Merger Update: What’s in a Name? Come Up with New Name & Win $100

The Boards and voting members of AOCDO and CDN are focused and taking steps to complete the merger process by June 30^th.  Currently, we are defining governance and membership structures, drafting bylaws and beginning our strategic planning. 

Our merger process is being “steered” by an able committee, and we appreciate the time and thoughtfulness of its members: Margaret Davidson (Community Connections of NE Oregon), Rita Grady (Polk CDC), Peter Hainley (Casa of Oregon), Jim Tierney (Community Action Team), Maxine Fitzpatrick (PRCI), Traci Manning (Central City Concern), Martha McLennan (Northwest Housing Alternatives), Nick Sauvie (ROSE CDC) and Darcy Vincent (Northwest Housing).

A new organization will need a new name!  You are invited to help us find a name that will best represent our united efforts to make affordable housing a statewide policy priority and to strengthen Oregon’s affordable housing industry.

What are your suggestions?  Please send them to Karen via email.

Did someone say there was a prize?  The person who suggests the name closest to that chosen will receive a $100 contribution to the AOCDO-CDN member of their choice.

Wall Street Journal: Losses Stall Affordable-Housing Projects

(By ALEX FRANGOS March 12, 2008; Page B1)

Affordable housing is the latest victim of the credit crunch that is reverberating through financial markets.

Projects are being canceled because some of the nation's largest financial companies, including Fannie Mae, Freddie Mac and Bank of America, have scaled back their participation in the federal government's largest and most prolific affordable housing tax-credit program, designed to boost construction of below-market-rent apartments.

Carlisle Development Group, a developer that manages 6,000 government-subsidized units in Florida, recently shelved the first phase of a $100 million project it was planning in Miami with the local YMCA. It would have provided 355 affordable housing units. The housing authority in Pueblo, Colo., delayed a 25-unit project for senior citizens this week. Developers report similar tales around the country.

Reeling from losses in the housing and credit markets, U.S. financial giants are without profits that need shielding from taxes and therefore don't need tax credits. With few buyers, the value of tax credits has declined sharply, leaving a funding gap for developers.

The low-income housing tax-credit program was created in 1986 and has financed the construction of more than a million below-market rate apartments. It is considered one of the most successful federal housing programs that melds aspects of government subsidy with free-market enterprise. Both for-profit and nonprofit developers receive between 30% and 65% of a project's cost via tax credits in return for agreeing to keep rents within reach of residents who earn below 60% of an area's median income. Projects serve the homeless and mentally ill, as well as low-income professionals. The rent restrictions last from 15 to 40 years. Projects under the program have had a very low default rate.

The credits are allocated to states based on population and are distributed to developers by state housing finance agencies. The developers sell the credits to middlemen called syndicators, who in turn sell the credits to investors. Most investors are typically financial institutions looking to shield profit from taxes and to comply with federal requirements to invest in communities that banks had shunned in the past.

"Fannie and Freddie and a number of the major banks are either not in the market or are reassessing" how much they will invest, says Richard Richman, founder of the Richman Group, a tax-credit syndicator and developer of low-income housing. He says the lack of equity has "caused a shock to the marketplace. Now it's not even a matter of the pricing. It's even the availability of equity."

Also depressing Fannie Mae's appetite for the credits is that its financial condition could make it subject to the corporate alternative minimum tax, a provision of the tax code that blunts the effectiveness of tax credits. "Because of the net loss we recorded in 2007, there is an increased risk that we may not be able to fully utilize these tax credits" it said in Feb 27 federal filing.

Ed Neill, a Fannie Mae senior vice president says: "As with other investors in this market, we periodically adjust our levels of new investments and our levels of sales of [tax credits] to correspond to our current corporate tax liability." Elizabeth Hersch, executive director of the Housing Alliance of Pennsylvania, says the tumult comes as the slack economy and foreclosure crisis dumps folks into the low end of the rental market. "The tax-credit program has been the one production program that has increased supply at the low end. If we see decline now, it's piling disaster on top of disaster."

