What changes have you made or plan to make in your qualified allocation plan (QAP)?

Sarah Carpenter, executive director, Vermont Housing Finance Agency: Vermont has one of the lowest vacancy rates in the nation, and pressure is continually put on our state’s rental housing. Because of the high cost of building in Vermont, little new market rental or affordable homeownership units are being built. The very lowest income feel this squeeze especially hard, so this year we adopted a change making the 130 percent basis boost only available to developers who target 10 percent of their tax credit units for people who are homeless or at risk of homelessness. By removing the ability to get the boost for just being in a designated development area or a qualified census tract, which covered the much of the state, we are trying to increase the number of units affordable for this vulnerable population.

Susan Dewey, executive director, Virginia Housing Development Authority: To continue funding as many affordable units as possible and to address upward trending of costs, VHDA implemented an abbreviated cost limit structure in 2013 and have fully applied cost limits in 2014. The limits are per unit and account for the geographic location of properties and different building types. If certified costs are above the limit by 5 percent or more, penalties will apply to future tax credit applications.

Douglas A. Garver, executive director, Ohio Housing Finance Agency: The competitive scoring structure was altered to promote policy initiatives that are important to the state. Controls were put into place to ensure that the agency will fund projects in several priority policy categories instead of concentrating on one project type.

Kim Herman, executive director, Washington State Housing Finance Commission: We made significant 2014 plan changes to address the capital needs of existing affordable housing stock and rehabilitation projects. Specifically, we clarified the definition of rehabilitation versus new construction; we refined the minimum threshold requirements for eligible rehabilitation projects; we established preservation and recapitalization set-asides in our metro and non-metro credit pools; and we refined the allocation criteria that apply to rehabilitation projects. Finally, we clarified the definition of projects that are at risk of loss as affordable housing. We made these changes to direct rehabilitation projects to the bond/4 percent credit program so we can use the 9 percent housing credits for affordable preservation projects that need deeper financial subsidies. The other significant change was to award incentive scoring points for projects that were nearest to or below the median project development cost in the 2014 round. This was a further step to reduce the total development cost of affordable housing in Washington and spread the resources to more projects.

Jorge ReyesTDHCA

Tim Irvine, executive director, Texas Department of Housing and Community Affairs: The biggest change to the QAP was made to implement changes in the department’s enabling statute coming from the 2013 Texas legislative session. The Texas Legislature passed legislation adding, as the required second highest scoring item for 9 percent tax credit applications, input from local governments (cities and counties) in the form of resolutions of support or no objection. This requirement has been implemented in the state’s 2014 QAP. A similar requirement was added as a threshold requirement for 4 percent tax credit applications.

Steve Matteo

Mary Kenney, executive director, Illinois Housing Development Authority: One of the major changes that we made to our QAP this year was to require developers that had rental subsidy to apply for 4 percent credits before they would be eligible to apply for 9 percent tax credits as part of the competitive process. Given the current surplus of tax-exempt bond volume cap, it made sense to see if we could make these transactions work with 4 percent credits and tax-exempt bonds. And given the cash flow for properties with rental assistance, we have found that a number of these transactions in fact could be structured this way with a relatively small amount of subordinate debt. In this way, we have been able to increase our overall production of units. This will be especially important as HUD continues to expand the Rental Assistance Demonstration (RAD) program, balancing the preservation of existing units while continuing to add new units to our state’s inventory of affordable housing.

Jolene Kline, executive director, North Dakota Housing Finance Agency: North Dakota’s need for affordable housing extends beyond the areas of oil and gas activity and has become a statewide issue. Because there is little to no vacancy across the state, NDHFA deleted a set-aside for energy-impacted counties in western North Dakota, allowing for the best projects to be funded wherever they are located. Scoring was tweaked in a couple of categories: More green features are required to be incorporated into a project to earn points, and greater recognition is given to those obtaining a nationally recognized green certification to encourage healthy, efficient homes for tenants; more points are provided for serving special-needs populations for which there is much unmet need in our state; and points were eliminated giving preference to projects located in rural areas.

