National Housing Trust
National Housing Trust Newsletter
 March 28, 2012
In This Issue
NHT Responds to HUD FY 2013 Budget
NHT/E Partners with Mercy Housing Lakefront
HUD Announces Funding for Tenant Protections
NHTCDF to be Lending Partner in SAHF Energy Efficiency Financing Pilot

Greetings!   

 mb_photo

For reasons that fall well beyond this commentary, the federal government is sharply reducing so-called "discretionary" spending. Nevertheless, President Obama's proposed FY 2013 budget fails the test of reducing the deficit while avoiding harm to our nation's neediest.

 

HUD's budget proposal for next year would "short fund" the Project-Based Section 8 program by over $1 billion. The bulk of this shortfall would be met by not funding housing contracts for a full 12 months. As many as 920,000 apartments may be "short funded" under this proposal.  

 

Short funding is short sighted. Appropriators from both parties have expressed concern over this proposal. Sen. Murray (D-WA), chair of the Senate THUD Appropriations Subcommittee, and Sen. Collins (R-ME), the ranking member, expressed concerns that short funding contracts could lead to perverse incentives for owners to opt out of the program or under invest in property conditions. House THUD Appropriations Subcommittee Chair, Rep. Latham (R-IA), has asked HUD for more specifics on how this proposal will be implemented. 

 

Here are 5 reasons why short funding Project-Based Section 8 contracts is misguided:

 

1. Short funding contracts will NOT reduce federal expenditures. Short funding merely kicks the can down the road.  At a recent appropriations hearing, Rep. Olver (D-MA) expressed concern about making up this shortfall in the upcoming FY 2014 budget.  We cannot gamble that these funds will be replenished given the political uncertainty concerning future expenditures. 


2. Short funding contracts will harm vulnerable residents. Anything less than full, 12 month funding will increase rent burdens on fixed-income populations, delay critical repairs to affordable housing, and limit a property owner's ability to provide supportive services to their elderly and disabled tenants. The average income of families that will be affected by short-funding is less than $12,000 annually. 64% of households are either elderly or non-elderly disabled.

 

3. Short funding contracts increases both risks and costs to owners, lenders and investors as it becomes increasingly uncertain whether property owners will be able to meet their debt servicing obligations. Tens of thousands of Section 8 apartments are rehabilitated with the low income housing tax credit every year. HUD's proposal will undermine investor confidence in these transactions.

 

4. Short funding contracts will hurt the FHA. More than half of all Section 8 properties are FHA insured to the tune of $14 billion. Without ongoing rental income, owners will be unable to continue payments on existing debt and the FHA will be left holding the tab.


5. Jobs, jobs, jobs...according to HUD, the Section 8 program supports 100,000 private sector jobs annually.

 

 

As HUD itself observed two years ago: "Annual funding should be predictable, timely and sufficient to fund rental contracts for a full 12 months."  HUD must act as a fair and consistent partner by honoring the contracts it has entered into with property owners. Full 12 month funding of the Section 8 program is crucial for Section 8 residents, properties, investors, and the owners of over 1.2 million apartments across the U.S.

 

Stay tuned, 

Michael Bodaken

NHT Responds to HUD's FY 2013 Budget; Urges Full Funding for

nhc_budget_forum_panel

Sec. 8  

 

Since the release of HUD's proposed budget for fiscal year 2013, the National Housing Trust - together with a broad coalition of nonprofit and for-profit partners - has been working to secure full, 12 month funding for HUD's project-based Section 8 rental assistance program.     

 

On Friday, February 24th NHT President Michael Bodaken discussed the impact of the proposed budget on Section 8 at a National Housing Conference budget forum.  Mr. Bodaken observed that at least 740,000 low-income households - and as many as 920,000 individuals - could be negatively impacted by the Section 8 budget cuts and proposed short funding. Also, he emphasized the economic impact of the program, including 100,000 jobs and $460M in property taxes generated every year.

   

NHT joined more than a dozen industry organizations in a letter to congressional appropriators, urging them to soundly reject HUD's proposal.  The letter asserts that "The proposal to short-fund contracts creates real risks for residents and owners, would discourage new investment in affordable rental housing, and would result in reduced rehabilitation and job creation in the portion of the housing sector where there is the greatest unmet demand." 

 

NHT is educating members of Congress regarding the impact of HUD's budget proposal on low-income families and seniors living in their districts, generating congressional district-specific lists of properties affected under this proposal. Through one-pagers and videos, we are telling the story of why project based Section 8 is so important to the well-being of extremely low income, vulnerable families and seniors. 

