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Emily thaden and branda thorpy tuesday state of u.s. cl_ts 6-20-13
- 1. E M I L Y T H A D E N , P H . D . N A T I O N A L C L T N E T W O R K B R E N D A T O R P Y C H A M P L A I N H O U S I N G T R U S T The State of CLTs in the U.S.
- 2. Roughly 250 U.S. CLTs
- 3. Exponential Growth of CLTs 0 20 40 60 80 100 120 140 160 180 200 220 240 260 1970-74 1975-79 1980-84 1985-89 1990-94 1995-99 2000-04 2005-09 2010-13
- 4. Foreclosure filings on U.S. properties by year 1 in 45 housing units 1 in 45 housing units
- 5. We’re the solution to “hot market” problems % of Median Income needed for first purchase % of Median Income needed for subsequent purchases
- 6. We’re the solution to “cold market” problems
- 7. Fewer clt start-ups after NSP Less homeownership development after NSP Shrinking public & private funding Lack of access to home mortgages Fewer mortgage-ready buyers More in-trouble owners Consequences of the foreclosure crisis & Great Recession
- 8. More rental development More urban agriculture More mergers & acquisitions Needed organizational sustainability planning New solutions in response to new problems
- 9. PUBLIC AWARENESS CAPACITY BEST PRACTICES FUNDING GROWTH Ongoing challenges for CLTs
- 10. Proactive, effective, and participatory policy engagement Grow capacity of CLTs Expansion-adoption approach for on-the- ground outcomes Broader sector development & coordination around “permanently affordable housing” Organize, brand, professionalize, and standardize the broader sector Future Directions (hoped by the Network)
Editor's Notes
- BRENDA
- BRENDAThere are roughly 250 CLTs in the U.S. to date.
- BRENDAMajor growth through 80s, 90s and eary 2000s but as you can see the growth curve is less steep in the past five years. And that’s because
- BRENDA….of the foreclosure crisis and economic recession. Only three years ago, 1 out of every 45 housing units received a foreclosure notice. And while foreclosure notices have slowed, there is still a hard-to-move housing stock left in the aftermath. However, in the past 6 months, we are seeing the housing market rebound again. New construction is up, housing values in middle and upper class areas are rising quickly. It’s only a matter of time that we begin to deal with hot market conditions again.
- EMILYBut as I presented yesterday, we know that CLTs and other permanently affordable housing programs are the solutions to old and new problems, including both hot and cold market conditions. Here we see a graph of seven programs that preserved affordability over time, resale after resale, which shows that these programs are successfully increasing access to homeownership, keeping home affordable permanently. This can combat the adverse impacts of gentrification
- EMILYAnd as I presented yesterday, we know that CLTs perform in cold market conditions, having substantially lower rates of delinquencies and foreclosures. Explain graph
- BRENDANevertheless, there have been a lot of challenges and consequences of the foreclosure crisis and economic recession on CLTs:1. (Explain NSP was a result of stimulus and resulted in new sources for community development and affordable housing) NSP led to the establishment of new CLTs in Tuscan, AZ and Nashville, TN and Pennsylvania. NSP also led to a burst of funding for developing CLT homes. BUT then the NSP well dried up. 2 & 3. Now there is ongoing shrinking of federal and local funds for affordable housing. Sequestration is taking a major toll. Private sources were also hit. For instance banks in the U.S. get community Reinvestment credit, which is required for mergers and acuisitions. But when less banks are growing, they are investing less in their communities.4. On top of that, with the development of a new institution the Consumer Finance Protection Bureau, CLTs are facing even tougher challenges. Many lenders who would previously lend to CLT buyers have pulled out. The federal government is understaffed and drowning red tape so they are not making needed policy changes to open up access to mortgage lending for our buyers. 5. Furthermore, the economic recession and backlash to the foreclosure crisis has hurt americans and low income and minority households the most. Therefore, there are fewer households with good enough credit and reasonable debt who are able ot enter homeownership, even when it is affordable.6. Lastly, CLTs—in an very resource depleted environment—are spending a tremendous amount of time with owners to ensure they don’t become delinquent or foreclose. This takes time and money.
- BRENDAIn response to this recent climate that we have found ourselves in, we’re seeing CLTs find new ways to operate:1. More rental development…but honestly, most CLTs don’t have the capacity. They don’t know how to use LIHTC. They don’t know how to manage a rental portfolio, etc. 70% of CLTs are operating with an operating budget below 300K a year. This is a problem2. Some have turned to non-residential development and trendy community development that appeal to funders, which in large part has been urban agriculture. CLTs have seen tremendous community benefits from these projects and were able to tap into new grants to keep their organizations alive; however, the majority of them don’t have the know-how to do urban agriculture and almost all of them are relying on grant funds to keep these projects alive. 3. We’ve also seen more organizations opt to merge or be acquired in the face of going under, which has been critical to preserving permanently affordable housing units. 4. Throughout the crisis, I think that all CLTs have realized that they need to more effectively plan for their organizational sustainability. Many CLTs were developed in the hay-day and strong economies of the 90s and early 2000s. However, its clear ot everyone that now that CLTs need to plan to survie both cold and hard market conditions. Some of this can include balancing rental and homeownership portfolios, or diversifying their work into non-residential development or providing community services.
- EMILYBut above and beyond just the recent hallenges or emerging trends in CLTs, our model is still face our time-old challenges. These include:Public awareness. We’ve made some strides in this recently because of the foreclosure results and our ongoing outreach; however, we are not a household concept or event known by everyone in the field of community development. Capacity Roughly 70% of CLTs have operating budgets below 300K. Most have 1-3 staff.With the lack of capacity, we see that many CLTs are having trouble utilizing best practices:Only 50% have a membershipOnly 25-30% maintain an emergency fund or repair reserve fundOnly 40% have a system in place to identify 90 day delinquenciesFunding is an ongoing problem—shrinking pots of funding during the recession and trouble accessing some sources of funds either because 1) CLTs are not allowed as an eligible use or 2) CLT doesn’t have expertise to acces certain types of complicated funding, such as Federal Home Loan Bank affordable housing programs or LIHTCIn light of this, it has been very challenging to grow the number of CLT homes on the ground.
- EMILY1. Proactive –not reactive. Our members are actually not great at engaging in advocacy. Therefore, we’re starting new engagement initiatives in policy and we’re also proactively and strategically focusing on getting permanently affordble into TOD conversations. 2. We’re aiming to grow the capacity of CLTs through our ongoing training and education. Including starting to develop industry standards.3. We’re emphasizing expansion and conversion to the CLT model. With limited funding, we are beginning to identify high-opportunity organizations that can either convert to permanently affordable housing models or organizations in climates with high potential to leverage existing policies to grow the sector. 4. Next, CLTs are not alone in terms of organizations promoting the lasting affordability of housing and preserving public funding. LIST MODELS. However, we’re not coordinated. Were not branded, we’re not advocating together. We are stronger united than divided, so we’re moving in the direction of not being a CLT-only organization but to support permanently affordable housing in general5. Lastly, we are moving to professionalize and standardize the sector in the ong-term. A lot of our problems stem from the lack of uniformity across CLTs. While a strength of the model is its ability to be flexible, the double edge sword is that we can’t negotiate for national lending products when everyone’s ground lease is different. We can’t get private companies to offer discounts or lend for development when we don’t know the standing of each CLT. Etc. Therefore, we are looking into the idea of developing a certification, pushing for a national lending product, and streamlining how CLTs operate.