RoadEffective September 21, amendments to HUD’s Housing Choice Voucher (HCV) Program – the government’s largest program for assisting low-income, elderly, and disabled populations in the private housing market – will change the portability process. Portability enables a voucher holder to use the voucher assistance to move outside of the jurisdiction of the public housing authority (HA) that initially issued it. Unfortunately, the current portability regulations and guidance are often unwieldy for many HAs, and in some cases have led to disputes, delayed payments, and other unintended consquences.  HUD indicates that the amendments seek to better define the roles between HAs if the family moves into another PHA’s jurisdiction, improve billing arrangements in portability cases, and allow families to more easily lease and rent homes in their favored locations.  Hopefully, the new regulations will achieve HUD’s intended results.

The new regulatory provisions include the following changes:

  • Mandatory absorption (when HAs absorb the HCV into their own portfolio rather than bill the initial HA) requirements are removed; mandatory voucher suspension notifications are clarified.
  • HAs must notify local HUD offices within 10 days of any portability moves that were denied due to lack of funding.
  • Vouchers issued by the receiving HA to the family must be given expiration dates no less than 30 calendar days from the expiration of the initial HA voucher.
  • All parties involved in portability must be briefed on how portability works and the benefits of living in low-poverty areas.
  • Families are allowed to choose the receiving HA if they use portability.

Additional information, detailed regulations, and comments on HUD’s final rule is available.

According to a recent Department of Justice (DOJ) settlement, some pets are allowed in the house. HUD filed and settled a civil rights lawsuit against RiverBay Corporation, a New York City-based affordable housing cooperative manager that owns and operates 15,372 residential units – the largest housing cooperative in the country, claiming the company maintained no-pets policies violating Fair Housing Act and Americans with Disabilities Act (ADA) guidelines for accommodating individuals with disabilities.

In light of the settlement’s complexities, the DOJ issued new guidance on ADA distinctions of service animals and their purpose, and clarified requirements for accommodating individuals who need them. The guidance restates that government agencies, public-serving businesses, and nonprofit organizations must comply with ADA service animal requirements, but also emphasizes that institutions of higher education should consider all efforts to remain compliant with ADA standards while balancing to the equal access needs of students with allergies on campus and in dormitories. The DOJ provides additional information that clarifies questions businesses and property managers may have regarding public health and safety concerns for service animals accessing pool grounds, open food areas, and hospital facilities.

While there are likely to be future concerns and developments regarding ADA requirements for service animals, it is important to remain mindful of the way private policies relate to the access and compliance standards set forth for those with service animals. Please see our legal alert for additional considerations and discussion points.

Justice BuildingIn a 5-4 decision today, the U.S. Supreme Court recognized that disparate-impact claims maintain adjudication viability under the Fair Housing Act (FHA). Justices Kennedy, Ginsberg, Breyer, Sotomayor, and Kagan provided the majority opinions, while Chief Justice Roberts and Justices Alito, Scalia, and Thomas wrote dissenting opinions. The majority opinion is available here.

The Court acknowledges that the Fair Housing Act contributes significantly to the removal of “artificial, arbitrary, and unnecessary barriers” that may arise in the management and distribution policies that affect equal access to affordable housing. Disparate-impact claims, the Court majority notes, should be scrutinized under measurable criteria and data. Specifically, the party bringing the claim must establish “robust” causation in the form of evidence – statistical or otherwise – that a policy directly causes disparate impact. Such a provision is meant to protect defendants from being held liable for racial disparities they did not create, to maintain that race alone cannot be a pervasive or determining factor for claims, and to encourage the use of workable community information, including costs, traffic patterns, quality of life, and preservation of historic architecture, to establish that housing decisions did not construct “artificial, arbitrary, or unnecessary” barriers. There is currently a framework under the FHA for evaluating and litigating disparate impact claims, but the applicability of various factors and data will ultimately fall under judicial interpretation. A more detailed overview of the decision can be found within this alert.

In light of this impactful decision, Ballard Spahr will be hosting an informational webinar in the next few weeks. Topics will explore the practical impacts, implications, and developing issues of this ruling. We will be sure to keep you apprised of the program information and registration.

On April 9, 2015, the Housing Authority of the City of El Paso (HACEP) and its development, private equity and lending partners closed Phase I of the largest Rental Assistance Demonstration (RAD) project in the country. Hunt Development Group has joined HACEP in undertaking the development, preservation and rehabilitation of all of the 1,590 existing low-income housing units across 13 separate public housing apartment complexes in El Paso, Texas in connection with the conversion of those units to Section 8 RAD units.

The project utilized several forms of financing, including private equity, tax-exempt loans and bonds and subordinate loans. Freddie Mac and Centerline Mortgage Partners, Inc., a wholly owned subsidiary of Hunt Mortgage Group, LLC, provided $59,625,000 in long-term, senior debt financing through Freddie Mac’s new Direct Purchase of Tax-Exempt Loans program. The conduit lender for this tax-exempt loan, the Alamito Public Facilities Corporation, also issued $65,375,000 in tax-exempt, short-term bonds, in support of the project.

Ballard Spahr was honored to be a part of this historic transaction, closing the nation’s largest RAD conversion to date, ensuring that over 1,500 families will have affordable and sustainable housing available on a long-term basis. The financing and structuring considerations and issues addressed in this transaction provide a strong basis for future deals of increasing complexity.

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.

 

Light BulbOur Ninth Annual National Housing Symposium successfully brought together a rich panorama of perspectives across the affordable housing industry. Laura Green Zeilinger, the Executive Director for the United States Interagency Council on Homelessness (USICH), gave a keynote presentation that affirmed and galvanized the dialogue occurring among our panelists and attendees: the successes of affordable housing depend on collaboration.

Ms. Zeilinger emphasized interdependency – how chronic homelessness, Veterans Affairs, the Affordable Care Act, and federal funding initiatives are as much interrelated societal issues as they are affordable housing issues. From her own experiences with USICH, she described how the complex problem of homelessness (like the need for affordable housing) is fruitfully addressed when various key actors and sectors recognize and work towards a common goal. Ms. Zeilinger offered many valuable insights throughout her presentation:

  • HUD and Veterans Affairs establishing interagency missions to successfully decrease homelessness among Veterans
  • The priority to create targeted affordable housing opportunities for those experiencing chronic homelessness
  • How the costs of healthcare individually and nationally decrease with the availability of housing options and the life-stability they offer
  • Affordable housing initiatives are economically sound endeavors on community and federal levels

We truly appreciate Ms. Zeilinger’s perspectives as we look towards the horizon of affordable housing and beyond. Her whole speech is available.

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.

 

 

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!

 

DiceRecently, the New York Times published an article about the trend among some credit unions to offer “prize-linked savings accounts” as a means of encouraging saving by low-income families.  The article explains that the “Save to Win” program currently operating in Michigan, Nebraska, Washington and North Carolina is an example of an effort to change financial habits by tapping into a tendency among low-income and financially vulnerable individuals to rely on lotteries and gambling as a means of improving their financial situation. The offering of cash prizes for making deposits into a savings account generates higher rates of saving.

While the effort is only possible at credit unions at the moment, the article explains that Congress and state legislatures are exploring ways to remove barriers to allow the expansion of prize-linked savings accounts to other financial institutions and additional jurisdictions.  In communities with credit unions willing to partner with housing authorities, the possibilities of introducing prize-linked savings accounts as part of a larger financial literacy initiative could mean the difference for moving residents to self-sufficiency.