Section 8 Short Funding in Wisconsin
Brief video about the impact of short funding Section 8 contracts in Wisconsin
(please ensure volume is turned on) 

From Rail Cars to Affordable Homes, the National Housing Trust/Enterprise Partners with Mercy Housing Lakefront to Preserve Pullman Wheelworks in Chicago, IL
 
Pullman Wheelworks in Chicago, Illinois gives new meaning to transit-oriented affordable housing.  Built in 1903, Pullman Wheelworks was originally a railroad car manufacturing facility owned by The Pullman Palace Car Company.  It was converted into affordable housing in the early 1980s.  NHT/Enterprise recently partnered with Mercy Housing Lakefront to acquire and rehabilitate Pullman Wheelworks, saving 210 affordable Section 8 apartments and protecting the property's historic character. 

    

Financing was raised from multiple sources in order to complete a $34 million renovation.  The redevelopment of Pullman Wheelworks involves the preservation of the building's historic features, improvement of masonry and concrete, roof, window and door replacement, and interior renovations. A 20-year extension on the Section 8 contract was approved. Critically, a  $2.25 bridge loan from the John D. and Catherine T. MacArthur Foundation was secured to assure closing in a timely manner. Other financing sources include tax-exempt bonds issued under the New Issue Bond Program, Low Income Housing Tax Credits, Historic Tax Credits, and  State of Illinois and City of Chicago gap financing.  

HUD Announces Funding for Tenant Protections: Tenants now Eligible for "TPVs" 

TPVs will help protect low-income families across the country

  

HUD has issued new guidance explaining how it will allocate $6 million in tenant-protection vouchers (TPVs).  The TPVs provide rental assistance to families and seniors who face higher housing payments because they reside in properties with expiring HUD-imposed affordability restrictions. Under this guidance, households are eligible to receive TPVs if they reside in low-vacancy areas and are likely to pay rents greater than 30% of household income due to a maturing Section 202 Direct Loan, an FHA-insured primary mortgage, a HUD-held primary mortgage, or the expiration of affordability restrictions imposed by other HUD-administered mortgage or preservation programs.    

 

The HUD guidance includes instructions for owners on how to apply for TPVs. The deadline for owners to apply is May 4, 2012. After this deadline, HUD will conduct a lottery to determine the order of funding. 

 

The National Housing Trust (NHT) and the Preservation Working Group (PWG) urged Congress to provide funding for TPVs as part of the FY 2012 Appropriations Act.   Without these tenant protections, residents are at risk of being evicted from their homes when the mortgage matures and affordability restrictions end. At the recommendation of NHT and PWG, the guidance permits the assistance to be in the form of project-based vouchers in order to maximize the preservation of affordable housing.  

SAHF's EZ Retrofit program will help make affordable multifamily homes more healthy and energy-efficient.

NHTCDF to be Lending Partner in Multifamily Energy Efficiency Financing Pilot Program Spearheaded by SAHF

 

Stewards of Affordable Housing for the Future (SAHF) is one of 12 organizations selected by HUD to test new energy-saving approaches in older multifamily housing. SAHF will develop and implement a simplified approach to energy retrofits of low-income multifamily housing, using an analytic tool to be developed under the program ("EZ Retrofit"), and a one-stop shop approach to energy retrofits that will include access to low-cost capital via a loan fund. The pilot is being funded through HUD's new Energy Innovation Fund.  

 

As part of the pilot, the National Housing Trust Community Development Fund (NHTCDF),  has committed $1.5 million to help finance energy conservation measures at five to ten multifamily properties serving 500 low-income households. 

 

"NHTCDF's willingness to expeditiously process a loan commitment for SAHF enabled us to satisfy an important pre-condition for an application under this HUD Energy Innovation Fund NOFA," noted Rick Samson, president of SAHF Energy.  "Having now won an award we are excited by the opportunity to work with members and their properties in an applied research demonstration to streamline the energy efficiency process for affordable multifamily properties." 

 

NHTCDF makes Green Predevelopment Loans to fund initial feasibility analysis, appraisals, market studies, environmental studies, due diligence, design studies and other early project needs; Green Interim Development Loans to bridge the funding gap in acquisitions until more permanent sources of financing can be arranged; and Green Retrofit Loans to help fund the hard and soft costs related to energy retrofits of existing multifamily affordable housing.

 

Click here for more information about NHTCDF's green loan products.