Environmentally Sustainable Affordable Housing: The Costs and Benefits

eco housing

 

There is a growing environmental sustainability movement in the US, and DC is no stranger to it. In fact, DC has one of the highest green standards in the country, due in part to former Mayor Gray’s Sustainable DC initiative that went into effect a few years ago. When it comes to new housing construction in DC, many new developments offer sustainable features in their units. Likewise, it is becoming increasingly common for owners of existing properties to take steps towards energy efficiency as well, whether it is installing water efficient toilets, or placing solar panels on their roofs. Yet, many sustainable features are costly. As a result, when you think of an “energy efficient home” the terms “low income” or “affordable housing” usually doesn’t come to mind. However, DC has entered into a new pilot program that will help bridge affordable housing with sustainable design in one particular development. I hope the project will provide insight into how to balance the cost of incorporating environmentally sustainable design when constructing affordable housing.

DC recently received an award from the International Living Future Institute to build sustainable affordable housing.  This organization’s “Living Building Challenge,” is a pilot program that will provide DC with free technical assistance and expertise to equip affordable housing with green technology. Six cities will participate in the program this year. DC’s award will allow the District to develop ten to 15 energy efficient townhomes on a site in the Deanwood area. Under the program, the site will be “net-positive,” so it will create more renewable energy than it uses. The development will incorporate solar panels and smart-design features to help achieve this goal. It is estimated that this project may take up to two years to complete, and the unit’s efficiency will be monitored for the entire first year that residents live there before it can “receive green certification under the Living Building Challenge”. Despite this lengthy process, I am excited about DC entering into this program, and I am interested in what it will teach us about developing sustainable affordable housing.

Here at Manna, we recognize the importance of equipping our affordable homes with environmentally efficient technology, and we try to do so whenever possible. The standard benchmark that we meet is Enterprise’s Green Communities Criteria , which sets criterion regarding water conservation, energy efficiency, and integrative design (just to name a few). Some of the sustainable technologies we have installed in our developments include energy efficient windows, which provide our homes with both ventilation, and warmth, and translate into reduced energy costs for our residents. We were also able to install solar panels on the roof of the Whitelaw Hotel Apartments at 13th and T Streets NW, with the help of a grant we received from Neighborworks. In addition, there are a lot of environmentally sustainable measures we have to take, due to DC law. For example, as part of compliance with DC storm water management regulations, we will be installing a green roof at an apartment building undergoing rehab on Kennedy Street NW. However, it is not easy to finance these sustainable advancements; there is an art to finding funds to pay for the additional costs. There is a need for both the public and private sector to provide more resources. Nevertheless, once the financial obstacles of making affordable housing environmentally sustainable are overcome, the benefits are enormous, both on the individual and communal/public level.

According to the GW Solar Institute, although low-income households use less energy than affluent households on average, electricity costs make up a much larger share of a low-income households’ budget compared to their counterpart. The cost of electricity accounts for 5.7 percent of the median low-income family’s budget, compared to 1.9 percent of other families’ budgets. Therefore, providing access to solar energy and other sustainable features for low-income communities could actually generate wealth and meet a large percentage of their power needs. It is estimated by the George Washington Solar Institute that if all low-income households went solar, their annual budgets would increase between $17.9 billion and $23.3 billion.

If people are spending less money on energy, they will have more money to save, and flexibility to take care of other financial responsibilities. Ultimately, an eco-friendly home can make a home that was affordable to purchase or rent, even more affordable to live in. Environmentally sustainable designs are not only good for the environment, but they can be a source of financial security for its owner and greatly impact low-income households.

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How the Lack of Affordable Housing Impacts Domestic Violence Survivor Support

shelter-300x287I think it is fair to say that finding somewhere affordable to live is the goal of most people who are in the market for a new home. Unfortunately, this search is becoming increasingly difficult for those living in the DC area. The high cost of rent and purchasing a home is a popular topic among those who live and work in the District. You hear people discussing how expensive rent and homes can be as you walk down the street, at work (especially here at Manna) and on the subway. Moreover, we usually do not think about how housing rates affect those who provide housing services.

As you may have noticed housing is, in fact, being developed in DC. However, as Payton Chung of Greater Greater Washington reports, “over the last decade, DC has built 13% less housing than its Comprehensive Plan calls for. Furthermore, of the new housing that is being constructed, most of it is confined to the central city even though the plan recommends only 30% go there. Meanwhile, many parts of the District are seeing little or no new housing construction.” The city has put forward increased funding  and policy to create affordable housing, and Manna and others are constructing affordable and mixed-income developments in parts of town not seeing a lot of new development, but the process is slow.  Overall, these constricted development trends are having an adverse effect on the affordability of our housing market, and having a real effect on people and non-profits alike.