Raymond A. Skinner, secretary, Maryland Department of Housing and Community Development: DHCD adopted a new QAP in fall 2013 that made substantial changes to the scoring system, changed threshold requirements to emphasize more objective standards, and limited applications to four Project Priority Categories to clearly communicate state preferences and allow us to focus federal and state resources on them. The new QAP will be amended in summer 2014 to incorporate recent statutory changes that consolidated several state-funded multifamily lending programs, which are often awarded in concert with low-income housing tax credits (LIHTCs). Many of these changes were made to make the state programs consistent with federal tax credit requirements.

Mary Tingerthal, commissioner, Minnesota Housing: Last year we transitioned from a three-month lead time between the QAP being finalized and the applications being due to a 14- to 15-month lead time. This will give developers more time to plan and develop their tax credit applications around the priorities specified in the QAP. Therefore, for 2015 we made no substantive changes, limiting our changes to clarifications and technical adjustments and allowing the 14 to 15-month lead time to come into place.

Cris A. White, executive director and CEO, Colorado Housing and Finance Authority: CHFA added a priority for developments serving communities impacted by natural disasters in the 2014 QAP. We did this in recognition of the fires and floods that devastated several Colorado communities last year. Ensuring that these communities can restore and provide new affordable housing stock is of critical importance to the state’s recovery efforts.

Many projects are nearing the end of their 15-year compliance periods. How are you addressing the preservation of these aging properties?

Carpenter: Thankfully Vermont had some foresight on this and adopted a requirement in 2000 that all projects receiving ceiling credits be perpetually affordable. Most of the developments that predate this policy have already reached the end of their compliance period, and we have successfully either signed a preservation agreement with the owners to continue their affordability or aided in the transfer of the property to an owner who will continue the requirements. For the bond credits, VHFA has a 30-year affordability requirement, and most are still within the state requirement. Those projects typically give a right of first refusal to a nonprofit. All projects in the state receiving funds from the Vermont Housing and Conservation Trust Fund must agree to permanent affordability.

Dewey: Owners with properties that are coming to the end of their 15-year compliance periods have the option to apply for 9 percent competitive credits or 4 percent credits with tax-exempt bond funding. Recapitalization with a new tax credit allocation occurs in a large majority of our existing portfolio. We do have a qualified contract application process in place; however, a full application has not yet been received.

Garver: The agency continues to set aside a significant amount of credits for the preservation of existing affordable housing. Existing housing credit projects are eligible for the preservation pool. Developers are encouraged through points in the QAP and preferences in the agency’s gap financing program for multifamily bond projects to submit a portfolio of small projects. These projects allow the agency to preserve a greater number of properties since they normally require limited resources to be repositioned for another 30 years. The agency is also loaning recycled Tax Credit Assistance Program funds to extended-use and late compliance period projects. The funds can be used for refinancing or capital improvements. The agency is also willing to entertain changes to projects during extended use, such as modifying rent or income limits in response to demand in the local market.

Herman: In addition to the changes noted above and together with the state Housing Trust Fund, we are contracting for a study of our affordable housing portfolios to assess the capital needs of the post-Year 15 properties. A secondary objective is to assess the financial health of their operations and determine what capacity exists to finance needed improvements. We want to develop a series of asset management trainings to assist owners to develop their plans for long-term operation of the properties. This is part of our ongoing effort to identify and quantify the preservation needs of existing affordable housing in Washington and consider adjustments in our financing programs to preserve existing affordable properties.

Irvine: Due to the continued growing need for new affordable housing in Texas, the majority of the department’s tax credit resources facilitate the development of new affordable housing. However, the QAP has a long-standing provision (again a statutory mandate) that requires the department to set aside 15 percent of the total annual allocation for “at-risk” developments. These developments include existing tax credit developments that are at the end of their 15-year compliance period. Although the agency has seen an increase in the number of applications for at-risk developments in the last year, the statutory language does not allow for an increase in the amount of set-aside for these developments.

Kenney: While IHDA has always had an emphasis on preservation in our QAP, we have not seen a significant demand for new tax credit allocations for Year 15 deals. Our portfolio of aging credit deals continues to maintain strong asset quality, which we attribute to conservatively underwritten deals and healthy funding of project reserves. In fact, many of these assets have been able to address recapitalization through the private sector.

Kline: Although allocations were limited to new construction, substantial rehab of uninhabitable rental structures and adaptive-reuse of existing non-residential buildings in the 2014 QAP in an effort to create as many new units as possible, if an applicant could demonstrate a habitable project was in imminent danger of being lost from the affordable housing inventory, an exception for acquisition/rehab could be made at the discretion of the agency.

