The new HUD administration has been pretty quiet on the regulatory front, with only a handful of regulations and notices issued since January. That may change soon. HUD is hard at work identifying regulatory changes that might be made to comply with Executive Order (EO) 13771, “Reducing Regulation and Controlling Regulatory Costs.”  The EO requires that two regulations be eliminated for each new regulation issued and that the overall costs of new regulations, including repealed regulations, this year be zero. In February 2017, the Office of Management and Budget issued guidance for implementing the EO, and now HUD  seeks the public’s input into which regulations it could modify or eliminate.  Recommendations are due June 14, 2017.

Over the years, a number of groups and agencies have submitted recommendations to HUD for regulatory reform, and this is a good time to reconsider those proposals.  Since the request is for modifications to regulations, not statutes, recommendations should focus upon regulations and guidance that is not required by federal law.  Areas Ballard Spahr has been thinking about recommending changes include:

  • Better ways to implement prevailing wage rate requirements at mixed-use projects where the prevailing wages need not be paid for the full project;
  • Streamlining of the demolition/disposition process for public housing;
  • Modifications to site and neighborhood standards;
  • Modification of the public housing asset management rules;
  • Requirements for designation of public housing as elderly-only; and
  • Thoughtful modifications to affirmatively furthering fair housing requirements.

Two recent news stories highlight a possible surge in the development of housing in high cost rental markets like New York and Washington, DC. A New York Times article and NPR story featured approaches to living in small housing units, or micro units, as a means of providing an affordable alternative to high rent living.  In New York, the first batch of prefabricated micro housing units are being assembled in the Brooklyn Navy Yard  and are about to be put in place this Spring.  In DC, the story tells us about the push for smaller living by featuring an apartment building in the U Street Corridor as well as a tiny house community that had a promising start, but demonstrates the challenges for a cooperative effort to realize long-term stability within an urban setting.

With rents of $2,000-$3,000 for the New York units and more than $1,700 in Washington, DC, these micro units would still be out of range for many lower income renters.  However, the ability to prefabricate the units for a fixed cost that is significantly lower than the per unit cost of more traditional affordable housing, micro units present possibilities for expanding affordable housing choices.  A micro unit may allow a means for enhancing opportunities for permanent supportive housing for formerly homeless individuals, for example.  As noted in the articles, the micro unit offers a home while also encouraging community by living outside the unit and engaging with neighbors while using common area amenities and the resources of the broader neighborhood. And, in many ways, the micro unit notion has been in place for a while through senior living communities of smaller units and shared common areas.

It is a creative approach pushed by the need for housing in high rent urban markets that also offers possibilities for real innovations in creating more affordable housing across communities.  It would be interesting to hear from those of you who have looked at this approach or developed projects using the micro unit concept to see how it is shaping the effort to provide affordable housing and what impact it is having on providing sustainable housing options.

During one of the sessions at Ballard Spahr’s Ninth Annual National Housing Symposium, Mara Blitzer from the U.S. Department of Housing and Urban Development (HUD) discussed federal housing resources for aging Americans with a focus on HUD’s Section 202 Supportive Housing for the Elderly Program.  Ms. Blitzer explained that Section 202 is the federal government’s only rental housing program targeted to low-income seniors.  Even then, Section 202 is only a small fraction of HUD’s overall rental assistance programs.  Unfortunately, the funding levels for Section 202 approved by Congress since 2011 remain approximately half of the  pre-2011 funding levels.

She explained that older adults of today are more likely than their predecessors to have limited financial resources to put toward housing costs. Ms. Blitzer pointed out important aspects of Section 202 and how it can be used to help the aging population:

  • One of the main goals of Section 202 is to enable the elderly population to “age in place” to improve the quality of life and provide cost saving by not relocating to a more expensive care facility like a nursing home, for instance.
  • Section 202 has helped fund over 390,000 units of affordable supportive housing over 50 years allowing elderly adults to age in place.
  • HUD and the United States Department of Health and Human Services (HHS) have collaborated to research useful practices and analyze how services can be incorporated into existing affordable housing systems.  Some of the goals of this research are to increase the residents’ quality of life and realize cost savings to the public sector by reducing the need for more expensive services and care facilities.
  • HUD and HHS research uncovered a correlation between HUD-assisted households and Medicare and Medicaid use by elderly adults as well as more chronic conditions and higher Medicare spending than unassisted households.
  • Some research organizations came together to analyze effective models of affordable housing linked with supportive services with the goal of aging in place.  Congress approved $20 million for FY2014 for the Section 202 demonstration.  HUD’s request for additional, unused funds in order to generate enough projects for a helpful evaluation was not approved for FY2014; it may still be reconsidered for FY2015.

Ultimately, the elderly population is on the rise without a corresponding increase in investments in affordable housing and services for them.  This could lead to greater risk of homelessness and higher cost to tax payers.  Through Section 202, there is hope for a sustainable long term solution.  Ms. Blitzer’s presentation is available here.

