housing need;” that is, they pay more than 50 percent of their income for housing or live in physically dilapidated units. The Center and NHC reported in November 2002 that there had been a 67 percent increase from 1997 to 2001 in the number of low- to moderate-income families paying at 13 least half of their income for housing. Subsequently, the Center and NHC compared wages for “five vital occupations”—janitors, retail salespersons, elementary school teachers, licensed practical nurses and police officers—with homeownership and rental housing costs in 60 of the nation’s largest housing markets. The results, published in May 2003, showed that, “for the United States as a whole, median earnings in all five 14 occupations fall short of qualifying for the median-priced home of $156,000.” On the rental side, janitors and retail salespersons fared worst, unable to rent a two-bedroom apartment in any market without paying an excessive percentage of their income. There was no market in the nation in which all occupations could qualify for a median-priced home or rent a one- or two-bedroom apartment at an affordable cost. Part of the reason for this wage-cost imbalance, especially in metropolitan markets, is the simple fact that housing production is not keeping up with job growth. Experts set the appropriate ratio of new housing units to new jobs at one new unit of housing for every 1.5 new jobs. Predictably, when jobs are added to a market without the addition of units, the pinch will be felt most severely among low-wage workers. To the 2003 roundtable participants, the inability of some families to afford housing is not new. In their comments on the issue, however, participants mentioned several nonhousing factors that contribute to housing “unaffordability.” One participant from

America’s Working Families and the Housing Landscape, 1997-2001. Center for Housing Policy/National Housing Conference, November 2002.

Paycheck to Paycheck: Wages and the Cost of Housing in America, Center for Housing Policy/National Housing Conference, May 2003.

Charlotte suggested, for example, that the federal government should increase its support for daycare and after-school programs. Others reiterated the issue of transportation costs. In Portland, where land is scarce, development costs are high and the possibility of increasing the affordable supply is therefore problematic, the wage-cost imbalance is of particular concern. One roundtable participant commented that housing costs have had a direct effect on her employees, and she feels frustrated—as a small business owner—by her inability to address the problem. Though employer assisted housing (EAH) programs have emerged as one way in which businesses can help to level the imbalance between wages and housing costs, the costs to small employers of implementing such programs can be prohibitive. A representative from Fannie Mae, a leader in EAH program implementation, explained that even the larger businesses in the Portland area see no reason to offer the benefit, because—due to the lack of affordable housing—it is simply not attractive to employees.

BETWEEN JULY 1999 AND JUNE 2000,

the General Accounting Office (GAO) conducted a nationwide survey of 1,926 local communities—768 counties located in metropolitan areas and 1,158 cities with populations over 25,000. The purpose of the survey was to obtain information about the growth-related challenges facing such communities. One finding from the survey was that, while many localities had concerns about growth, they placed a “high value on economic development when planning for the 15 future.” The most frequently cited growth-related concerns, therefore, were “infrastructure needs, traffic congestion and the adequacy of [the] local tax base for supporting schools and services.” For counties, future planning priorities focused on “increasing [the] local tax base, attracting businesses and enhancing transportation systems.” While cities cited similar planning priorities, downtown revitalization “was more often a high or very high priority than enhancing transportation systems.” To the extent that communities are focused on growth and finding the right balance between “economic development” and “quality of life,” the challenge for housing professionals is twofold: first, they must draw attention to the link between affordable housing and economic growth and, second, to the extent that they possibly can, they must make themselves heard when decisions are being made regarding how non-housing resources will be spent, whether for transportation, schools, employment or social services. The task is not an easy one. As the Millennial Housing Commission pointed out in its 2002 report to Congress, “the many silos of categorical programs create almost insurmountable barriers to [the] execution of comprehensive local programs.” Looking at federal funding in particular, the Commission noted, “funding flows to different jurisdictions, on different timetables, with unique planning, performance standards, eligibility determinations and procurement requirements. Often these requirements are not only incompatible, but they also discourage comprehensive strategies altogether 16 because of the time and energy required.” Participants from the 2003 roundtable cities recognize that housing is a critical part of the whole, and that housing challenges cannot be resolved through attention to housing alone. Growth and development patterns, transportation spending, school quality, jobs and employment support services all have some relationship to housing, from factoring into where it is built to determining how much of a household’s budget is available to pay for it. Participant comments suggest that now is the time for a more coordinated approach, one that is defined by some measure of attention to the whole. 15

Community Development: Local Growth Issues—Federal Opportunities and Challenges (GAO/RCED-00-178, September 2000). 16

Meeting Our Nation’s Housing Challenges: Report of the Bipartisan Millennial Housing Commission, 2002, p. 41.

Barriers to Housing Production: Funding, Flexibility and Local Obstacles The Millennial Housing Commission (MHC) reported in 2002 that “affordability is the 17 single greatest housing challenge facing the nation.” The report noted that, “in 1999, one in nine households reported spending more than half its income on housing.” Both homeowners and renters face cost burdens. While factors other than supply figure into high housing costs, lack of supply is a significant part of the problem. For extremely low-income (ELI) and moderate-income households, in particular, there is a growing shortage of units. The MHC reported that, in 1999, there were 8.5 million ELI households and only 6.7 million units affordable to such households. For households in the 60 to 100 percent of annual median income (AMI) range, the number of affordable units decreased by nearly 2.5 million between 1985 and 1999. Clearly, there is a need for affordable housing production. Roundtable participants from each of the four cities identified challenges related to housing production. Such challenges range from inadequate or inflexible public subsidy to obstacles that increase the time and cost associated with using public subsidy. Land costs were cited as an obstacle to housing production in all four cities.

Existing capital sources are insufficiently funded, and they are governed by rules that make them sometimes ill-suited as tools to respond to locally identified need.

PHOTO BY DON OSBORNE AND PROVIDED BY THE WORKFORCE HOUSING COALITION OF THE GREATER SEACOAST

KITTERY, MAINE: WOODLAND COMMONS This new development, about 50 miles south of Portland, provides 65 units of affordable housing as well as a community center and three play areas.

The two main sources of capital subsidy are the Low Income Housing Tax Credit (LIHTC) and HOME. The LIHTC serves households up to 60 percent of AMI, while HOME funds are targeted to families with incomes at 80 percent or less of AMI. In practice, the National Council of State Housing Agencies points out, “nearly one in three homebuyers, seven in 10 homeowners, and about nine in 10 renters whom HOME assists earn 50 percent or less of area median income,” and “more than half of HOME assisted renters earn 30 percent or 18 less.” The LIHTC often serves households below its upper income target, as well. A GAO study of the LIHTC published in 1997 “found that [LIHTC]

Meeting Our Nation’s Housing Challenges, p. 14. Home Investment Partnerships Program. National Council of State Housing Agencies. (n.d.). Retrieved March 17, 2004, from http://www.ncsha.org/uploads/HOME%20Program%20Fact%20Sheet.pdf.

apartment renters earn only 37 percent of area median income” and that “many earn 19 less than 30 percent.” While the LIHTC and HOME programs are widely recognized to be successful, they are not funded at levels adequate to address the nation’s supply problem. In addition, there is no production subsidy targeted to ELI households, nor is there a subsidy for households in the 80 to 100 percent of AMI range. Participants from all four roundtable cities recognize production constraints that arise from such shortages or lack of subsidy. In Charlotte, the City Council recognized that most developers who use the LIHTC rent to households at the high end of the targeted income range. Seeking to serve households closer to 30 percent of AMI, the city turned to the voters, requesting a $20 million bond obligation that would be used to capitalize an affordable housing trust fund. As one participant explained, trust fund monies are used as gap financing on projects intended to serve ELI households. Still, the demand for such units far exceeds the supply, even with the trust fund (see profile of Patrick Mumford). For households earning even less, Charlotte calculates “an unmet demand for 6,900 housing units.” Despite a positive local response to the challenge of affordable housing production, local resources are inadequate to address demand. Participants from Portland describe a similar situation. In response to diminished federal resources, the state of Maine established a program known as Housing Opportunities for Maine, or HOME. The program is funded out of real estate transfer tax receipts. A report published in January 2004 by the Community Preservation Advisory Committee, which was created by the state legislature to advise the Governor, the Legislature, and state agencies and entities “on matters relating to community 20 preservation,” identified several problems with the state’s HOME program. First, it is unable to keep up with demand and, second, when the state budget gets tight, “these 21 funds are withdrawn and used for other purposes.” As a result, the program is funded some years but not others, and when it is funded well—as a result of increased real estate activity—home prices are generally up, exacerbating affordability problems. Participants from all four cities support enactment of the proposed National Housing Trust Fund. The proposal calls for a dedicated source of revenue that would be used to provide capital for the production or preservation of 1,500,000 units of housing over the next decade. A portion of the money would be used to support homeownership, but three-quarters of it would be targeted to rental housing. At least 45 percent of trust fund monies would be “used for housing that is affordable for extremely low income 22 households.” In addition to calling for additional federal support for production, participants identified elements of existing subsidies that limit their utility as tools to address locally identified need. A participant from Columbus emphasized the importance of maintaining the flexibility of the HOME program. A recently enacted federal measure set aside a portion of HOME funds for assistance to first-time homebuyers, something that was already permitted under the HOME statute. The set-aside had the effect of reducing the amount of funding available for other permitted activities. Participants agree that one reason for the HOME program’s strength is that it allows localities to determine the best use of program funds, and they agree that such flexibility should be preserved.

Housing Credits for Low-Income Renter Apartment Development. National Council of State Housing Agencies. (n.d.). Retrieved March 17, 2004, from http://www.ncsha.org/uploads/20040311_HC_factsheet.pdf. 20 Web site of the Maine State Planning Office. Description of the Community Preservation Advisory Committee. Retrieved March 17, 2004, from http://www.state.me.us/spo/landuse/tfandcomm/cpac/. 21 Second Annual Report of the Community Preservation Advisory Committee. State of Maine, 121st Legislature, Second Regular Session. January 2004, page 17. Retrieved March 17, 2004, from http://www.state.me.us/spo/landuse/docs/2004reportfinal.pdf. 22

Web site of the National Housing Trust Fund Campaign, Retrieved March 17, 2004, from http://www.nhtf.org/about/proposal.asp.

PATRICK T. MUMFORD At-Large City Councilman Charlotte, North Carolina

Patrick (“Pat”) Mumford is serving his second term on the Charlotte City Council. He is chair of the Transportation Committee and a member of both the Budget and the “Communities Within A City” (CWAC) Committees. The latter committee, which he chaired during his first city council term,focuses on housing and neighborhood development. In addition to holding elected office, Mumford works as a senior vice president with the Corporate Real Estate Division of Wachovia Corporation. He has lived in Charlotte for 17 years and has been active in the community, serving on the board of his neighborhood’s community development association and as board president for Habitat for Humanity, among many additional volunteer endeavors. “Money...funding...is the greatest housing challenge we face in Charlotte,” Mumford says. The voters have been generous, Mumford adds, approving “a $20 million general obligation bond issue in November 2002 to set up a local housing trust fund.”The Council established an advisory group to determine the best way to leverage the funds. “The private sector is able to supply product at about $90,000 per unit,” says Mumford, “which is pretty low. We wanted to reach lower, using the funds for gap financing on housing intended to serve families in the range of 30 to 60 percent of the area median income...and at the lower end of that range.” According to Mumford, trust fund monies are used to “make the numbers work”on such projects. “Our goal was to leverage $100 million from the original $20 million,”Mumford says, “and we’re ahead of the goal, having used the first $7.5 million to build $45 million worth of affordable housing. Thirty percent of those 567 units reached households at 30 percent of AMI. Still,” he adds,“we had a study done showing that five to six thousand units are needed, and we’re going back to the voters this year for additional bond funding.We hope they’ll see that we’ve used the monies wisely and done what we said we’d do.” In commenting on what the federal government could do to address funding problems, Mumford doesn’t lead with the obvious response: provide more money. Instead, he favors an approach that “rewards communities that spend wisely, using existing funding to leverage additional dollars.Charlotte has been very creative,”he says, “and we wouldn’t mind competing with other cities. I’d like to see a process where the federal government recognizes and rewards good work.” Additional challenges in Charlotte involve locational concerns. “We struggle over where to locate affordable housing, especially given NIMBYism and land values,” Mumford says.“The Council is working on housing policies to set goals for the number of units to build, the economic group to be served and the number of units per neighborhood,” Mumford explains, adding “you find that you can’t go everywhere,though,due to land costs.”The mixed-income model may be part of the solution,according to Mumford.“Mixed-income gets the private sector involved and helps to offset the subsidy required for low-income units.” “We’ve made an effort to involve the development community and neighborhoods in policymaking,” Mumford says,“because we want to be sure our policies are clear.”The city also is working on a policy to promote housing for lower income households along transit lines. “I wouldn’t really want state or federal involvement in our efforts to address the locational challenges,” says Mumford, adding “I do think the human service piece is critical, though. Adequate funding of after-school and daycare programs is integral to the development of healthy neighborhoods,” he says.“It’s not just about housing.”

