Category Archives: Advocacy Days

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.

 

The Banks Are Back At It

Here we go again! Banks are back at it, crying foul to new regulations, in return telling some of their largest clients to take their money elsewhere, or be slapped with huge fees. The large financial institutions, including J.P. Morgan Chase & Co., Citigroup Inc., HSBC Holdings PLC, Deutsche Bank AG and Bank of America Corp, have stated that the new regulations have made some of these deposits less profitable. For most banks, deposits have been the usual catalyst for driving growth: more deposits allow banks to loan out more money and bring in more profits. However, with tighter regulations and a smaller amount of loans being generated, banks are beginning to see large deposits as dead weight. This mindset has led to these decisions, decisions that have taken a turn away from some of the fundamental principles and actions typically associated with banking. First and foremost, deposits have usually been seen as the key driver for banks since there is a lower interest rate on money kept in-house and then loans can be made at a higher interest rate. The new rules given by regulators to make our financial systems safer require more cash on-hand so that banks are more resistant to shocks like those seen during the financial crisis of 2008. Many banks feel as if these regulations carry too much liability.

Historically, banks’ fundamental purpose was to serve the credit and banking needs of local communities. While things have changed such as the services offered or the speed of these services, the principle responsibility still remains. Banks put a community’s surplus funds (deposits and investments) to work by lending to people to buy homes and cars, to start and expand businesses, to put their children through college, and for countless other purposes. While times have changed, the central focus shouldn’t. We must develop comprehensive strategies that allow maximum community development, while ensuring our communities are safe guarded from predatory practices or financial crises.

Last week, the Community Development Amendment Act of 2013 passed the District Council; this bill encourages banks who do business with the District to make plans to meet the banking needs of all District residents. There will be a chance for the public to weigh in on banks’ plans and progress once implementation begins in early 2016. We hope for good faith banking partners in the District and a chance to champion improved banking services and products for District residents and neighborhoods that need it the most.

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!

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.

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.

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.

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.

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.

No More Poor Door


As demand for housing continues to rise in more economically emerging areas, public and affordable housing continues to dwindle, soon becoming a thing of the past. In an attempt to curb this crisis Mayor Bill Deblasio has commissioned the development of 80,000 new affordable units in NYC over the next 10 years, but this hasn’t come without its fair share of problems. One of these problems has been the “Poor Door”, separate entrances for affordable housing recipients in market rate building in NYC, which began to cause widespread outrage among residents and city leaders. This problem stems from indirect policies that allow developers to have multiple entrances on developments that feature a variety of housing options-like condos and rentals in the same building. What has been more difficult than managing the bad publicity, is finding a clear cut solution to the problem. Market-rate buildings in high priced cities typically offer concierge service, entertainment rooms, and breathe taking views, amenities that are not necessarily requested by affordable residents or even expected. So, how do meet your affordable housing goal of creating 80,000 new units, a large amount that will need to be developed alongside market-rate development, while ensuring market-rate residents get the amenities they pay for without offending affordable residents. This is the question that has many stumped.

There are solutions, one being offsite development. This would require developers to still develop the same amount of affordable units, and likely more than they would have developed in their market-rate buildings, but at another location. This would remove the economic totem pole that is mixed-income development, and in condo developments avoid some of the economic issues that have resulted from escalating common fees and a minority of affordable owners at risk of getting priced out.

Aside from policies, cities like New York and even Washington, DC use a variety of tax breaks and subsidies to encourage more affordable development, often times providing tax relief or allowing the developer to build more square feet then typically allowed. Many developers prefer to develop the affordable units offsite, because it allows them to maximize profits at the most desirable locations. Gary Barnett, the founder and president of Extell development in NYC says, that affordable developments incorporated in market rate buildings means “giving away” the most valuable units. “We wouldn’t be able to do affordable,” he said. “It wouldn’t make any financial sense.”

While there is some backlash to this approach, most affordable housing supporters agree that the development of affordable units is much more important than where they are located as long as the alternate location is reasonable, and hopefully close by. “It’s so important to build as much affordable housing as possible, and you always have to compromise,” said Carol Lamberg, co-chairwoman of the New York Housing Conference, an affordable housing coalition. “I just think the need is so great, you don’t need a fancy lobby.” Currently, the New York city council is working on past policies that have allowed the “Poor Door” to exist. “It’s such a visual separation,” Assemblywoman Rosenthal said. “It gets at people when they see two separate doors. It’s no longer theoretical. It looks and smells like discrimination.” While New York works to add its 80,000 units of affordability through private developments so the city can remain home to individuals from all walks of life, the District of Columbia already has policies in place requiring the development of affordable housing in all new developments. The city can also use government owned land for increased affordable development. We continually need to find ways to creatively maximize our production and provide quality affordable housing in as many neighborhoods as possible.

No Refuge For The Homeless

 

Homelessness has steadily risen throughout the United States. While many of the District’s homeless population have found refuge on the streets, even this is becoming increasingly difficult. In many places being homeless is now a crime, possibly being arraigned or imprisoned for simple standing, sitting, or sleeping in the wrong areas.

While there are many laws specific to homelessness, many laws affecting the homeless population are often hidden or blended in with other laws. Park or public area curfews are often used to regulate the homeless population. In high-priced cities like the District of Columbia where affordable housing options are in high demand, there simply aren’t enough places for the homeless to go.

Recently, in March of 2014 a homeless man in New York died due to the criminalization of the homeless. A former war veteran, he was imprisoned for trespassing because he was unable to find shelter. He was sent to Rikers Island because he was unable to post the $2,500 bail set for him; he was place in a hot cell and ignored for days “basically baking him to death”.

Since 2011 there has been a great increase in the laws affecting the homeless, even prohibiting individuals from feeding the homeless. As homelessness continues to steadily rise in the District we must begin implementing creative solutions to solve this crisis. Would you be able to survive if there was no place to go and you could be jailed simply for asking for help? There are many better solutions than these and we should start looking at them.