On Common Ground: Winter 2008

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Creating Housing Opportunity

Creating a range of housing opportunities and choices is a major principle of Smart Growth, as stated by the Smart Growth Network, a coalition of more than 30 organizations including the U.S. Environmental Protection Agency, Smart Growth America and the NATIONAL ASSOCIATION OF REALTORS®.

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On Common Ground: Winter 2008

  1. 1. S m a r t G r o w t h ’s AFFORDABLE 2 ON COMMON GROUND WINTER 2008
  2. 2. Opportunities C reating a range of housing opportunities and choices is a major principle of Smart Growth, as stated by the Smart Growth Network, a In this issue of On Common Ground, we highlight the many efforts nationwide to provide affordable housing for working Americans. Several articles coalition of more than 30 organizations including the focus on the many programs that have been U.S. Environmental Protection Agency, Smart developed to meet the needs of people in specific Growth America and the NATIONAL occupations, such as police officers, teachers and ASSOCIATION OF REALTORS®. Other Smart resort workers. Other articles discuss tools, such as Growth goals, such as greater mobility, reduced employer assisted housing and preservation of traffic congestion and mixed-use walkable affordable rental housing, which can help moderate- communities, can best be achieved when every income people with housing costs. community has housing for all income levels. In addition to housing costs, transportation costs The inclusion of “ workforce housing” is an put an additional burden on households. As described especially critical element of a complete community. in this issue, Transit-Oriented Developments are an Workforce housing is described as housing serving increasingly popular form of development that can those who make between 60 to 120 percent of the lower consumers’ transportation costs. Building median income in their local area, or perhaps even up mixed-income housing at transit locations is the key to 200 percent in markets with high housing costs. to providing a valuable mix of affordable These are the people on whom we rely for basic transportation and affordable housing. By looking services in our communities, including education, law holistically at affordable housing, transportation and enforcement, safety, retail services and health services. land use planning can lead us to Smart Growth approaches to providing greater housing opportunities for all Americans. For more information on NAR and Smart Growth, go to www.realtor.org/smartgrowth. For more information on NAR and Housing Opportunity, go to www.realtor.org/housingopportunity. On Common Ground is published twice a year by the Government Affairs division of the NATIONAL ASSOCIATION OF REALTORS® (NAR), and is distributed free of charge. The publication presents a wide range of views on Smart Growth issues, with the goal of encouraging a dialogue among REALTORS®, elected officials and other interested citizens. The opinions expressed in On Common Ground are those of the authors and do not necessarily reflect the opinions or policy of the NATIONAL ASSOCIATION OF REALTORS®, its members or affiliate organizations. Editor Co-Editor Joseph R. Molinaro Mike Lehrman Manager, Smart Growth Programs Housing Opportunity Program NATIONAL ASSOCIATION OF REALTORS® NATIONAL ASSOCIATION OF REALTORS® 500 New Jersey Avenue, NW 500 New Jersey Avenue, NW Washington, DC 20001 Washington, DC 20001 Distribution: For more copies of this issue or to be placed on our mailing list for future issues of On Common Ground, please contact Ted Wright, NAR Government Affairs, at (202) 383-1206 or twright@realtors.org. WINTER 2008 ON COMMON GROUND 3
  3. 3. Analyzing the Market Today’s current housing opportunities and challenges By David Goldberg 6 ON COMMON GROUND WINTER 2008
  4. 4. I f there was an upside to the bursting of the for planning and design at New Urban Builders, “housing bubble,” it was supposed to be that the Inc. in Chico, CA. “In a sense, we stole from the end of the meteoric rise of home prices would at future market.” least make homes more affordable in the red-hot Builders “stole” from that market, Anderson said, metro areas that are the epicenter of the slump. by focusing on larger, more expensive homes, while After all, the years-long run-up during the period of ignoring the large swath of households that would anomalously low interest rates had torturous have been perfectly happy with a smaller house, consequences for households supported by town house or condo they could afford—especially teachers, firefighters and countless other modestly in locations that offered shorter commutes. “A lot of paying jobs. The commute to areas where they people were stretching to get into big houses they could “qualify” for a more affordable home got didn’t really want, thinking that it would be easier longer and longer, and budgets were stretched to sell it later to someone else who didn’t really want thinner and thinner. it,” Anderson quipped. Today, we hear story after story about high- production homebuilders and other developers bleeding red ink as new subdivisions go begging. With builders slashing prices to lure buyers, sellers of existing homes are watching their hoped-for asking prices recede. Bad news for sellers, but perhaps good news for first-time homebuyers. But then there’s that other set of headlines: The foreclosure crisis among high-risk mortgages is leading major lenders to pull in their horns and ratchet up qualification requirements or leave the business altogether. At the same time, mortgage rates for Adjustable Rate Mortgages are on the rise. All this is making it tougher and more expensive for less-affluent buyers to get into their own homes. “There is an affordability problem, and I’m guessing that it has gotten worse recently and will continue to get worse in the next few years,” said Kermit Baker, who serves as chief economic analyst at the American Institute of Architects and the Joint Center for Housing Studies at Harvard. “The marginal buyer was getting in with adjustable rate mortgages more than fixed. Many of those are gone, and rates are going up.” At the same time, he noted, “The concessions by builders are affecting a certain piece of the market, but you don’t see widespread lowering of prices. People selling their own homes will wait for the market to recover.” There isn’t a single housing market, of course. Market conditions are by their nature highly localized. In some areas the time on the market and price can be heavily influenced by just a small number of large projects. “You could pick out 15 or “It’s fair to say we are 20 metro areas where there was massive overbuilding,” Baker said, “but the issues are in the entering a fundamental areas where the subdivisions are, but not in the rest of the metro area. The area where we’re seeing turning point in how concessions is in the new home market, where there is inventory overhang.” households are making Where have those buyers gone? “Buyers are on strike now because many who would be looking for housing decisions a move-up house already exercised that option when rates were low and prices for the first house and responding to were high,” said R. John Anderson, vice president changing conditions.” WINTER 2008 ON COMMON GROUND 7
  5. 5. “We’re seeing changes in lifestyles and a growing preference for being close to jobs and activities.” Since the 1970s, the median size of newly built housing costs anymore. You have to talk about houses has grown by roughly 45 percent, reaching housing and transportation, because it is getting so 2,300 square feet early this year, according to the expensive.” In high-mileage Atlanta, for example, U.S. Census Bureau. This occurred even as the combined cost of housing and transportation households were shrinking. In 2006, the share of accounts for 61 percent of the typical household single-person households edged past the proportion budget, higher than any other region save the San of households with children; both hovering near 31 Francisco Bay area. But with one in seven percent. Wages, meanwhile, have stayed flat in households nationally paying more than half of its recent years. income for housing, according to the Joint Center, There are signs the building industry has begun Atlanta is far from alone. to take notice. Saddled with a surplus of larger To accommodate the new economic and houses that are a drag on the bottom line, high- demographic realities, Baker said, “There will production builders such as KB Home and Centex continue to be a trend toward more of a mix of have announced that they will build smaller, more housing types and uses in areas closer to jobs. And affordable homes aimed at first-time buyers. more changes are ahead now that sustainable Already in the second quarter of this year, the design and green building are coming into play as average size had slipped to 2,241 square feet, and people become concerned about climate change market observers believe the trend will continue. and energy independence.” Recognizing the There are a number of signs that the slumping