Fred Copeman, national director of Ernst & Young's tax-credit practice in Boston, estimates 40% of the equity in what annually is usually an $8 billion market went away in the past six months. Developers across the country, he says, are "twisting on the vine."

"I've got a lot of screwed up tax-credit deals," says Matthew Greer, chief executive of Carlisle. On the YMCA project, he qualified for $74 million in tax credits but the investor who had committed to taking the credits walked away. "There's lack of liquidity," says Mr. Greer.

Frank Pacheco, executive director of the Pueblo Housing Authority put a senior-citizen development on hold this week after pricing on tax credits came in 8% lower than expected. He had planned to start construction in April. "It would have been great," he said.

Like other groups, his only hope now is to secure gap financing, such as grants from local governments or private foundations. In his case, he's looking to make the projects qualify for a separate federal rent subsidy program. Meanwhile, his group put another project that's in an earlier stage of development on the shelf. "We won't even talk about that until this thing straightens out," he says.

In recent years, investors would pay upward of 95 cents per dollar of tax credit, in some cases even paying above par value.

Now credits are being priced as low as 79 cents per dollar of credit. For example, last year a developer who was awarded $1 million in tax credits could expect to get an investor to pay 95 cents per dollar of credit, yielding $950,000 for the project. Today, an investor might pay 79 cents, yielding just $790,000.

Fannie Mae and Freddie Mac were the largest investors in the credits, together snatching up 40% of the available credits in recent years, according to syndicators. Fannie Mae had $8.1 billion worth of unused credits stockpiled according to a Feb. 27 company filing. When the companies pulled back from the market last year, the moves sent prices tumbling and created a situation where some projects are having trouble attracting investors at all.

The logjam in tax-credit investing is similar to the crunch in the debt markets. "If I'm an investor there's nothing really compelling me to come into the market when pricing is unsettled," says Mr. Copeman of Ernst & Young. "Why shouldn't I sit back and wait for some clarity. When will there be clarity? Who knows."

New Orleans, which received a special allocation of credits following Hurricane Katrina, will be particularly hard-hit by the drop in the value of credits. High construction costs and relatively low rents already made it difficult for tax-credit-driven developments to pencil out. Now that the tax credits are worth less, deals are even harder to accomplish. NHP Foundation, a Washington, D.C., nonprofit developer recently received a $1 million grant from a state-chartered organization in Louisiana to fill the gap on two projects in New Orleans. "What New Orleans was counting on was that the credits would be highly sought," and have high value, says Ghebre Mehreteab, NHP's chief executive. With values of the credits having dropped, "the only way to meet that gap is through other sources," he says.

Congress has already begun to tackle the issue. The House Ways and Means Committee is considering a bill that would change the governing legislation and could unleash supplemental resources.

National Housing Trust Fund Conference Call for Oregon Advocates March 27

The National Low Income Housing Coalition (NLIHC) is asking Oregon housing advocates to urge Senators Smith and Wyden to cosponsor S. 2523, the National Affordable Housing Trust Fund Act. Call in on March 27 at 1:00 p.m. to learn why their cosponsorship is important (More Info).

Please join other Oregon advocates on a field call lead by NLIHC President, Sheila Crowley, who will describe the latest information from Senator Smith's and Senator Wyden's offices and explain what you can do to secure their cosponsorship of S. 2523, the National Affordable Housing Trust Fund Act.

The Oregon call will be Thursday, March 27 at 1:00 PM (Pacific). The toll-free number is 1.866.878.4191.The code is 967 1875.

NLIHC staff have been speaking with the staff of Senator Smith and Senator Wyden about becoming cosponsors of S. 2523; however, to date they have not signed on. Therefore, they need to hear from you and others in Oregon to take action by adding their names to the growing list of S. 2523 cosponsors.