Skinner: DHCD’s Rental Housing Works (RHW) initiative, which uses state appropriations to provide gap financing in conjunction with multifamily bonds and 4 percent tax credits, has proven to be a strong catalyst for preservation activities in the Maryland. DHCD has seen a dramatic increase in the number of units it has preserved since RHW was initially funded in FY 2013. In FY 2012, before the RHW initiative, about 23 percent of the units financed by DHCD were preservation. In FY 2013, that percentage jumped to 53 percent. To date, in FY 2014, the percentage is 62 percent. DHCD just received an additional $24.73 million in the RHW initiative for FY 2015. A portion of that will be used for the preservation of public housing using under HUD’s RAD program.

Tingerthal: In Minnesota we’ve found that deteriorating physical condition of tax credit properties is more critical than the risk of converting to market. We’ve had very few properties exit the program, and so our efforts focus on preserving the condition of the buildings, which is reflected in our QAP criteria.

White: CHFA has created new multifamily lending tools designed to assist with preservation and new construction. Our 9 percent LIHTC loan program, launched in 2013, provides a permanent finance option for borrowers receiving competitive LIHTC awards. The loan can be used in conjunction with our Housing Opportunities Fund (HOF), which was recently recapitalized with $3 million. HOF allows CHFA to buy down borrowing costs or fill financing gaps. We are also utilizing recycled bond proceeds to add additional resources to our product mix.

What is the most innovative move that your agency has made in the past year to advance the production of affordable housing?

Carpenter: VHFA, in partnership with several other agencies, advocated increasing Vermont’s state affordable housing credits in order to fund the replacement of dilapidated mobile homes with new Energy Star–rated manufactured homes. These credits provide equity for 0 percent interest-deferred second mortgages to help borrowers place a new home on owned land or in a park. Loan amounts can cover up to 50 percent of the installed cost of a new home, with a maximum loan amount of $35,000. VHFA allocates these credits to nonprofit housing organizations that so far have worked in 10 of the 14 Vermont counties. About half of these loans helped replace old, very inefficient mobile homes, and other loans were replacements for survivors of Tropical Storm Irene or first-time home buyers.

Dewey: VHDA has become very proactive at reaching out to the owners of properties that could be candidates to refinance with another lender to take advantage of low interest rates. VHDA contacts these owners and works with them to restructure their loan so as to provide the owner with a lower rate and thus a lower payment, while also preserving or even extending the affordability period for a development. VHDA is able to do this through the use of internally generated subsidy funds, and by restructuring the underlying financing structure if possible. By restructuring with VHDA instead of obtaining a new loan with another lender, the owner is also able to move much more quickly without incurring transaction costs.

Garver: We have developed partnerships with other state agencies, such as the Ohio Department of Mental Health and Addiction Services to leverage their resources and create more housing opportunities throughout the state. Also, we have focused additional resources, including recycled TCAP funds, into gap financing for multifamily bond projects. These projects help alleviate some of the demand in the oversubscribed competitive housing credit program.

Herman: In the multifamily programs, we have carried forward the maximum amount of unused bond cap from previous annual allocations and dedicated it to finance multifamily projects that combine bond financing with 4 percent housing tax credits. By using short-term bonds backed by an escrowed Federal Housing Administration (FHA) guaranteed loan or working with in-state lenders on private bond placements, we have significantly increased our financing of for-profit owned projects serving households under 60 percent of area median income. Of course it helps that the regional economy around Seattle is one of the fastest recovering in the nation. In the homeownership arena, we introduced a very successful taxable first mortgage and downpayment assistance program in 2013 that has doubled the number of home buyers we serve. We are still issuing mortgage revenue bonds at lower than market rates for special-needs populations, but we will continue the taxable program as long as it offers an advantage for first-time buyers.

Irvine: The department is working with a major university to develop educational tools for local governments to use in assessing proposed developments and deciding how to utilize their newly conferred powers to affect scoring.