 

Rock Path over StreamYesterday Ballard Spahr held its 9th annual National Housing Symposium in Washington, D.C..  The theme of the Symposium was “Beyond the Horizon:  Housing and Community Development Strategies for the Future”.   Government officials, investors, developers, lenders, and other housing professionals spent the day discussing affordable housing issues.  To give a flavor of what was discussed, below is a sampling of some of the interesting facts, statistics and ideas expressed:

1) On average for every $1 of public funds used, $19 of private funds was available for rehabilitation of the first 7,500 public housing units converted through the Rental Assistance Demonstration Program (RAD).

2) The EB-5 Investor Immigration Program has been used for residential financings and may be a viable option for soft loans for affordable housing financing.

3) CRA markets continue to demand high low income housing tax credit (LIHTC) pricing, with one investor being outbid at $1.19.

4) Each night 578,000 individuals in the United States are homeless.

5) Senior services are extensive and a necessary part of successful senior housing.

6) Housing should be a bipartisan issue.

If you were unable to attend, we hope to see you next year.

 

 

Harvard Joint Center for Housing Studies recently released a report entitled Housing America’s Older Adults, which highlighted several issues:

  • High housing costs resulted in older adults to skimp on other necessities, including food.
  • Most housing does not include basic accessibility features, making it harder for older adults to age comfortably at home.
  • When older adults cannot (or choose not to) drive, the lack of transportation options often results in social isolation.
  • Connections between housing and health care are weak.  These weak connections can result in premature admissions to nursing homes.

In addition to documenting various challenges, the report summarizes policy solutions, including lots of great examples.  Suggestions range from better planning for pedestrians, better mass transit access, tax incentives to encourage universal design, and planning and coordination for health care service delivery.   Of particular interest to the readers of this Blog, there are a number of good suggestions as to how to better integrate housing and health care support for lower-income seniors.

We are dedicated to creating dialogue among the various voices of the affordable housing community, which makes us excited to announce our Ninth Annual National Housing Conference in Washington, D.C., from November 12 to 13. The two-day, complimentary event features lively discussions, panels, insights, and networking opportunities with the movers and shakers of the affordable housing industry.

Day one is our Housing Authority Summit. Housing authority executives will join us to explore the evolving aspects of affordable housing and share insights into addressing some of the most complex challenges and issues that housing authorities face today. Panel discussions will cover an array of topics, including property managements trends, nonprofit and ongoing governance, the MA rule and the MCDC initiative, waivers, energy efficiency models, and RAD financing strategies. While registration for the Summit is limited, we are poised to author blog updates about the need-to-know answers to the biggest questions within the affordable housing industry.  While attendance is limited to housing authority representatives, if you would like additional information on attending the Summit, please contact Jennifer Boehm.

Day two will feature our National Housing Symposium, an open event where nationally recognized affordable housing leaders and innovators discuss and analyze industry trends, financing strategies, and developments forming beyond the horizon of the affordable housing industry. In addition to exploring the plans pervading Capitol Hill, panels will engage diverse perspectives for spirited discussion about debt and equity strategies, the need for seniors housing, and the multifaceted Rental Assistance Demonstration (RAD) program. Registration is free, and our detailed program description is available.

It is our privilege to create such an informative and collaborative forum for dialogue, exploration, and networking within an industry about which we feel so passionate. Though we will certainly blog about conference updates and insights, we hope you will join us in person!

 

Rows of HousesThis past weekend I attended an open house for Mary’s House for Older Adults,  a pro bono client in northeast D.C.   Mary’s House is the brainchild of Dr. Imani Woody, who plans to transform her childhood home into  affordable senior housing friendly to lesbian, gay, bixseual, or transgender (LGBT) residents.  This is the first LGBT-friendly senior housing project planned in the District of Columbia.  Ballard Spahr helped Mary’s House incorporate in the District, and draft its application for 501(c)(3) status.   Until  I attended this open house and started reading newspaper articles, I did not realize the extent to which LGBT seniors experience bias.  At the open house, people shared stories of LGBT seniors going back into the closet or “de-gaying” their homes so they could receive services without harassment and live without bias in traditional senior-only housing.  Mary’s House will be LGBT-friendly:  the project will exclude no one, but will advertise as being friendly to LGBT residents.

The effort to create Mary’s House overlaps with a growing recognition across the country and at HUD of the bias experienced by LGBT individuals in their search for housing.  The Washington Post reported that since last year, HUD has received 150 allegations of housing discrimination based on sexual orientation, and that federal officials plan to conduct fair housing studies through LGBT “fair housing testers”.   Although sexual orientation is not a protected class under the Fair Housing Act, an LGBT person’s experience with sexual orientation or gender identity housing discrimination may still be covered by the Fair Housing Act.   In addition, projects that receive HUD funding or that are financed by loans insured by FHA may be subject to HUD program regulations intended to ensure equal access to LGBT persons.

See links below for two great articles by the Washington Post, one about Mary’s House, and another article about John C. Anderson Apartments, an LGBT-friendly development in Philadelphia that recently opened its doors. Also below is a link to HUD’s June 2013 rule on equal access to HUD-subsidized housing and to an earlier Housing Plus blog post about the equal access rule.