One participant from Houston identified particular laws and regulations that perhaps discourage private sector participation in affordable housing production. The affordability restrictions on units subsidized by HOME funds were mentioned 23 specifically. Davis-Bacon wage requirements were mentioned, as well. Several issues with the LIHTC drew participants’ attention. First is the fact that LIHTC-funded units cannot be rented to households earning more than 60 percent of AMI. In high-cost areas especially, there is a growing shortage of units available and affordable to such households. Since these households can outbid low-income renters for units that might otherwise be available to them, the shortage in the moderate-income range worsens the shortage in the low-income range. Second, due to this upper income limit, the LIHTC cannot readily be used to produce mixed-income housing, which has come to be seen as preferable to housing characterized by a concentration of poor households. Participants from Houston called for both an increase in the LIHTC and “expanded flexibility to use the LIHTC to support mixed-income housing.” Finally, one participant from Houston commented that the Texas Department of Housing and Community Affairs—which allocates tax credits—should be able to influence where such units are built. “The allocating agency has to follow the Qualified Allocation Plan [QAP] guidelines,” this person commented, “and the QAP allocates points for resources leveraged. That’s important, but it also means that we can’t get units built in some of the less prosperous rural and ex-urban areas, where units are badly needed, because the projects don’t score high enough under leveraging. I think the federal government could provide more flexibility with regard to the QAP requirements.” On the homeownership side, participants from all four cities support enactment of a “homeownership tax credit” that would be modeled on the LIHTC. The credit would support the production of units for homeownership, providing sufficient equity to cover the gap between development costs and the price at which the home could be sold to an eligible buyer. Participants from Columbus point out that such a credit would be a valuable community development tool for older city neighborhoods where the cost of production exceeds the appraised value of a completed unit. Since the market will not provide new housing in such a circumstance—and since the market will not therefore lead the revitalization of older city neighborhoods—such a credit would serve an essential function. Finally, participants from all four communities recognize the importance of good design. Design that blends affordable units with market-rate units can go a long way, they remark, toward addressing public misconceptions about affordable housing.

Local laws and regulations governing land-use and construction can make affordable housing production more costly—or prevent it altogether. Locally adopted laws, regulations and codes that govern land-use and construction are often described as “regulatory barriers.” For example, one participant from Portland mentioned height restrictions as a significant regulatory barrier. Given the shortage of land in the city, the desire to increase supply by increasing building height is thwarted by such restrictions. Of much greater concern to participants overall were the density and use restrictions embedded in local zoning codes. Zoning, most participants agreed, is the greatest single obstacle to multifamily housing production, in suburban areas especially.

Rental units must remain affordable to low-income families for up to 20 years; owner-occupied properties that are resold within a period of up to 15 years must be purchased by another low-income family or the seller must repay all or a portion of the HOME subsidy.

In Portland, for example, participants describe the failure of towns surrounding the city—towns that are rapidly being converted to “suburbs”—to zone for multifamily housing. Such towns employ a practice known as “zoning by negotiation” to deal with developments that propose densities greater than what is allowed by default (one unit per acre if the land is not on public sewer, and four units per acre if it is). A developer wishing to build high-density housing must enter into negotiations with the town. This practice of “contract zoning” is identified in a publication of the International City/County Management Association as bad public policy, “because it is impossible for the governing body to set good policy in a public meeting room with an eager developer on one side, unhappy neighbors on the other and a specific piece of land in the middle. Good policy must be established in the abstract, away from such particular pressures and concerns, 24 and then enforced in the review of individual applications.” Not all participants target zoning as a major obstacle to affordability. In Houston, the only major American city with no formal zoning code, affordability problems persist. This is at least partly due to the fact that the city’s land development ordinance seeks to regulate development appearances through requirements on lot sizes and setbacks, among other things. Until 1999, the ordinance mandated a minimum lot size of 5,000 square feet for single family homes. In 1999, this requirement was relaxed in neighborhoods closer to downtown, but since 98 percent of the city’s housing stock 25 had been built before 1999, the change had little impact. In terms of homeownership, one participant said, Houston is one of the most affordable markets in the nation. In the vast majority of communities, zoning is an issue not just because density requirements preclude the construction of multifamily housing. Zoning is an issue because a request for rezoning must be acted upon by local government, and this opens the way to public opposition. All participants identified public “Not in My Backyard” (NIMBY) attitudes as a significant obstacle to affordable housing production. An important consequence of NIMBYism is its effect on for profit, private sector developers. The delays and associated costs entailed in fighting NIMBYism can create a disincentive for such developers to become involved in the affordable market. The situation is made worse if a developer seeks to serve the lowest income households; in such a case, multiple subsidies must be used, adding to the complexity—and cost—of the development. One of the participants from Charlotte talked about the importance of strong property management as a good way to counteract NIMBYism. In Charlotte, where public and assisted housing are well run and onsite management is strong, voters were comfortable with the idea of “affordable housing,” contributing to their willingness to endorse the local bond initiative. One participant from Houston pointed out that the U.S. Department of Housing and Urban Development (HUD) has taken measures to address the issue of regulatory barriers. It has established a Regulatory Barriers Clearinghouse that is intended “to support state and local governments and other organizations seeking information about laws, regulations, and policies affecting the development, maintenance, 26 improvement, availability, and cost of affordable housing.” HUD also announced a department-wide initiative known as “America’s Affordable Communities Initiative” that will “focus on breaking down regulatory barriers that impede the production of affordable housing.” As part of this initiative, the Department published notices in the 24

The Practice of Local Government Planning (second edition). Lewyn, Michael (2003, November 24) Zoning Without Zoning. Planetizen: The Planning and Development Network. Retrieved March 17, 2004, from http://www.planetizen.com/oped/item.php?id=112. 26 Web site of the Regulatory Barriers Clearinghouse of the U.S. Department of Housing and Urban Development. Retrieved March 17, 2004, from http://www.huduser.org/rbc/index.html. 25

November 25, 2003, Federal Register seeking comments on two items: (1) proposals to consider barrier removal as part of funding allocation and; (2) “HUD regulations that address the production and rehabilitation of affordable housing and present barriers 27 to the production and rehabilitation of affordable housing throughout America.”

In some markets, wages are inadequate to support new housing production. The Millennial Housing Commission reported that “working full-time does not guarantee immunity from acute housing affordability problems,” pointing out that “of the 11.3 million lower income households with severe housing affordability problems in 1999, nearly one-quarter had earnings at least equivalent to full-time work at the [federal] 28 minimum wage ($10,712).” In addition, the report stated, “many families with earnings significantly higher than the full-time, minimum wage equivalent also face moderate and severe housing affordability problems.” Where capital subsidy is lacking or where regulatory barriers make the development of housing that would be affordable to lowwage workers either impossible or still too costly for such households, the market will not produce the needed units. In some markets, participants pointed out, the needs of such households could be addressed via the Housing Choice Voucher program. A participant from Charlotte suggested, for example, that the best way “to ‘produce’ new units of affordable housing is to increase the number of private landlords willing to accept voucher holders.” Previous analyses of the voucher program have identified lack of landlord participation as a challenge, recommending, among other things, that the U.S. Department of Housing and Urban Development (HUD) and voucher-administering agencies “develop consensus standards for shortening the inspection and lease approval process and for providing 29 better service to landlords.” In other markets, however, the ability to produce affordable units for such families bumps up against federal funding limitations. In Houston, for example, the voucher utilization rate is 100 percent, with 15,000 vouchers in use, but there are an additional 29,000 families and individuals on the waiting list for housing assistance. One recommendation that emerged from the Houston roundtable is a proposal for a “thrifty voucher” program. Under the proposal, Congress would allocate thrifty vouchers to states, who would then “attach” them to a portion of the units in LIHTC properties. The vouchers would cover operating costs only and would therefore cost less than “regular” vouchers, which typically cover at least a portion of debt service. Such units would then be rented to ELI households, whose incomes are typically too low to cover even basic operating costs.

“Department of Housing and Urban Development: America’s Affordable Communities Initiative, HUD’s Initiative on Removal of Regulatory Barriers: Identification of HUD Regulations That Present Barriers to Affordable Housing; Notice.” Federal Register. November 25, 2003. Retrieved March 17, 2004, from http://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/2003/pdf/03-29325.pdf. 28 Meeting Our Nation’s Housing Challenges, p. 16. 29 Ibid, p. 59.

AT THE FEDERAL LEVEL, affordable housing production is supported primarily by the LIHTC and HOME programs. Participants commented that both programs work well and that their funding should be increased. With regard to the HOME program, participants called for preserving flexibility. Two proposals for new production tools have the support of participants: the National Housing Trust Fund (NHTF) and the homeownership tax credit. The NHTF will provide a dedicated source of capital for units intended for occupancy by ELI households, something that does not currently exist. As for reaching moderate-income households, participants called for expanded flexibility in the use of the tax credit, suggesting not that the income targeting be raised exclusively to reach moderate-income households, but that it be raised in order to facilitate the production of mixed-income developments. The issue of regulatory barriers is complicated. Where federal regulations impede program use, participants agree that regulations should be rolled back. Where local barriers are the more readily identifiable problem, participants believe that solutions should come from the local level. One idea under consideration in Charlotte, for example, is the use of density-bonus incentives for developers who make a portion of units available to low-income households in an otherwise market-rate development. With regard to NIMBYism in particular, public relations campaigns appear to be gaining in popularity as a way of addressing the challenge. A participant from Charlotte pointed out, however, that as affordable housing advocates become more sophisticated in their presentation of the issue, opponents do too.

Barriers to Housing Preservation and Rehabilitation: Funding, Flexibility and Local Obstacles Affordable units are lost from the housing supply for any number of reasons. Privately owned, federally assisted properties may deteriorate, becoming old and obsolete in the hands of owners who lack any incentive to sell. If the properties are in strengthening markets, owners may opt out of affordable programs, resulting in the removal of rent restrictions and the loss of the units from the affordable stock. Conventionally financed properties, which in 1999 “made up more than 60 percent of units affordable to extremely low-income households and nearly 87 percent of units affordable to very low-income 30 households,” face pressure from gentrification as well as tightening markets. The capital and operating budgets of public housing agencies have been consistently underfunded, leading to a situation in which substantial numbers of public housing units have been demolished and replaced by lower density, mixed-income housing. The potential loss of affordable units is serious in and of itself, particularly in light of the challenges inherent to increasing supply through new production. For neighborhoods in which there is a relatively high concentration of units characterized by deterioration, the preservation challenge is just as importantly a community development challenge. Participants from Charlotte and Columbus are particularly concerned about barriers to housing and neighborhood preservation.

Policies that fail to address deferred maintenance contribute to the loss of affordable units from the housing stock. One participant from Charlotte commented that HUD funding fails to adequately address deferred maintenance at public housing properties. He called for a change in how HUD operating and capital subsidies flow to public housing properties—on a portfolio basis. He suggested that private sector management practices should be put into place, with each property considered separately. Such an approach, he suggested, would contribute to making the properties self-sustaining, which would alleviate the likelihood of their loss from the affordable stock. Absent such an approach, he suggested, the local government would need to intervene further on down the line to prevent their loss. This proposal is similar to that put forward by both the Millennial Housing Commission and the Harvard

COLUMBUS: Y WCA The $19.3 million rehabilitation of this YWCA building in Columbus, Ohio, involved federal, state and local government, a nonprofit developer, private investors and nonprofit service providers.

PHOTO PROVIDED BY OHIO CAPITAL CORPORATION FOR HOUSING 30

Meeting Our Nation’s Housing Challenges, p. 32.