Kenney: Well, as I mentioned previously, “steering” projects that can support more debt into our tax-exempt program has enabled us to create more units and to generate more federal housing resources (in the form of 4 percent credits) for our state. We have also employed a number of short-term financing structures that have allowed developers to achieve a lower rate over the long term making the project more sustainable. In addition, we have been very proactive in soliciting and securing rental subsidy commitments from our local public housing authorities (PHAs) to participate with tax credit developers in our tax credit program in order to provide deeper subsidies for Illinois residents who are disabled. Our outreach both locally and with the legislature has never been greater as we continue to try and access more resources to serve these populations. For the first time in our history, IHDA has been able to access capital funds for the production of affordable housing with a significant emphasis on supportive housing units and housing for veterans.

Kline: During the 2013 legislative session, our agency was given the authority to issue up to $20 million in state income tax credits for contributions into a fund to help finance affordable rental housing. This fund was also augmented with a $15.4 million general fund appropriation. Developer interest was high, and in less than six months all $35.4 million was awarded to projects that will create 705 new affordable rental units. In addition, contributor interest was also very high, and the full $20 million was raised by the end of 2013, a full year ahead of the deadline for issuing state income tax credits due in large part to aggressive marketing by NDHFA and our partners.

Skinner: DHCD has provided additional financing options within its tax-exempt bond program. This includes enhancing its new taxable/tax-exempt financing technique to help ensure the lowest possible cost of capital. This has worked well with DHCD’s RHW initiative. Providing a full of array of financing options has allowed DHCD to utilize all of its RHW funding, and this has resulted in the expansion of funding for the initiative for the third consecutive year. In addition, DHCD just completed the successful enactment of legislation to streamline multiple DHCD rental financing programs into one to ensure consistent requirements and processing that makes DHCD financing for rental housing more transparent and easier to use for both stakeholders and DHCD staff.

Tingerthal: We’ve built a strategic partnership with the housing advocacy groups and the business community throughout the state, which has created broad-based, bipartisan support for affordable housing. We’ve shaped programs that work for communities throughout the state, and there is a better understanding of our work and our impact. As a result, we were able to make the case that housing is critical community infrastructure that is worthy of support through both state capital investment bonding and appropriations. The 2014 legislature is now in session, and the governor’s capital investment bill includes $50 million in resources for affordable housing, with a focus on preservation and supportive housing. The House bill supports the same programs, but at a $100 million funding level that was promoted by advocacy groups. With either outcome, state support and resources for affordable housing continue to grow.

White: This year, CHFA has worked with leaders at the Colorado General Assembly to pursue reauthorization of the state LIHTC program. The program operated in 2001 and 2002, but was sunset due to declining economic conditions. Given the recent natural disasters, increased pressure on the rental market, and cuts at the federal level, the demand for resources is unprecedented. We are grateful to our bill sponsors, Rep. Crisanta Duran and Sen. Jessie Ulibarri, for their interest and advocacy to move this idea forward.

What market trends are you watching and developers should be watching?

Carpenter: Similar to the priority Vermont’s 2014 QAP put on housing for extremely low-income households, we see increasing demand and political pressure to serve these households with programs, like the housing credit program, that were not necessarily designed to serve without a subsidy. At the same time, the available subsidies for these households are disappearing, and waiting lists continue to grow or remain closed. How HFAs, in partnership with social service agencies and other partners, support these households to prevent them from becoming homeless or rapidly rehouse them despite very limited resources, is a major challenge with no easy answers.

Dewey: I see two major trends in the rental market right now. One is the Generation Y population, which has been driving much of the growth in rental demand in recent years and which may stay in the rental market longer due to current economic conditions. As this group ages and demand levels off, we want to make sure that we’re not creating excess units targeted to a narrow demographic that aren’t marketable to other age groups as well. The other issue is that we’re seeing increases in empty nesters and early retirees as renters. As the renter population ages, developers need to be aware of different preferences, such as universal design and mobility features that can accommodate the needs of people as they age.

Garver: Housing for an aging population and persons with special needs in an integrated setting are two trends that are growing in Ohio. Developers should also be more aware of local planning priorities as communities increase their focus on redevelopment and targeting scarce public resources. Finally in some areas of the state, the construction of market-rate apartments is booming. If these markets become overbuilt, they will impact the rents of the affordable housing market. This highlights the importance of understanding site location and ensuring that a property is designed to successfully compete in a market.