growth in a more “urban” market, at least four of the sales in exurban subdivisions and shrinking house big, national homebuilders—KB Home, Centex, K. sizes are bellwethers of something more than a Hovnanian and Toll Brothers—have created temporary market “correction,” Baker said. “It’s fair divisions focused on building attached and other to say we are entering a fundamental turning point housing in mixed-use settings. in how households are making housing decisions But will all these changes help more people find and responding to changing conditions. an affordable place to live? Tammie Hoy, executive “The affordability issue is something more director of Low Country Housing Trust in pressing in the last couple of years. We’re also Charleston, SC, thinks they will, if they are managed seeing changes in lifestyles and a growing well. “The best way to promote affordability is to preference for being close to jobs and activities. maximize land, because that’s the biggest cost on Homebuyers were disillusioned with buying houses the coast. We promote higher density, mixed use 15 to 20 miles from what they needed or wanted to communities because that’s more efficient in terms do, and now higher fuel costs underscore that and of land and infrastructure. If it’s well done it can you’re paying more for transportation.” reduce the cost and make a nicer neighborhood.” Egbert Perry, CEO of The Integral Group, an Building a denser mix of housing types requires Atlanta developer, agreed. “You can’t just talk about a transition from viewing housing as a commodity 8 ON COMMON GROUND WINTER 2008
  6. 6. to building distinct places, said Anderson. And that presents a greater design challenge than carving out makes the design both of individual homes and of uniform lots and offering a few similarly sized house neighborhoods all the more critical, he added. plans. Closely grouped houses have to be arranged At the level of the individual home, this means to allow for private space, as well as usable, shared “recognizing that one size really doesn’t fit open space. Buildings of all sizes and types must be everyone,” he added. This can mean, for example, built with similar design detail to protect the building houses as small as 1,000 square feet and property values and cohesion of the neighborhood. avoiding house plans that have the garage Meeting the changing demand and economic incorporated, and making a detached garage an circumstances will require that not only developers option rather than a standard feature. This makes change their way of doing business, but that the house cheaper, but it also increases flexibility for government does as well. Local governments have the buyers, he said. “Once the garage is detached, played a role in promoting the building of higher- we don’t really care whether you buy a garage or end subdivisions over more affordable homes, some not. You can do it now or later, build it bigger and developers said. Most jurisdictions zone their land put an apartment over it; or skip it and build a into single uses at low densities. Many also have carport.” The smaller a house is, the more the put up a growing number of regulatory barriers to available space needs to be used flexibly and more-affordable housing, imposing requirements efficiently—a bigger design challenge than for larger lots, bigger houses and restrictions on building a separate room for each function, but also multifamily housing. When interest rates were low a big money-saver. and barriers to building affordable homes high, Similar considerations operate at the builders cranked out the large, single-family houses neighborhood level as well, Anderson said. Buyers that are now waiting for buyers. looking at a particular neighborhood should have a In the Bay Area and Central Valley of California, variety of options, from small to large houses or from where Anderson works, building the more attached to stand-alone. “People decide they want to affordable, compact configurations can require a be in the neighborhood and they decide which dozen or more special allowances, he said. At times house is a better fit or more affordable.” Again, this his firm has negotiated a special zoning overlay known as a form-based code, which regulates the form and placement of buildings so that the overall Building a denser mix design has a “high-quality” feel, whether the units of housing types are costly or more affordable. Government can help make homes more requires a transition affordable in others ways as well. To help meet the powerful demand for “workforce” housing for the from viewing housing technology workers making $50,000-$80,000 a year, Anderson is working with local jurisdictions to as a commodity to develop smaller one- and two-bedroom condominium flats. In Chico, the city offers second building distinct places. mortgages to help cover costs. Employers are getting into the act, too. In Silicon Valley, some companies are offering their employees an Employer-Assisted Housing plan to help pay for a downpayment or closing costs. Though well behind northern California in terms of house prices—like every other region—the Charleston area is seeing similar changes, Hoy said. “Developers are finally starting to think of working families as a niche market,” she added. “It’s a whole new set of customers for developers who think of it that way. But everyone—developers and local governments alike—is having to go to school on how to build for it successfully.” David A. Goldberg is the communications director for Smart Growth America, a nationwide coalition based in Washington, D.C. that advocates for land-use policy reform. In 2002, Mr. Goldberg was awarded a Loeb Fellowship at Harvard University where he studied urban policy. WINTER 2008 ON COMMON GROUND
  7. 7. Balancing Shared equity home ownership addresses affordable housing needs By Judy Newman 10 ON COMMON GROUND WINTER 2008
  8. 8. the Cost N ancy Rowand and her 18-month-old twin equity housing, a trend that, in the past few years, daughter and son were welcoming the has taken on the momentum of a bullet train. holidays in their tiny Washington, D.C. Though their numbers still make up only a apartment on Christmas Eve, 1977. small percentage nationwide, more and more But their joy faded quickly when Rowand people are embracing shared equity arrangements received a startling, hand-delivered “gift:” an to become homeowners. eviction notice. Shared equity, also called permanently New owners of the eight-building, 96-unit affordable home ownership or third sector housing, complex—built in the 1940s to house military or is a step between the traditional American housing military support staff—wanted to tear down the alternatives of either buying or renting; of private 600-square-foot, one-bedroom apartments between home ownership or ownership by a government Georgetown and American universities or convert agency or nonprofit organization. them to condominiums. In shared equity arrangements, a homeowner Rowand and her neighbors, a diverse group of generally receives some type of subsidy from a moderate-income people, were not about to let that government agency or nonprofit group, reducing happen without a fight. They formed a committee, the purchase and payment costs. In return, the hired lawyers and appealed to the city for help. “We homeowner shares the rise in the home’s value with had a rally and chanted, ‘we shall not be moved,’” Rowand said. Southern Lights in Boulder, Colorado And they won. In 1979, the Beecher Cooperative was created, 63 units in six buildings, for an initial buy-in cost of $1,000 per household plus a co-op fee to cover a blanket mortgage on the property. Nearly 30 years later, the Beecher Cooperative is still going strong. In 1986, members bought out the limited partnership that co-owned their buildings, raising $2.5 million through individual share loans averaging $30,000 from the National Cooperative Bank. Today, households pay $550 to $800 a month in mortgage and co-op fees, Rowand said, a lot less than the area’s market-rate, one-bedroom rents of about $1,400. “We’re very much of an anomaly,” Rowand said. “We really have a beautiful situation in an area of Washington, D.C. that’s very pricey, wooded and Three types of very desirable.” The Beecher bunch might not shared equity have foreseen it at the time, but it was part of what has become a housing are growing trend toward shared gaining ground. WINTER 2008 ON COMMON GROUND 11