To exacerbate this problem, much of the housing that is being built are high-rises, and everything about developing high-rises is costly, from the development techniques, to the materials used in its construction. In Chung’s most recent article, he stated, “Where housing is built influences how housing gets built. That, in turn, determines how much new housing will cost and thus, who can afford to live there.” Consequently, an expensive building built on an expensive plot of land will produce rents that many would classify as being expensive. And as Chung points out, “These high costs go a long way towards explaining why so little of the District’s new housing is affordable to low and moderate income households …developers can’t afford to sell their products at a 50% loss.”

This causal nexus presents a new dilemma. If the average resident in DC finds these rents to be high, just imagine the effects of these housing trends on service oriented organizations that depend on affordable units. This week, my focus won’t be on organizations that help build affordable housing for DC residents. Rather, it will be on organizations like DC Safe and DC Coalition Against Domestic Violence that find housing for those in crisis situations. A couple of weeks ago, Washington City Paper published an article entitled “A House Provided” by Morgan Baskin ,which discussed the burden that the DC housing market has placed on survivors of domestic violence, who need safe, long-term housing. According to the article, “ A successful domestic violence survivor network operates along a continuum of service, providing 30-day crisis shelters, 90-day emergency shelters, and two-year temporary housing. The problem with D.C.’s survivor support isn’t in crisis intervention. The problem is with mid- and long-term shelter”. According to Karma Cottman, Executive Director of the DC Coalition Against Domestic Violence, “Domestic violence shelters are supposed to house victims for 30 days…We’re talking an average of six months [that families are staying in a shelter], because there is no affordable housing.”

Far too often, victims who cannot be placed in safe housing end up returning to their abuser, or they end up on the streets. “Regionwide, the number of people in families whose current episode of homelessness was the result of domestic violence rose from 261 in 2014 to 1,101 [in 2015]”.

It is clear that rising rental prices are having unintended effects on various segments of our population. We have to ensure that there is affordable housing available for all District residents, especially the most vulnerable in our society. Patton Chung suggests that in order to make future dwellings more affordable, more units need to be developed in less expensive areas of DC, and low-rise and mid-rise techniques should be used. However, it is not just a matter of techniques, but also policy and vision. The city’s vision of a continuum of affordable housing sets us on the path of creating more affordable housing, while at the same time having a dynamic system that supports people to move along that continuum and create spaces for those coming out of crisis. Perhaps if these methods were used more often and our vision drove production, more units would be available for those escaping domestic violence, so they can begin the next chapter in their lives.

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A Moment of Reflection

josh Silver

This will be my last blog post as a Manna employee. I hope to continue writing blogs periodically as a guest columnist. It has been a great year and I will forever cherish the good people at Manna who work against great odds and obstacles in their quest to provide affordable housing.

Manna’s mission as stated on its business cards is “Rebuilding neighborhoods and preserving diversity through affordable housing.” As if this is not ambitious enough, I would add “Combating inequality,” “building the middle class,” “fighting poverty,” “revitalizing neighborhoods and families one housing unit at a time.”

Tireless….persistent…loving kindness and some tough love…more than 1,000 families and households have been housed by Manna since 1982. I was an intern at Manna in 1990 when I was in public policy graduate school. I admired Manna then and kept in touch for the next 25 years, mostly by running in their annual 5 K race. I saw an opportunity to work for them in 2014 as a fundraiser and Development Manager. I took advantage of that opportunity. My work during the last year has made me more impressed with Manna.

There is not enough support for this critical work. I will just say it plainly. There is not enough funding for affordable housing. Housing is not a popular political issue. Some see it as a handout, not a hand-up. But it should be a popular issue. If you think about it, housing is a public good. The families receiving affordable homeownership and rental housing certainly benefit by improving their situation. But the entire neighborhood benefits through raising home values and increased property tax revenues for local jurisdictions. When families gain equity, they have more income to spend and invest. This boosts demand and increases economic output. If we view housing as benefiting entire cities, neighborhoods, and the country as a whole, maybe there will be more public pressure to invest in affordable housing and ensuring that no family or individual is in an unsafe or unaffordable home.

When I knew less about public policy and economics, I viewed housing as a human right and a basic necessity of life. It surely is a basic necessity. And there have been laudable efforts to make it a right. For example, the 1949 Housing Act states that its goal was “the implementation as soon as possible of a decent home and suitable living environment for every American family.”