Herman: In Seattle itself, we are watching rapid rent increases, escalating construction and underground parking costs, and expensive building sites that limit affordable housing opportunities. The bulk of our for-profit developer business is outside of Seattle in the smaller metro cities where land is cheaper and parking is still above ground. We expect our demand for bond/4 percent financing will continue there until the rental market slows down significantly. We are still doing some 9 percent credit deals with nonprofit developers in the Seattle market but only in cooperation with other public funders that can provide subsidies. Across the rest of Washington, the economy has not improved as fast, and we are primarily working with nonprofit developers using the 9 percent credit program. We have a few nonprofit developers using the bond/4 percent program in smaller metro areas, and we are working to increase the use of this program among nonprofit and for-profit developers to use our excess bond cap as noted above.

Irvine: Continuing very robust economic growth in Texas is making affordability a huge issue, especially in high-growth metropolitan areas and in areas of oil and natural gas production.

Kenney: The credit markets are very interesting right now because of where we are in the Community Reinvestment Act (CRA) cycle. We see strong competition for credits and a willingness from banks to invest at unusual yields to meet their CRA obligations. In addition, we continue to see exceptionally strong demand for project-based Sec. 8. The recent increase in rents and relative affordability is also a disturbing trend.

Kline: Our state is experiencing a very strong economy, but this brings challenges on the housing side as demand continues to exceed supply. Land is at a premium, construction materials are in high demand, and laborers are in short supply; all of these factors are causing the end housing product to be unaffordable for many consumers. Personal income growth is strong for wage earners, but households on fixed incomes are struggling to pay escalating rents and the cost of new homes being built is often beyond the affordability of many potential home buyers.

Skinner: DHCD, along with its developer partners, continually assess the financial markets to achieve the lowest possible interest rates and most innovative financing techniques. DHCD regularly watches market interest rates, yield curve, raise-up for tax credits, market analysis of supply and demand for affordable housing. Clearly changes at the federal level are important— including housing finance reform and funding for HUD programs.

Tingerthal: Federal resources for affordable housing continue to shrink while the need for affordable housing continues to grow. Incomes for low- and moderate-income families have been stagnant, while there is upward pressure on rents. More than 500,000 lower-income Minnesota households pay more than 30 percent of their incomes for housing, which represents 57 percent of all lower-income households in the state. We must use our limited resources as effectively as possible to meet the growing need. We’re watching the rental vacancy rates very closely, as they dropped in the Minneapolis-St. Paul metro area from 7.3 percent in the fourth quarter of 2009 to just 2.5 percent today. These low rates are pushing up rents and reflect this growing need for affordable housing.

White: The Denver metro region’s rental market has a number of new market-rate rental units in the pipeline. As these units come online, we will be watching the impact these units will have on the affordable rental housing market. Local expert opinions differ as to whether or not these new units will translate into a market shift resulting in increased affordable housing options for Colorado’s low- and moderate-income households.

What are your biggest concerns regarding tax reform and/or housing finance reform?

Carpenter: We are very concerned about our ability to access low-cost, long-term capital. Vermont is not a large market, and while our state weathered the housing market turmoil better than most, we are still greatly impacted by the drying up of long-term housing investments. HFAs want financial system supports to insure access to credit for all creditworthy borrowers and to serve the scale of affordable housing needed in communities in small or rural markets. To do this through finance reform, the state HFAs should be given preferred access to whatever securitization and guarantee programs are created. To do this through tax reform, the key tools available to create affordable housing (like 9 percent and 4 percent housing credits and private-activity bonds) must be preserved and strengthened.

Dewey: Our biggest concern for tax reform is the fate of both the LIHTC program as well as private-activity bonds, given their central role in making affordable housing possible in Virginia and across the country. With government-sponsored enterprise (GSE) reform, our concern is that the important role state HFAs play in financing both homeownership assistance for first-time home buyers and affordable rental developments be reflected in whatever new securitization structure emerges in Washington. Over the last 20 years, HFAs have become more involved in direct securitization of loans and not simply the traditional sale of tax-exempt bonds, so we must ensure our ability to continue being significant players is not critically impacted by the structure created by GSE reform.