  9. 9. that organization. There are income guidelines for and reduce their home-buying costs while purchasers and often, rules on use of the property, investors could participate in “a new asset class,” shared governance, and caps on appreciation. the report suggested. A study on shared equity home ownership by Also in April, a Business Week article said one John Emmeus Davis for the National Housing type of shared equity mortgage already is Institute (NHI) in 2006 concluded that “after becoming more prevalent: parents contributing to waiting in the wings for many years, third sector their child’s home downpayment and claiming a housing is now reaching a broader audience and comparable share of the appreciation when the winning wider support.” Davis estimated there home is sold. could be anywhere between 500,000 and 800,000 But the concept of shared equity is not without its shared equity units around the country. But that bumps, ranging from how long covenants should number will likely explode over the next decade. As stay in effect to how much equity the homeowner housing costs have soared, more and more cities should receive. And it is not for everyone. Shared have adopted inclusionary housing requirements equity homeowners won’t get rich on their real and set up housing trust funds. estate investment. At the Beecher Cooperative, Meanwhile, an expanding range of alternatives units are now valued at $90,000; condos in the two is being explored as the call for affordable home buildings that did not join the co-op were recently ownership grows louder. Shared equity mortgages, selling for $250,000. But that’s the crux of the in which homeowners share the increased value program: to keep home ownership affordable. of their property with investors, are touted in an Most commonly, three types of shared equity April 2007 report co-authored by New York housing are gaining ground, the NHI study said: University economics professor Andrew Caplin in limited equity co-ops, such as the Beecher partnership with the Fannie Mae Foundation. Cooperative, deed-restricted housing and Homeowners would gain a new source of financing community land trusts. In Boulder, Colo., four families moved into two Deed-restricted houses, new duplexes in July in Southern Lights, a deed- restricted housing project initiated by the Boulder town houses and Area REALTOR® Association. With the help of Boulder’s Affordable Housing condominiums are Alliance—a nonprofit group that already had built other deed-restricted units nearby—and the the fastest growing city’s land contribution, the REALTORS® raised $75,000 and worked side-by-side with the form of shared equity homeowners-to-be, hammering, painting and landscaping the property. home ownership. City’s Edge in South Burlington, Vermont Elmwood in St. Albans, Vermont 12 ON COMMON GROUND WINTER 2008
  10. 10. Southern Lights in Boulder, Colorado REALTORS® worked side-by-side with the homeowners-to-be, hammering, painting and landscaping the property. The Victorian-style duplexes were sold to shared equity home ownership, the NHI study families earning 80 percent of the median income said, primarily because so many communities are or less, about $57,000 for a three-person household. now using regulatory incentives and inclusionary “Architecturally, they do not resemble affordable mandates, requiring that some or all new housing housing that you may be used to seeing,” said developments include affordable units. Kenneth Hotard, senior vice president for public Community land trusts also are sprouting affairs with the Boulder Area REALTOR® nationwide, from Burlington, Vt. to Irvine, Calif. Association (BARA). Traditionally, the land trust owns the land and Two of the units are 1,504 square feet, with four leases it to the owner of the home that sits on the bedrooms and two baths; they sold for $200,000. land. With condominiums, there’s no land to lease, The other two, at 1,227 square feet, with three so a covenant fulfills a similar purpose. bedrooms and two baths, sold for $175,000. The Burlington Community Land Trust, one of the “Market rate would be at least twice that much,” oldest community land trusts in the U.S., was Hotard said, noting that Boulder’s median home founded in 1984. Renamed the Champlain Housing sale price is $560,000. Trust when it merged with the nonprofit Lake City rules specify that when the current Champlain Housing Development Corporation in homeowners sell their duplexes, the price cannot 2006, it is also one of the largest, encompassing appreciate more than 1 to 3.5 percent a year. nearly 400 single-family homes and condominiums, Boulder also has inclusionary zoning rules more than 1,400 rental units and six co-ops with 115 requiring 20 percent of all housing built to be homes in a three-county area of northwest Vermont. permanently affordable. But a problem has Eighty employees run the land trust, which also sees emerged, Hotard said: there’s not enough housing its mission as revitalizing declining neighborhoods, for middle-income people. not just with housing but also stores and offices. “We’re basically driving the middle class out,” “We really are a large-scale community develop- he said. BARA plans to work with the city to create ment organization,” said Kirsten DeLuca, homeland incentives to build more middle-income homes. and technical assistance program manager. Deed-restricted houses, town houses and Champlain serves households below the area’s condominiums are the fastest growing form of median income and provides a subsidy that lowers WINTER 2008 ON COMMON GROUND 13
  11. 11. the cost to the buyer, then limits the appreciation Neighbors who paid full price don’t get angry, the homeowner can receive to 25 percent when the DeLuca said. “If you can afford to buy a market- home is later sold. rate home on your own, that’s a better investment. For example, on a home priced at $200,000, You’ll get 100 percent of the appreciation.” Champlain may provide a $50,000 subsidy. When People get involved with the land trust because the owners decide to sell, a fair market appraisal is they’re “entirely priced out of the market,” DeLuca conducted. If the home is then worth $240,000, the said. “We’re talking nurses, teachers, firemen; owners will get $10,000 of the $40,000 middle-class and working-class folks cannot afford appreciation. They sell the home back to the land to buy property in our area. We have a critical trust for the amount they initially paid—$150,000— affordable housing crisis and that’s what you’re plus $10,000, for a total of $160,000. The land trust seeing in many parts of the country,” she said. “If keeps the housing affordable by providing the next folks want to afford a home, for many people, this is buyer with a $70,000 subsidy, holding the their only option.” mortgage down to $170,000, DeLuca said. The Champlain Housing Trust is seen as a Potential homebuyers not only can buy units built model for the nation and serves as a mentor to land by Champlain, they can also find a home they like trusts organizing elsewhere, including City First but can’t afford in another location and ask to make Homes, incorporated in Washington, D.C. in it part of the land trust, with a subsidy from the October. Its goal: creating 1,000 units of organization to help cover the fair market value cost. “permanently affordable workforce housing” within three years. “If folks want to own a home, for many people, this is their only option [the land trust].” 14 ON COMMON GROUND WINTER 2008
  12. 12. “It has become increasingly clear that workforce housing was a challenge that was facing D.C. for which there were no large-scale solutions,” said David Wilkinson, executive director of City First Enterprises, nonprofit parent of City First Homes. City First is using a $10-million city grant coupled with $65 million in private financing, whose investors will receive federal New Markets tax credits. The homes will target families at 80 percent of D.C.’s median income, currently at $94,500 for a family of four. Average home prices are nearly $450,000, Wilkinson said. “A teacher in D.C. in 2000 could buy one of every three homes. Now, it’s closer to one in 10. Real estate rates have risen much more quickly than incomes in D.C. so the city is facing potential shortages of teachers and health care workers and others.” City First plans to work with developers to build town homes, single-family homes, condominiums and cooperatives in mixed-income developments throughout the District of Columbia, Wilkinson said. City First will help finance the affordable housing part of the development which will be passed along as a 3 percent second mortgage for the homebuyer. For example, on a $300,000 home, the buyer would take out a $225,000 conventional mortgage. The remaining $75,000 would come from City First as a second mortgage, with 3.1 percent interest. When the buyer later sells the unit, the buyer takes 25 percent of the appreciation. “We are told by home ownership counselors and other real estate market experts across the city that demand will be very high for this. It will significantly increase the affordability of units,” Wilkinson said. Developers like the idea because it expands the number of potential buyers for their units, he added. Irvine, Calif. is another community establishing a new land trust. Approved by the city in 2006, its goal is to create 9,700 units by 2025—10 percent of Irvine’s housing stock. Shared equity housing is “a vision that is neither impractical nor remote,” the NHI study said, calling for more resources and research into such programs. Public and private support are growing, the study noted, adding, “There are encouraging signs that third sector housing has Shared equity housing is finally arrived.” a vision that is neither Judy Newman is a business reporter for the Wisconsin State Journal newspaper in Madison, Wis. impractical nor remote. WINTER 2008 ON COMMON GROUND 15