Graduate School of Design’s Public Housing Operating Cost Study. Both reports called for a shift to a property-based model for public housing management. An underlying reality of both studies, as well as the comments of the participant from Charlotte, is that a shift to such a system will facilitate private sector investment in public housing properties. The private sector is accustomed to evaluating and assessing real estate on a property-by-property basis and has difficulty engaging an individual property without—at the very least—information on its capital needs and market value. A participant from Houston shared a different view regarding public housing. He attributed problems at public housing properties not to the portfolio-based funding approach but to chronic federal funding shortfalls. He cited reductions in both the capital and operating funds and the termination of the Public Housing Drug Elimination Grant program as factors that contribute to the inability of public housing agencies (PHAs) to keep up with maintenance and operational needs. He also cited the regulatory burden on PHAs. “In the private sector,” he commented, “when regulations add costs, businesses pass those costs on to the consumer. PHAs can’t do that.” The combination of funding shortfalls and costly regulations, he said, results in decreased services to residents, including the assignment of a lower priority to non-emergency maintenance problems. The situation contributes to gradual property decline, increasing the likelihood that units will ultimately be lost from the stock. Another participant from Charlotte commented that the older housing stock in that city is simply not being maintained, a reference to privately owned, federally assisted units. Rents on such units are regulated, making it impossible for owners to increase rents to address deferred maintenance needs. As this commenter pointed out, the federal government provides no assistance to help owners address the maintenance backlog, resulting in a situation in which “the city and private sector will need to step in.” A similar situation prevails in the older city of Columbus, where, according to a participant from that city, approximately 70 percent of the units are more than 40 years old. Of the units in need of rehabilitation, more than 75 percent are rentals. Also, one in 10 units in the older city is vacant; these units are concentrated in the lowest income areas 32 of the older city. One participant from Columbus talked about the need for a comprehensive approach to housing revitalization in areas such as the older city. Through HUD’s Mark-to-Market program, he said, the debt on individual properties can be restructured to bring rents down to market, and rehabilitation grants may be available for needed capital improvements or to bolster replacement reserves, but there is no attention to the broader neighborhood. He suggested the need for a HOPE VI–type program for privately owned, federally assisted properties. “It doesn’t make sense just to fix up one property in a neighborhood that’s experiencing a downturn. A more comprehensive approach would make sense.” Another challenge in Columbus’s older city relates to the needs of individual homeowners. Many of them, one participant said, cannot afford to maintain or improve their homes. The median value of homes in the area is $85,000 or less, and rehabilitation costs can range from $40,000 to nearly $100,000 for a historic structure. Even if low-income owners could afford such costs, it is unlikely that financing would be made available in many cases, because the costs of rehabilitation would exceed the appraised value of the home upon completion.

Strong property management is critical to the preservation of affordable housing. The physical decline of units is one problem that threatens to push such units from the affordable stock; another derives, according to roundtable participants, from the cumulative effect of inadequate property management. A participant from Charlotte 31

Web site of the Public Housing Operating Cost Study. Retrieved March 17, 2004, from http://www.gsd.harvard.edu/research/research_centers/phocs/. 32 Housing Rehabilitation in Older Columbus: Background Paper, prepared by Community Research Partners for the National Housing Conference Senior Executive Roundtable in Columbus, Ohio, June 2003.

commented that the tolerance of nuisances by property managers can contribute to a situation in which the housing asset itself is damaged. The private owners of federally assisted housing, one participant commented, took their tax benefits, then—when such benefits were eliminated—continued to sit on the properties, deferring maintenance indefinitely. “They don’t seem to care about managing the properties, about taking care of the assets,” he said. One participant from Columbus pointed out the difficulties of managing federally subsidized properties given the complexities involved in complying with the requirements of the various funding sources. “Typically,” he said, “asset management fees are not adequate to the task. It takes a real commitment and skill and experience to manage these properties, and there aren’t a lot of people who do it well.” A participant from Charlotte agreed: “It’s all about compliance.” On the public housing side, one participant from Charlotte talked about the need for public housing to blend in with market-rate units. “When the van pulls up with ‘housing authority’ printed on the side, that sends a message,” he said. He suggested that PHAs should follow private sector asset management principles.

A source of funding for the recapitalization of affordable properties is needed. The simple passage of time will ultimately lead to a point at which affordable properties need to be recapitalized. Deferred maintenance and poor property management may make that time arrive more rapidly. As a participant from Columbus pointed out, there are investment incentives for new production—such as the LIHTC—but there are few resources available to recapitalize and preserve the existing stock of rental housing. Participants from all cities recognized the exit tax as a barrier to the sale and recapitalization of privately owned, federally assisted properties. A participant from Columbus suggested that a reduction or deferral of exit tax liability would be a good idea, “as long as the property is being transferred to a nonprofit organization” (see profile of Hal Keller). Another participant pointed out that the same issue will come up when the affordability periods on LIHTC-financed properties begin to expire. Any proposal for exit tax relief should consider the needs of this family of properties, as well. All participants expressed concern that any source of recapitalization come with affordability restrictions. A participant from Charlotte emphasized how important it is, given the problems associated with new affordable housing production, to maintain affordability restrictions where they already exist. “Even as we ‘recapitalize’ public housing via HOPE VI,” she said, “we bump up against problems with landlord reluctance to accept voucher holders. That equates to a loss of units.” One participant from Charlotte called for a broader, more strategic approach to revitalization. She suggested that, particularly given the lack of federal funding for the recapitalization of individual properties, a strategy focused on entire neighborhoods—and homeownership as well as rental housing—is needed. Such an approach, she said, could help to attract investment from the city and the private sector, and could help to compensate for the lack of federal funding for individual properties. Such an approach should include mixedincome development to help secure the areas against a recurrence of economic downturn. Taking a similarly broad-based, strategic approach to the challenge, a participant from Columbus commented that another way of bringing new resources into neighborhoods such as the older city is to take steps to market the area’s unique characteristics to potential residents. Given the perceived weakness of public schools in the area—something that several participants from Columbus said is more of a misconception than a reality—this commenter suggested marketing the area to young professionals and empty nesters. Another said that tax abatements could be offered as a marketing incentive. The abatements could be offered to existing owners, as well, he said, to encourage them to undertake capital 23

HAL KELLER President Ohio Capital Corporation for Housing Columbus, Ohio Hal Keller has been president of the Ohio Capital Corporation for Housing (OCCH) since 1993. OCCH is an independent, nonprofit corporation. A statewide equity fund, it was created by the Ohio Housing Finance Agency in 1989 to get Low Income Housing Tax Credit equity into parts of the state that would not otherwise have had access. OCCH has raised more than $650 million from corporate investors and has a portfolio of close to 12,000 units. In addition to acting as a syndicator, OCCH packages tax credit applications and assembles financing for projects receiving LIHTC equity. The nonprofit is represented on statewide planning and advisory committees. “One of the greatest challenges in Columbus,” Keller says, “has to do with deteriorated single family properties in the older part of the city.” Citing the costs of rehabilitating such properties—lead-based paint rules and historic rehabilitation requirements, for example—Keller explains that the values of rehabilitated properties don’t support the cost of doing the work, resulting in a so-called “appraisal gap.” “There is still land available in surrounding counties,” Keller adds,“and people can buy homes for less than the cost of rehabilitation in the city. Also, the suburban schools draw people with kids.” To address this challenge, Keller suggests developing marketing approaches that emphasize the appeal of older neighborhoods. “Neighborhood planning activities are important, too,” he says. He cites the city and county’s joint housing trust fund corporation—funded through county general revenues and city hotel taxes—as a critical resource. Other means of dealing with the challenge could include identifying funding sources that don’t activate lead-based paint requirements, flexibility in building codes and inspection procedures where practical, investment in entities that focus on the particular problem of vacant homes, and measures such as tax abatements and tax increment financing. “At the federal level,” Keller says, “the proposed homeownership tax credit would help to address the appraisal gap.” Another challenge in Columbus derives from the need to preserve expiring use Section 8 properties. “The properties go through Mark-to-Market, but there’s no real investment in rehabilitation,” Keller says. “We’re looking for innovative ways to bring in rehabilitation dollars.” Keller explains that OCCH recently acquired a portfolio of 250 buildings (1,350 units), purchased the management company and is in the process of rehabilitating the majority of the buildings, which are scattered through seven neighborhoods. The remaining buildings will be sold at a minimal price so that buyers “have to borrow for rehabilitation costs only.” The preservation challenge, Keller suggests, could be helped through a HOPE VI–type program for the project-based Section 8 portfolio. “We need an approach that allows similar flexibility so that we can engage in general community redevelopment instead of just fixing up individual buildings.” Exit tax relief would help, as well, Keller says. “I’d like to see reduced or deferred exit tax liability as long as the property is being transferred to a nonprofit organization.” 24

improvements to their homes. Several participants pointed out that this “ground up” approach to neighborhood revitalization would be a good complement to federal funding targeted to individual property recapitalization, but that it would not go far enough in and of itself as a strategy for dealing with chronic underinvestment in the area.

Federal and local requirements add costs to housing rehabilitation, creating disincentives to preservation. Participants from Columbus cite a number of factors that add costs to housing rehabilitation. The need to engage in lead-based paint and asbestos remediation and historic design regulations are at the top of the list. Since lead-based paint requirements kick in when federal sources of funding are used for rehabilitation, one participant stated that people interested in doing rehabilitation work may make efforts to identify alternate sources of funding. When the costs of such rehabilitation requirements are factored in, the result is that new housing units in suburban school districts can be purchased for prices at or below the cost of a rehabilitated unit in older Columbus. “Smart codes” may offer an antidote to the sort of situation facing Columbus’s older city, according to a participant from Houston. In August 2001, HUD issued a publication titled Smart Codes in Your Community: A Guide to Building Rehabilitation Codes. The guidebook “reviews the general regulatory environment governing reuse of existing buildings and 33 provides examples of recent State and local efforts to reduce regulatory complexities.” It also provides a model rehabilitation code based on New Jersey’s Rehabilitation Subcode. The goal of the effort is to provide predictability and proportionality, two things that participants from Columbus stated would greatly serve the rehabilitation process in that city. The HUD guidebook describes specific steps a community can take to implement a model rehabilitation code: create a committee of stakeholders that includes housing advocates, builders, owners, historic preservationists, architects and building and fire officials, among others; review HUD’s model code and other applicable literature that HUD can provide; initiate a study to compare the community’s rehabilitation code against the model code; develop a model for the community; and establish follow-up mechanisms. Roundtable participants from Columbus also commented that a significant number of homes in the older city are in fact obsolete, meaning that they lack the basic amenities sought by the market (e.g., garages, space, updated bathrooms). As a result, participants said, there are lots of vacant one- and two-bedroom units in the older city. The prohibitive costs of rehabilitation, as well as the costs of adding the amenities desired by the market, contribute to a situation in which rehabilitation can cost more than the appraised value of the revitalized home. In other words, rehabilitation becomes uneconomic. For this reason, some participants from Columbus support the idea of a federal homeownership tax credit that could be used to fill the gap between the cost of revitalization and the newly rehabilitated home’s appraised value. Others focus on the need to reduce the costs of revitalization via proper code enforcement, or by completing rehabilitation work on entire blocks rather than individual homes. Still others said it makes most sense simply to demolish such homes, freeing up the land for new housing.

Market pressure for gentrification can drive existing lower income households out of neighborhoods and prevent new lower income owners and renters from moving in. Just as the outflow of capital from a community can signal decline, an inflow of capital can be a precursor to gentrification. Gentrification has been defined as the process by which lower income residents of a neighborhood are involuntarily displaced by higher 33

“Smarter Codes Spur Reinvestment,” Recent Research Results. U.S. Department of Housing and Urban Development, Office of Policy Development and Research. (n.d.). Description of a HUD/PDR publication titled Smart Codes in Your Community: A Guide to Building Rehabilitation Codes. Retrieved March 17, 2004, from http://www.huduser.org/periodicals/rrr/rrr_02_2002/0202_2.html.

income residents. For roundtable participants, the key to neighborhood revitalization is to encourage capital inflow without forcing out low-income residents. A participant from Charlotte listed factors that, according to a paper published by the 34 Brookings Institution, suggest the likelihood of gentrification: a high rate of renters, ease of access to job centers, high and increasing levels of metropolitan congestion, high architectural value, and comparatively low housing values. The paper also listed four signs that gentrification is already under way: a shift from rental tenure to homeownership, an increase in downpayment ratios (and a decline in FHA financing), an influx of households and individuals interested in specific urban amenities and cultural niches, and an influx of amenities that serve higher income households. Specific to housing, the Brookings study identified four pressures that appear to hasten gentrification: constrained housing supply relative to job growth, relative affordability within the larger housing market, lucrative investment potential in highrisk neighborhoods and a large rent gap (i.e., the difference between property values before and after renovation). According to another study, the key to assuring that lower income residents are not displaced as a result of these pressures is “effective community 35 mobilization and involvement.” Both studies state that increasing affordable housing production and preserving existing affordable housing are necessary in order to counteract gentrification. Marketbased policies, such as rent control; land-use policies, such as inclusionary zoning; and the use of mechanisms such as community land trusts are all mentioned. The authors of the Brookings study also highlight public sector policies that can “either facilitate or impede gentrification,” including direct investments, tax incentives and zoning regulations intended to facilitate neighborhood revitalization. Participants from Houston talk about two neighborhoods in that city that were recently redeveloped. Allen Parkway Village, owned by the Housing Authority of the City of Houston, and Freedman’s Village, adjacent to the public housing site, were both listed on the National Register of Historic Places. Allen Parkway Village was razed and replaced by mixed-income housing; a percentage of the units still serve public housing residents. The single family homes in Freedman’s Village, founded in 1870 by newly emancipated slaves, were cleared, as well, to make way for housing that one participant described as “not affordable.” One participant from Houston suggested that the redevelopment of Freedman’s Village represents an example 36 of gentrification, a process that began when, after years of “neglect and disinvestment,” Allen Parkway Village became a candidate for HOPE VI–financed redevelopment. The two neighborhoods are adjacent to downtown and served by public transit.

