Category Archive: Justice

  1. My Four Takeaways from Denver Summit on Supportive Housing

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    Denver HousingIn May, several LDC colleagues and I attended the Corporation for Supportive Housing (CSH) Summit in Denver. The conference brought together hundreds of thought leaders in the field of supportive housing to share trends, hands-on experiences, and ideas. We also enjoyed Denver’s craft beer scene, and the conference swag and endless supply of fresh coffee provided by our hosts. Here are my takeaways from the conference sessions:

    Partnerships: CSH CEO Deb de Santis led a lively lunch session with pictures from Jaws to emphasize her message for the need to build a bigger boat. She was alluding to the idea of bringing more partners that have a stake in ending homelessness—healthcare, criminal justice, and child welfare—to the table to work toward solutions. Many of the conference sessions highlighted the role of each of these sectors, and one session was completely devoted to understanding the different language used to talk about healthcare and housing.

    Another lunch session highlighted the collaboration among health and housing partners in Portland, Oregon, to develop new units of affordable and supportive housing. The session provided attendees with a concrete example of the innovative partnerships and financing approaches that can be developed when people are willing to come together and think big.

    Data Integration: Cross-sector data integration innovations are happening across the country. For example, many communities have undertaken projects to connect their Homeless Management Information System (HMIS) data with criminal justice and healthcare data to identify overlapping populations and target resources more efficiently. The key with these efforts will be sustainability and keeping data updated and fresh.  Many communities have done one-off pilots and integrated data from multiple systems to create frequent user lists or to inform policy decisions, which is great, but these become static.  Innovative technology will be needed for ongoing impact and decision making.

    System Redesign: I also attended a half day pre-conference institute that showcased Houston’s homeless system redesign. Houston is well-known for effectively changing their homeless system and the leadership involved to coalesce a community around a common goal. What intrigued me most, however, were the ways they utilize their emergency shelter and transitional housing programs—two things that many communities across the country are in the midst of addressing.

    Political Leadership: On the last day of the conference, the Mayor of Denver addressed the audience. I was impressed with both his charisma and his clear commitment to finding innovative solutions to assist underserved populations, especially those experiencing homelessness, in his city. Recently, the City of Denver released a short-term strategy that specifically addresses housing, health, and employment. Denver is also operating a Pay for Success initiative targeted at people who are chronically homeless.

    While I enjoyed the conference sessions and discussions with colleagues from across the country, the swag I picked up was the clear highlight at home. My kids loved the new CSH florescent orange silly putty, and I even gave in and bought my kids some Denver Bronco souvenirs. Although I’m a diehard Chargers fan, my son said that he’s thinking of rooting for the Broncos, which might not be a bad idea now that the Chargers have moved to LA.

    For more information about homelessness programs, data, or policy, contact Kris Kuntz, Senior Associate, at Kris@lesardevelopment.com.

  2. Federal Budget Cuts Add Uncertainty to State and Local Agencies

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    Speaker Ryan with Pence and TrumpPresident Donald Trump unveiled a budget proposal, or so-called “skinny budget,” on March 16th that calls for heavy cuts in many areas of government, including the U.S. Department of Housing and Urban Development, Environmental Protection Agency, the National Institutes of Health, and the U.S. Department of Transportation, while boosting military spending by 10 percent ($54 billion) and allocating more than $4 billion for a U.S.-Mexico border wall. As noted by the Los Angeles Times, “The president’s blueprint would disrupt almost everything California does, in some cases quite brutally.”

    In releasing his state spending plan for the 2017-2018 fiscal year in January, Governor Brown projected a $1.6 billion deficit by mid-summer. The state budget anticipates facing a multi-billion gap in federal funding with deep cuts across numerous agencies. A revised budget will be released by the Governor in May.

    In California, about 12 percent of CalEPA’s budget comes from the federal government. The State Water Resources Control Board gets the largest share – about $300 million. Those funds are used to clean up polluted streams, make sure toxic substances aren’t leaking into groundwater, and ensure drinking water is safe. If EPA funding is reduced or eliminated, the state will have to make up the deficit. The pending cuts to the U.S. EPA’s funding for brownfields reuse and revitalization will also reduce a key source of leveraging for assessment and cleanup of older sites that could be used for housing, commercial/retail and mixed use development throughout the state.

