Deals, subsidies, gossip, taxes, and sneaky fine print in the world of rental real estate, from the editors and writers of Apartment Finance Today and Affordable Housing Finance magazines.
Friday, May 27, 2005
Questions from the editors II
Another question for readers from Senior Editor John Zipperer:
"What are the most important factors to you in choosing a financing source? Do you stick with a relationship you've built up with a lender for many years, or do you shop each deal around to the appropriate agencies, lenders, conduits, and life insurance companies?"
...and this is not just an effort to make conversation. We really want your thoughts on these subjects. So go ahead: click the "comment" button and tell us.
Well, the advisory committee for the proposed "Strengthening America's Communities Initiative," which is seemingly disfavored by 55 senators (see below), has shortened its June public meeting schedule from two days to one morning. SACI is the program called for by the 2006 White House budget proposal that, if passed, would create a single bigger, simpler formula grant program to replace Community Development Block Grants and a double handful of other community development grantmaking programs. A huge change if it goes through, of course, but since that now seems unlikely to happen, could it be that interest in the meetings is waning? A number of urban officials officials did testify at the May meeting in Kanas City, but from its transcript it's hard to tell how or if the discussion would contribute to the actual drafting of legislation. The April meeting in Fresno, California also looks from its transcript to have been singularly inconclusive. It'll be interesting to see how hard this committee and the Commerce folks work at the time-eating task of drafting actual legislation to put SACI before a Congress that may not necessarily be interested.
HUD extended deadlines today for some SuperNOFA funding applications due to Internet problems that it blamed in part on a "denial of service attack." The extension notice says, "The processing capacity degraded by this attack, coupled with a high volume of application submissions, rendered the Grants.gov website almost inaccessible during certain times between Tuesday, May 17, 2005 and Thursday, May 19, 2005." Accordingly HUD extended the application deadlines for several programs whose deadlines fell around that period.
The announcement does appear to be suggesting the attack was malicious, as it links to a site that explains prominently, "A 'denial-of-service' attack is characterized by an explicit attempt by attackers to prevent legitimate users of a service from using that service."
In an adjacent notice, HUD reopened the application process for the SuperNOFA's Rural Housing and Economic Development program, which had had applications due May 17. The new deadline for that program is July 11. (PDF versions of the two notices are here and here.)
Does anyone here know if this is the first time the vagaries of the Internet have affected a HUD application deadline? At any rate it's certainly a reminder that new technologies bring new problems.
A question for our readers from Senior Editor John Zipperer:
"Do you use Fannie Mae-backed financing for your projects? If so, what do you think of the government-sponsored enterprise's reorganization and much-vaunted flexibility in deal terms? Has anyone started using Fannie financing as a result of these changes in the past year?"
(This is where you click on the "Comments" link. C'mon, don't be bashful.)
The National Low Income Housing Coalition (NLIHC) has posted the free online version of its valuable 2005 Advocates' Guide. Apart from stating NLIHC's own policy recommendations, it offers a highly practical inventory of the many federal housing programs and their current political fortunes.
There's an extensive list of real estate blogs, including ours, on The Big Picture, an interesting macroeconomics blog that has a lot to say about housing. As with our last real estate blogaround, Your Mileage May Vary, but some of the sites linked there make interesting browsing.
At first glance there may not seem to be much for multifamily developers in today's Federal Register notice about "Identification of HUD Regulations That Present Barriers to Affordable Housing." A lot of it is about HUD's promotion of single-family homeownership. But if you scroll down in the file there's a long series of responses to commenters' letters that includes considerable guidance on both owned and rented housing, notably under the HOME program. HUD's argument that pending Section 8 rule changes could reduce barriers to affordability may also be worth attention.
OAHP, the successor to OMHAR, issued guidance May 5 on Section 8 contracts for properties going through the Mark-to-Market program. The NH&RA site has the 12-page PDF document available for free download.
All the federal agencies published their semiannual regulatory agendae in Monday's Federal Register. These are worth a look because they provide some advance notice of rules not yet proposed.
The news on affordable housing includes a statement from the Federal Housing Finance Board that it "is considering adopting comprehensive amendments to its Affordable Housing Program regulations."
At HUD, plans include a rewrite of HOME Investment Partnerships regulations, rules implementing recent Mark-to-Market legislation, a rewrite of the grant formulas governing Housing Opportunities for Persons with AIDS (HOPWA), and perhaps most dramatically, a big clutch of rewrites affecting Section 8 and public housing. For those last, look in the HUD agenda, find the the Office of Public and Indian Housing in the table of contents and, within that, see the "Proposed Rule Stage" items, starting with No. 1426. Affordable housing dealmakers may especially want to look at No. 1429 in this section on "Streamlined Mixed Finance Application Review."