I personally think housing is a basic necessity and should be a human right. Yet, that is a hard sell. The public good angle might be an easier sell. There is a clear connection between decent housing and neighborhood health. The foreclosure crisis illustrates vividly what happens to the economy as a whole when people have unaffordable housing. In contrast, when homeowners prosper, the entire neighborhood prospers. The public good of housing benefits the entire neighborhood and ultimately the entire country.

How are we going to adequately fund affordable housing? One of my favorite ideas is a modest counseling fee imposed on every mortgage so as to fund counseling for anyone who wants counseling and a counselor to be at the table when he or she signs mortgage documents. Home inspections are commonplace before closing on a home. So should counseling so that we can be more effective at preventing predatory lending. But will we need even more funding beyond adequate funding for counseling. In addition to government funding, the Community Reinvestment Act (CRA) and the fair lending laws must be strengthened so that the private sector contributes its fair share. Recall that mainstream economics teaches us that public goods, by their nature, are inadequately funded because they produce “positive” externalities enjoyed by everyone though not everyone pays for the public good. Therefore, all sectors of society should contribute in a progressive funding mechanism (more from those with means) to financing counseling and affordable housing.

Which brings me back to Manna. It is very hard to make a convincing argument for housing in the midst of political polarization and paralysis confronting this country. Manna cannot make this argument overnight. Yet, Manna and like-minded organizations are making this argument everyday through their actions. Manna makes connections. It provides opportunities for people to meet new homeowners, to tour affordable housing developments, and to volunteer in neighborhood revitalization efforts. Manna enables people to see first-hand how housing benefits families but also neighborhoods. The results can also be seen in detail in two recent reports of the financial and community benefits of Manna and nonprofit housing.

We have a long way to go. But by bridging the gap and closing the separation between people who would not otherwise have contact with each other, Manna helps build consensus for more critical support for affordable housing. You can see it when you walk down the halls of Manna. On the walls, there is a hall of fame of pictures of Manna’s families and volunteers producing beautiful and long lasting affordable housing. It is heartwarming. I encourage you to make a visit and support the vital mission of affordable housing and preserving neighborhood diversity.

P.S. I am returning to the National Community Reinvestment Coalition (NCRC) as a Senior Advisor. NCRC aims to strengthen the Community Reinvestment Act (CRA) and the fair lending laws so that more resources will be available for affordable housing and community reinvestment.

 

Josh Silver is the Development Manager at Manna, Inc. Prior to his time at Manna, Josh served as Vice President of Research & Policy at NCRC. Josh is an avid District sports fan and loves spending time with his daughter.

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The Struggle for Women’s Rights and Manna

female homeowner and sonDuring my vacation less than two weeks ago, my family and I went to upstate New York to visit the Finger Lakes and enjoy nature’s beauty as well as some fine wine. However, I purposefully made part of the visit historical. Seneca Falls, New York is the site of Harriet Tubman’s home in her later years and also the site of the Women’s Rights Convention that occurred during July 18-20, 1848.

Seneca Falls is an interesting intersection between the struggle to abolish slavery and the fight for women’s rights. Elizabeth Cady Stanton, Lucretia Coffin Mott, and Martha Coffin Wright organized the Women’s Rights Convention which culminated in the issuance of the Declaration of Sentiments, modeled after the Declaration of Independence and listing the ways in which men had subjugated women. The Declaration of Sentiments was signed by 68 women and 32 men including the abolitionist Frederick Douglass. The question for this blog is how are we continuing the struggle for freedom, particularly women empowerment?

The Declaration of Sentiments is a document that describes the political and economic servitude of women. It states that because women cannot vote that, “He (men) has compelled her to submit to laws, in the formation of which she had no voice.” The declaration continues, “He has made her, if married, in the eye of the law, civilly dead. He has taken from her all right in property, even to the wages she earns.” This is rather complete subjugation.

Despite the eloquence and persistence of the suffragettes over the ensuing decades, it took 72 years before the 19th Amendment establishing women’s right to vote was passed in 1920. In fact, the 95th anniversary of the passage of the 19th amendment occurred just last week. It took even longer to combat economic servitude. One effort in this struggle was Congressional passage of the Equal Credit Opportunity Act (ECOA) in 1974 prohibiting gender and race discrimination in lending. Until passage of ECOA, it was common that lenders required male co-applicants before women received loans. Advocacy is difficult and struggles must occur over long periods of time, even decades. But victory, as the 19th amendment and ECOA demonstrate, does occur.

