Legislation to establish a National Affordable Housing Trust Fund has been introduced in the House of Representatives, with the goal of producing, rehabilitating, and preserving 1.5 million housing units over the next 10 years.
The bill (H.R. 2895) would allocate between $800 million and $1 billion annually to local communities (60 percent) and states (40 percent). The fund can be used to build, rehabilitate, and preserve affordable rental housing and to provide downpayment and closing cost assistance for first-time home buyers.
Under the proposal, states and localities would be required to make trust fund grants to qualified entities, including forprofits, nonprofits, agencies, and faithbased organizations, that propose affordable housing projects designed to meet the highest-priority housing needs in their jurisdictions.
“The growing shortage of affordable housing is one of the most serious social and economic problems facing our country,” said Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, in a statement. “Given our severely constrained fiscal realities, we are today doing the best we can to address this—creating a low-income housing trust fund that will be paid for in ways that do not draw from federal tax revenues.”
The legislation is a bi-partisan effort with several other House members joining Frank in introducing the bill.
The fund would be funded by different sources, including the proposed Government Sponsored Enterprises’ Affordable Housing Fund (H.R. 1427), which recently passed in the House.
Affordable housing advocates praised the introduction of the new bill.
“The introduction of the National Affordable Housing Trust Fund Act of 2007 is a signal of hope for the millions of families of low-wage earners and elderly or disabled people on fixed incomes who cannot afford even the most modest rental homes,” said Sheila Crowley, president of the National Low Income Housing Coalition. “With this bill, new resources will be dedicated to expand the supply of rental homes that the lowest income people can afford.”
More information can be found at www.nhtf.org.
LIHTC market remains tentative Should developers with a reservation of low-income housing tax credits (LIHTCs) wait for prices to increase before selling?
That was one of the questions posed to a panel of equity experts at the National Council of State Housing Agencies (NCSHA) 2007 Housing Credit Conference in San Francisco.
If a deal works with existing rates, a developer should do it, said Jeffrey Donahue, president and CEO of Enterprise Community Partners, Inc. No one knows where prices will go in the future, he said.
During the discussion moderated by Richard Goldstein, a partner at Nixon Peabody, LLC, speakers said the LIHTC market has stabilized in recent months but remains tentative. It wouldn’t take much for the market to get skittish, warned a speaker.
Meeting rural needs In another session, “The Rural Challenge,” panelists discussed ways to develop affordable housing in rural communities.
More developers should take advantage of the under-utilized U.S. Department of Agriculture Rural Development (RD) Sec. 538 program, said Michael Steininger, director of the multifamily housing processing division for RD. The program is compatible with LIHTCs.
One-third of all rural renters are “cost-overburdened,” said Lowell Barron II, president of The Vantage Group, an affordable housing development firm based in Fyffe, Ala. That means they are paying more than 30 percent of their income for rent and utilities.
Barron said there is a bias against rural housing. People just find it hard to believe that housing could not be affordable in parts of the country where the cost of living is lower than in urban areas.
A speaker noted that rural developments tend to be smaller in size than those found in urban areas. It may also be necessary to have scattered-site properties.
For example, a rural community might not have a demand for a 100-unit development, but might need 15 units.
Twenty miles away, another rural town needs 10 units. So it might not be practical to build one affordable development with many units.
“Having all the sites in the same county or municipality would be cheaper to operate in terms of management,” said Sherry Bossie, senior director of multifamily development for the West Virginia Housing Development Fund. “It’s important to make sure you’re building to the market so you can cover your costs. Find your target rent and work backwards.”