HOUSING PROGRAMS AND POLICIES

of the past focused on production and affordability at the expense of long-term viability on the “bricks and mortar” side. The rents on public housing properties and privately owned, federally assisted units were regulated to assure affordability, and funding for operations, maintenance and the replacement of major capital systems was inadequate. Any number of factors combine to increase the urgency of affordable housing preservation. First, affordable housing production is inadequate to meet demand. Funding is scarce, regulations add costs and local opposition is often strong. In areas such as the older city of Columbus, deferred maintenance, ineffectual property management and a lack of funding for recapitalization contribute to broader neighborhood decline. Regulatory barriers that add to the costs of rehabilitation only increase the likelihood that such areas will become candidates for comprehensive revitalization, which, if it is done solely to attract capital, could result in gentrification.

Dealing with Neighborhood Change: A Primer on Gentrification and Policy Choices, Maureen Kennedy and Paul Leonard, The Brookings Center on Urban and Metropolitan Policy, April 2001. 35 Gentrification: Causes, Indicators, and Possible Policy Responses for the San Francisco Bay Area, Strategic Economics, Berkeley, CA, September 1999. 36 The Historic Oaks of Allen Parkway Village. (n.d.). Retrieved March 17, 2004, from http://smt.nefinc.org/uploadProject%5C/texas/nef97/historicoak.pdf.

The Importance of Partnerships: Across Boundaries, Sectors and Functions Housing is just one element in a world-class community. Barriers to housing production and preservation are complicated. They result from any number of factors: codes and regulations that add time and costs; exclusionary land-use policies; a lack of federal, state and local resources devoted to housing; a failure to plan for the full range of needed housing; and low-wage jobs, to name a few. Such barriers often result, as well, from a failure to recognize what might be termed a “natural alignment” of interests. Transportation planners seeking to reduce emissions in order to comply with federal requirements may fail to recognize how aligning transit and housing policies can strengthen their case for continued federal funding. Economists seeking to design policies that will attract businesses—and new jobs—to an area may fail to realize the need for workforce housing; as businesses move in and services sprout up to serve them, the resulting roadway congestion may contribute to the cost of doing business, creating, in aggregate, a community that new businesses wish to avoid. The recognition of mutual interests between housing advocates and others in the community is not new, nor is the recognition of the need sometimes to involve multiple jurisdictions in framing solutions to the housing challenge. The flip side of this recognition is action, and action on this level means the formation of partnerships. Partnerships may entail any number of things, from regional land-use planning to publicprivate ownership structures to agreements between housing and social service providers.

HOUSTON: ROSE OF SHARON MANOR II

This senior housing facility was developed by a local nonprofit corporation with funding from the city.

PHOTO PROVIDED BY THE CITY OF HOUSTON

Individual communities attack “the housing challenge” with varying degrees of success. Increasingly, success appears to be linked to an overt acknowledgment that housing is just one element in the broader community. Such a view tends to support the search for natural alignments, which in turn results in partnerships and the leveraging of resources. The 2003 roundtable cities represent the broad spectrum of communities in this regard.

Interjurisdictional cooperation on housing policy is important, especially, but not exclusively, when housing and job markets traverse jurisdictional boundaries. Charlotte’s proposal to the Federal Transit Administration for a light-rail transit line had the support of jurisdictions through which the line will run. Households from jurisdictions to the south of Charlotte were especially aware of the problems associated with commuting into and out of city job centers each day. The transit line proposed for Columbus has the support of surrounding jurisdictions, as well. Ultimately, seven additional rail lines will be added to the system, taking commuters from the growing metropolitan area of central Ohio into and out of Columbus’s job centers. Both of these projects were awarded funds out of the federal “New Starts” program. The potential amount of funding available through the program—set at 50 percent of capital costs—creates a significant incentive for interjurisdictional cooperation on transit policy. The New Starts program also suggests the practicality of linking transit and housing policies through its requirement that applicant and grantee jurisdictions report on the number of households—and the number of low-income households—within one-half mile of each transit station. Absent any federal funding incentive, interjurisdictional cooperation on housing policy becomes problematic. Often, the need for such cooperation is exhibited by its absence. In Columbus and Portland, for example, the unwillingness of suburban jurisdictions to zone for multifamily housing contributes to the overall affordability crisis. A participant from Columbus said simply that the urgency of the rehabilitation challenge in the older city is increased by the fact that suburban jurisdictions “have housing policies that keep affordable units out.” He cited the absence of a “regional effort.” In Portland, where, one participant noted, there are “no vacant or abandoned units and land is very scarce,” the lack of zoning for multifamily housing in the newly suburban areas surrounding Portland contributes to sprawl and traffic congestion and a daunting affordability challenge. A recent report by the Community Preservation Advisory Committee of the State’s Legislature identified a need for the promotion of regional solutions. The report acknowledged that “housing—and for that matter transportation and economic development and sprawl as well—are all issues that require municipal cooperation within a region to address,” and it continued “one community may be reluctant to provide affordable housing if it feels that 37 neighboring communities are not doing their fair share.” In Charlotte, where issues of growth and housing and transit are recognized as challenges requiring interjurisdictional cooperation, participants express concerns about the potential for gentrification in neighborhoods beyond the half-mile radius of proposed transit stations. Participants from that city recognize that the housing needs of the lowest income households need to be considered on a region-wide basis. One commenter cited the absence of a “funding mechanism” to support regional cooperation on the issue. Participants from Houston also identified a “lack of regional cooperation” on housing issues as a significant challenge. One person commented that the problem is made worse by the fact that NIMBYism has moved into central city neighborhoods. “It 37

Second Annual Report of the Community Preservation Advisory Committee, State of Maine, 121 Legislature, Second Regular Session, January 2004.

used to be that NIMBYism was a problem mainly in the newer, suburban areas,” he said, “but now it’s a problem in the city as well. People in the lower income areas,” he added, “are saying ‘enough already.’”

Public-private partnerships are essential to balanced housing development. The development of affordable housing has always been undertaken jointly by the public and private sectors. Public contributions have taken the form of subsidy, land, management and, increasingly, development expertise. On the private side, contractors, developers, owners and investors have played important roles. Increasingly, nonprofit expertise in these areas is equivalent to that of private entities. As the public role of “subsidy provider” has diminished, the need to attract private investment has take on new importance. At the same time, public bodies increasingly view their contributions as “investments” rather than “expenditures,” which reflects two positive circumstances: renewed attention to the linkages between housing and the broader community and greater consideration for the role of housing as an asset with value that should be protected over time. In practical terms, then, public contributions must provide both a context and an incentive for private sector investment. Both the context and the incentive must correlate with the amount of private investment needed, for example to produce units for the nation’s poorest households. The public sector creates context and incentives for private sector investment through land-use policies, planning activities, regulations, and appropriations or tax expenditures. Participants from each of the four roundtable cities talked about ways in which the public sector is either enhancing or impeding private sector investment in affordable housing. In Charlotte, the City Council recognized that the private sector would not build below a certain income range without additional public subsidy. The voters agreed to provide it. If developers also need to succeed on rezoning requests in order to develop such housing, the voters also will have a say in whether the housing gets built—and at what cost per unit. “The establishment of policies isn’t painful,” a participant from Charlotte said, “implementation is. The Council needs to support its policies through rezoning.” One participant from Charlotte suggested that an important private sector incentive would come about if the federal government allowed the state to set locational criteria in its allocation of Low Income Housing Tax Credits. As things stand currently, the locational incentives are backward, another participant noted, explaining that developers 38 get a basis boost for building in high-poverty areas known as qualified census tracts. In light of the costs associated with building in other areas—land costs and the costs associated with rezoning petitions—such a boost would more appropriately be applied to projects proposed for higher income areas. The argument is accompanied by a call for increased funding of the LIHTC program so that the costs associated with building in higher income areas do not result in diminished per-unit production overall. Participants from Charlotte and Columbus cite the exit tax as an obstacle that puts private owners at odds with public priorities. The lack of public subsidy to offset the taxon-sale liabilities of owners inhibits many of them from selling, despite the existence of private sector buyers who would acquire and rehabilitate the properties, maintaining them as affordable. At the local level, a participant from Houston observed, it may not be entirely realistic to expect the public sector to want to make it easier—or financially feasible—for private 38

“A Qualified Census Tract is any census tract...in which at least 50 percent of households have an income less than 60 percent of the Area Median Gross Income (AMGI) or where the poverty rate is at least 25 percent and where the census tract is designated as a Qualified Census Tract by the Secretary of Housing and Urban Development.” From http://www.taxcredit.com/S8-LIHC%20Rents.pdf.

developers to build affordable housing. “Look at how the city raises revenue”—she said— “through property taxes.” The appeal of high-end homes over affordable units creates an incentive for cities to subsidize such developments through reductions in fees and requirements—or their outright waiver. Such developments typically do not require zoning changes, and perceptions tend toward the assumption that they do not place a burden on schools to the same extent as affordable multifamily housing developments. “In fact, jurisdictions compete for the high-end housing, and their reasons for doing so are completely clear,” this participant elaborated, “so they would need an equally good reason to become involved in any sort of regional initiative that would require them essentially to compete for affordable housing.” Participants from Houston were surprised to learn that real estate agents are among the strongest supporters of Maine’s real estate transfer tax, which funds the program known as Housing Opportunities for Maine. A good portion of funding from that program goes to the Maine State Housing Authority to promote affordable homeownership initiatives. “The realtors see the tax as promoting homeownership,” a participant from Maine explained. The Maine example illustrates a point raised by participants from all four cities: The private sector can be an ally not only in producing and preserving affordable housing, but also in persuading public officials of the need to do so. The actions of the Charlotte Chamber of Commerce illustrate this fact, as do the comments of at least one businessperson from Portland (see profile of Mary Allen Lindemann). A key missing ingredient, participants from each city agreed, is a public-private initiative geared toward educating the broader public about why affordable housing is important to community vitality. Both the private sector and the broader public must arrive at some sort of consensus about the importance of housing; only then will the representatives of the public take steps to address the land-use policies, planning activities and regulations that impede private sector involvement in housing production and preservation.

Partnerships between organizations that focus on various types of housing—from emergency shelter to units accessible for the disabled to rental units to homes for purchase—are critical to assuring that communities serve the full continuum of housing need. Homeownership is often referred to as the “American Dream.” For those who are born into owner-occupied homes, the dream is more likely to become a reality. According to the Millennial Housing Commission, “children of parents who own their homes and live in neighborhoods with low turnover have a higher probability of completing high school. Teenaged daughters of homeowners are also less likely to become pregnant. Even after controlling for parents’ age, income and other influences, homeowners’ children have significantly higher math and reading scores as well as significantly fewer behavioral 39 problems and a better quality home environment than renters’ children.” The positive consequences of homeownership can be contrasted with the stresses of homelessness. On any given night, an estimated 800,000 Americans are without shelter. During any given year, approximately 3.5 million people are homeless. More than 35 percent of them are children. A significant number of the homeless are either physically or mentally ill or victims of substance abuse, and they tend to remain homeless for longer 40 than those with lesser health problems. The ability of households at one end of the spectrum to reach up to the next level depends on supply and affordability, and it also depends on the availability and accessibility of services. Likewise, the prevention of a downward step from homeownership to renting or even homelessness depends on supply and affordability and the availability and accessibility of services. For this reason, participants note, 39 40

Meeting Our Nation’s Housing Challenges, p. 11. Henry Cisneros, John T. Dunlop Lecture at Harvard University, September 29, 2003.