Yet, we are far from finished. The gender gap in pay remains stubborn and persistent.  According to the Institute for Women’s Policy Research, African-American women make 68 cents on average for every dollar earned by white men. Also, women also have access to fewer sources of wealth or other assets. According to Mariko Chang, previously an Associate Professor at Harvard University, a single woman has only 32 cents for every dollar of wealth owned by a single man.

Manna combats gender economic inequalities through its housing program. Manna did not set out to be a women’s rights organization but over the years, about 80 percent of our clients have been women, mostly African-American women. Many of them are single parents.

We have also had heartwarming stories of women’s empowerment collected by my colleague Annelise Osterberg. Consider the case for one Manna homeowner who purchased in the Le Droit Park neighborhood in 1997. After finalizing her divorce, this homeowner decided she wanted to purchase a home so that she could have something to pass on to her grandchild.  However, she soon realized she didn’t have the necessary savings for a down payment.

She recounted, “Back then the bank account was opened in my husband’s name. The credit cards were in my husband’s name. I was a stay at home mom, so I started working late in life and didn’t have a lot saved up.” Because this homeowner had been economically dependent on her husband during their marriage, she became financially vulnerable after the divorce.  However, with Manna’s assistance she was able to purchase her own home. The financial stability that this purchase afforded her gave her the ability to both start her own small business and begin saving for retirement.  Now after strategically managing her finances, she is fully prepared to retire in the next few years as well as pass her home on to her grandchild—a position she would not have been in without help from Manna.

We have much more ground to cover before achieving gender parity. Manna will continue pursing homeownership and neighborhood revitalization as part of the struggle for women’s rights and dignity.

 

 

Josh Silver is the Development Manager at Manna, Inc. Prior to his time at Manna, Josh served as Vice President of Research & Policy at NCRC. Josh is an avid District sports fan and loves spending time with his daughter.

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What are the Presidential Candidates Proposing to do about Affordable Housing & Community Development?

Presidential Campaign 2016

It is the summer of 2015 and I am already tired of the campaign season. Why do the campaigns start almost two years before the election? And there is so much money involved that citizens can easily become cynical. However, instead of tuning out, it might be the time to ask the candidates some hard questions about housing and community development. The only way the people take back their democracy is by participating and holding candidates accountable!

If you witness a debate among the candidates or attend a speech, ask the candidates questions about affordable housing and community development. See if their webpages have emails to which you can send questions. Read position papers of the candidates. Do they say anything about housing and community development and is it thoughtful?

Housing and community development is often overlooked and neglected. This is the case, I think, because these programs are perceived to be for poor/undeserving people. Most candidates think that housing and community development are not politically popular. They need to be educated. While most beneficiaries of housing and community development are low- and moderate-income, the entire country benefits if thoughtful and effective housing and community development programs can improve the economic well-being of low- and moderate-income people. If low- and moderate-income people live in revitalizing neighborhoods, they are more likely to be employed at livable wages. They are more likely to have access to good education. In the aggregate, if effective housing and community development programs improve the wellbeing of hundreds of thousands of people, then consumer demand increases, economic output increases, and unemployment decreases.

The following are some housing and community development positions. Observe how close the candidates come to these positions:

Restore Department of Housing and Urban Development (HUD) budgets: As reported in a previous blog, as housing needs have increased, HUD budgets have been slashed. The budget for Section 8 vouchers to help very low income households pay the rent has not kept pace with rising rents while housing cost burdens for renters have increased. The HOME budget that provides subsidies for housing and homeownership programs has been cut by more than 60 percent between 2005 and 2012. The District of Columbia Department of Housing and Community Development has used HOME funding for, HPAP, its low downpayment program. Which candidates are clearest about the needs to increase HUD’s budget?

Strengthen the Community Reinvestment Act (CRA): As described in previous posts, CRA requires banks to meet the needs of communities. Federal agencies produce reports cards for banks that are publicly available and which rate banks on their lending, investment, and services in low- and moderate-income communities. CRA needs to be strengthened as applied to banks and needs to be expanded to cover other financial institutions including mortgage companies, insurance companies, and Wall Street investment banks. Do the candidates discuss CRA in their speeches and websites?