Also of possible interest is Treasury agenda item No. 2472, regarding an upcoming proposed rule on "amendments to the general public use requirements in the low-income housing tax credit program."
But this is just a taste of what's in the agenda documents. If you work in affordable housing it might be worth taking the time to wade through these.
Quite a raft of corrections out in today's Federal Register on HUD's major annual grant offering, the March 21 SuperNOFA. Many programs are affected, out of which four have deadline changes, those being as follows: "Indian Community Development Block Grant Program: June 20, 2005, Housing Counseling Program: June 27, 2005. Public Housing Neighborhood Networks Program: June 11, 2005. [ERROR: See below] Public Housing Family Self-Sufficiency Program: June 28, 2005."
[CORRECTION 5/19: HAC News has caught a mistake in the announcement: although the Neighborhood Networks deadline is said to be "June 11" at the top of the announcement, reading farther shows that the correct date is July 11.]
With another round of military base closures coming, some communities (hardly all) are celebrating the possible release of attractive land for civilian development. There is outright rejoicing in Concord, Calif., and the real estate possibilities are being welcomed to at least some extent in Fort Monroe, Va. and, very reluctantly, in Portsmouth, N.H.. But as AHF reported in 2002, development on former military property can bring with it a lot of extra headaches.
So is it worth the trouble? Anyone got an experience to share?
NCSHA has posted two Congressional support letters for housing appropriations: one from 55 Senators for HUD and CDBG funding; the other from 170 House members for Section 8 voucher funding. So, no, 170 members isn't half the House yet, but if legislative efforts keep on this way maybe the new "TT/HUD" appropriations subcommittee (sounds like a sound effect) won't land so hard on housing after all.
This week HUD posted the companion study to its update on the Low-Income Housing Tax Credit (LIHTC) Database. The update (through 2002) appeared on the database site some time ago, but the statistical study of the figures only just became available online. Findings include that LIHTC projects have gotten steadily bigger, a change attributed to the greater involvement of tax-exempt bond financing. Nonprofit sponsorship rates rose through the mid-'90s but declined after 1998. More than 40% of properties had at least some Section 8 voucher tenants.
A study of the Section 8 Mark-to-Market program just appeared at HUDCLIPS. It's a meaty HUD-commissioned effort by Abt Associates and Econometrica, Inc. -- a 280-page free PDF download including a history of the restructuring process since 1996. Also lots of case studies. Maybe worth a look.
Meanwhile three big housing industry associations released a statement today expressing distinct unhappiness with the Section 8 renewal funding provisions (or lack thereof) in the proposed State and Local Housing Flexibility Act, q.v. below. Basically they're tired of surprises. They want to see housing subsidies paid according to a steady formula.
[UPDATE May 12 '05: The Urban Institute's view is that the bill hurts the "housing choice" possibilities for poor families that were a big reason to create the voucher program in the first place.]
Today's Federal Register resolves an inconsistency in the March 21 SuperNOFA by announcing that the application deadline for the Rural Housing and Economic Development Program is May 17, not May 20. A separate notice offers corrections and guidance on electronic application procedures for the SuperNOFA. (Note: the disability housing deadline correction it mentions is pretty clearly the Sec. 811 one from yesterday, which see below.)
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Incidentally, would readers here find it helpful to share tips for researching housing programs and regulations online? For example, the item above is from the handy Federal Register browse-by-date page. Are research shortcuts like this one common knowledge, or might it be a public service for us to post more of them? Do any of our visitors have favorite online resources to share?
As some readers likely know, tomorrow is the announcement date for $2 billion in New Markets Tax Credit awards by the Community Development Financial Institutions (CDFI) Fund. The announcement event is set for 10 a.m. Eastern time, after which the results will presumably appear on the CDFI Fund site. (If they don't show up there, it might be worth checking the main Treasury press page.)
By the way, for CDFI Fund watchers, the CDFI Coalition sent out considerable fresh budget news in its newsletter yesterday.
...and, of course, comments on this and other housing issues are, as ever, welcome. For example, is anyone out there learning to make the New Markets credits work? Got any stories to share?
For folks seeking funding for disabled tenants under the Sec. 811 program, there's a biggish raft of "technical corrections" in today's Federal Register. Among other things the deadline is moved back from May 24 (as published in the March 21 SuperNOFA) to June 10.