MARY ALLEN LINDEMANN Co-owner Coffee By Design Portland, Maine Mary Allen Lindemann and her husband, Alan Spear, own Coffee By Design, a company that provides “handcrafted coffees.” They opened their first retail location in downtown Portland in 1994 and have since added two more stores. Coffees are roasted in the company’s microroastery, also in Portland. As a business owner, Lindemann is committed to promoting values that are important to her, including social responsibility and community sustainability. She is president of the board of Maine Businesses for Social Responsibility, an association of businesses founded in 1993 whose members are “committed to creating a new business climate that recognizes that long-term, sustainable profitability is directly linked to acting in a socially 1 responsible, ethical and compassionate manner.” “The biggest housing challenge in Portland is affordability,” Lindemann says, adding “people need to be able to find housing on the wages that are paid.” Lindemann talks about the effect of housing costs on her staff. “We had six staff living in one apartment together,” she says. “When I was growing up,” she adds, “housing was supposed to cost one week’s salary. Now rents are increasing disproportionately to wage increases.” Coffee By Design’s business strategy involves purchasing the buildings in which its retail stores are located. Lindemann talks about a building they just purchased that has a residential unit above the ground floor retail area.“It’s three bedrooms and one bath,” she says, “and it rents for $1,200 a month. That’s not affordable.” According to Lindemann “Maine has become a very desirable place to live, and lots of apartments are being converted into condos. Workers are having to decide whether to move. Our workers,” she adds, “want to be part of the community in which they work. They don’t want to have to move to outlying areas. They don’t want to become dependent on cars.” Lindemann is frustrated by her inability to do much about the housing challenge. She notes that her company provides “the best health care package” it can for its 34 employees,“and we pay 70 percent of the premium. On the housing side, though, we struggle over what to do.” Lindemann notes that the city’s Downtown Portland Corporation provides below-market loans to businesses so that they can purchase the building in which they’re located.“Why couldn’t we have a similar program for businesses that want to purchase housing for their staff?” she asks. “The city itself had a first-time homebuyer program where purchasers got assistance if they bought and renovated a multifamily property and then lived in one of the units. Why not have businesses purchase and renovate properties to house staff? Why not offer a tax break for businesses that do something like that?” Lindemann asks. “Even as a small business,you can make a difference,”Lindemann says,adding “you may not have lots of disposable income, but you pay taxes and you have a voice.”She says she’d “love to get a tax credit for doing something to help staff with a downpayment or security deposit.” For an employer such as Lindemann, profitability and values go hand in hand. “For us, owning a business is about more than just ‘people come to work and then they go home.’ It’s not just about the bottom line.” 1

31 From the Web site of Maine Businesses for Social Responsibility at http://www.mebsr.org/.

partnerships among the various types of housing and service providers within a community are critical. One participant from Charlotte talked about the importance of addressing the severe shortage of housing for extremely low-income households. Absent production for such households, she commented, “two things happen: their vulnerability to homelessness increases, and the duration of exposure for currently homeless families increases.” She noted that the Charlotte Housing Authority (CHA) is the only agency with housing programs to serve such families, but CHA’s resources are inadequate to meet the need. In Houston, where “disparities in wealth distribution” was cited as a key challenge, one participant said there is a need for “housing options for people at all income levels.” Another said that shortages exist for people with disabilities, as well, including the growing elderly population. Still another talked about the need for housing and services for people who are terminated from the Housing Authority of the City of Houston’s Section 8 program. Columbus has been recognized for its successes in establishing emergency shelter, in part because the city has a system in place to move people from emergency shelter into permanent housing. The system involves a broad range of community partners: private contributors, housing agencies, private landlords, service providers and coordinating agencies. The “needs-tailored” system is focused on providing units of permanent supportive housing to chronically homeless individuals (and some families), emergency short-term rental assistance to prevent homelessness and direct housing for individuals and families that are prepared to enter into a lease. Operated by the Community Shelter Board (http://www.csb.org), an umbrella organization, the model continues to attract national attention for its programs, partners and overall success.

IN COMMUNITIES

like Charlotte, Columbus, Houston and Portland— communities that are experiencing economic growth—job and housing markets cross jurisdictional boundaries. As a result, one of the most obvious consequences of growth— traffic congestion—makes manifest the need for interjurisdictional cooperation on transportation and housing policies, at least. Incentives that align transit and housing policies are a step in the right direction, but continued progress is required on the issue of housing alone. As housing challenges become increasingly regional in nature, partnerships will become increasingly important as vehicles for resolving interjurisdictional housing policy discrepancies. Absent such coordination, regulatory and other barriers that inhibit the production and preservation of affordable housing will continue to skew regional housing markets. Perhaps, more importantly, given the shortcomings of public subsidy for housing, they will continue to inhibit private sector investment in affordable housing. The situation for homeless families and extremely low-income households will likely worsen as a result and, in some markets, shortages for moderate-income families will only exacerbate overall housing need. Achieving a balanced housing continuum within a community has always been a challenge. Partnerships between public and private sector actors and among housing and service providers have always been essential. Growth complicates the challenge. In addition to meeting the needs of the local population, housing professionals must concern themselves with the actions—or inactions—of adjacent communities with regard to their own housing challenges. To achieve a balanced housing continuum, housing practitioners must now look beyond their own communities, seeking “natural alignments of interest” with partners in neighboring jurisdictions. Absent such an effort, growth threatens simply to push local imbalances into the broader region.

The Federal Role: An Exclusive Perspective, a Compelling Opportunity Beginning in 1974, with the enactment of the Community Development Block Grant (CDBG) program, Congress began, in effect, to change the federal governmentâ&#x20AC;&#x2122;s role in housing and community development. Where federal funding had once flowed through specific, categorical programs, it now came in a single grant that localities could use to meet locally determined need. This devolutionary trend was reinforced with the enactment in 1986 of the Low Income Housing Tax Credit (LIHTC) program, administered by states, and in 1990 with the Cranston-Gonzalez National Affordable Housing Act, which established the HOME program. On the public housing side, the Quality Housing and Work Responsibility Act of 1998 (QHWRA) gave public housing agencies (PHAs) the ability to use capital funds for financing expenses, opening the way for PHAs to turn to the capital markets for rehabilitation funds rather than looking to HUD. Federal support for housing includes both direct spending (outlays) and tax expenditures. In any given budget year, the total amount of outlays is arrived at by adding current year appropriations (budget authority) to portions of funds appropriated in 41 previous years. From 1976 to 2006 (projected), budget authority will have decreased by more than 50 percent, from $61.2 to $30.2 billion, and outlays will have increased from $6.6 to $31.3 billion. Tax expenditures, which tend to benefit middle- and upper-income 42 households, will have increased during the same period from $29.4 to $133.2 billion.

COLUMBUS: ROSEWIND This project for single-parent heads of household was funded in part with federal GREG MILLER PHOTOGRAPHY

HOPE VI monies.

PHOTO PROVIDED BY OHIO CAPITAL CORPORATION FOR HOUSING 41

Funds appropriated in previous years come into play because, prior to the late 1970s, Congress appropriated funding for multiyear subsidy contracts all at once. (Such funding is now provided one year at a time.) Some of these contracts are still in effect, and funds appropriated earlier are thus added to the total outlays in the subsequent budget years in which they are expended. 42

Housing in the Twenty-First Century: Achieving Common Ground, by Kent W. Colton, p. 243. Amounts are in 2001 dollars.

In fiscal year 2001, total program outlays equaled $33.649 billion; nearly one-half of that amount was for Section 8. Considering outlays and tax expenditures together, federal support for housing is enormous. In fiscal 2001, for example, federal support for housing totaled $154.75 billion, greater than the total for transportation ($55.2 billion), agriculture ($26.6 billion), and education-related services ($57.3 billion). Only health and Medicare, at $390.1 billion, 43 received greater federal support than housing. Considering outlays separately from tax expenditures, however, it becomes apparent that federal support through tax expenditures (i.e., incentives for private sector investment, including homeownership) is far greater than support for outlays (project-based support and rental assistance). Participants from the 2003 roundtable cities view the federal role similarly. They agree that some programs work well, that funding for them should be increased, and that flexibility should be maintained. They also agree that the federal government should be doing more to promote policy and spending coordination across the various federal funding “stovepipes” (housing and transportation, for example) and to stimulate partnerships, particularly interjurisdictional and public-private partnerships.

Federal funding is essential to the ability of states and localities to address housing need. Participants from all four roundtable cities express strong support for CDBG and HOME, which are funded out of annual appropriations, and the LIHTC program, a tax expenditure. Participants agree that increased federal funding for HOME and LIHTC— essential production tools—is needed. In Columbus, especially, there is strong support for a homeownership tax credit that would help to drive the renewal of the older city. Participants from all four cities view the proposal as an important tool for its potential to stimulate demand, as well. The extraordinary efforts of roundtable participants to make do with existing levels of federal funding illustrate the limitations of this approach and therefore the need for increased funding. In Charlotte, voters agreed to finance an affordable housing trust fund, and the Housing Trust Fund board directed that resources should be used to address the shortage of units affordable to extremely low-income (ELI) families. Even with this support, however, the demand for such units far exceeds the supply. The challenge of increasing the supply of units affordable to ELI households is also felt in Columbus, Houston and Portland. Participants from all four cities support the establishment of a National Housing Trust Fund to provide capital for the production and preservation of units targeted for occupancy by ELI families. One roundtable participant from Charlotte suggested that increased funding for vouchers would go a long way toward addressing housing need. She said that production and preservation are not as important as providing access to the existing housing stock through “more vouchers and more landlords that are willing to accept them.” A proposal for a new type of voucher that would cover operating costs only on units intended for occupancy by extremely low-income families was put forth by participants from Houston. Several participants from Charlotte suggested that home purchase counseling should be made mandatory, and that such a requirement would generate a need for additional federal support. The recent rise in foreclosures—a result of more aggressive lending combined with the recent economic downturn—illustrates the importance of assuring that purchasers understand clearly the vicissitudes of homeownership. Counseling is especially important for low-income buyers, one participant suggested, though another pointed out that it is important for all first-time buyers. 43

Ibid, p. 240.

On the public housing side, participants from Charlotte and Houston affirmed the importance of the HOPE VI program and called for its renewal and increased funding. A participant from Houston’s housing authority called for a restoration of the public housing capital fund. With regard to the preservation of privately owned, federally subsidized multifamily properties, participants from Charlotte, Columbus and Portland support the enactment of some form of tax relief for owners that agree to sell to new owners who are committed to maintaining the properties’ affordability restrictions. Such relief, they suggest, could take the form of a tax credit that would be allocated by states—much like the LIHTC— or a reduction or deferral in the tax liability. In addition to increased federal support for rental housing and homeownership, participants call specifically for a stronger federal role in helping to offset indirect costs that limit the effectiveness of local and state efforts. Land and infrastructure costs, for example, dissipate local and state resources earmarked for housing. Increased federal support—in the form of direct subsidy or incentives to promote cost reductions—could help to reduce such costs. A participant from Charlotte described a local effort to deal with land costs. Davidson College sold some of its land to obtain funds for the development of housing on other plots, the ownership of which it retained. The homes are sold to faculty and staff, who enjoy a reduced purchase price due to the fact that the land underneath the homes is being leased—not sold—and the purchase price does not therefore reflect the land’s market value. The state or federal government, this participant suggested, could help to promote the establishment of similar land trusts by helping to offset the costs of land acquisition by local agencies. Participants from Portland suggested that the state should step in to pay for the costs of infrastructure associated with affordable housing development. Absent such assistance, the costs fall on existing taxpayers in the form of increased property taxes and can contribute to public opposition to affordable housing. Given the experiences with the state’s Housing Opportunities for Maine program, however, which has been inconsistently available for housing due to the tendency of funds to be used for other purposes during tight budget years, the shortcomings of such a proposal are evident. The same is true of the suggestion that the state establish a revenue sharing pool for housing progress that would be “used to reward communities for positive housing development and growth.” Both proposals highlight the need for involvement beyond the local level; both also suggest the need for involvement beyond the state level. Finally, participants from all four cities note the importance of increasing public awareness about the importance of affordable housing. A participant from Charlotte pointed out that a statewide, multi-year public awareness and education campaign is under way. Federal support for research on the effect of affordable housing on adjacent property values, he suggested, would go a long way toward buttressing such campaigns.