Foreclosure prevention and mediation: Frankly, one of the biggest policy failures of the Obama administration has been its foreclosure prevention program. While I agree with a number of the policy approaches of this administration, foreclosure prevention was not a large enough endeavor. The major program was the Home Affordable Modification Program (HAMP) which offered banks financial incentives and subsidies to rework loans and reduce interest rates for homeowners facing foreclosure. Recent reports by an independent inspector general found that only 1.5 million people were assisted by HAMP but that 6.1 million experienced foreclosures during the time period. In addition, HAMP has $21 billion in unspent funds.

Some may say that the distressed homeowners brought this upon themselves by spending too much on housing and stretching their budgets too thin. However, when a problem reaches this magnitude, a more likely explanation is a rotten industry that was pedaling abusive loans on a large scale. Since homeowners were more sinned against than sinning and since the foreclosure crisis continues to impede the overall economic recovery, a fair question for candidates is will they continue this effort and make it more effective.

Promote neighborhood integration and revitalization:  Recently, a columnist suggested that efforts to revitalize economically distressed neighborhoods should be abandoned in favor of using housing subsidies to move minority and lower income households to more affluent neighborhoods. This is a false choice. Over its 30 year history, Manna has pursued both neighborhood revitalization and integration. Do the candidates recognize the complexity of housing and neighborhood development and will they pursue policies and approaches that promote neighborhood integration and revitalization.

Secondary education that benefits all citizens: Various candidates have announced ambitious plans to provide subsidies and aid so that students do not confront high debt after they finish college. President Obama has proposed free community college for students that maintain acceptable performance. The President’s approach is a step forward. Post-secondary education policies and subsidies must include community colleges and vocational training as well as colleges. Otherwise, a large segment of the population served by Manna will not benefit and will still confront high housing costs because more opportunities to earn higher wages via education and training will not be available to them.

Granted, it is hard work to hold the candidates accountable and you may base your voting decisions on many factors in addition to housing and community development. I took a quick glance at some of the candidate websites and they do not seem geared at this point to stimulate dialogue between the citizens and the candidates in the manner of Congressional websites (you can at least send an email to a member of Congress asking them to respond to your opinion). Yet, keep these issues in mind as you evaluate candidates and take advantage of opportunities to ask them hard questions. It is the only way in the long run to hold them accountable for promoting a more prosperous future for everyone.

 

Josh Silver is the Development Manager at Manna, Inc. Prior to his time at Manna, Josh served as Vice President of Research & Policy at NCRC. Josh is an avid District sports fan and loves spending time with his daughter.

 

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The False Dichotomy – Housing Choice and Revitalization

Choice road sign

A lot has been written the past couple weeks about where lower-income families should live and where affordable housing should be produced. In the New York Times last week, Thomas Edsall decried affordable housing development in high-poverty neighborhoods and stated that all subsidies should go toward moving poor households into higher cost areas that offer better school and job options; this is only answer to helping families move up and out of poverty. He also went a step further to lay blame for concentrated poverty on the many organizations that help finance and build affordable housing across the country, dubbing them the poverty housing industry.

Since his article, there has been a firestorm of responses:

Enterprise writes that “uprooting low-income families and moving them to affluent neighborhoods” is not a panacea to socioeconomic mobility and all the other issues faced by families in poverty. If we abandon communities that have experienced divestment for years, we take away those residents’ choices and condemn those communities to a dismal future.

Similarly, The Atlantic explores how efforts to combat segregation, when that is the only focus, may end up in divestment from communities that need it most. The article highlights a woman named Kellee Coleman, a 34 year old African American single mother from East Austin. Coleman knows the studies on how families like hers would flourish if they moved to “the wealthy suburbs”, but she doesn’t want to move to an area far from public transportation and neighbors that know and support her. She’s also concerned about her children going to school in a predominantly white suburb with few African Americans in leadership to look up to.

The Urban Institute emphasizes that all families, including those who are lower-income, should have the choice to live where they choose. As Edsall points out, these families face constrained choices due to lack of affordable housing in high-cost neighborhoods and discrimination, among other things. However, like Kellee Coleman says, there are many factors that lower-income families weigh when thinking about home. For Edsall to blame the constrained choices of lower-income families on the affordable housing industry is to ignore the effects of redlining and disinvestment targeted towards people and communities of color in this country, disinvestment that many community-led organizations were founded to combat. He is also ignoring where revitalization has occurred and how community-led affordable housing and community development groups have played a part and worked with their lower-income neighbors to stay and benefit.