Garver: We are pleased with the inclusion of the housing credit program in recent tax reform proposals and grateful to the affordable housing community for their work in communicating the benefits of the housing credit. However, all interested parties must remain vigilant as reforms are debated over the next couple of years and emphasize the effects of any changes. For example, some of the recent proposals will likely reduce the amount of housing developed, such as the elimination of the 4 percent credits. Also any changes to the tax code that affect the demand and pricing for Housing Credits, directly or indirectly, will impact the amount of equity available for development and squeeze other financing sources. Another concern is both tax and housing finance reform may affect tax-exempt bonds, which are widely used by state HFAs as a source of capital for multifamily projects and home buyer mortgages and are beneficial to many low- and moderate-income persons across the country.

Herman: With regard to tax reform, our biggest concern is the proposal to end the private-activity bond programs and the 4 percent credit program. More than 42,000 units (46 percent) of our multifamily portfolio were built using private-activity bond authority and the 4 percent housing credit. Losing those resources through tax reform would be a terrible blow to our programs. The small increase proposed for the 9 percent program would not even come close to filling the gap that would be created by terminating private-activity bonds and 4 percent credits. In addition, we would lose the ability to do mortgage revenue bonds and mortgage credit certificates for homeownership, which would be devastating! On the GSE reform front, we have made great use of Fannie Mae in both our single-family and multifamily programs, and, of course, we did not do any of the poor quality loans that caused the financial collapse. More than 17,000 units (41 percent) of our multifamily production involved the participation of either Fannie Mae or Freddie Mac. Losing the ability to work with secondary market guarantors like them would be another serious blow to our affordable housing programs. So, we are extremely concerned about what will come out of GSE reform. We explored both of these issues in our January 2014 newsletter, “Federal Housing Policy at the Crossroads.”

Irvine: State law in Texas prohibits state employees from any form of lobbying. Therefore, we respectfully decline any comment on proposed federal legislation that could be considered lobbying.

Kenney: We were horrified to see that the discussion draft on tax reform proffered by Rep. Camp eliminated tax-exempt bonds and the 4 percent credit. Tax-exempt bonds are the cornerstone of our work. The elimination of this tool would have a devastating effect on HFAs and their ability to fulfill their mission—not just in providing affordable rental opportunities but also as a key tool in providing safe and affordable opportunities for homeownership. The Johnson-Crapo bill on housing finance reform is also cause for concern. We would like to see more explicit requirements for those guarantors benefitting from the federal guarantee to serve underserved markets and to ensure that a fixed percentage of the units they help finance are affordable. The reform needs to address the nation’s affordability needs, not just the liquidity needs of the market.

Kline: The potential for elimination or reduction of effectiveness of LIHTCs or mortgage revenue bonds are obviously of biggest concern. To continue to make the LIHTC an efficient tool, a permanent rate fix is needed. On housing finance reform, preserving the 30-year fixed-rate mortgage and ensuring adequate and affordable access to the markets for HFAs is needed. With unprecedented growth in the state in the past few years and projections for many more years of expansion, affordable housing is of critical importance. State HFAs have been very effective at leveraging these limited resources for the greatest impact. HFAs need to continue to have the tools to do the job.

Skinner: DHCD wants to make sure that any tax reform package retains the LIHTC and the tax-exempt bond programs. These are the engines that make preservation and creation of affordable housing possible. Any changes that reduce the value of the credit, or that makes the programs more difficult for investors to use, will undermine the ability to meet the tremendous need for affordable housing. With regard to housing finance reform we want to make sure that the system going forward provides a robust secondary market accessible to HFAs and has a strong affordable housing mission.

Tingerthal: If tax reform is done for the purpose of raising revenue, I fear proper consideration may not be given to the results of the reform beyond the increased revenue it may produce. Tax-exempt bonds and the LIHTC provide tax incentives for the private sector to invest in affordable housing, and if tax reform eliminates or reduces incentives for the private-sector investment without new investment of public dollars to offset that loss, there will be less affordable housing. If Fannie Mae and Freddie Mac are eliminated, another entity must be created that carries on their function of providing a strong secondary market that provides a stable flow of capital to all housing markets, even during economic downturns, with a responsibility to support affordable housing.

White: Preservation of both the 9 percent and 4 percent LIHTC programs and the tax-exempt status of private-activity bonds are at the top of CHFA’s priority list. These resources are the engines that fuel the bulk of affordable housing transactions across the nation. There are no other resources available to fill their role should they be eliminated or impaired by tax reform. Ensuring that stable housing is available for all low- and moderate-income households nationwide is critical to the success of not only the industry’s work, but also to advance any meaningful change in health care, education, or transportation.