The flexibility of federal programs is important; it should be increased and not diminished. While similarities from one roundtable city to the next suggest the need for increased federal funding, the variability of local housing challenges demonstrates the importance of retaining the flexibility of federal program funds. A participant from Columbus made specific reference to a recent set-aside within the HOME program that directs funds to downpayment assistance toward “the purchase of single family housing by low-income 44 families who are first-time homebuyers.” Such an activity, she pointed out, is already an eligible use of HOME program funds, so the set-aside does not represent federal support 44

American Dream Downpayment Assistance Initiative. (n.d.). Retrieved March 17, 2004, from http://www.hud.gov/offices/cpd/affordablehousing/programs/home/addi/qa.doc.

for a new activity but rather an effective reduction in federal funding for communities in which the promotion of homeownership by such households is a lower priority than the construction of rental housing or the provision of rental assistance or any of the other activities eligible under HOME. Participants from Houston suggested that increased flexibility would improve the utility of the Low Income Housing Tax Credit as a tool for the production of mixedincome housing. An increase in the credit to reach families with very low incomes, they suggested, should be combined with the flexibility to use the credit on a portion of units that would then be available for occupancy by households up to 80 percent of area median income. In the older city of Columbus, where a concentration of privately owned, federally subsidized units has contributed to neighborhood decline, the need for greater flexibility in the use of project-based subsidy is recognized. A participant from that city noted that civic leaders and local elected officials would like to have the option of transferring federal subsidy on some of the units to units elsewhere in the community. Such flexibility, he said, would support efforts to revitalize neighborhoods that are characterized by a high concentration of households living in poverty. Participants from each city agree strongly that it is desirable to have increased flexibility with increased funding rather than entirely new programs targeted to particular problems. Especially given the importance of private sector involvement, enhancements to existing, familiar tools are preferable, participants said, to new tools that come with new regulations, new allocation formulae and timetables, and new reporting requirements. One of the promising aspects of the proposal for a National Housing Trust Fundâ&#x20AC;&#x201D;which participants from all four cities supportâ&#x20AC;&#x201D;is that the proposal intends for trust fund monies to be combined with existing resources, and it is therefore put forth as a much needed enhancement rather than an entirely new program.

Incentives are needed to promote appropriate policy alignment among housing, economic development, transportation, employment, education and social services programs. Making the connections between housing programs and other programs that bring federal (or state) funding into a community is complicated. On the transportation side, the promise of significant levels of capital funding contributed in at least one roundtable city to the alignment of housing and transit policies. Participants recognize this as a desirable outcome that should be promoted in other communities. The need for federal incentives to support policy alignment is recognized, as well. Participants from the state of Maine remark that state level economic development activities often take place without consideration of their effect on housing. The use of tax increment financing, for example, was cited as an action that brings businesses into a community without any requirement of additional housing for workers. Economic development funding, one participant suggested, should be conditioned on the existence of a plan for the provision of housing. Participants suggested that the federal government could promote policy alignment between economic development activities and housing by requiring it when federal economic development resources are employed, by helping to offset the costs of policy development and implementation, or through other federal incentives for communities that align their job creation and housing affordability strategies. On the issue of transportation, the federal government has already enacted a requirement in the FTAâ&#x20AC;&#x2122;s New Starts program that applicants and grantees report on the housing stock within a half-mile radius of transit stations. In cities such as Charlotte, the requirement contributed to the development of a transit-oriented land-use policy focused on housing supply. 36

A participant from Portland stated that the federal government could do something to promote policy alignment on the demand side, as well. He suggested that the federal government—through the Federal Housing Administration (FHA)—could establish a product with underwriting standards similar to those of Fannie Mae’s Location Efficient CM Mortgage (LEM) . The LEM increases homebuyers’ purchasing power by assigning a dollar value to the potential savings they can achieve by purchasing in an area served by public transportation. The dollar value of the savings is counted in calculating the amount that the family can qualify to spend on a home. Through such a mortgage product, families earning 80 percent of the area median income could qualify to purchase in the city, whereas they are now priced into rural areas, where home values are lower. Regarding schools, participants from all four roundtable cities recognize that the predominant method of financing public schools—via property taxes—encourages the development of single family versus multifamily housing. This is a challenging issue that gets at the complicated topics of tax fairness and education equity. In areas such as the older city of Columbus, the residential tax base has been diminished due to disinvestment, and school funding is dependent on increasingly lower value homes. A vicious cycle is in play. In Houston, a city/county land assemblage board is working to clear the title on abandoned homes in residential areas and hopes to transfer ownership to nonprofit and private developers who will rehabilitate and sell them. The Houston Intermediate School District, a taxing authority, is unwilling to relinquish back taxes on the properties, however, which has made it difficult to proceed. From its vantage point, the federal government could perhaps help the most by either increasing its support for public education or funding research on the direct and indirect costs and benefits of affordable housing—or both.

Given that neither housing nor job markets recognize jurisdictional boundaries, federal incentives to promote interjurisdictional and public-private partnerships are needed in order to promote balanced regional development. Federal incentives to promote cooperation between housing professionals and practitioners with expertise in other areas—economic development, transportation, employment, education and social services—are increasingly important. Likewise, partnerships among the various levels of government are important to assuring the efficient use of existing (and any new) federal resources for housing. Participants from the four roundtable cities recognize the importance of such partnerships; some recognize it as a result of what they have been able to achieve through interjurisdictional cooperation, and others recognize it because such cooperation has proven difficult—if not impossible—to achieve. Those who have formed partnerships found reason to do so; those who have fallen short in their efforts suggest that federal incentives to promote such cooperation could make a difference. A factor that underscores the importance of partnerships is the effect on the private sector of their existence or absence. Roundtable participants from each city recognize that private sector involvement will likely increase in scope and scale as communities work together to create whole areas and perhaps regions that are governed by agreed-upon housing policies. The achievement of scope, scale and stability are significant from the perspective of private sector actors, from investors to developers to owners and managers. Charlotte is one city in which interjurisdictional partnerships are quite strong. It is interesting to note that the partnership that has developed around the issue of affordable housing grew out of efforts by the local business community to take a proactive approach to economic growth. Partners in the “Housing our Workforce Initiative” include the Charlotte City Council, the North Carolina General Assembly, the Charlotte-Mecklenburg Housing Partnership and members of the Charlotte development community. 37

One participant from Charlotte pointed out that, with its enactment of QHWRA, Congress created an important tool that encourages public housing agencies (PHAs) to look to local partners—rather than HUD—for the support of capital improvement initiatives. The ability of PHAs to use a portion of their annual capital grant for financing expenses means that PHAs can obtain debt from the private sector to undertake redevelopment activities. Since such activities benefit not only public housing properties but also the neighborhoods in which they are located, this financing tool serves cities broadly and creates the potential for partnerships around community revitalization. Absent such flexibility, the continued deterioration of public housing properties, this participant pointed out, would ultimately result in the need for city intervention. Participants from both Charlotte and Columbus spoke of the need for partnerships to deal with the aging stock of privately owned, federally assisted multifamily housing. Out of the desire to stabilize the neighborhoods in which such properties are located, participants called for project-based subsidy portability. Such flexibility would enable them to do two things: disperse subsidized units throughout the broader community, and create mixed-income properties in place of these 100 percent subsidized buildings. Participants from both cities recognize, however, that their ability to disperse units throughout the community depends in large part on the willingness of suburban areas to zone for multifamily housing. Interjurisdictional agreement on an affordable housing policy becomes essential. In Houston, where—participants acknowledge—building partnerships is somewhat of a challenge, the range of suggestions for building interjurisdictional and public-private cooperation is broad. One participant said simply that the public sector should provide more “information and guidance” regarding housing activities in which the private sector could take part. Another pointed out that the impetus for cooperation needs to come from the top—from the mayor. Others cite a lack of coordination among jurisdictions such as the city and Harris County for contributing to confusion regarding the requirements of federal programs. Jurisdictions tend to interpret federal rules differently, she explained. The lack of coordination and cooperation results, one participant said, in the inability of the public sector to leverage private funds in a manner that responds thoughtfully and deliberately to local need. It also contributes to a situation in which organizations, such as community development corporations, target particular areas for activity, but the lack of broader agreement inhibits not only political support for their work, but also the availability of needed resources. Several participants from Houston decried a lack of vision and called for a regional housing council to “implement a housing strategy, disburse funding and oversee housing development.” In Maine, where town opposition to affordable housing is expressed in an unwillingness to zone for multifamily housing, the Community Preservation Advisory Committee (CPAC), an advisory body established by the state legislature, recently published in its second annual report that the lack of affordable housing for low- and moderate-income households is “a social, economic, environment and land-use issue” and that “no single municipality can adequately address the issue...[because] it is a regional problem that must be solved on a regional scale.” The CPAC reports that it will “continue to support efforts to implement a statewide building code [that] will include a rehabilitation code” and that “developing meaningful incentives for infill development and improving communication between regulators, such as local historic preservation boards and developers, are among the Committee’s administrative priorities.” Among its mid- and long-term recommendations, the CPAC includes the goal of increasing awareness regarding community preservation and smart growth statewide, putting forth plans for a “sustained campaign” that will increase knowledge about links between “health, lifestyle, transportation and community development.”

PARTICIPANTS FROM ALL FOUR

roundtable cities recognize the value of some of the tools in their toolkits. HOME, CDBG, the LIHTC and Housing Choice Vouchers are all critical to addressing housing need. Where need is great relative to the ability of participants to respond, they call for increased federal funding and enhancements in the flexibility of existing tools. Set-asides such as the recently enacted American Dream Downpayment Initiative may target important challenges, but they do so in a manner that undermines local efforts to set spending priorities based on local need. To the extent that local need is sharpened as a result of spending decisions regarding economic development, transportation, employment, education and social services, participants recognize the desirability of working with their professional counterparts in these areas of activity. The coordination of resources can result in mutual leveraging that is beneficial to the community as a whole. Where such coordination is difficult due to a lack of local leadership or initiative, or as a result of the complexities inherent to efforts to achieve program and policy coordination, federal support can play a useful role. Finally, participants recognize that job and housing markets traverse jurisdictional boundaries. In order to harness the promise of growth so that it contributes to balanced development within individual communities and the larger regions of which they are a part, participants recognize the importance if not the necessity of interjurisdictional cooperation on housing policy. Such cooperation, they assert, should come in the form of agreement on inclusionary land-use policies, the elimination of regulatory barriers and the use of increasingly scarce public resources to direct private investment toward some of the most challenging production and preservation dilemmas. The federal government can support such efforts through incentives to promote cooperation where it is lacking, or, as one participant from Charlotte suggested, by rewarding it where it has been employed with demonstrably positive results.

Conclusion Participants from Charlotte, Columbus, Houston and Portland have a vision for housing. They are cognitive of its rightful place in a well-balanced, world-class community. They are, however, experiencing something that might be called “resource dissonance.” Federal funding is inadequate. Program rules and regulations can create obstacles to production and preservation. The resources have not kept pace with the evolving vision. Likewise, at the local level, the vision has not been embraced consistently. Resources flow into a community only to encounter obstacles in the form of local laws, regulations and land-use restrictions. Profit-seeking developers follow the market, taking the path of least resistance and, therefore, greatest return. Where growth is strong, market-driven development contributes to increased land costs, exacerbating affordable housing shortages at the low end of the income scale and underscoring the inflexibility of federal resources to serve needs in the moderate-income range. Participants have struggled, during the past decade or so of growth, to achieve affordable housing production on a scale with need. Preservation has become even more critical. Through the careful, piecemeal combination of subsidies, they have done what they can to keep up. Meanwhile, as growth has linked individual communities to one another through the expansion of job and housing markets, and through the daily flow of traffic back and forth, the importance of thinking beyond local boundaries has become manifest, as has the importance of thinking beyond housing. Increasingly, housing professionals recognize the need to align their interests not only with neighboring and higher level jurisdictions, but also to reach out to professionals in the fields of economic development, transportation, employment, education and social services. Resource coordination “across stovepipes” is important not only to achieve leveraging in an era of increasingly tight public budgets, but also because its absence can result in spending decisions that exacerbate housing need. The new vision for housing must be met with purposeful action. Where obstacles to coordination exist, participants agree that the federal government can—and in fact must—play a supporting role. The ability of the nation to harness economic growth for the betterment of all communities depends upon it.

Appendix

The National Housing Conference gratefully acknowledges the following organizations and individuals for their contributions to these Senior Executive Roundtables.