Ultimately, this is about a both-and public policy approach and sustained investment from private and public partners…policy that promotes expanded choices for lower-income families and that also focuses on revitalizing neighborhoods. In thinking about Manna’s history, this both-and approach has been absolutely key. If Manna and others had only focused on high-income areas of DC (which were almost impossible to build in), then there would not be affordable housing in areas like Shaw and Adams Morgan today – there would be even less diversity in those neighborhoods today. For Manna’s first homeownership development, we had to go to 33 banks before finding one who would provide a construction loan – sacrifices were made and it was done with the community. And affordable housing is not just one type of housing – it’s an entire continuum that people can move along over time, from supportive housing up through homeownership. Finally, it’s not just about affordable housing but combining that with community and economic development, being strategic about partnerships and investments and an advocacy approach centered on the needs of people and neighborhood.

 

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The Subpar State of the Nation’s Housing

State of Housing

Each year, the Joint Center for Housing Studies at Harvard University produces a comprehensive overview of the state of the nation’s housing, including affordability and availability of homeowner and rental units. This year’s report is a sober read, particularly for minority and lower income households.

The homeownership rate of 64.5 percent is the lowest homeownership rate since 1993. Rates for minorities remain 25 percentage points lower than rates for whites. The Great Recession and financial crisis wiped out gains in homeownership due to high levels of foreclosures.

During the economic recovery, two factors impeding increases in the homeownership rate are stagnant incomes and restrictions in credit availability. In 2013, the median household income was $51,900, which was 8 percent below the 2007 level and equivalent to the 1995 level. At the same time, credit availability remains restricted. According to the Urban Institute, home purchase loans for borrowers with credit scores of 660 to 720 dropped 37 percent from 2001 through 2013 compared with a 9 percent decrease for borrowers with higher scores. While not pristine, credit scores in the range of 660 to 720 are usually associated with prime loans at market interest rates. In addition, the growth rate of home purchase loans in predominantly minority neighborhoods was half that in white neighborhoods from 2012 to 2013.

The decrease in homeownership has been accompanied by a boom in renters. The decade from 2004 through 2014 marks the fastest in the growth of renters since the 1980s. The national vacancy rate has dropped to 7.6 percent, the lowest level in 20 years. As a result of the surge in demand for rental housing, rents have increased and so have cost burdens (spending more than 30 percent of income on renting). Almost half of all renters in the nation have cost burdens! An incredible 80 percent of households with incomes at or below the federal minimum wage face housing cost burdens! Twenty six percent of African-American and 23 percent of Hispanic households have cost burdens compared with just 14 percent of white households.

Low income and minority communities remain hard hit. The Joint Center for Housing documents that in the communities where housing prices are 35 percent lower than before the Great Recession, minorities are the majority of households and the median poverty rate is 19 percent. In addition, negative equity (the outstanding mortgage amount exceeds equity gains) plagues minority and lower income neighborhoods. In the 10 percent of zip codes with the highest rates of negative equity, minorities made up 51 percent of the population and the income levels were low- and moderate-income.

What can be done to alleviate cost burdens and racial inequalities in homeownership and equity gains? The Joint Center for Housing does not provide a comprehensive menu of policy recommendations but does offer some hints. For very low-income and low-income renters, federal housing vouchers need to increase in availability. But despite higher federal budgets for vouchers between FY 2005 and FY 2015, the increased funding was offset by higher rents, meaning that the program did not serve more renters. In response, the District of Columbia has added more vouchers to its own local voucher program, though the same challenges exist in regards to higher rents.

At the same time, funding for the Federal HOME program that funds housing construction and rehabilitation of affordable housing (homeownership and rental) has been cut by an incredible 62 percent during FY 2005 and FY 2015. HOME funding is channeled to local agencies like the District’s Department of Housing and Community Development (DHCD) and is used to support housing developments by Manna and other nonprofits.

On the lending front, Freddie Mac and Fannie Mae (which buy loans from lenders and thus help lenders make more loans) created downpayment programs allowing for 3 percent downpayments. Likewise, the Federal Housing Administration (FHA) reduced upfront mortgage insurance on loans it insures, which should also increase the availability of low downpayment loans that clients of Manna use. Yet, it is still too early to determine the impact of these reforms.

As discussed in previous columns, community groups should use the Community Reinvestment Act (CRA) to work with and motivate lenders to make more loans and investments in affordable housing. The District of Columbia’s Responsible Banking Ordinance (RBO) can also motivate lenders to increase their financing of affordable housing once the RBO is implemented.