    Trump’s budget cuts $9.2 billion (13.5%) from the U.S. Department of Education. Betsy DeVos, Trump’s Secretary of Education, has long been a staunch proponent for voucher programs and private schools. The budget boosts charter school funding by $168 million and adds $250 million for a new private school choice program. It also adds $1 billion for Title I, a federal program that distributes funding to schools with a high percentage of students from low-income families, but eliminates $1.2 billion for before- and after-school programs as well as summer programs. These cuts to education come as many school districts face funding challenges. The San Diego Unified School District, for example, has to slash $124.4 million from next year’s budget, due in part to long-term “structural defects.” Teacher lay-offs are more likely to hurt schools in lower-income neighborhoods which have a higher percentage of more recently hired staff.

    In addition, the budget cuts $2.5 billion from the Department of Labor. It decreases federal support for employment services programs for unemployed seniors and disadvantaged youth, shifting the responsibility to state and local agencies.

    Especially significant for local housing development are proposed cuts of $4.3 billion to the Department of Housing and Urban Development, including:

    • Eliminating funding for the Community Development Block Grants (CDBG) program, cutting $3 billion. The League of California Cities is lobbying fiercely to stop the CDBG elimination proposal at HUD, on which its members depend to fund services such as building housing for the homeless and revitalizing decaying neighborhoods.

    • In addition to zeroing out funding for community development groups that create affordable housing (Section 4), Trump’s budget would eliminate the HOME Investment Partnerships Program, Choice Neighborhoods, and the Self-help Homeownership Opportunity Program, cutting more than $1.1 billion.

    For more information about innovative approaches to policy and real estate development, contact Jennifer LeSar, President and CEO at Jennifer@lesardevelopment.com.

    Jennifer LeSarWith more than 25 years of experience in the real estate development and investment banking industries, Jennifer LeSar brings a diverse background to her work in community development and urban revitalization. Her technical expertise spans from policy and program development to the origination and underwriting of complex investments in equity funds, multi-family portfolios, and historic and low-income tax credit properties utilizing federal and state financing programs.

  3. Ben Carson Sworn In as New HUD Secretary

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    Ben CarsonOn March 3rd, Dr. Ben S. Carson, Sr. was sworn in as the 17th Secretary of the U.S. Department of Housing and Urban Development (HUD). Among his first actions in his new role, Secretary Carson plans an ambitious listening tour of select communities and HUD field offices around the country, beginning in his native Detroit. In a statement published by HUD, Carson said:

    “I am immensely grateful and deeply humbled to take on such an important role in service to the American people,” said Secretary Carson. “Working directly with patients and their families for many years taught me that there is a deep relationship between health and housing. I learned that it’s difficult for a child to realize their dreams if he or she doesn’t have a proper place to live, and I’ve seen firsthand how poor housing conditions can rob a person of their potential. I am excited to roll up my sleeves and to get to work.”

    Dr. Carson assumes the position of HUD Secretary at a time of potentially deep cuts to the agency’s budget. The Center on Budget and Policy Priorities projects that:

    • Protecting all existing tenant and project-based vouchers from a potential 15% funding reduction would result in the elimination of all other HUD programs as well as the entire staff.

    • Elimination of funding for the Housing Choice Voucher program could result in almost 800,000 people across the U.S. losing their rental subsidies and the McKinney-Vento homeless assistance program would lose as much as $360 million.

    • The loss of homeless assistance funding would eliminate 20,000 new permanent housing units or end housing for 15,000 people.
    Program-specific funding allocations in the 2018 Transportation and Housing and Urban Development (THUD) budget will not be released until May or June.

    For more information about innovative approaches to policy and real estate development, contact Jennifer LeSar, President and CEO at Jennifer@lesardevelopment.com.

