A Day For Affordable

Yesterday, on Tuesday October 28th, two important affordable housing bills were passed by the District City Council. The Disposition of District Lands, a bill that provides an affordable housing mandate on all District government owned land being disposed of for development. The other bill, The Affordable Homeownership Preservation & Equity Accumulation Act of 2013, reduces resale restriction in distressed parts of the city, while providing a recapture & recycle model for the city that recaptures District subsidies and recycles them for the production of more affordable housing.

Both bills take steps in the right direction in addressing key housing needs. However, the Gray administration expressed concerned with the Disposition of Public Lands bill, feeling the affordable housing mandate might tie the city’s hands. Originally the CFO would be able to waive the affordable housing mandates based on certain criteria, something the mayor believes should stay with the executive. However, amendments were added giving the District Council final oversight. In response to criticism of the Disposition of Public Lands, introducer Kenyan McDuffie’s said “This bill was never intended to be a panacea,” McDuffie said, responding to the administration’s criticism. “It’s just one more tool in the toolkit to ensure we’re creating housing across income levels.”

The Affordable Homeownership Preservation & Equity Accumulation Act of 2013 took a big step in providing more access to the benefits of traditional homeownership, such as the access to equity, and incentive for more affordable homeownership development in areas of the city that need it most. This bill also provides an innovative measure to the District that recaptures all pre-existing equity in a home and recycles it into the development of more affordable housing, having an effect far in the future.

Both of these bills are much needed tools the District can use to address its affordable housing disparity and needs. These actions show a concerted effort from advocates, constituents, and elected officials to make affordable housing available and workable for District residents and neighborhoods.

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Ownership is still cheaper

According to recent data released by Trulia it is still significantly cheaper to own in the DC region then to rent, 34% to be specific. This has been consistent all year and is slightly below the national average of 38%. Jed Kolko, chief economist for Trulia provides in-depth analysis providing further breakdown. For instance, it is 25% cheaper to own in Fairfax, VA than it is to rent, while it is 33% cheaper to own in the District of Columbia.

Trulia calculates this by using several factors, which includes average utility bills and tax deductions amongst other things, but one very important factor that was discovered was that the owner must remain in their home for at least 7 years. Trulia used many different variables to make these calculations like changing the length of the mortgage or type of loan, and every time ownership beats out renting.

This data lends significant strength to the solution of homeownership as a vehicle to help low-to-moderate income individuals achieve economic mobility. The District of Columbia already has programs in place to help lower income individuals purchase homes, like the HPAP program and development subsidies, but more can be done on the side of our financial institutions. A piece of legislation, the Community Development Amendment Act of 2013 would incentivize community development by evaluating the community development plans of financial institutions that apply for financial contracts with the city, and assigning contracts partly based on those plans. Now is the time for the city to lead the way in promoting economic mobility and holding financial institutions accountable!

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Touring With Councilmember Grosso

 

Grosso 1

This weekend, Manna, Inc. had the privilege of touring affordable developments and meeting with affordable homeowners with Councilmember David Grosso.  Throughout the experience the councilmember and his staffer were able to hear first hand from constituents what homeownership has meant for their families, as well as some of the difficulties associated with District homeownership programs.

Grosso2At our first tour stop, Councilmember Grosso met with Pam Johnson, an affordable homeowner in Historic Anacostia.

Grosso3The councilmember also met with Natalia Otero, an affordable homeowner in Columbia Heights, hearing what homeownership means to her family.

 

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The Disappearance of Affordable

It’s known that housing cost in the District of Columbia are through the roof, but the Urban Institute took it a step further, through illustration, showing the rapid decline in housing affordable throughout the District. According to the study there has been an almost 180 degree turn in the percentage of apartments in the District considered affordable compared to higher end ones. Specifically in 2005, 17 percent of all rental units went for under $500 in 2012 dollars, while 14.9 percent charged over $1,500. These numbers changed dramatically over a seven year period. In 2012, those sub-$500 units made up just 11.3 percent of the total stock, while the $1,500-plus ones were up to 35.9 percent of the total.  The report also shows that between 2000-2011 the stock of affordable apartments, those costing no more than 30% of a lower income individuals income, had plummeted.

Simply put, prices are going up and the stock of affordable units is going down. One of the biggest problems that has come from this is the rapid flight of affordable housing and section 8 building owners, who can barely wait  for their affordability obligations from government subsidies to expire so they can raise rates. While this loss of affordabilty from subsidized units has been a huge hit, the lack of adequete affordable developments has pushed rents up as more and more individuals migrate to the District. In order to truly address this crisis the District government must find creative ways to incentive subsidized development owners under affordabilty contracts, while providing a boost to affordable development.

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Time For Change?