  13. 13. A New Benefit Employer Assisted Housing in the 21st century 16 ON COMMON GROUND WINTER 2008
  14. 14. By Mike Lehrman I n his work entitled “The World is Flat,” Thomas Friedman explained how astounding advances in technological collaboration combined with the global spread of capitalism have fundamentally altered the way businesses operate. In a growing global economy, companies are now facing more fierce competition for business and resources both locally and around the world. This competition extends to recruiting and retaining a productive workforce. As the business landscape continually evolved, the median home price in the United States increased from $126,000 in 1997 to $228,900 in July of 2007, an increase of more than 80 percent. As business practices have changed at an ever increasing rate, so have demands on space in America’s urban areas, and housing prices have risen dramatically as a result. Skilled workers are now in higher demand at a time when the price of owning a home is the highest in history. Employers have begun to recognize that in order to remain competitive in the changing business landscape of the 21st century, they must attract and retain skilled employees. One way that businesses have increased their recruitment and retained more employees is by enacting various housing benefit programs. Employer Assisted Housing (EAH) is a term that describes an employer benefit program that helps employees attain housing in both the rental and home ownership markets. A financial EAH program can take many different forms, but is most commonly administered as downpayment assistance, rental/mortgage assistance, shared equity, forgivable loans, matched savings or upfront grants. According to the Society of Human Resource Managers (SHRM) annual benefits survey, the number of employers who offer their employees WINTER 2008 ON COMMON GROUND 17
  15. 15. downpayment assistance has increased greatly in Act,” originally proposed in 2005, provides a the past seven years. In 2000, only 3 percent of all federal tax credit to companies for a portion of the employers offered a downpayment assistance expenses that they incur by offering a housing benefit program. In 2007, that number increased benefit to their employees. Furthermore, this significantly to 11 percent of all employers. legislation treats housing assistance benefits of up Rental and mortgage assistance programs have to $10,000 as nontaxable income for the employee. experienced similar increases during the same Lastly, the legislation creates a competitive period. In 2000, only 6 percent of all employers grant program whereby nonprofit organizations offered rental assistance. In 2007, that number that assist in the administration of EAH programs increased to 19 percent, dropping slightly from the can apply for federal grants to fund their efforts. high of 22 percent in 2006. Mortgage assistance Many times nonprofit organizations offer free programs doubled during this time period as well, credit counseling services to employees who increasing from 6 percent to 12 percent. participate in an EAH program. Employers in the most competitive fields with Enacting such a bill would create a large highly skilled workers have turned to these tools as incentive for employers to offer EAH benefit a way of increasing recruitment efforts and programs to their employees. Despite having retaining employees for a longer period of time, numerous cosponsors, the legislation did not make thus increasing productivity and limiting costs. it to the Senate floor for a vote, but future prospects Employers have found that offering a benefit like a for the bill remain promising. forgivable loan can greatly increase retention rates, As policymakers have become more aware of the as employees have a financial incentive to remain increasing value of EAH programs, so also have with the company until the full balance of the loan federal regulators. In August of 2007, the Office of is forgiven. These programs have the potential to the Comptroller of the Currency released a report improve the bottom line of employers who face entitled “Understanding Employer-Assisted high turnover rates and engage in competitive Mortgage Programs: A Primer for National Banks.” employee recruitment. The study was released as a response to the SHRM Benefits Survey, 2000-2007 Employers have found Benefit Mortgage Assistance Rental Assistance Downpayment Assistance that offering a benefit Yes/No Yes No Yes No Yes No like a forgivable loan 2000 2001 6% 9% 89% 88% 6% 8% 90% 89% 3% 5% 93% 92% can greatly increase 2002 7% 94% 5% 95% 4% 96% retention rates. 2003 12% 88% 15% 86% 9% 91% 2004 12% 88% 19% 81% 8% 92% 2005 13% 87% 21% 79% 9% 91% 2006 12% 89% 22% 78% 11% 89% 2007 12% 88% 19% 81% 11% 88% As the popularity of EAH expands, it is beginning to be recognized among policymakers as an important tool which helps to expand home ownership and revitalize communities. Despite this, currently there is no federal incentive for companies to offer employees a housing benefit. Companies do not receive any tax incentive for offering this kind of benefit program, and unlike health, dental or life insurance benefits, employees must pay tax on all housing related benefits that they receive. Senator Hillary Clinton (D-NY) introduced a bill in April of 2007 that would change this portion of the tax code. “The Housing America’s Workforce 18 ON COMMON GROUND WINTER 2008
  16. 16. REALTORS® have taken important roles to promote EAH programs. increasing popularity of EAH programs, and was When Lane heard about the Home From Work™ intended to explain to bankers their responsibility program, she thought it was a great fit for her efforts when issuing a loan to a homebuyer who is in Las Vegas, and she traveled to Denver in late participating in an EAH benefit program provided 2006 to participate in an NAR sponsored Home by their employer. From Work™ training session. Lane recognized In addition to politicians and federal regulators, “bringing the employer into partnership with REALTORS® have also taken a leadership role by nonprofits and lenders creates another source to promoting EAH in their own communities. In 2006, help potential homeowners achieve the dream of the NATIONAL ASSOCIATION OF REALTORS® home ownership.” She adds, “the program is about (NAR) launched Home From Work™, an outreach building goodwill by educating the employers and and educational campaign that teaches educating the public.” REALTORS® how to assist employers in creating Lane has successfully achieved that goal, their own EAH program for their employees. working with the city councils of Henderson and Home From Work™ encourages REALTORS® to Las Vegas along with a statewide title company to get involved with lenders and nonprofit groups in organize eight-hour HUD approved homebuyer their communities to help promote employer educational courses for employees who are assisted housing and increase home ownership interested in home ownership. Lane is currently opportunities. Dawn Lane, a REALTOR® from Las working with these employers to construct an EAH Vegas, Nev., has done just that. financial benefit program that meets their In 2002, Lane founded the HOPE program individual business needs. (Housing Opportunities, Programs, and Education). Policymakers, regulators, nonprofits, lenders The HOPE program is a partnership between and REALTORS® have taken important roles to REALTORS®, local lenders and nonprofits to supply promote EAH programs as viable ways for HUD-approved home ownership education and employers to improve their bottom line while funding to prospective homeowners. Since 2002 the remaining competitive in the market and HOPE program has helped prospective homeowners promoting home ownership and vibrant find funding from nonprofits and affordable communities. EAH employee benefit programs are financing to achieve the dream of home ownership. a growing trend among companies and can be a To date, Lane and the HOPE program have helped valuable tool to help employers recruit and retain a more than 300 families become homeowners, and highly skilled workforce in an ever changing have never lost one to foreclosure. business environment. Mike Lehrman is an associate in the Housing Opportunity Program of the NATIONAL ASSOCIATION OF REALTORS®. WINTER 2008 ON COMMON GROUND 19
  17. 17. The Founda tion of home ownership REALTOR® Housing Foundations are providing innovative solutions for affordable housing By Brad Broberg WINTER 2008 ON COMMON GROUND 21