    Jennifer LeSarWith more than 25 years of experience in the real estate development and investment banking industries, Jennifer LeSar brings a diverse background to her work in community development and urban revitalization. Her technical expertise spans from policy and program development to the origination and underwriting of complex investments in equity funds, multi-family portfolios, and historic and low-income tax credit properties utilizing federal and state financing programs.

  4. Wage Gap Puts Rentals Beyond Reach of Single Women Earning Median Income

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    Woman raising her handThe housing affordability gap is tied in many ways to the income equality gap. Single wage households are especially vulnerable and, according to recent research, single women earning median income wages or less are extremely disadvantaged. According to a February 2017 study published by the Thomson Reuters Foundation, single women cannot afford to rent a small apartment in nearly all of the biggest U.S. cities but single men could manage to lease in a third of those locations, a reflection of the gender wage gap.

    The median income of single women can pay for a studio or one-bedroom apartment in only two of the 50 largest cities in the U.S. – Wichita, Kansas and Tulsa, Oklahoma. Across the country, women working full time are paid 80 percent of what men are paid, according to U.S. Census Bureau statistics. In the 50 largest U.S. cities, a woman makes only 74 cents for every dollar earned by a man, a gender wage gap of 26 percent, according to RentCafe.com. In those cities, single men make an average of $32,451 a year, while single women average $24,115.

    The RentCafe.com research on which the study is based used the U.S. industry standard that housing costs should not comprise more than 30 percent of household income. Among the 50 cities, men can afford to rent a studio or one-bedroom apartment on their own in 18, the research found. Those cities include Phoenix, Las Vegas, Oklahoma City, Memphis, Indianapolis, Omaha and Kansas City. In 14 cities, the median income is not enough to rent a studio or one bedroom by single women or men.

    The least affordable spots for singles are Boston and the New York City borough of Manhattan. Eight of the 50 most expensive cities are in California.

    For more information about innovative approaches to policy and real estate development, contact Jennifer LeSar, President and CEO at Jennifer@lesardevelopment.com.

    Jennifer LeSarWith more than 25 years of experience in the real estate development and investment banking industries, Jennifer LeSar brings a diverse background to her work in community development and urban revitalization. Her technical expertise spans from policy and program development to the origination and underwriting of complex investments in equity funds, multi-family portfolios, and historic and low-income tax credit properties utilizing federal and state financing programs.

  5. HUD – An Overview of the Uncertainties Ahead

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    The Department of Housing and Urban Development (HUD), like every other agency of the federal government, faces major changes under the new Administration and Congress that have yet to be fully delineated but which could alter the organization for decades to come. The most immediate impacts will affect three key areas: leadership, budget and policy.

    1. Leadership: Ben Carson Endorsed by Senate Committee for HUD Secretary

    Ben CarsonThe Senate Committee on Banking, Housing, and Urban Affairs has cleared the way for Dr. Ben Carson’s appointment as secretary of HUD. The next step in his approval process is for his nomination to go to the Senate floor. Republican leaders have not yet set a date for the final confirmation vote. Carson is a retired pediatric neurosurgeon who has never worked in government.

    According to The Hill, “It is unclear how Ben Carson will shape the agency. He told lawmakers in his confirmation hearing that he wants to have “listening sessions” with housing officials around the country. It also remains to be seen whether Ben Carson would uphold an Obama administration rule that puts teeth into fair housing laws. When questioned by senators on the issue, he remained noncommittal.”

    The National Low Income Housing Coalition’s 2017 Policy Forum, to be held in Washington, D.C. on April 2-4, has invited HUD Secretary Nominee Ben Carson to share his thoughts about America’s affordable housing challenges, HUD’s role in addressing them, and his priorities for the future.

    2. Budget: No New Program Funding with Probable Cuts Most Likely

    In November, House Speaker Paul Ryan announced a stopgap spending bill effective through March 31, 2017 to keep the government spending roughly at last year’s levels. Without this action, government spending would have run out Dec. 9th. House Republicans are resurrecting a fiscal 2017 balanced budget resolution to use as the vehicle for dismantling the Affordable Care Act. That resolution will be followed by a fiscal 2018 budget resolution with fresh reconciliation instructions in order to push through Trump’s major tax cuts or reductions in entitlement spending in order to make good on GOP pledges.