Sometimes all you need is a little momentum. In a recent article by Alan Jenkins of Rooflines, as a country we are in prime position for social change. and poverty is the issue atop the list. A growing disparity between the social classes, corporations involvement in the political system, and congressional gridlock all add to the growing public awareness of the issue. The Opportunity Agenda, has recently released a study of American poverty in the public discourse. According to the study, 65% believe that reducing inequality and poverty should be a top or high government priority. Also, 60% believe that our country would be better off if the gap between rich and poor shrank.  The study also shows that over 80% of Americans support legislation that helps low-wage workers have more access to good food, early child care, and opportunities for higher education.

Our author follows this call for change by identifying many of the traps that hinder progress. The American public’s consciousness is much higher than our governments and political parties, relying on it would be a great hindrance to progress. Waiting too long was also another primary concern of our author, the momentum were seeing today is the result of many issues converging at the same, unemployment, inequality, and the environment.

As access to opportunity shrinks and inequality grows, in the District we have an opportunity to make progress. Through our voices we have the power to make change possible, the only question is. will we?

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Failure By Flagstaff

In recent months many factions of the financial industry have been penalized for the participation in the mortgage crisis of 2008, but in recent news the Consumer Financial Protection Bureau has narrowed its scope and taken aim at the mortgage servicing firms who play a large role in whether struggling individuals either lose their home or receive extra time to rectify their situations.

In its first act of enforcement under new mortgage servicing rules that began this year, the consumer financial regulatory bureau and Flagstar bank reached a $37.5 million settlement because of accusations the bank prevented thousands of people from accessing tools that would have helped them escape foreclosure. Flagstar has been accused of withholding information from clients, stringing clients along for months, then wrongfully denying them loan modifications, they also failed to inform clients that documents critical to the approval of their modifications were needed. Richard Cordray, the director of the consumer protection bureau said “Flagstar took excessive time to process borrowers’ applications, did not tell them when their applications were incomplete, denied loan modifications to qualified borrowers, and illegally delayed finalizing permanent loan modifications”

One of the biggest concerns generated from this situation is the lack of options or even community oriented departments in these large financial institutions, focused on helping clients find the best option. Here in the District we have an opportunity to provide an incentive to some of these financial institutions. The Community Development Act of 2013 would incentivize more community development from financial institutions, by evaluating their community development plans and factoring those evaluations into which banks secure financial contracts with the city. This latest settlement by Flagstar shows our financial institutions need a little push in the right direction; a Responsible Banking Ordinance seems like the perfect start.

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Financial Crisis Conundrum

There have been many long term consequences following the financial crisis of 2008, but recently, one that has taken the forefront of the discussion is the growing divide between economic classes and the disappearance of diverse communities. One of the largest contributors to this issue is the severe credit crunch that followed the crash. Today, black homeowners in America are so likely to return to renter status that all the gains made by blacks in homeownership since the 1970s have been wiped out. Black and Hispanic households have gained the least from the recovery, making it all but one-sided.  While the credit squeeze has significantly contributed to the overall problem, individuals of color already lagged behind due to factors like lack of access to good schools, which in large part reside in more affluent communities, etc. This greater economic stratification has only widened the gap.

 

In a paper released earlier this year, researchers Amine Ouazad and Romain Rancière show that the credit boom leading up to the crash allowed many families of color to move into more mixed-income and culturally diverse areas, but that also caused white borrowers to move out as well, which lead to more isolated black communities. The paper details how people of color tend to become homeowners in their current neighborhoods or diverse communities, while white individuals usually use homeownership as an opportunity to move into predominately white communities.

 

The District is very special in this regard. Due to a cultural and economic boom, the city has become a melting pot filled with homeowners from all walks of life. However, in order to maintain diversity, the city must be very strategic and targeted with its resources, ensuring an adequate amount of affordable housing is available. In an article written by Cheryl Cort for Greater Greater Washington, the author speaks on the city’s history of using public land for affordable development, and how this practice has waned. She references a current development proposal that would require no affordable development in a more affluent area of the city, but allow the developers to produce the units in a more distressed area of the city. While this allows the developer to develop more affordable units, it strips potential affordable owners of the access to transit, employment, and education opportunities that are more plentiful in more affluent areas of the city, and are critical to economic mobility. The choices in this situation are not easy, and the District also needs to be mindful of enacting policies that allow lower income and minority homeowners to have access to good credit as well as access to growing equity in their homes. The District is in a great position and must leverage all of it resources to produce as much affordable housing as possible. If not, it runs the risk of ending its cultural and economically diverse renaissance.

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The Future of Community Wealth Building

Since the financial crash of 2008 many low-to-moderate income families have had a hard time getting back on their feet during these years following. One city is taking an innovative approach to helping families in their community build wealth. Founded on the rich legacy of Maggie Lena Walker, the first woman of any race in the nation to charter a bank, the City Richmond is trying an innovative approach called the Maggie L. Walker initiative for Expanding Opportunity and Fighting Poverty. The main focus of the program is developing an Anti-Poverty Task force comprised of key administrators, issue experts, non-profit and business stakeholders, and community leaders to oversee the development and implementation of programs such as an Affordable Housing trust fund for the development of more affordable housing and a revamped workforce development program. There will also be a focus on developing rapid bus transit and the establishing of a citywide scholarship program to increase the access to college and vocational education. A Citizen Advisory Board will also be assembled to ensure poverty stays at the top of the agenda and that persons living or working in or near poverty have a seat at the table.