  18. 18. J oyce Patton froze in disbelief. Then she mortgage-ready was eligible to win a free house if hugged her children. Then she cried. Joy, not they had not already bought one. sorrow, triggered her tears. Her name had just Talk about affordable housing! All people had to been drawn as the winner of a new home. do was show up for the annual drawing—and cross Six months later, Patton is still pinching herself. their fingers. “I never win things,” said the Charlotte, N.C. “I’ve never seen lives change in one moment resident. “Every time I walk in the house, I smile.” like that,” said Rodney Tucker, executive director of Patton’s good fortune was no accident. She earned the Charlotte HOF. “It was very exciting to see.” a chance to put her name in the hat for a 1,500- Of course, giving away a home a year—or 10 or square-foot home by completing a first-time 100—won’t solve the country’s affordable housing homebuyer education program—all made possible by crunch anytime soon. But it did build some buzz about the Housing Opportunity Foundation (HOF) of the the buyer education program and provide a creative Charlotte Regional REALTOR® Association (CRRA). Between 2003 and 2007, the CRRA Housing Opportunity Foundation teamed up with local builders to give away five homes to promote a buyer education program it co-sponsored with the Charlotte Housing Partnership. Each year, everyone who completed the program and became Providing a range of housing choices at all price levels is a principle of Smart Growth. example of how state and local REALTOR® associations are striving to make housing more affordable for more people. Across the country, local REALTORS® and state REALTOR® associations have established REALTOR® Housing Foundations. The Foundations are identifying, developing and promoting ways to expand affordable housing in their communities. Today, approximately 300 state and local associations sponsor programs of their own through their foundations to assist buyers, renters and builders of affordable housing. It’s not just the “right thing to do.” Providing a range of housing choices at all price levels is also a principle of Smart Growth that allows people to live in the same community where they work, taming sprawl and curbing the congestion created by mass commutes. Beyond that, a healthy supply of affordable housing creates a more dynamic market for REALTORS®. Joyce Patton, winner of a new home through the first-time, homebuyer education program. 22 ON COMMON GROUND WINTER 2008
  19. 19. “At the end of the day, if people aren’t moving support a wide range of affordable housing initiatives into the first home and building equity, there’s and organizations in their communities—with more never going to be a second home,” said Monica and more emphasis on increased production of Rodriguez with the California Association of workforce housing. REALTORS® (CAR). “We’re helping people grab How big is the problem? Nearly one-third of the first rung of that ladder.” Americans worry they will never be able to afford a The CAR recognized early on the growing chasm home and nearly 60 percent are concerned that the between incomes and housing prices—and not just for high cost of housing is hurting their local economy, the poor, said Toby Bradley, former president of the according to a 2006 survey by the NAR’s Housing CAR. “Much of the workforce, even the middle class, Opportunity Program. cannot afford housing,” she said. “The statistics are While individual markets vary widely, the average bad all over the country.” monthly mortgage and interest payment climbed from Bradley began pushing $840 in 2003 to $1,132 in 2006. Other costs associated the issue to the front burner with home ownership also have risen steeply. The in 2000. Three years later— Energy Information Administration estimates that during her term as between 2005 and 2006, the average price of president of CAR—the electricity rose 12 percent, natural gas rose 28 percent association launched its and heating oil rose 25 percent. Meanwhile, annual Housing Affordability Fund. state and local property taxes climbed from an “The market—supply and average of $969 per person in 2002 to $1,121 in 2004, demand—wasn’t taking according to the U.S. Census Bureau. care of the problem,” she The lack of affordable housing also is hurting said. “We needed to become renters. According to the 2006 Housing more proactive.” Opportunity Program survey, more than two-thirds Over the years, the CAR’s of Americans believe that families in their Housing Affordability Fund community have difficulty paying their rent has awarded $1.8 million compared to 7 percent who thought so in 2005. to local REALTOR® State and local associations are using many Associations in California, different models to attack the problem. The New which have used it to Jersey Association of REALTORS® (NJAR) Housing Opportunity Foundation awards some money to local associations to support various projects of their choosing, but most goes to New Jersey Community Capital (NJCC), a nonprofit corporation that finances the creation and preservation of housing and commercial real estate. Since 2004, the NJAR Housing Opportunity Fund has given more than $200,000 to NJCC, including $57,900 in 2007. The money helps support a program that supplies pre-development financing for affordable housing—both homes and apartments—developed by nonprofit and community organizations. Examples include redevelopment Pleasantville, New Jersey of the F. Berg Hat Manufacturing Co. in Orange. When completed, the converted factory will include a mix of Nearly one-third of Americans 35 market-rate and affordable housing units. Other projects supported by the worry they will never be able Housing Opportunity Fund include the development of 10 apartments in to afford a home. Montclair and two single-family homes in Pleasantville. WINTER 2008 ON COMMON GROUND 23
  20. 20. Although $200,000 is a relative drop in the Grants from the CAR Housing Affordability bucket, the money provides pre-development Fund have helped local associations support a financing that many organizations are unable to variety of strategies to achieve that goal, including obtain from more traditional sources. “Partnering housing trusts. The Marin Association of with New Jersey Community Capital enables us to REALTORS® received $150,000 to support the leverage our contribution to make a much larger Marin Workforce Housing Trust (MWHT), which impact on the supply of affordable housing provides low-interest loans to housing developers throughout the state,” said Teresa Tilton, director of that construct homes and apartments affordable to political affairs and member services for NJAR. lower- and moderate-income families. The NJAR also strives to make an impact by According to the MWHT, the median price of a showing its members examples of successful single-family home in Marin County is $899,000 affordable housing initiatives. Every year, the NJAR forcing many local workers—teachers, nurses, joins with the New York and Pennsylvania police officers, clerks—to commute long distances associations to hold the Triple Play Convention in Atlantic City. And every year, the Housing Opportunity Fund sponsors a bus tour of “We care about affordable redevelopment projects in Atlantic City—many of which include affordable housing. housing and helping all “It’s a way to show our members the new face of affordable housing and give them ideas that they members of the community can take back to their communities,” said Tilton. Member donations account for much of the get into a house.” money REALTOR® associations use to support affordable housing initiatives. Other major sources include fund-raising events, a slice of association dues and—where state law allows—interest from earnest money in escrow accounts. The Colorado Association of REALTORS® relies on escrow interest to fund its Housing Opportunity Foundation. With an annual budget of between $300,000 and $500,000, it awards grants to housing organizations that help first-time homebuyers, the homeless and victims of natural disasters and domestic violence. The foundation also helps families in danger of losing their homes. Last year, it gave the Colorado Division of Housing $30,000 to help launch a new Foreclosure Prevention Call Center. The center— the first of its kind in the country—connects homeowners involved in foreclosures with counselors who help them find options to eviction. As the rising cost of housing has priced more and more people out of the market, the term affordable housing—often stigmatized as low-income housing—is being replaced by the term workforce housing to better reflect that it isn’t just “poor” families who can’t afford to buy a home. In California, for example, only 14 percent of the state’s households can afford a median priced home, according to the CAR. “We certainly can’t solve the problem on our own or address the problem in a comprehensive fashion,” said Rodriguez. “But we want to show we are at the table, and we care about affordable housing and helping all members of the community get into a house.” 24 ON COMMON GROUND WINTER 2008
