Affordable Housing Finance

SPECIAL REPORT

AFFORDABLE HOUSING HALL OF FAME

A Master Legislator

AFFORDABLE HOUSING FINANCE • September 2008

Frank advances housing on Capitol Hill

BY JERRY ASCIERTO

Barney Frank may be the best friend that the affordable housing industry has ever had in the halls of Congress. Few legislators have championed the cause of affordable housing as long or as effectively as this Democratic congressman from Massachusetts.

Frank’s latest victory—as chief architect of the National Affordable Housing Trust Fund Act of 2007, the first new federal production program for low-income housing in decades—was signed into law July 30.

The trust fund, which aims to produce, rehabilitate, and preserve 1.5 million affordable housing units over the next decade, is part of a larger multi-faceted housing bill, much of which was engineered by Frank.

But the trust fund is only the latest in a series of affordable housing initiatives— such as the Federal Home Loan Banks’ Affordable Housing Program, the HOPE program, and the HOME program—that Frank has helped to create over a remarkable 28-year career on the national stage.

“If you look on both sides of the aisle in both houses of Congress, you won’t find a better or more knowledgeable advocate for housing,” said Doug Bibby, president of the National Multi Housing Council. “He is a consistent affirmative voice for housing.”

Building consensus

Known for his keen intelligence and gruff wit, Frank’s compassionate ideals are balanced by a pragmatic approach that reaches across the aisle to build accord.

After Frank became chair of the House Financial Services Committee in January 2007, the House of Representatives passed more than a dozen housing-related bills, including an update of the Federal Housing Administration’s (FHA) multifamily programs, Sec. 8 voucher reform, and reauthorization of HOPE VI, to name a few. In contrast, the Senate passed just two housingrelated bills in that period.

“He is a master legislator,” said Sheila Crowley, president of the National Low Income Housing Coalition. “In a Congress that is otherwise marked by hostile partisanship, he’s managed to do a great deal of work and get things through his committee on a bipartisan basis.

While preparing for the chairmanship, Frank was inspired by accounts of Lyndon B. Johnson, who served as Senate majority leader when the Senate, like today, tipped Democratic by only one vote. Johnson’s powers of persuasion and coalition-building skills were especially critical in such a tightly divided legislature.

“There are powers in the chairmanship, and if you exercise those powers reasonably, you gain power,” Frank told AFFORDABLE HOUSING FINANCE. “I focus as much as I can on trying to build up my political capital so I can use it within the committee. I think about it all the time.”

Frank has also built strong relationships with right-leaning trade associations representing realtors, home builders, and mortgage bankers. “There are people that may have a conservative record in some ways, but whose involvement in the housing industry gives us a lot of common ground,” Frank said.

Frank’s consensus-building skills have made the National Affordable Housing Trust Fund, which was blocked by Republicans in 2002, a reality. Seventy-five percent of the fund would be used for rental housing serving people with incomes below 30 percent of the area median income (AMI), and another 15 percent would go toward rental housing serving those with incomes below 50 percent of the AMI.

“The national housing trust fund is a real statement because it sets up a mandatory funding source for production, the first new production program for extremely low income people since the Sec. 8 program in 1974,” said Crowley. “It’s a very big deal.”

Castle Square

Born in Bayonne, N.J., the Harvard-educated Frank began working on housing issues as a 28-year-old chief assistant to Boston Mayor Kevin White. But it wasn’t until he ran for the Massachusetts Legislature in 1972 that Frank’s focus on housing came into clear view.

Frank was running in a heavily Republican district: Eight of the area’s 10 precincts reliably voted Republican. One of the two Democratic precincts, in Boston’s South End neighborhood, consisted chiefly of a housing project called Castle Square, a development that Frank became “attached to” during the campaign.

The social possibilities represented by Castle Square impressed Frank. “This was at a time of great racial tension, and it was particularly a problem for interracial couples,” said Frank. “If you were interracial and rich, you could move to the suburbs, but if you were working-class or lower-income interracial, it was hard to find a place to live.”

Interracial couples faced social opposition in both Boston’s white and African- American neighborhoods. “But Castle Square was a haven; I was struck by the number of racially mixed couples I met there,” he said. “It was an example of how this publicly funded resource was so important.”

Preservation focus

The housing lessons Frank learned in Boston set the tone for the rest of his political career. Frank witnessed firsthand the problem of displacement as Boston began to aggressively gentrify parts of his district.

“Boston had the old insensitive style of urban renewal in which you went in and leveled the poor people’s houses,” Frank said. “It’s bad enough the government doesn’t provide housing for people, but it shouldn’t wipe out the housing they already have and not replace it.”

Preservation of affordable housing has been a mainstay of Frank’s agenda ever since. “Barney didn’t just wake up one morning and decide that housing was going to be his most important issue,” said Conrad Egan, president and CEO of the National Housing Conference. “He’s distinguished himself across his career as a very active leader in the areas of housing production and particularly housing preservation.”

One of the first major bills that Frank helped craft was the Cranston-Gonzalez National Affordable Housing Act, which established the first HOPE program, providing homeownership opportunities for low-income families. The act also created the HOME program, which gives grants to states and jurisdictions to help expand the supply of affordable housing, with an emphasis on providing rental housing for low-income tenants.

Frank and the late Rep. Henry Gonzalez (D-Texas) also collaborated to create the Federal Home Loan Banks’ Affordable Housing Program, which remains an important funding source for affordable housing developers nearly 20 years later. The program was enacted through the Financial Institutions Reform, Recovery and Enforcement Act of 1989. Though the Savings and Loan debacle was the impetus for the act, the legislation also gave Freddie Mac and Fannie Mae additional affordable housing responsibilities, and strengthened the Home Mortgage Disclosure Act and Community Reinvestment Act.

Frank was also a chief architect of The Low Income Housing Preservation and Resident Homeownership Act of 1991 (LIHPRHA). LIHPRHA provides incentives to owners to extend the affordability on Sec. 236 and Sec. 221(d)(3) properties when subsidy contracts expire or owners reach an “opt out” point. The legislation also gives advantages to tenants and nonprofits in purchasing buildings should the owners choose to sell.

Incidentally, Castle Square, a property financed through the Sec. 221(d)(3) program, remains affordable housing to this day, and is now owned by the Castle Square Tenants Organization, thanks to LIHPRHA.

Full circle

Nearly 20 years after crafting legislation in response to the Savings and Loan scandal, and creating a critical affordable housing program in the process, Frank finds himself in a similar situation with the Housing and Economic Recovery Act of 2008.

In addition to the trust fund, the act includes $3.9 billion in Community Development Block Grants, provides increased funding for the low-income housing tax credit program, and updates the FHA and Rural Development multifamily programs. Many of these provisions originated with Frank.

Frank was a critical figure in renegotiating the act’s provisions as it evolved. When fears of insolvency at Fannie Mae and Freddie Mac caused a Wall Street panic in July, Frank partnered with Treasury Secretary Henry Paulson to add provisions for stronger government-sponsored enterprise (GSE) regulation and an explicit government guarantee to extend liquidity to the GSEs.

This latest episode provides yet another example of the 14-term congressman’s importance to the affordable housing industry, and those who depend on it.

“The country is very fortunate to have Barney Frank in Congress,” Crowley said. “And poor people with housing needs are fortunate to have Barney in Congress, because there’s somebody in a position of power for whom they are a primary concern.”