NHC SENIOR EXECUTIVE ROUNDTABLE PARTICIPANTS April 3, 2003 – Charlotte, NC J. Mitchell “Mickey” Aberman, James, McElroy & Diehl, PA Earl Andrews, Jr., New York City Housing Authority Aric B. Beals, Berryhill Realty Company Andrea Young Bebber, Legal Services of Southern Piedmont Gordon L. Blackwell, Third Renaissance, Inc. Jeff Bradsher, Bradsher Properties Timothy T. Breslin, Duke Power Katrina L. Brown, Mecklenburg County Community Development Emmy Lou Burchette, Burchette & Associates Lucy Bush, Friendship Trays Debra D. Campbell, Charlotte-Mecklenburg Planning Commission Mona Lita Carr, City West CDC (f/k/a Reid Park CDC) Nancy Carter, City of Charlotte Mark C. Cramer, Real Estate and Building Industry Coalition (REBIC) Nancy Crown, Bank of America Bill Daleure, Crosland, Inc. Catherine E. Dolan, Wachovia Corporation Community Development Finance Group Bill Dowse, North Carolina Housing Finance Agency Robert T. Drakeford, The Drakeford Company Conrad Egan, National Housing Conference Thereasea Elder, City of Charlotte, League of Women Voters Robert J. Ett, OMNI Architecture, PA Ray Farris, III, Tuscan Development Thomas A. Fassett, Reznick Fedder & Silverman, CPAs, PC Maria G. Fiore, National Housing Conference Jeff Firestone, Wachovia Bank Richard C. Fuqua, Bordeaux Development, LLC David Furman, David Furman/Architecture Victor Galloway, First Citizens Bank Patricia Garrett, Charlotte-Mecklenburg Housing Partnership, Inc. Jon Gauthier, Fannie Mae Timothy Gibbs, Charlotte Area Transit System Ronnie Giberson, Countrywide Home Loans, Inc. Deborah Gibson, Charlotte-Mecklenburg Workforce Development Board 42

Robert S. Goodling, Wells Fargo Home Mortgage Van L. Gottel, SocialServe.com Patrick Graham, Crisis Assistance Ministry Bert Green, Habitat for Humanity of Charlotte Rickey V. Hall, Sr., Mecklenburg County Department of Social Services Judy Harper, U.S. Representative Sue Myrick Jerry E. Hayden, Charlotte Landlord Association Isaac Heard, Jr., Heard Systems Parks Helms, Charlotte-Mecklenburg Board of County Commissioners Michael Horst, Urban Land Institute David L. Howard, Charlotte-Mecklenburg Housing Partnership, Inc. Anne Marie Howard, Charlotte Regional Realtor Association John J. Huson, P.E., Carocon Corporation Sheri P. Jessell, Mid-City Financial Corporation Torre Jessup, Office of Congressman Mel Watt David H. Jones, Kennedy Covington Lobdell & Hickman, LLP Raymond V. Jones, Charlotte Housing Authority Gary Paul Kane, Center to Create Housing Opportunities William Kirksey, HEEDworks, Inc. Mark Leggett, Financial Services Exchange T. Anthony Lindsey, Globe Crossing LLC Sarah A. Linn, Bank of America Justin F. â&#x20AC;&#x153;Judâ&#x20AC;? Little, Crosland, Inc. Krista Long, Beazer Metro/Beazer Homes Jerome Luke, Wachovia Corporation Vi A. Lyles, City of Charlotte Frank Martin, Landcraft Properties William McCoy, UNC Charlotte Urban Institute The Honorable Patrick McCrory, City of Charlotte Aaron McKeithen, Garden Park Neighborhood Association Judy McLeod, Wood Partners, LLC Patrick M. McNeely, Cadwalader, Wickersham & Taft LLP Anthony T. McNeill, BB&T Debbie Meadows, UJAMMA, Inc. Rusty Mills, Wachovia Corporation Minnie L. Mitchell, Cooperative Extension Services Patrick T. Mumford, City of Charlotte Reg Narmour, AIA, Narmour-Wright Architects Joy Paige, Wachovia Corporation Barbara B. Peek, ACS State and Local Solutions J. Michael Pitchford, Bank of America Melody Burgess Poetzsch, SunAmerica Affordable Housing Partners, Inc. Lat W. Purser, III, GVA Lat Purser & Associates Inc. 43

Clifford F. Roberts, Charlotte-Mecklenburg Housing Partnership, Inc. Cheryl Ramsaur Roberts, University of North Carolina at Charlotte Stephen A. Rosenburgh, US Land Investments, LLC Janet Singerman, Child Care Resources Inc. Darrel W. Stephens, Charlotte-Mecklenburg Police Department Angela Stokes, Urban League of Central Carolinas Claude H. Stone, Urban Renewal Development Lawrence Toliver, Charlotte Chamber of Commerce Graham Tyrrell, MV Communities Jackie Walton, UJAMMA, Inc. Stanley D. Watkins, Neighborhood Development, City of Charlotte Jerry Widelski, Community Housing Development Corporation Christian W. Wolf, LunarSeas Consulting Charles Woodyard, Housing Authority of the City of Charlotte Paul A. Woollard, Housing Trust Fund

NHC SENIOR EXECUTIVE ROUNDTABLE PARTICIPANTS June 2, 2003 â&#x20AC;&#x201C; Columbus, OH Tony Applegate, Nationwide Insurance Company Michael Banish, Community Research Partners Mark Barbash, City of Columbus, Department of Development Trudy A. Bartley, City of Columbus John Bohm, National Housing Conference James A. Bowman, National Affordable Housing Trust Gene R. Brockmeyer, Community Housing Development T.A. Burns, Grange Insurance Patricia Cash, National City Michael Childs, Bank One Corporation The Honorable Michael Coleman, City of Columbus James F. Croft, Red Capital Group Lynne Crow, Office of U.S. Representative Robert W. Ney Kenneth Danter, The Danter Company Gary Davisson, Community Housing Development Peter Deitenbeck, Deitenbeck Estates, Cornerstone Home Finance Linda Donnelly, City of Columbus Phil Downing, Community Development Collaborative of Greater Columbus Karen Kerns Dresser, Ohio Capital Corporation for Housing Larry Druggan, Money Med Conrad Egan, National Housing Conference Richard V. Everhart, Ohio Housing Finance Agency Carl Faller, Crisilis Development Company, LLC 44

Thomas J. Finnegan, III, Huntington Mortgage Group Maria G. Fiore, National Housing Conference Cynthia Flaherty, Fannie Mae Anthony F. Forte’, Franklin County Commission Sharon A. Francis, Miracit Development Corporation Roberta F. Garber, Community Research Partners Steven D. Gladman, Columbus Apartment Association Sanford “Sandy” Goldston, The Wallick Companies M.J. Gravel, Ohio Housing Council Mike Greene, Central Ohio Transit Authority (COTA) Chris Grim, Nationwide Insurance Company Dennis S. Guest, Columbus Metropolitan Housing Authority Bill Habig, Mid-Ohio Regional Planning Commission The Honorable Harland Hale, Franklin County Municipal Court Environmental Division Amelia D. Hatcher, Homes By Ruth William Heaton, Office of U.S. Representative Robert W. Ney Maude Hill, Columbus Housing Partnership, Inc. Ed Hoffman, B.R.E.A.D. (Building Responsibility, Equality and Dignity) Donna Hunter, City of Columbus, Department of Development Ernestine L. Jackson, Institute for Location Efficiency Hal Keller, Ohio Capital Corporation for Housing Amy D. Klaben, Columbus Housing Partnership, Inc. Linda La Cloche, City of Columbus, Department of Development J.B. Lawton, III, Ph.D., Community Research Partners Thomas H. Leach, U.S. Department of Housing and Urban Development Roy Lowenstein, Ohio Capital Corporation for Housing John McGory, McGory Group Joseph McKinley, United Way of Central Ohio Ruth McNeil, Office of U.S. Representative Deborah Pryce Nan Merritt, Columbus/Franklin County Affordable Housing Trust Robert A. Meyer, Jr., Dominion Homes, Inc. The Honorable Ray Miller, Ohio Senate Mark K. Milligan, Passage Capital Hazel A. Morrow-Jones, The Ohio State University Craig Murphy, Columbus Housing Partnership, Inc. Preston Pace, U.S. Department of Housing and Urban Development Bob Perryman, Greater Columbus Habitat for Humanity Rick Pfeiffer, City of Columbus, Ohio Barbara Poppe, Community Shelter Board Clyde Powell, Stenson Powell Kim Powell, Stenson Powell Carol Prigan, Columbus Board of REALTORS® Pat Ramsey, U.S. Bank 45

Mark Ransom, Fifth Third Real Estate Capital Markets B.J. Reed, City of Columbus Mary Rogers, Community Collabrative of Columbus Zdravko Rom, Columbus Housing Partnership, Inc. Boyce Safford, III, City of Columbus, Mayorâ&#x20AC;&#x2122;s Office Charles R. Santer, Santer Housing Capital Ltd. Emily Savors, The Columbus Foundation Bob Schilling, Renewed Properties Inc., Urban Restoration Robert Shamansky, Benesch, Friedlander, Coplan & Aronoff LLP Curt Shook, MBS Homes Thomas W. Slemmer, National Church Residences Stephen A. Sterrett, Campus Partners John Stock, Paramount Realty Advisors Charleta B. Tavares, Columbus City Council Hamilton J. Teaford, Columbus Metropolitan Housing Authority Patsy Thomas, Columbus City Council Stephen Torsell, Homes on the Hill, CDC Roland L. Turpin, Dayton Metro Housing The Honorable G. Gary Tyack, Tenth District, Court of Appeals Warren W. Tyler, Columbus, Franklin County Affordable Housing Trust Rhonda Van Houten, Ohio Capital Corporation for Housing Susan Weaver, Community Housing Network Tim Widman, Main Street Business Association Jackie R. Winchester, National City Barry Zigas, Fannie Mae

NHC SENIOR EXECUTIVE ROUNDTABLE PARTICIPANTS August 5, 2003 â&#x20AC;&#x201C; Portland, ME Mark B. Adelson, Division of Housing and Neighborhood Services, City of Portland, Maine Caroline Allam, Greater Portland Council of Governments John Anton, Northern New England Housing Investment Fund Margaret Bean, Maine State Housing Authority Constance Bloomfield, Architect John Bohm, National Housing Conference Joseph C. Brannigan, Shalom House, Inc. David H. Brenerman, UnumProvident Gordon Brigham, Stockard & Engler & Brigham Honorable Lynn Bromley, Maine Senate Bill Burney, U.S. Department of Housing and Urban Development Susanne Marzi Cameron, Fannie Mae Cynthia Chadwick, Mortgage Bankers Association of Maine 46

Wendy Cherubini, City of Portland, Maine The Honorable Susan M. Collins, U.S. Senate Colleen Converse, Center for Real Estate Education Darrell Cooper, The Information Alliance Dennis M. Corrigan, Fannie Mae Rich Cromwell Heather Curtis, Portland Tenants Union Suzanne Dargie, FleetBoston Richard Davies, Office of the Governor Jeff Davis, Mulkerin Associates David A. De Lise, Waterstone Commercial Properties John Del Vecchio, Maine State Planning Office Ed Democracy, Maine Tenants Union Howard Dupee, Coastal Enterprises, Inc. Vicky L. Edgerly, Department of Health & Welfare, City of Biddeford Conrad Egan, National Housing Conference Gary Eisenman, Related Capital Company Geoffrey Emanuel, HomeStreet Capital Kenneth Feller, Coastal Economic Development Corporation Michael L. Finnegan, Maine State Housing Authority Maria Fiore, National Housing Conference John Gallagher, Westbrook Housing Authority Karen Geraghty, Portland City Council Joseph E. Gray, City of Portland, Maine James Gulnac, Town of Sanford David M. Haney, FleetBoston Jim Hatch, Freeport Housing Trust Lisa Fisher Henderson, Workforce Housing Coalition of the Greater Seacoast Dick Johnson, State of Maine Emergency Operations Mary Ellen Jutras, Federal Home Loan Bank of Boston William G. Keefer, Sanford Housing Authority Paula Fowler Kilby, Greater Portland Chambers of Commerce G. Allan Kingston, Century Housing Corporation Jud Knox, York Hospital Honorable Ted Koffman, College of the Atlantic Valarie Lamont, Institute for Real Estate Research and Education Donna Larson, Town of Freeport Mary Allen Lindemann, Coffee By Design Jonathan T. Lockman, AICP, Southern Maine Regional Planning Commission Linda Lyon, Office of Senator Olympia J. Snowe Garrett Martin, Genesis Community Loan Fund Sandra Mathieu, Home Builders Association of Maine Honorable Dale McCormick, State Treasurer of Maine 47