  21. 21. The fund helps low- to moderate-income families qualify for a conventional loan. from surrounding counties. As a result, traffic In Charlotte, the Home Giveaway Program clogs the roads, workers lose time with their generated plenty of publicity, but the CRRA families and employers struggle to hire and retain Housing Opportunity Foundation is not a one-trick quality employees. pony. Among other activities, the foundation also Given Marin County’s location—it’s directly conducts a Workforce Housing Certificate Program across the Golden Gate Bridge from San that helps REALTORS® learn how to work with first- Francisco—the high price of housing is not time homebuyers. The program includes unexpected. But housing costs are also a problem participation in Home from Work™. three hours away in sparsely populated Calaveras Developed by the NAR, Home from Work™ County, where demand from retirees and people teaches REALTORS® to work with employers to buying vacation homes is pricing the local develop housing benefit plans that offer buyer workforce out of the market as well. education, downpayment assistance, loan “You’d be hard-pressed to find a house here for guarantee programs and other forms of less than $350,000—even a small one,” said Tim assistance to their workers. Muetterties, a local REALTOR® and current chair of That’s just the sort of hand up that gives working the board of trustees of the CAR Housing men and women like Joyce Patton a shot at home Opportunity Fund. ownership. As it turns out, the luck of the draw was Compared to Marin County, that may sound like all Patton needed. Yet the single mother of three— a bargain, but incomes in Calaveras County are who went back to college to study electrical about one-third as much as incomes in the Bay Area engineering and now designs distribution systems and many members of the workforce end up leaving for the local power company—was on track to buy a to find more affordable housing. “The American home on her own thanks to the financing options Dream is to own a home, and if you can’t find a and access to downpayment assistance she gained place you can afford, you’re going to move through the buyer education program. someplace where you can,” said Muetterties. “I feel like I should carry cards with information To stem the tide, the Calaveras County [about the program] to pass around to people,” Association of REALTORS® established a Housing she said. Assistance Fund, receiving a $19,000 grant from the Brad Broberg is a Seattle-based freelance writer CAR Housing Opportunity Fund and raising specializing in business and development issues. His $19,000 on its own to get the program started. The work appears regularly in the Puget Sound Business fund helps low- to moderate-income families qualify Journal and the Seattle Daily Journal of Commerce. for a conventional loan by providing downpayment assistance or buying down the interest rate. WINTER 2008 ON COMMON GROUND 25
  22. 22. Transit- O nce the site of Denver’s historic Elitch gardens and amusement park, Highlands’ Garden Village in Colorado might just be one of the best examples of recent transit- oriented development and Smart Growth around. The approximately $105 million project created by Jonathan Rose Companies boasts a bus line just 10 minutes from downtown; 75,000 square feet of retail space; schools; a theater; a carousel; 140,000 square feet of open space—and every bit of it is tastefully entwined with dozens of lofts, multi-family residences, town homes, single-family houses, senior residences and carriage houses. 26 ON COMMON GROUND WINTER 2008
  23. 23. Portland, Oregon Oriented By Amanda Kramer Developments Affordable choices: Connecting communities to the workplace Jonathan Rose Developer Chuck Perry said the project, which was completed in 2007, has been a rousing success. And for a site that may have been considered “underutilized” a few years ago, Perry said, the Highlands’ area in Denver is now basking in the light of its successful marriage of transportation lines and life— the key to transit-oriented development, or “TOD.” “These (TODs) are the wave of the future,” said Perry. “We need to be continually working to create dense, mixed-use, mixed-income communities.” WINTER 2008 ON COMMON GROUND 27 WINTER 2008 ON COMMON GROUND 27
  24. 24. TODs address affordable housing What Perry is saying—and what he’s helping to build—isn’t far off the mark. According to the Center for Housing Policies’ most recent report, “A Heavy Load: The Combined Housing and Transportation Burdens of Working Families,” a growing number of cities across the United States are identifying a lack of affordable housing, an increase in commute times and traffic congestion as high-priority issues. In fact, the study suggests that it’s critical for cities or regions throughout the United States to constantly consider both a housing and transportation policy—together. Mariia Zimmerman, vice president of policy for Reconnecting America, spends much of her time studying the impacts and policies surrounding current transportation-oriented development and how her organization can improve federal policy’s investment in the trend. Zimmerman, whose national nonprofit organization works to integrate transportation systems and the communities those systems serve, said the benefits of living in a TOD can be far- reaching—and all touch on the issues identified in the Center’s study. “If you’re looking at one development versus a TOD community, there’s much more benefit if it’s part of a whole community strategy,” Zimmerman said. “We see households who live near transit own a half a car less and spend less on transit. There are other benefits if you’re in a vibrant, mixed-income, walkable neighborhood—you’re getting more exercise, there’s nice engaging open space … you’re creating great places.” “For the developer, the positives are that there’s more of a price premium for the TOD units—even with the higher cost it takes to do many of these projects. I think at its most basic element that’s what’s appealing for development,” Zimmerman continued. “The retail mixed-use side is still hard for the developer and may have slower immediate return, but the unit can maintain itself over the longer-time horizon.” Zimmerman said Reconnecting America has looked at the issue of incorporating mixed-income housing into TOD communities. “With a lot of urban markets there’s concern about gentrification and displacement,” she said. “There’s a growing interest in seeing if there are ways we can create mixed-income TODs so we have units available for people with a range of ON COMMON GROUND WINTER 2008
  25. 25. incomes, working families as well as some low- $519,” Perry said. “I believe that the key to effective income households.” TOD is going to be to ensure there are mixed- Perry said he finds the issue of mixed-income income communities and they create a sense of housing critical to the future of TODs. He said his place and a sense of community.” company considered and incorporated varying Perry said another older, but still thriving, TOD housing costs into the Highlands’ project. his company worked on was the Denver Dry Goods “The reactions have been very positive particularly Building renovation and renewal. Adjacent to a here—and what people really recognized is that light rail line and completed in phases from 1993 to we’ve created a sense of space, very pedestrian- 1999, the downtown historic department store was friendly. It’s an inter-generational community and redeveloped into housing, offices and retail stores the most significant thing is that you can stand at the using a handful of “green,” or environmentally bottom of a picture (of the development) and see friendly, features and attention to detail. Perry said town houses for $300,000 or apartments that rent for other developers had simply suggested the space “These (TODs) are the wave of the future.” Highlands’ Garden Village in Colorado WINTER 2008 ON COMMON GROUND 29
  26. 26. Dry Goods building renovation in Denver, Colorado The future of TODs The key to effective Currently, Zimmerman said Reconnecting TOD is going to be America is just beginning to research current trends in TOD and its future. to ensure there are “I can’t say where it is right now,” Zimmerman said. “Anecdotally, what we’re hearing is it does mixed-income depend on the market. In the Twin Cities, some people are putting plans for TODs on hold. In the communities. D.C. area; Charlotte, North Carolina; and the Bay area and the L.A. area in California, we’re hearing be used as retail, but his company felt the project that the market is healthy in terms of sales and would fare better and serve more if the TOD model prices—from all income levels. It actually appears were used on the 350,000-square-foot space. to be holding its own.” Perry said aside from focusing on mixed-income Whether waxing or waning, though, projects, he also strives to plan TODs that are as transportation planner Katherine Perez said it’s gentle to the environment as possible. For the Dry simply smart to realize that TOD could and should Goods renovation, Perry said his company play an important role in future development contracted with an organization to create an energy across the country. model for the building and incorporated a set of Perez, who currently serves as vice president of energy-saving features like rebuilding historic development for Forest City Development in windows with double-paned glass, using low VOC California and is often on the “front end” of paints and glues, and installing a cooling system development projects, said there are a number of that uses evaporative techniques. All are features to issues inherent to TODs that are important for maintain a home’s affordability into the future. developers and real estate professionals to 30 ON COMMON GROUND WINTER 2008