The state of the nation’s housing is indeed subpar for the populations that Manna serves. But we know what works: responsible lending combined with subsidies, some of which can be repaid and recycled. The Dodd Frank Wall Street Reform and Consumer Protection Act required the Consumer Financial Protection Bureau (CFPB) to promulgate anti-predatory and responsible lending standards. This step has been taken. Now we must pressure the federal government to reverse the decline in subsidies for housing. And we must work with lenders to increase their responsible lending.

Now some may complain that subsidies are not spent effectively and encourage dependence. We have enough experience to demonstrate that carefully administrated programs avoid the pitfalls that can be associated with subsidies. And the alternatives are worse: continued inequalities and stagnant economic recovery. We all sink or swim together. Continued economic depression in growing minority communities drags down the nation as a whole.

Josh Silver is the Development Manager at Manna, Inc. Prior to his time at Manna, Josh served as Vice President of Research & Policy at NCRC. Josh is an avid District sports fan and loves spending time with his daughter.

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Decreasing Flood of Millenials & DC Housing

MIllenials

It seems the flood of millennials that have been coming to the District has come to an end. The population of 25-34 year olds has shown significant signs of drying up. The change has been drastic; in 2010, the year millennial growth outpaced that of any other city in the country, 10,430 individuals in that age range moved into the District, compared to only 2,662 millennials in 2014. This huge surge in the young adult population subsequently led to the rapid rise in apartment housing and restaurants catering to a more transient and youthful way of life. This sharp change in demand has some worried. “We have concerns about the millennials and their appetite to move into DC,” says Cardinal Bank president Kevin Reynolds. Kevin’s counterpart, EVP of real estate lending Andy Peden, says millennials are “just like every other generation,” except they are postponing larger life decisions. While there is still demand for housing and more specifically apartments, this shift will more than likely lead to either rental stabilization or a drop in prices.

What’s more important is why this happening is, and what the effects are. Over the last decade college graduates from all over the country have been pouring into District neighborhoods that had suffered from earlier blight and disinvestment. Now neighborhoods like Shaw, Columbia Heights, NoMa, and H Street NE are seeing tremendous growth and increasing home values. The arrival of primarily white collar, white workers felt like an invasion to some. Many new developments and restaurants in the District co-opted the names of historically significant African American figures and events for their high priced eateries and housing complexes, a sort of cultural appropriation.

One of the main contributors to the waning growth is the large decrease in public sector jobs; D.C. lost 11,800 public sector jobs in the past four years. Millennials have also become victims of their own success. The high housing cost that is excluding an entirely new population of young adults was in part generated by the demand created by their predecessors. This is why Director of Planning, Eric Shaw said he was “excited by the fact that people are remaining here.”

“We need to have a wide range of housing choices. So it’s not just the micro-units,” he said. “People are deciding to remain here for longer as they find a partner, add a dog, start a family. They are finding the neighborhood where they want to be.” And we also need to have more affordable housing and Class B apartments. Over the last decade, high end and Class A properties have been the focus to cater to a growing affluent population, but in the wake, the District’s affordable housing has decreased.

Now the time to truly address the city’s housing crisis. While new comers are scarcer, we need to take a harder look at how we can do more for the District’s long-term at-risk households.

 

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Raising the Minimum Wage – Indispensable for Affordable Housing

minimum-wage

Last Thursday, two prominent newspapers, the Washington Post and New York Times, had stories on their front pages about raises in the minimum wage. In New York State, it is likely that fast food workers will have a minimum wage of $15 per hour. In Washington DC, the voters are likely to vote in 2016 whether to increase the minimum wage to $15. Currently, the minimum wage is $10.50 and is scheduled to increase to $11.50 next year in the District of Columbia, a policy change which took years of organizing and political work to make happen.

Affordable housing and minimum wage policy go hand-in-hand, creating housing that families can afford with enough income left over for other basic necessities. Even if the minimum wage increases to $15, it would probably take two wage earners in a household to afford unsubsidized housing in the District of Columbia. The DC Fiscal Policy Institute calculates that in 2010, about two-thirds of households with incomes below 30 percent of area median income, or $31,050 for a family of four, paid more than half of their income on housing.

A minimum wage of $15 per hour brings a full time worker to about $31,200 in annual income or the income for households that was likely to result in a severe cost burden or spending more than half of income on housing. The minimum wage in the District of Columbia has just raised to $10.50 or $21,840 per year, which is clearly still too low to afford housing. Manna has sold affordable homes to families making around or under $30,000, but we and other affordable developers cannot build enough to meet low-income working families’ needs. There is not enough vacant housing stock and public and private subsidies to build enough affordable housing for low-income households without also making efforts to raise wages.