REGIONAL: Hard times for Seattle-area voucher housing
The Seattle-based King County Housing Authority recently won back $755,000 of a $3.5 million cut in its Section 8 housing voucher funding -- but that wasn't enough. Today the agency announced it would be cutting "more than 4,000 low-income households" from its voucher waiting list. The announcement quotes director Stephen Norman as saying, "we cannot, in good conscience, continue to offer false hope to households who are waiting in line for assistance." The top 1,000 households have been left on the list in case something opens up, but that likely won't be any time this year.
So what's happening with housing waiting lists elsewhere in the country? Anyone else got a story to tell?
Per the Cleveland Plain Dealer, Community Development Block Grants (CDBGs) have been safe for a week though some urban mayors still haven't noticed yet. On the other hand, the National Low Income Housing Coalition is calling the CDBG restoration "one small victory" in a budget resolution that is in general tough on affordable housing constituencies. NLIHC is also noting that the appropriations folks still have the final say whether the giveback money really goes to CDBGs or not.
HUD's Office of Inspector General reported last month that HUD wasn't collecting information that could help measure the success of the Moving to Work pilot program. Important, possibly, because this special program is letting a few housing authorities change the way they set Section 8 voucher rents, and the current systemwide "flexibility" proposals are calling for some of the same changes in all jurisdictions. Not that the program hasn't been studied: in fact HUD's website makes available a considerable list of reports on the subject. But OIG says the agency could have kept track of tenant data more systematically.
Got a comment on a recent article in Apartment Finance Today or Affordable Housing Finance? Go ahead and post it here.
This is our second invitation for letters to the editor, and we'll be posting more of these as time goes on.
Our first letters invitation led to an exchange in the comments thread about the need to remind people that if housing isn't affordable, economic development can suffer. If anyone would like to resume that discussion here please go right ahead.
The Legal Services of Northern California blog assumes a tenant perspective, but some of the items and resources are of interest to anyone in the housing business, and not just in California. The front page as of this writing has an April 15 item on low-income housing tax credit lease terminations.
There seem to be more newsletters than weblogs in the housing world, but some folks do blog steadily about housing and real estate, if not always the multifamily variety. Some even manage to have fun at it.
For a selection of mostly local-focus real estate sites, see the REblog directory page, maintained by a couple of blogging realtors. [UPDATE: Oops, one of the two, Todd Carpenter, says "I'm a mortgage guy, not a realtor." Sorry, Todd.] Not much multifamily talk here, and some sites are more intelligent than others, so as the saying goes, Your Mileage May Vary. Still, these sites might be worth a look, especially for developers branching out into new parts of the country. There seem to be local-focus real estate sites forming all over. The Beautiful Santa Barbara Blog is another good example.
For a slightly broader perspective on real estate try the newsy and opinionated REALTYgram by Pennsylvania realtor Frances Flynn Thorsen, or The Real Estate Blog, by California realtors "Fran and Rowena." Both of these sites have their own interesting "blogrolls" of other online sources for housing-related news and gossip.
Turning to a very different neighborhood of Blogland, housing finance people may be interested in the economics talk at the more scholarly end of general-audience political blogs. J. Bradford DeLong, once a Clinton-era Treasury official and now a Berkeley economics professor, writes a popular liberal weblog with some serious comments on economics. Yesterday, for example, he had some thoughts on the current state of the Fed. The more loose-limbed and politically irreverent group blog The Blogging of the President talks economics fairly often too. Yesterday, for example, a contributor looked at the FDIC's take on the housing boom, and today there's an item on Treasury Dept. bond policy. On the conservative side of economics, there's Chicago professor Daniel Drezner (really more of a libertarian), and of course there's a heavy dose of economics in the general political talk of sites like the Wall Street Journal's conservative OpinionJournal page.
But despite diligent searching, this space comes up short of weblogs -- as opposed to newsletters -- that talk about multifamily housing issues or subsidized housing issues in particular. Can any readers fill us in on Blogland neighbors who do this kind of writing?
Most local housing authorities are now required to use Fair Market Rents in determining their "payment standards" -- the highest local rents they are willing to subsidize. However, the current Section 8 "flexibility" proposals (see below) could reduce the Fair Market Rents' importance by allowing local officials to base their subsidy amounts on other data.
So how about some comments from readers who know this subject well? Is the GAO report fair to the process? Did the investigators pick up on the right issues?
Interesting that a Republican leader, Sen. Rick Santorum, D-Penn., is teaming up with Sen. Jon Corzine, D-N.J., to seek an increased appropriation for the Community Development Financial Institutions (CDFI) Fund. No mention in their letter of the much-protested Bush Administration proposal to melt down the CDFI Fund grants into a more generic new "Strengthening America's Communities" grantmaking entity, along with 17 other programs including the Community Development Block Grants (CDBGs). (For the proposed consolidations, see Page 136 (the 140th page of the PDF) in this White House budget document.)