  27. 27. understand. TOD planning that addresses the need design—the best kind of land use and transit for live/work environments and affordable housing pairing, they understand the value of transit.” options must be a priority. Perez said that as for the future of TOD, “The real estate market is really going through developers across the United States may want to some tough times,” Perez said. “What cities and pay attention to overseas models. residents and community folks should be doing “They’re in Hong Kong, Singapore, Tokyo,” Perez right now—if they have a corridor and a busline— commented. “They’ve marshaled sustainability— is planning these TODs.” and comparatively, affordability—and they’re good Perez said some TOD markets are mature while at that. They’ve marshaled technology, and on the some are not there yet. transit side they make it very efficient. If you miss a “New York and Boston are mature, and Portland train there’s another in 30 seconds.” is sort of the gold standard of TOD,” Perez Perez said models for the best in TODs can be remarked. “They really do the best kind of urban found outside the country—where the fear of density and entrepreneurship often inherent to this type of development is nowhere to be found. TOD could and “We’ve got a lot to learn from overseas partners should play an and colleagues—how we take good ideas and not be afraid to cherry pick them, and how to be ambitious important role in with this stuff,” Perez said. “We’re not there yet, but we will get there, in my lifetime, for sure.” future development. Amanda Kramer is a freelance writer from Evansville, Wis. Portland, Oregon WINTER 2008 ON COMMON GROUND 31
  28. 28. The American Communities are attempting to ensure affordable rentals 32 ON COMMON GROUND WINTER 2008
  29. 29. Dream … By Steve Wright of Affordable Rental Housing WINTER 2008 ON COMMON GROUND 3
  30. 30. I f home ownership is the American Dream, then lack of affordable rental housing is the American Nightmare. For a huge percentage of Americans—those who are part of the increasing low-wage workforce, elderly, disabled, entry-level professionals, even mid-level wage earners in expensive big cities— renting makes more sense than home ownership. While the need for affordable rental housing has never been greater, the uphill battle to preserve existing affordable housing has never been steeper. A number of factors—an endless maze of U.S. Housing and Urban Development (HUD) regulations, the lure of market-rate rent earnings, high land values, perplexing local building codes— Chicago, Illinois threaten to diminish an affordable rental housing inventory that already fails to meet the rising demand for it. The John D. and Catherine T. MacArthur A number of factors Foundation is supporting a 10-year, $75 million initiative to preserve and improve affordable rental threaten to diminish housing across the country. The foundation’s “Window of Opportunity: an affordable rental Preserving Affordable Rental Housing” goal is to directly support the preservation and improvement housing inventory. of 100,000 affordable rental homes and to significantly improve the regulatory and funding from which to successfully maintain, manage environment for preservation through policy and operate properties that are affordable to reforms at local, state and federal levels. low- and moderate-income renters. “Harvard University’s Joint Center for Housing • Transactions. Current housing programs and Studies reports that over the past 10 years, two regulations are fragmented, cumbersome, existing units were lost for every affordable rental often unpredictable and inconsistently applied. newly built,” said Debra Schwartz, director of Transactions that would transfer properties to Program-Related Investments for the MacArthur new owners committed to preserving Foundation. “Without concerted action, our nation’s affordability and providing good long-term stock of affordable rental housing is projected to fall by stewardship are difficult, costly and slow. another million units or more in the decade ahead.” In the Chicago region, the MacArthur “It is expected that by the end of 2007, more than Foundation is breaking barriers by funding the $3.5 billion in new long-term subsidy and financing Preservation Compact, an Urban Land Institute will have been invested in ‘Window of Opportunity’ project that will save at least 75,000 existing projects at an average cost of roughly $80,000 per affordable homes in Cook County by the year 2020. home,” she added. “This is significantly less than The compact is working to create more the cost to build a new affordable rental unit responsive and flexible financing from investors, anywhere in the country today.” expedited approvals or tax incentives from the Schwartz, sharing observations she and MacArthur public sector and creative development strategies colleague Erika Poethig delivered at a HUD both from for-profit and nonprofit developers. symposium, identified three barriers to affordable One recent victory involved the Lorrington housing preservation that must be overcome: Apartments in Chicago’s Logan Square • Properties. Current resources, incentives and neighborhood, which has been affordable since requirements tied to affordable rental 1985. The building owner’s Section 8 contract was properties do not adequately encourage or expiring, and he was ready to sell. require owners to preserve long-term With housing costs steadily rising in the popular affordability or to sell to other owners neighborhood, the classic building’s 54 units could committed to that objective. have easily been sold to a for-profit condo • Ownership. Current policies also limit the conversion developer. ability of owners to recapitalize, earn sufficient But a combination of public, private and cash flow and build a sustainable capital base nonprofit agencies preserved them as affordable. 34 ON COMMON GROUND WINTER 2008
  31. 31. The nation’s largest nonprofit developer housing tax credits and bonds, $63 million in loans bought, rehabilitated and now manages and $39 million in tax-increment financing. the building—with a contract ensuring Additional money will come from the Illinois affordable rental prices through 2027. Housing Development Authority, the Federal Home A case study provided by the Loan Bank and private investors and lenders. Preservation Compact explains that the Without such aggressive programs, the nation’s pre-development financing was provided lack of affordable rental housing will continue to by a nonprofit lender specializing in create dire consequences, according to Sheila emerging markets. Crucial financing was Crowley, president of the National Low Income provided by both the state of Illinois Housing Coalition. through tax credits and a housing trust fund and the city of Chicago via bonds and Community Development Block Grant funds. The city of Chicago will In August, Chicago Mayor Richard Daley announced that the city will help help create nearly 2,700 create nearly 2,700 affordable rental units affordable rental units for low- and moderate-income households in 29 developments in neighborhoods across the city. for low- and moderate- The city’s $277 million contribution to the multiyear project includes $175 million low-income income households. Block grant-funded development in San Antonio, Texas WINTER 2008 ON COMMON GROUN
  32. 32. A national housing trust fund would be a tool for reinvesting in affordable housing preservation. “Communities are incomplete,” she said. “People housing. HUD needs to preserve the stock it has to who do jobs that the community needs—hospital remain competitive in the market. At the end of the aids, cashiers—these folks must work more than day, the problem is budgetary—(the federal) one job and are left with fewer hours for family time. domestic discretionary budget is low.” There are health and education consequences.” Crowley also called on HUD to provide help to “Kids who are in families who don’t have maintain the aging housing stock that was created affordable housing move from school to school,” with its dollars. she added. “With these increased rates of school “The federal government needs to put more mobility—churning through school system to money into this. A national housing trust fund school system—they don’t learn and are trying to would be a tool for reinvesting in affordable catch up. Teachers in the classroom must devote housing preservation,” Crowley said. extra time to them, which has a negative effect on Recently, in additional efforts to preserve the quality of schools.” affordable housing, the House passed the Crowley said for owners who want to get out of “National Affordable Housing Trust Fund Act of HUD’s rule, there should be incentives to 2007,” which will create a national fund to be used encourage them to sell to nonprofits that will to produce, rehabilitate and preserve affordable maintain the apartments as affordable rentals. housing. The funds could also be used for home “If you have a property that is in a declining ownership assistance including downpayment and neighborhood, you tolerate it,” she said of HUD closing costs. hurdles. “But if the neighborhood is improving, The obstacles preventing affordable rental then you’re motivated to get out of affordable housing preservation could be further removed by: 36 ON COMMON GROUND WINTER 2008