Opponents of minimum wage increases state that while it is laudable to increase workers’ wages, the increases will generate more unemployment because the cost of production will increase and profits will be reduced below minimums needed to sustain small businesses. When wages increase beyond a certain point, the opponents of wage increases will be correct. However, the minimum wage has not kept up with inflation. Paul Krugman, a Nobel Laureate economist and columnist in the New York Times, states that minimum wages have not kept up with inflation for four decades while worker productivity has doubled. There is clearly room to raise the minimum wage.

Moreover, Krugman documents that states that raised minimum wages did not experience increases in unemployment when neighboring states left minimum wages the same. Finally, there is a motivational factor at play. If a company pays a worker decent wages, the worker will be more committed, work harder, and call in sick less frequently. The positive experiences of Costco which pays relatively good wages is contrasted with the poor work environment of Walmart that has lower wages and benefits (http://www.nytimes.com/2015/04/03/opinion/paul-krugman-power-and-paychecks.html and http://www.nytimes.com/2015/07/27/business/economy/scale-of-minimum-wage-rise-has-experts-guessing-at-effect.html?_r=0).

During the coming year, the debate over the minimum wage will ebb and flow. It will get heated. But just remember that adequate increases are long overdue, and affordable housing construction and programs are only part of the solution. Housing has become so expensive in Washington DC that we need multiple policies to make it more affordable for DC workers to have a chance at actually living in DC. It’s time for more change and living wages!

 

Josh Silver is the Development Manager at Manna, Inc. Prior to his time at Manna, Josh served as Vice President of Research & Policy at NCRC. Josh is an avid District sports fan and loves spending time with his daughter.

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New Accountability Tool – Consumer Complaint Database

bills

 

Do you feel powerless to resolve a debt payment issue, a credit report mistake, or a mortgage servicing issue? Does the financial company promise to resolve the problem, you make repeated calls over several months, and the problem does not get resolved?

Fortunately, you now have one more accountability tool in your toolbox. The Consumer Financial Protection Bureau (CFPB) was required by Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 to handle and help resolve consumer complaints. The CFPB also did a smart thing: it publishes the complaint data on the internet. Of course, financial companies hate this and complain, but my bet is that the publicly available data has reduced the number of problems and helps resolve complaints faster than they were fixed before. If you feel you need help on an unresolved issue, you can go to http://www.consumerfinance.gov/complaintdatabase/ to file a complaint and also to view other complaints about mortgages, bank accounts, debt collections, student debt, and more.

The CFPB has started issuing monthly reports that will help consumers and counselors understand trends and pinpoint emerging issues. Since 2012, the CFPB has received 650,700 complaints. For June of 2015, the CFPB reports that the top three products/services in terms of complaints in descending order was debt collection, mortgages, and credit reporting.

The database can be sorted by state, issue, company, and resolution status. When looking at Washington DC, complaint volumes increased 10 percent from April through June compared to a year ago (http://files.consumerfinance.gov/f/201507_cfpb_monthly-complaint-report-vol-1.pdf).  Complaints in DC now run about 577 complaints per 100,000 people which is a higher rate per capita than all the other states! Maryland also has a high per capita rate of 333 per 100,000.

A new feature of the complaints database is consumer complaint narratives. The individual consumer is not identified in order to protect privacy, but the narrative appears (if the consumer wants the narrative displayed). Looking at a couple of narratives reported from consumers in Washington DC shows typical complaints. In one case, a debt collection company kept contacting a consumer about debt his brother owed. In another case, a credit reporting company kept records of medical debt owed even though the consumer reports that the insurance company paid the bill.

It is hard to judge a company’s performance definitively on this database without some additional analysis. The companies that show up frequently are large companies, which by their unwieldy nature, will have some staff or divisions that do not do a good job. An analyst needs to “normalize” the data or figure out complaints per loans or complaints per assets or some other measure like this. The CFPB is currently taking comments on how to “normalize” the data. While consumers should certainly use this database to hold companies accountable, they should also be careful in labeling a company bad until additional analysis is conducted. The CFPB itself scours the database to help companies identify issues or bad offices and in some cases to pursue legal enforcement if misbehavior is due to a systematic pattern or practice.

Overall, the CFPB complaints database is a powerful accountability tool for consumers and counselors. Use it!

 

Josh Silver is the Development Manager at Manna, Inc. Prior to his time at Manna, Josh served as Vice President of Research & Policy at NCRC. Josh is an avid District sports fan and loves spending time with his daughter.

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