 

According to columnist Michael Paul Williams, this innovative approach aims to “undo centuries of Richmond history, including a poverty infrastructure built by ill-advised or malevolent public policies and sustained by latter-day indifference.” Policies like redlining and discriminatory housing covenants made it difficult for people of color to become homeowners following WW!!, hampering their wealth creation. Although this initiative has yet to fail or succeed, fresh ideas like these are needed to truly combat the current economic crisis. The District of Columbia is currently facing a homelessness crisis, as well as an affordable housing crisis. In addition to common sense policies focused on wealth generation for low-to-moderate income families and the development of more affordable housing, fresh ideas like the ones in Richmond are key to addressing these crises. DC is way ahead financially and programmatically (we have a huge Trust Fund, Workforce Development programs funded, etc.), but what’s unique is a stated focus on wealth building and the connection between all of the issues and a board of leaders and citizens to push the initiative forward. The resources are in place, but a commitment to fresh ideas and community development are needed to ensure the District’s sustained economic and cultural boom.

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Mounting Frustration

The District’s plan for revitalized mixed-income public housing through the New Communities Project has not moved forward, and this has frustrated residents. The New Communities project was first developed in 2005 as a way to redevelop aging public housing facilitates into mixed-income developments, two of them being Barry Farms, located in Ward 8, and Park Morton, located in Ward 4. None of the four projects are close to completion, and the developer originally assigned to the Park Morton project was given the boot this past spring. These deficiencies have led to a high level of frustration among residents. This situation has been especially disruptive because many residents have been displaced or relocated due to the development, leaving boarded up apartments in its place. In the past, meetings between developers and residents have been very tense. In a meeting last summer about the Barry Farms project, developers were met by protesters and tired residents, and police intervention was called to bring peace. Because of these events, meeting rules have been changed and very little details are now disclosed early on – meetings have simply become a meet and greet between residents and prospective developers, with plans for a panel to choose a developer and hammer out details with residents and others afterwards. Other issues, particularly with the Lincoln Heights development in Ward 7, include inappropriate financing assumptions and timelines. The New Communities Project needs a revamp, and there is no time to waste. Perhaps a Council Committee dedicated solely to housing, as Councilmember Grosso suggested last week as well as other actions from the DC Executive would help move this and other affordable housing processes along.

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Rapid Solutions

As the city continues to grapple with its affordable housing crisis and the sharp rise in the homeless population, rapid rehousing has been one of the few bright spots. However, a recent change in how the program is administered could create a self-re-enforcing system of continued homelessness and a growing homeless population. Due to a recent change all rapid re-housing subsidies end after one year; prior to this change the subsidies where reviewed by a case manager every three months.

In a Washington Post article shedding light on this issue, the author spends time with Nkechi Feaster, someone who would be considered a rapid re-housing success, but is currently on the brink of homelessness. As a recipient of the District’s rapid re-housing program Ms. Feaster was given a full housing subsidy to cover her monthly rent of $950 and her case was reviewed every three months. The next year, after she found a temp job as a community organizer paying $1,000 each month, the city asked her to put half of her income toward rent.  Shortly after she began paying her rent in full, her temp position expired and she was once again facing financial hardship. Instead of helping families break the cycle of poverty, the program can contribute to very briefly delaying it. A program first developed in Los Angeles and Minneapolis in the 1980′s, rapid re-housing was intended as a crisis intervention program, not a tool to break generational poverty. Next year the city has appropriated $20 million to rapid re-housing, while funding for homeless family services is being reduced by $6 million.

According to the Interagency Council of Homelessness families displaced are expected to increase 16% this winter and there is still huge demand for affordable housing in the city. Rapid re-housing is a phenomenal tool for quickly assisting displaced and homeless families, helping them find housing in difficult times, but to truly curb homelessness it must be paired with complementary programs that helps move families out of poverty and into stable housing. The city needs to continue to focus on funding the Interagency Council on Homelessness’ plan to end chronic homelessness by 2020, creating new units through the Housing Production Trust Fund (HPTF) whose rents are supported by the Local Rent Supplement Program (LRSP). As CNHED testified in May 2014, “ If we instead continue to focus our attention only on the “crisis” of homelessness and fail to increase the stock of affordable housing, we continue to fail these families and individuals, providing them with only an overcrowded shelter system, and no real strategies to prevent homelessness or provide permanent affordable housing.” Rapid re-housing is a great tool if used strategically, and can only work alongside these other production tools.  All of these tools, used correctly, will be greatly needed in the city’s battle to curb the homelessness crisis.

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