 

 

Rocking ChairNPR aired a story Monday morning reporting that New York has allocated $260 million in State Medicaid funds for supportive housing and exploring the question of whether housing counts as health care.  Right now, Medicaid and Medicare dollars can only rarely be used for housing costs.  However, the housing-as-health-care camp supports using  health care dollars  to pay for housing costs more frequently for high need individuals – either to pay rent or to support construction costs.  Some people consume so many Medicaid or Medicare dollars through emergency room visits and hospital stays, that paying for an apartment and access to supportive services actually saves money over time.   NPR shared the story of a woman who had suffered brain damage and eventually became homeless.  The cost of her housing with supportive services is less than estimates of annual expenditures for severely mentally ill homeless people.  The same argument can be true with the frail elderly – delaying admission to a nursing home by providing access to less intensive services can save state governments significant dollars.  The challenges to developing and maintaining these programs are many.  One issue is finding the neediest people who can benefit from the combination of housing and supportive services, especially if there is high turnover.  Another challenge is that states must create waivers to permit the use of health care dollars for housing costs.  Sometimes it is easiest (but still not easy!) to develop a service delivery site alongside the affordable housing.   There are enormous potential savings in health care costs available through the stabilizing effects of housing.  More states, in addition to New York, should examine potential savings through using health care dollars for supportive housing.

This is a new feature of the Ballard Spahr Housing Plus blog.  We’d like to feature housing projects around the country that use the NMTC for a piece of the finance strategy.  This installment finds us in Moss Point, Mississippi.

Hope Enterprise Corporation and Hope Credit Union (HOPE) – an affiliate of NeighborWorks – and Habitat for Humanity of the Mississippi Gulf Coast (Habitat) recently announced a partnership to build 41 affordable homes for low-income families in Moss Point, Mississippi.  The announcement was made at the construction site of the home of Ms. Ednearl Epps, a formerly homeless retiree, whose dream to own a home became possible thanks to this project and the creative use of New Markets Tax Credits. Bill Bynum, the CEO of HOPE, praised NeighborWorks for its investments that “positioned HOPE to help more than 10,000 people rebuild their homes and businesses.” The homes are expected to be built by the fall of 2014.The project is supported by $5,000,000 in New Markets Tax Credits, which are to be purchased by Capital One.

This is not the first time Hope and Habitat have partnered to create affordable homes using New Markets Tax Credits.  As Bill Bynum, the CEO of HOPE, said, “New Markets Tax Credits have proven to be a critical recourse for our organization in meeting community needs and revitalizing neighborhoods historically underserved.”

HOPE is a community development financial institution, community developer and policy center that provides financial services to low income communities and individuals.  It serves various groups throughout the South and is one of the affiliates of NeighborWorks, a network that helps individuals and families with affordable housing and counseling.

The New Markets Tax Credit program was created by Congress and is managed by the CDFI Fund of the Treasury Department to increase investments in operating businesses and real estate projects in targeted, low income areas around the country.  Since its establishment in 2000, the program has generated $40 billion in tax credit authority for loans for business and real estate projects.

Have a question about the New Markets Tax Credit program?  Ballard Spahr has a dynamic practice representing CDEs, QALICBs, investors, and syndicators.  Give us a call or look up any of our professionals.

Join us next time for “Get to Know a NMTC Housing Deal.”

Rows of HousesDid you know that an estimated 20 million people in the United States live in mobile home or manufactured home communities?  These communities make up a significant component of the nation’s affordable housing stock.  Manufactured homes can be an intermediate step for some individuals and families between apartments and owner occupied housing such as condominiums and detached homes.  And, while individuals with sufficient income and cash for down payments typically prefer to buy traditional homes, there are many manufactured home communities – for example retirement communities in Florida and California and communities located near the ocean – with tenants of all income levels.

Historically, manufactured home communities were owned primarily by for profit entities and developers.  Recently, however, many such communities have been purchased or developed by nonprofit entities, municipalities and tenant cooperatives.  These nonprofit owners may be unaware that their acquisition of a manufactured home community can be financed with the proceeds of tax-exempt bonds.  In addition, nonprofit owners of older communities may be unaware that they can finance improvements to their communities with tax-exempt bond proceeds. 

The tax requirements for issuing tax-exempt bonds to finance the purchase and/or improvement of a manufactured home community are similar to the requirements for financing a multifamily housing development.  The nonprofit owner is required to, among other things, set aside a certain number of spaces in the community for lower income households.

Investor demand for tax-exempt bonds secured by manufactured home communities has steadily increased over the last decade.  In the past, rating agencies were not as comfortable rating these types of bonds, so the bonds that were issued were often either unrated or credit enhanced by bond insurance companies.  Today, investors and rating agencies are more comfortable with a bond issue backed by a manufactured home community.  They recognize that manufactured home communities have a stable tenant base because it is costly for tenants to move their homes.  Recently, bonds secured solely by a manufactured home community and its rental revenues have been rated as high as “A” by S&P. 

The current economic environment could potentially provide nonprofit owners with an opportunity to use tax-exempt bonds to finance or refinance the acquisition and/or improvement of their manufactured home communities at historically low interest rates.