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Increasing Local Revenues for Affordable Housing Programs

Increasing Local Revenues for Affordable Housing Programs. The Alliance for Housing Solutions Eighth Annual Leckey Forum October 22, 2010. Survey & Case Study. Survey: Seattle, WA* Charlotte, NC* Minneapolis, MN* Alexandria, VA Boulder, CO Palo Alto, CA Pasadena, CA

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Increasing Local Revenues for Affordable Housing Programs

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  1. Increasing Local Revenues for Affordable Housing Programs The Alliance for Housing Solutions Eighth Annual Leckey Forum October 22, 2010
  2. Survey & Case Study Survey: Seattle, WA* Charlotte, NC* Minneapolis, MN* Alexandria, VA Boulder, CO Palo Alto, CA Pasadena, CA * Indicates selected for case study.
  3. Major Findings Affordable housing is an issue in each community. Affordable housing projects require complex financing across multiple sources. Some states are more active in financing affordable housing than others. Affordable housing production includes both new and rehab projects.
  4. Housing Trust Funds Relatively modest resources come from a wide range of sources. Used primarily for gap financing, wrapping around private, state, and federal funding sources. Generally allocated based on “rounds” or proposal invitations rather than unsolicited requests or staff initiated projects. Subject to appropriations and compete with other local needs.
  5. Support for Affordable Housing Programs are not portrayed primarily as social equity or income redistribution programs. Program rationale based on…. Economic development / workforce availability. Neighborhood development and stabilization. De-concentration of poverty and its adverse societal impacts. Objective measures of needs.
  6. Strategies to Consider State Coordinated campaign to increase state funding for affordable housing, especially through state bonds. Local Engage in a conversation about funding affordable housing in the Capital Improvements Program along with other community infrastructure projects. Levy special property assessment for affordable housing. Levy special property assessment for capital, of which housing would be a component. Aggregate federal funds into a more focused affordable housing program (e.g., CDBG).
  7. Survey Resultsn = 7
  8. STATE HOUSING TRUST FUNDS NC, MN, & CA report a state housing trust fund; VA & CO do not. States with a Housing Trust Fund report that public discretionary funds have been committed beyond federal dollars.
  9. LOCAL GOVERNMENT AFFORDABLE HOUSING PROGRAMS All responding local governments have an affordable housing program. Minnesota, Colorado, and Washington State give local governments the authority to raise taxes for this purpose. All responding local governments except Charlotte, NC, and Seattle, WA, have the authority to require a percentage ofaffordable housing in new housing developments.
  10. Authority & Policy Inclusionary authority (5) Inclusionary requirement (3) Inclusionary level – 15% (2 responses)
  11. Funding Size & Sources Sources of funds include: Developer contributions (5) Inclusionary zoning (3) General fund revenues (3) Dedicated property tax (3) Federal funds (CDBG, Home, etc.) (3) General Obligation Bonds (2)
  12. Production
  13. Program Emphasis New construction (7) Rehabilitation (7) Permanent Supportive Housing (7) Transitional Housing (6)
  14. Features Application Process RFP (5) Open (4) Type of support Loan (7) with flexible terms Grants (4)
  15. Major Challenges Insufficient funding Availability of land Development costs Constraints on federal funds NIMBY
  16. Case Studies:SeattleCharlotteMinneapolis
  17. Seattle - Profile Population: 598,541 Overlapping jurisdiction: King County Total city budget: $3.85 billion Total city general fund: $906 million Affordable Housing Program budget: $42 million (including administration) Land area: 83.9 sq. miles Unemployment: 8.9%
  18. Seattle – Major Findings Property tax levy is major funding source. Annual goal for rental production is 238 units. In 2009, the Office of Housing awarded funding to create or preserve 329 units. Consolidated funding approach aligns the request with the most appropriate funding mechanism.
  19. Seattle – Size & Source of Fund Property tax levy = $20.7 million per year for 7 years. HOME and CDBG funds. Document recording fees = $200,000 - $400,000 annually. Section 8 housing vouchers provided by the Seattle Housing authority = 500 vouchers for the 7-year period.