Nelson Merced, Neighborhood Reinvestment Corporation Leslie Merrill, Office of U.S. Representative Thomas H. Allen Peter Merrill, Maine State Housing Authority Kimberly Morris, PMI Mortgage Insurance Co. Robert C. Moss, Boston Capital Linda Moulin, Roman Catholic Diocese of Portland Marc R. Mutty, Roman Catholic Diocese of Portland Frank O’Hara, Planning Decisions Alec Porteous, Office of U.S. Senator Susan Collins George Samuels, Federal Reserve Bank of Boston Ann Marie Sargent, Portland Housing Authority Theresa Savoy, Coastal Enterprises, Inc. Betsy Sawyer-Manter, People’s Regional Opportunity Program Maurice A. Selinger, III, Curtis Thaxter Stevens Border & Micoleau LLC Aaron Shapiro, City of Portland, Maine Christopher St. John, Maine Center for Economic Policy James Stockard, Graduate Design School, Harvard University Honorable Edward J. Suslovic, Maine House of Representatives Monica Hilton Sussman, Nixon Peabody LLP Dana Totman, York-Cumberland Housing Jack Trifts, School of Business, University of Southern Maine Peter Ventre, Rockwater Capital Management, LLC Marilyn Weekes, Federal Reserve Bank of Boston Jamie Whelan, Princeton Properties Michael F. Whelan, The Housing Partnership Eleanor G. White, Housing Partners, Inc. (and CHAPA) Joe Wishcamper, The Wishcamper Group Joseph S. Wood, Academic Affairs, University of Southern Maine

NHC SENIOR EXECUTIVE ROUNDTABLE PARTICIPANTS October 29, 2003 – Houston, TX Sallie Alcorn, Office of U. S. Representative Chris Bell John J. Antel, University of Houston Miles G. Arena, City of Pasadena, Texas Jeffrey S. Baloutine, The Enterprise Foundation Tracy Baskin, Washington Mutual Chris Bergmann, Trammell Crow Residential Shad Bogany, Houston Association of Realtors® John Bohm, National Housing Conference Kenneth E. Bolton, College of Biblical Studies, Center for Community Development David Branham, Ph.D., University of Houston 48

Judy Bridges, Riverside General Hospital - HRC Barbara Brown-Tennant, Perry Homes Phyllis R. Caldwell, Bank of America Henry Cisneros, American CityVista Vince Clancy, Department of Veteran Affairs-Health Care for Homeless Veterans Mary L. Clay, Resident Council Telephone Road Apartments The Reverend Harvey Clemons, Jr., Fifth Ward Community Redevelopment Corporation Kent W. Colton, K Colton LLC Jolenta Court, City of Pasadena, Texas Renee Cross, University of Houston Polk C. Curtiss, Jr., Housing Opportunities of Houston, Inc. Janet Dirden, Houston Area Women’s Center Conrad Egan, National Housing Conference Frances Ferguson, Neighborhood Reinvestment Corporation Maria Fiore, National Housing Conference MaryEllen E. Forgay, New Hope Housing, Inc. Carlos Garcia, Carlos Garcia Realty Sally Gaskin, SGI Ventures, Inc. Ed Gonzales, Michael Berry Properties, Inc. Oscar Gonzales, Houston Association of Realtors® Ted Hamilton, Texas Interfaith Housing Corporation Milby Hart, Houston Habitat For Humanity Diana Helms-Morreale, The Enterprise Social Investment Corporation John Henneberger, Texas Low Income Housing Information Service John P. Hernandez, JPMorgan Chase Bank Steven P. Hornburg, Emerging Community Markets Naomi Hubert, United Cerebral Palsy of Texas Jane Hulsey, Texas House of Representatives Antoinette “Toni” Jackson, Coats, Rose, Yale, Ryman & Lee, P.C. Laura Jaramillo, Wells Fargo Bank Manson B. Johnson, South East Houston Community Development Corporation Kym King, Mayor’s Office for People with Disabilities Stephen Klineberg, Rice University Ray Landry, Davis-Penn Mortgage Company Mary Lawler, Avenue Community Development Corporation Michael Levitin, The Michael Group Eron Linn, Texas House of Representatives Robert M. Litke, City of Houston Planning and Development Department Stephen H. Lobo, CHRISTUS Health George S. Lopez, Adelante Mortgage Company, LLC Jeff M. Lubell Wendy Maceo, Mitchell Mortgage Company, LLC Bernard “Bud” Malone, Malone Mortgage Company America, Ltd. 49

Shari C. McElroy, Platinum Choice Investments, LLC Betty McGinnis, Office of State Representative Rick Noriega Tina Z. Moore, I Am Pleased Development Center Richard Murray, Ph.D., University of Houston Patricia G. Neal, Fannie Mae Sharon Phillips, Washington Mutual Bank The Honorable Gordon Quan, City of Houston Betty Rosignon, City of Houston Housing and Community Development Department Stacie Ross, State Farm Insurance Companies Lora Routt, Harris County Office of Housing and Economic Development Luisa Rowsey, Countrywide Home Loans Gloria A. Sanderson, Local Initiatives Support Corporation David H. Sands, LMSW, Department of Veteran Affairs-Health Care for Homeless Veterans Charles Saunders, Texas House of Representatives Alexander Savory, Washington Mutual Bank Tom Scott, Coach Realty Services Susanne Sereâ&#x20AC;&#x2122;, Lone Star Legal Aid Sally Shipman, U.S. Interagency Council on Homelessness J.J. Smith, Fannie Mae Jeffrey V. Smith, Houston Housing Finance Corporation Donald Sowell, Donald Sowell Interests, Inc. Daisy A. Stiner, City of Houston Housing and Community Development Department Vernon Stockton, Washington Mutual J. Michael Sugrue, Simpson Housing Solutions, LLC Reagan Swank, Covenant Community Capital Corp. Mark Thiele, Quadel Consulting Tim Tietjens, City of Pasadena, Texas Armando L. Walle, Office of U.S. Representative Gene Green Jimmie D. Wheeler, Big Wheel Development, Inc. David M. Wood, Bank One Corporation Toy Wood, Greater Houston Builders Association Michaelle Wormley, Woman, Inc. Vernon R. Young Jr., Artisan/American Corporation David A. Zappasodi, Housing Authority of the City of Houston

Four Windows: A Metropolitan Perspective on Affordable Housing Policy in America, 2003 Outline of Themes I.

Executive Summary A. Housing as an Essential Element in the Community: Balance and Scale B. Barriers to Housing Production: Funding, Flexibility and Local Obstacles C. Barriers to Housing Preservation and Rehabilitation: Funding, Flexibility and Local Obstacles D. The Importance of Partnerships: Across Boundaries, Sectors and Functions E. The Federal Role: An Exclusive Perspective, a Compelling Opportunity

II.

Introduction

III. Housing as an Essential Element in the Community: Balance and Scale A. Economic development policies should take housing into account — and housing policies should recognize the link between housing and economic growth or decline. B. Given the level of public investment in transportation and the need for public subsidy to build housing that is affordable to the workforce, transportation and workforce housing policies should be mutually reinforcing. C. New housing development and older housing decline can affect “school district wealth,” defined as “property value per pupil.” D. Some jobs that are essential to community vitality pay too little to cover housing costs at affordable levels.

IV. Barriers to Housing Production: Funding, Flexibility and Local Obstacles A. Existing capital sources are insufficiently funded, and they are governed by rules that make them sometimes ill-suited as tools to respond to locally identified need. B. Local laws and regulations governing land-use and construction can make affordable housing production more costly—or prevent it altogether. C. In some markets, wages are inadequate to support new housing production.

Barriers to Housing Preservation and Rehabilitation: Funding, Flexibility and Local Obstacles A. Policies that fail to address deferred maintenance contribute to the loss of affordable units from the housing stock. B. Strong property management is critical to the preservation of affordable housing. 51

C. A source of funding for the recapitalization of affordable properties is needed. D. Federal and local requirements add costs to housing rehabilitation, creating disincentives to preservation. E. Market pressure for gentrification can drive existing lower income households out of neighborhoods and prevent new lower income owners and renters from moving in.

VI. The Importance of Partnerships: Across Boundaries, Sectors and Functions A. Interjurisdictional cooperation on housing policy is important, especially, but not exclusively, when housing and job markets traverse jurisdictional boundaries. B. Public-private partnerships are essential to balanced housing development. C. Partnerships between organizations that focus on various types of housingâ&#x20AC;&#x201D; from emergency shelter to units accessible for the disabled to rental units to homes for purchaseâ&#x20AC;&#x201D;are critical to assuring that communities serve the full continuum of housing need.

VII. The Federal Role: An Exclusive Perspective, a Compelling Opportunity A. Federal funding is essential to the ability of states and localities to address housing need. B. The flexibility of federal programs is important; it should be increased and not diminished. C. Incentives are needed to promote appropriate policy alignment among housing, economic development, transportation, employment, education and social services programs. D. Given that neither housing nor job markets recognize jurisdictional boundaries, federal incentives to promote interjurisdictional and public-private partnerships are needed in order to promote balanced regional development.

VIII. Conclusion

THE NATIONAL HOUSING CONFERENCE is a nonprofit 501(c)(3) membership association dedicated to advancing affordable housing and community development causes. A membership drawn from every industry segment forms the foundation for NHC’s broad, nonpartisan advocacy for national policies and legislation that promote suitable housing in a safe, decent environment across the nation. The National Housing Conference believes that every American, regardless of income, should have the opportunity to live in decent housing in a suitable neighborhood. This opportunity must be available to all, regardless of race, national origin, religion, gender, age, disability, family composition or sexual orientation. NHC educates and advocates for resources and incentives which create and preserve safe and sustainable housing and communities; collaboration among business leaders, housing providers, nonprofit organizations and government at all levels to increase the amount and availability of low- and moderate-income housing; and sustainable programs that effectively link housing to community economic development and promote self-sufficiency for lower-income residents.

THE CENTER FOR HOUSING POLICY

❖

C Y❖

HOU

is the nonprofit research affiliate of the National Housing Conference. The Center works to broaden understanding of America’s affordable housing challenges and examines the impact of policies and programs developed to address these needs. ER NT F Combining research and practical, real-world expertise, the Center lays the groundwork for the development of concrete and politically viable policies and programs that can be used to promote affordable housing across the country. Nationally recognized housing experts including academics, advocates and practitioners as well as distinguished specialists from other fields are involved in the SI N G P O Center’s work. This interdisciplinary approach ensures that our research engages an ever widening circle of stakeholders both inside and outside the housing community. The National Housing Conference and the Center for Housing Policy conduct several studies each year with the ultimate goal of elevating affordable housing to its rightful place on the national agenda.

For More Information About NHC, or to Order a Publication Please fax completed form to (202) 466-2122 or mail to National Housing Conference, 1801 K Street, N.W., Suite M-100, Washington, DC 20006. (You may view any of the publications on the NHC web site at http://www.nhc.org/comm_and_pubs_publication.htm. Postage will be charged for orders exceeding 5 copies.)

Name: Title: Organization: Address:

City/State/Zip:

Phone:

Fax:

Email:

Website:

Center for Housing Policy: ●

● ● ● ● ● ●

Housing Problems of the Working Poor (April, 2004) — this publication is available online only. Please visit http://www.nhc.org/chp_working_poor.htm. America’s Newest Working Families: Cost, Crowding and Conditions for Immigrants (July, 2003) America’s Working Families and the Housing Landscape, 1997–2001 (November, 2002) Housing America’s Working Families: A Further Exploration (March, 2002) Housing America’s Working Families (June, 2000) Paycheck to Paycheck: Wages and the Cost of Housing in America (May, 2003) Paycheck to Paycheck: Working Families and the Cost of Housing in America (June, 2001)

ONLINE ONLY

SOLD OUT SOLD OUT

National Housing Conference ● ● ● ● ● ● ● ● ●

Four Windows: A Metropolitan Perspective on Affordable Housing Policy in America, 2003 (April, 2004) Four Windows: A Metropolitan Perspective on Affordable Housing Policy in America, 2002 (March, 2003) Four Windows: A Metropolitan Perspective on Affordable Housing Policy in America, 2001 (April, 2002) Inclusionary Zoning: The California Experience (February, 2004) Inclusionary Zoning: Lessons Learned in Massachusetts (January, 2002) Inclusionary Zoning: A Viable Solution to the Affordable Housing Crisis? (October, 2000) Strengthening Neighborhoods by Creating Long-Term Multifamily Assets (February, 2002) Expanding the Dream of Homeownership (April, 2001) NHC Annual Report

SOLD OUT

N AT I O N A L H O U S I N G C O N F E R E N C E 1801 K Street, N.W. Suite M-100 Washington, DC 20006-1301 Phone: (202) 466-2121 Fax: (202) 466-2122 Web Site: http://www.nhc.org