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This article is part of a Special
Section on “The Recession’s Silver Lining; A Roof Over Our Heads?
Housing Issues and Trends” that ran in the October print issue of PA TIMES.
See the end of this article for links to others from the Special
Holly A. Beard, Brian Carnahan, Blaine Brockman
State Housing Finance Agencies (HFA), a primary administrator of federal and state affordable housing funding, are at a defining moment in the development of innovative state-led housing policy. Across the country, HFAs are delivering numerous federally and state sponsored programs to address housing needs of those burdened by excessive housing costs or at-risk of becoming homeless. Feeling the impact of the economic crisis and pressured by the increasing demand for affordable housing options, innovative solutions and partnerships have been sought to address these complex policy issues.
Prior to the current housing crisis, HFAs were able to address a range of housing and housing-related needs not necessarily required as a matter of statute to support larger socially driven policy initiatives. Examples of these more altruistic policies included development of Permanent Supportive Housing for the homeless, targeting very low income (below 30 percent AMI) households for affordable multifamily housing, or adding universal design and accessibility requirements to the states’ qualified allocation plan.
Furthermore, HFAs have also provided programs for accessible and affordable homeownership and foreclosure mitigation for those facing the possibility of losing their home. The recession has changed the housing industry and HFAs have continued to implement a number of different strategies to meet the social goals established over the last decade and the changing needs of states concomitantly maintaining the primary mission of the agency.
The most recent economic downturn changed the way public policymakers are doing business, but it has also opened the doors to new opportunities. Support for socially driven missions is evident in the FY 2011 Transportation, Housing and Urban Development, and Related Agencies appropriations bill. The current administration is leading the way to continue supporting these socially driven endeavors through their funding commitments of projects that address housing needs for vulnerable populations.
An example of these programs included the “Veteran’s Homeless Demonstration Program” and other capital advance programs for Section 202/811 housing projects. Other opportunities have become available through the American Recovery and Reinvestment Act (ARRA) creating two new funding mechanisms (Tax Credit Assistance Program (TCAP) and the Exchange program) to reinvigorate the economy and the development of affordable housing. In tandem with these programs, the recent the allocation of HFA Hardest-Hit Funds to create unique solutions for those in severe economic distress driven by the high unemployment and recent housing crisis demonstrates the dynamic nature of housing policy led by HFAs.
While there is overwhelming support to continue and even ramp up efforts to maintain the socially driven missions demonstrated by the recent federal legislation, many HFAs struggle to garner collaboration for these efforts in the economically constrained environment. Relying on private investors, advocates, and non-profit partners to contribute to the implementation of housing policy, HFAs are questioned about the feasibility and appropriateness of these efforts. It is not that these socially driven housing policies are not seen as less valuable by stakeholders, but they are more difficult to achieve and possibly viewed as reaching beyond the scope of what should be typically mandated by a public entity. Moreover, public support for government intervention has eroded as time has passed since the 2008 flash point of the economic and housing crisis.
It is anticipated that in the process of adapting to the economic environment while expanding operations to address social issues; unintended consequences could influence future state-led housing policy. The role of HFAs in their traditional mission of allocating low-income housing tax credits for the development of affordable housing and selling mortgage revenue bonds to offer affordable mortgage products is certainly going to expand, but at what cost? Multiple sequelae of the economic and housing crisis could include a general decrease in the availability of affordable housing; on the other hand, these policy changes may also provide an opportunity for new entrants in the affordable housing industry.
Because the affordable housing industry is sensitive to the business models of private partners, some may not continue to pursue this type of housing product in their portfolio. Unlike commercial or private development, affordable housing is more complicated to build and operate due to funding constraints and the need to target housing to those with extremely low incomes or special needs. Alternatively, new developers may act as replacements for those who exit, attracted by similar socially driven missions.
To continue making strides towards the housing policies adopted before difficult economic times, while addressing the current housing crisis, states should consider key factors for the formation and implementation of comprehensive housing policy. Four critical items should be addressed: the role of partnerships, economic and social return on investments, eliminating politics, and transparency.
The unique mission of the Housing Finance Agencies is being challenged and changed by the instability in the bond market, tax credit market and the broader economy. It is this challenging environment that the programs and services provided by HFAs are most needed. By addressing the key issues discussed in this article HFAs will be better placed to respond to the current environment and plan for the future.
Holly A. Beard, Brian Carnahan and Blaine Brockman are all with the Ohio Housing Finance Agency in Columbus, OH. Email: [email protected]
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of the State of Ohio and the Ohio Housing Finance Agency.