    Development of the FY 2017-2018 Budget by the Trump Administration would purportedly strive to reduce federal spending by $10.5 trillion over 10 years. The proposed cuts adhere closely to the “Blueprint for Balance: a Federal Budget for 2017” published last year by the conservative Heritage Foundation, a think tank that has helped staff the Trump transition. The administration’s full budget, including appropriations language, supplementary materials and long-term analysis, is expected to be released toward the end of Trump’s first 100 days in office, or by mid- to late April. The budget offices of the various departments will have the chance to review the proposals, offer feedback and appeal for changes before the president’s budget goes to Congress.

    The Heritage Foundation’s plan would cut federal support for numerous departments and programs, including HUD. Funding for HUD would be cut $4.3 billion ($38.8 billion to $34.5 billion) in FY2017, with an overall reduction of $292.8 billion over the next 10 years. Heritage’s proposal would transfer fiscal responsibility of subsidized housing programs to state governments. It also proposes eliminating the Community Development Block Grant in FY 2018—and eliminating the Federal Housing Administration entirely.

    In 2016, the block grant program dispersed more than $3.2 billion dollars toward affordable housing and economic development, public improvements, and public services. The Federal Housing Administration guarantees mortgage insurance for homebuyers. The Trump administration has already reversed the Obama administration’s recent effort to reduce FHA mortgage fees (see below). The transfer of subsidized housing to states presents the biggest shift—the report points to the $53 billion spent in FY2015 and proposes reducing federal funding for means-tested housing programs at a rate of 10 percent per year for 10 years.

    3. Policy: Walking the Horse and Cart Backward

    FHA Mortgage Fee Reduction. Within hours after Donald Trump was sworn into office as President, he signed an Executive Order which overturned a mortgage-fee cut under a government program that’s popular with first-time home buyers and low-income borrowers. The Department of Housing and Urban Development on Friday said the agency is canceling a reduction announced last week while President Barack Obama was still in office. The Federal Housing Administration had planned to cut its annual fee for most borrowers by a quarter of a percentage point to 0.60 percent, effective on Jan. 27. The fee cut would have reduced the annual premium for someone borrowing $200,000 by $500 in the first year. Some housing industry groups lauded the change, saying it could increase home buying by offsetting recent rises in mortgage rates.

    Federal Legislation: Bill Introduced in Congress to Nullify Fair Housing Regulation.

    Rep. Paul Gosar (R-AZ) introduced H.R. 482 and Senator Mike Lee (R-UT) introduced a companion bill, S. 103, on January 12th, 2017. Both bills are titled the “Local Zoning Decisions Protection Act of 2017.” The bills would nullify the new Affirmatively Furthering Fair Housing (AFFH) regulation and the Assessment Tools associated with the rule. The bills would also prohibit federal funds from being used for the HUD database containing geospatial information regarding community racial disparities and disparities in access to affordable housing. The bills would also require the HUD Secretary to jointly consult with state, local government, and public housing agency officials to develop recommendations to further the purposes of the “Fair Housing Act of 1968” by means other than through regulations. The HUD Secretary would be required to draft a report based on the consultation, and the recommendations in the report could only be those reached by consensus.

    The Fair Housing Act prohibits housing discrimination on the basis of race, color, religion, sex, familial status, national origin, or disability – the “protected classes” of people. The act also requires “all executive departments and agencies to administer their programs and activities related to housing and urban development in a manner affirmatively to further the purposes” of the act.

    The text of these bills is not yet posted at Congress.gov. However the text of H.R. 482 is on Mr. Gosar’s website at: http://bit.ly/2ilFzjd

    For more information about innovative approaches to policy and real estate development, contact Jennifer LeSar, President and CEO at Jennifer@lesardevelopment.com.

    Jennifer LeSarWith more than 25 years of experience in the real estate development and investment banking industries, Jennifer LeSar brings a diverse background to her work in community development and urban revitalization. Her technical expertise spans from policy and program development to the origination and underwriting of complex investments in equity funds, multi-family portfolios, and historic and low-income tax credit properties utilizing federal and state financing programs.