  20. Seattle – Other Observations Dependence on Housing Property Tax Levy creates vulnerability. Continued voter support, however, suggests is may be a sustainable. Seattle Special Levy election results: Year 2009 – 67% Yes Year 2002 – 54% Yes Annual average cost per household is $67.
  21. EMC Resident Survey Even in the current economic environment, a strong majority of Seattle residents support continuing the low income housing levy. Seattle residents overwhelmingly believe that it is important to continue investing in low income housing programs and assistance. Most residents agree that investing in low income housing is a good use of taxpayer dollars and has broader positive impacts for the city and its residents.
  22. Seattle Public Survey continued There is particularly strong backing for programs that provide broad support for residents to help them become self‐sufficient and succeed in staying housed. Housing for low income seniors is also a strong priority. Residents place a higher priority and intensity on housing for homeless families and emergency rental assistance than on providing loans to first‐time homebuyers or foreclosure prevention programs.
  23. Charlotte – Profile Population: 728,254 Overlapping Jurisdictions: Mecklenburg County Total City Budget: $1.65 billion Total City General Fund: $445.5 million General Bonded Debt % of Property Value: 0.51% Debt Service % Non-Capital Expenditures: 18.3% Land Area: 299.2 square miles Unemployment: 10.1%
  24. Charlotte– Major Findings The Housing Trust Fund is resourced almost completely by city-issued general obligation bonds. Bond authorizations are placed on the ballot every two years. A citizen advisory board makes recommendations on the use of the Housing Trust Funds.
  25. Charlotte– Size & Source of Fund Government obligation bonds Pending bond referendum: $10 million if FY 2011 $5 million in FY 2012 HOPE VI and HOME funds Modest program revenue = $100,000 annually
  26. Charlotte– Other Observations Bond referenda is primary funding source, so is dependent on voters. Debt service for all GO bonds is paid through as separate property tax levy. Housing competes with other infrastructure capital needs.
  27. Charlotte Election Returns Charlotte Bond Referendum 2008 $10 million 63% Yes 2006 $10 million 58% Yes 2004 $15 million 62% Yes 2003 $20 million 60% Yes
  28. Minneapolis - Profile Population: 385,592 Overlapping jurisdiction: Hennepin County Total city budget: $1.28 billion Total city general fund: $371.6 million AHTF: $10 million Land area: 54.9 sq. miles Unemployment: 6.2%
  29. Minneapolis – Major Findings The Affordable Housing Trust Fund relies entirely on federal funds. Funds allocated through competitive process. Developers must create a funding plan across numerous sources, the HTF providing final gap funding, typically between 8% and 15% of the total development cost.
  30. Minneapolis – Size & Source of Fund Housing Trust Fund 1/3 CDBG 1/3 HOME 1/3 local In 2009, for rental housing the Trust Fund contribution =$4.8 million. Leveraged funding = $18.4 million.
  31. Minneapolis – Other Observations City receives approximately $40 million in Housing Revenue Bonds from the Minneapolis Housing Finance Agency. The city uses this allocation for multi-family or single-family mortgage products. State bonds lower the cost of financing, but still require an income stream for repayment.
  32. Overall Case Study Conclusions There is no free money. Local resources are a zero sum game. Achieving additional funding for affordable housing is a political process. Problems solved by more affordable housing need to be (and are) more than social equity. Coalitions of support are needed.
  33. Local Strategies to Consider(from earlier in presentation) Engage in a conversation about funding affordable housing in the Capital Improvements Program along with other community infrastructure projects. Levy special property assessment for affordable housing. Levy special property assessment for capital, of which housing would be a component. Aggregate federal funds into a more focused affordable housing program (e.g., CDBG).
  34. Essential Elements of Advocacy WARNING: Dedicated funding streams limit political and administrative flexibility to address changing or emerging needs; consequently, financial best practices discourage earmarked funding. Champions from across sectors, including elected and appointed officials. Good needs assessment. Broad-based coalition. Broad-based public support.
  35. With support that is deep and broad, increased funding for affordable housing is possible.
  36. Contact information: Ron Carlee, Chief Operating Officer/Executive in Residence, ICMA, rcarlee@icma.org; 202-962-3647 Evelina Moulder, Director of Survey Research, ICMA, emoulder@icma.org; 202-962-3534
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