  33. 33. More affordable rental housing can be preserved by providing tax relief to owners of aging, low-income housing portfolios. states and counties matching the dollars that come air, congest the roads, lower productivity and from HUD, affordable developers creating good increase absenteeism. community relations programs that erase • There is a negative impact on community life neighborhood opposition and some sort of because people don’t identify with either their incentive or device that would assist developers in work community or their home community and overcoming regulatory barriers at the local level. are on the freeway when they could be coaching Denise Muha, executive director of the National Little League or volunteering at the hospital. Leased Housing Association, said a lack of • The incidence of substandard housing affordable housing rentals can result in problems increases as tenants don’t have decent choices, ranging from an insufficient amount of service so they accept whatever dwelling they can find. workers to keep an economy going to dangerous • Overcrowding results in both apartments and situations where 10 or more people are crammed houses. When housing is unaffordable, two into a tiny housing unit. families will double-up to rent housing. “Owners’ decisions to renew the contracts or • Illegal conversions—usually garages, but any terminate their low-income use are generally structures not intended to be housing—create market based, but can be attributed to something an unsafe supply of rental housing to meet we call ‘HUD fatigue,’” which Muha defined as demand in the underground economy. owners “just getting tired of dealing with the HUD • Employers cannot find workers to fill essential, layers of rules and changing policies and recently but lower paying, jobs. HUD’s inability to pay its bills—specifically, • Many young families leave the area and most subsidy on Section 8 contracts. Many owners have others can’t afford to move in, so an expensive waited one or more months for their funds, leaving area’s population becomes older very quickly. them late in paying mortgages, etc.” School population declines and perfectly good Muha said more affordable rental housing can schools close for lack of students. be preserved by providing tax relief to owners of As National Church Residences continues to aging Section 8 (low-income housing) portfolios in expand beyond its traditional portfolio of affordable exchange for selling the properties to new owners housing for elderly and disabled people and tackles that will recapitalize them to remain affordable for more diversified projects for all ages and years to come. populations, Senior Vice President of Acquisitions She notes that current tax laws act as a and Development Michelle Norris sees a need for disincentive for investors in certain properties to more flexibility from HUD. consent to a sale to a new entity that would “HUD headquarters must help steer the deal rehabilitate and extend the life of affordable through the complicated old regulations that seem apartment complexes. to want to trip up every deal and expedite the “It is shameful that in the richest country in the timing. Preservation often takes longer to do than world, a worker earning two times the minimum new construction, which means we aren’t reaching wage is living in substandard housing or doing as many communities as we should quickly without sufficient food, medicine, etc. to pay the enough.” Norris said. rent,” Muha said. “Americans have lost interest and “Preservation is complicated, often frustrating as a result, so has our federal government, in and hard to execute with excellence,” she ensuring that our citizens have a decent and safe continued. “However, when it is done right, it is place to live. Until housing becomes a priority on the absolutely the right thing to do. It is more national agenda, there will be families and elderly economical than building new, it is inherently and disabled folks living in substandard housing.” green, it allows residents to stay in their Julie Bornstein, president of the Campaign for communities and it creates partnership and great Affordable Housing, can easily tick off a list of the pride in all who are involved in saving the housing.” consequences of not preserving a healthy inventory Steve Wright frequently writes about Smart Growth of safe, well-located and affordable housing: and sustainable communities. He and his wife live in • Workers are pushed farther away from jobs and a restored historic home in the heart of Miami’s Little must endure long commutes that pollute the Havana. Contact him at: stevewright64@yahoo.com. WINTER 2008 ON COMMON GROUND 37
  34. 34. BUILDING STRONG By Christine Sexton 38 ON COMMON GROUND WINTER 2008
  35. 35. COMMUNITIES Housing options for those who protect, serve and teach Builders develop Barrington Village in Raleigh, North Carolina WINTER 2008 ON COMMON GROUND 39
  36. 36. A simple act of Christmas charity has become executive director of the San Diego Association of the inspiration for an innovative effort to REALTORS® (SDAR) and the driving force behind help those who help everyone else. the group’s new program, Everyday Heroes, Years ago, Tim Mercurio was a Cincinnati administered by the recently developed SDAR policeman who one Christmas Eve decided to bring Ambassador Foundation. home a woman and her two kids caught shoplifting The goal of Everyday Heroes is to provide instead of put in jail. This random act of kindness education and financial preparation, as well as buy resonated with one of the kids, who years later as down mortgage loan interest rates, for up to 10 part of a school project, wrote a letter to the qualifying San Diego Police Department officers by policeman, identifying him as a hero. the end of 2007. It’s part of a trend across the The incident left a lasting impression on Mike nation where REALTORS® are helping to provide Mercurio, the son of the kindly policeman. “I never workforce housing to those who serve, protect, looked at him the same again,” said Mercurio, the teach and care for Americans. “I saw the challenges my dad had. I can only imagine the challenges these men and women have,” Mercurio said of San Diego police officers. The first phase of the program will assist police officers, but Mercurio envisions that after the Ambassadors Foundation receives its tax free REALTORS® are helping to provide workforce housing to those who serve, protect, teach and care for Americans. 40 ON COMMON GROUND WINTER 2008
  37. 37. designation from the federal government, it can blossom further, extending to firefighters and other They really need to live municipal employees who may not be able to afford homes in the zip codes where they work. in the cities they are so “They really need to live in the cities they are so vested in serving,” Mercurio said. vested in serving. The Everyday Heroes program is funded in part by the Ambassadors for Cities grant program, which is funded by the NATIONAL ASSOCIATION OF REALTORS® in partnership with the United States Conference of Mayors. Funding for Everyday Heroes comes from other sources as well, including a recent golf outing that raised $25,000 and an upcoming benefit dinner. Those who have an interest in vying for the officers’ business, such as REALTORS® and mortgage bankers, also have to contribute to the program, by paying a $49 fee and registering for the ABCs course, or Ambassador Buyer Certification, which helps them help first-time homebuyers. To qualify for the program police officers must have served on the force between two and five years and must also be a first time homeowner. Prequalified officers will be offered access to Eure helped develop the Hertford Pointe educational programs and be given information complex, which boasts 24 apartments. The units about other organizations and programs in the city have two bedrooms, two baths, a living room, an that promote home ownership. updated kitchen, a dining area and laundry room. Teachers, too, are often held out as heroes, and They rent for $500 per month and profits will be used similar to police officers, can be locked out of to pay off the $2.2 million interest-free loan issued by affordable housing in the communities where they State Employees Credit Union Foundation, the work. In Hertford County, N.C., young teachers charitable arm of Eure’s credit union. fresh out of college cannot find affordable rental The school system donated the land, the town units in the county. At times, the lack of available and county extended utility lines, and private rental housing meant the county couldn’t hire businesses donated money. Hertford County enough teachers. James Eure, senior vice president School District Executive Director Betty Pugh had of the State Employees Credit Union and president an easier time recruiting teachers this year, and she of the Partners for Hertford County Public Schools, knows that the Hertford Pointe apartment complex helped broker a deal that changed all that. is the reason. WINTER 2008 ON COMMON GROUND 41

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