  6. Point-in-Time Count: Understanding the Extent and Complexity of Those Living Outside

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    Edited Jennifer and Kris interviewing pictureEvery January, volunteers throughout the country set out to participate in the annual Point-in-Time Count (PITC). Mandated by the U.S. Department of Housing and Urban Development (HUD), the count allows regional Continuums of Care (CoC) to have better reliable data, while at the same time raising public awareness of homelessness in their communities.

    Felix 3On January 27th, several of our LDC staff participated in the San Diego County PITC and took to the downtown San Diego streets early in the morning. While Kris Kuntz, Jennifer LeSar, Jonathan Hunter, and Rachel Ralston have participated in previous PITC’s, Hampton Dohrman, Felix Yan, and Sebastian Sarria were first-comers and willing to participate. LDC staff engaged and completed several interviews with people living on the streets. The experience was a strong reminder to keep on persevering in the fight to ultimately end homelessness in San Diego.

    For more information about innovative approaches to policy and real estate development, contact Jennifer LeSar, President and CEO at Jennifer@lesardevelopment.com.

    Jennifer LeSarWith more than 25 years of experience in the real estate development and investment banking industries, Jennifer LeSar brings a diverse background to her work in community development and urban revitalization. Her technical expertise spans from policy and program development to the origination and underwriting of complex investments in equity funds, multi-family portfolios, and historic and low-income tax credit properties utilizing federal and state financing programs.

  7. Uncertainty for Federal Tax Credit Programs

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    Uncertainty picture 2Since November, financial analysts have been concerned with the future of federal tax credit programs for investment in low income affordable housing and other community and economic development projects.

    With Donald Trump as President and a Republican-controlled House and Senate, the prospects of tax reform have increased dramatically. This has heightened concerns that the LIHTC program could be significantly hampered, or even eliminated, under a sweeping tax reform effort.

    Specifically, Trump has called for slashing the business tax rate from 35% to 15%. If the corporate tax rate is reduced, LIHTC pricing will have to drop to maintain current market yields. It is estimated that the drop could be between 5 and 10 cents drop per dollar of credit for a 9% LIHTC deal. The alternative is that investor yields drop and prices remain the same.

    According to Vihar Sheth, senior vice president and director of business development at U.S. Bancorp Community Development Corp., who spoke in November at AHF Live: The Affordable Housing Developers Summit in Chicago: “There’s almost a zero percent chance” that the tax rate changes alone. Other complex moves, such accounting and tax credit regulation changes, will be involved.”

    Another analyst, Jeff Weiss, president of Alden Capital Partners, has stated that he does not believe the LIHTC will be eliminated. Speaking at the AHF summit, he said: “Your choice is a public-private partnership or HUD. You have a Republican Congress and a Republican president. They’re not going to say, ‘Let’s go back to public housing.’ They’re going to go to states’ rights, with states having the ability to push credits.” Still Weiss acknowledged that LIHTC syndicators will have to “sharpen their pencils to make deals work.”

    Communication between syndicators and investors about placement and timing is also going to be critical to getting deals done. Although corporate tax reforms may take a few years to fully take effect, financial analysts are advising developers to close their deals if the numbers work.

    Another threat to community and economic development will surface if the pending House budget hews to the Heritage Foundation’s Blueprint for Change (see preceding article about HUD). The Heritage report advises eliminating the Treasury Department’s Community Development Financial Institutions Fund ($238 million), which issues New Markets Tax Credits on a competitive basis to certified community development entities. However, the Community Reinvestment Act (CRA) provides a strong incentive for banks to invest in tax credits, and these CRA obligations will likely remain in place. In addition, the coalitions of investors and supporters of housing and economic development will strongly push back on threats to these federal tax incentive programs.

    Liz Tracey-4x5For information about affordable housing and community development financing resources, contact Liz Tracey, Senior Principal, LDC at: liz@lesardevelopment.com.

    Liz Tracey is an expert on affordable housing and community development finance using tools such as the Low Income Housing Tax Credit and New Markets Tax Credits.