As you know, a National Affordable Housing Trust Fund bill (S. 2523) was introduced in the Senate on December 19, 2007 with bipartisan cosponsors led by Senators John Kerry (D-MA) and Olympia Snowe (R-ME). Eight other senators have signed on as cosponsors so far, and still others are on the verge of cosponsoring. We have an unprecedented opportunity to make the National Housing Trust fund a reality. To build on this momentum, we need as many senators as possible to sign on as cosponsors and to request a hearing for S. 2523 in the Senate Committee on Banking, Housing, and Urban Affairs.

The goal of the National Housing Trust Fund is to establish a dedicated source of revenue which will produce, rehabilitate, and preserve 1,500,000 units of housing over the next 10 years. For more information about the National Housing Trust Fund Campaign, such as answers to frequently asked questions, Oregon-specific data on the need for affordable housing, and issue-specific fact sheets, visit the NHTF website at www.nhtf.org, then go to the "Toolkit" below the logo.

If you have questions before then, you can contact Ed Gramlich (via email or 202.662.1530 x 314) or Jake Kirsch (via email or 202.662.1530 x244).

"See" you on Thursday, March 27 at 1:00 PM (Pacific).

(The toll-free number to the Capitol switchboard to call Senators Smith and Wyden in Washington, DC is 1.877.210.5351.)

CBPP Conference Call on Housing Voucher Funding Update March 26

On Wednesday March 26 from 11 a.m. - 12:30 p.m. PST, the Center on Budget and Policy Priorities will hold an audio conference concerning funding for the housing voucher program in 2008 and 2009 and implications for state and local programs. Barbara Sard and Douglas Rice will discuss agency funding in 2008 (including use of reserves), the likely funding policy 2009, implications of 2009 policy for voucher leasing policies this year, and pending appropriations and authorizing legislation related to the voucher program, particularly the Section 8 Voucher Reform Act. In advance of the call, registrants will receive links for a PowerPoint to accompany the presentations, state and local data on voucher use in recent years and vouchers funded in 2008. There is no fee to participate, but registration is required. To register for the call, email Anton Marx with name, company, address, phone number, and email address.

HUD, DOJ Release New Guidance on ‘Reasonable Modification’

New guidance released this week by the Departments of Housing and Urban Development (HUD) and the Department of Justice (DOJ) reinforced the right of persons with disabilities to make “reasonable modifications” to their dwellings if a structural change to their dwelling or to a common area of the building or complex in which they live is needed so that they can fully enjoy the premises.

The guidance is designed to help housing providers and homeowners’ associations better understand their obligations and help persons with disabilities better understand their rights regarding the “reasonable modifications” provision of the federal Fair Housing Act (FHA).

The guidelines are available online at both www.usdoj.gov/fairhousing and www.hud.gov/offices/fheo/disabilities.

City Council Secures $240 Million for Parks With New SDC Package

The Portland City Council unanimously adopted a new residential and commercial park system development charge (SDC) package on March 12. Over the next 12 years, this financing package is projected to raise roughly $240 million in capital funds for new parks, trails and natural areas to service our growing population of residents and workers. By building part of the cost of parks into the cost of new development, the program will help raise needed funds to help implement the Parks 2020 Vision. This includes:

* Acquisition of an estimated 700 acres of new parkland including ~550 acres of new natural areas.

* Development or improvement of roughly 225 acres of existing parkland and restoration of approximately 80 acres of public natural area.

and

* Acquisition of approximately 15 to 22 miles of new trailway.

The program will also help leverage state and federal dollars to acquire and develop hundreds of acres of additional parkland and many more trail miles. It will also bring new parks to rapidly growing areas of the City that are already park and natural area deficient.

Community Housing Fund Named a CDFI

The United States Department of the Treasury has certified the Community Housing Fund (CHF), a non-profit housing trust fund in Washington County, as a Community Development Financial Institution (CDFI). The Treasury’s Community Development Financial Institutions Fund recognized that the CHF meets strict regulatory criteria demonstrating that it has a mission of financing the construction and preservation of housing for working families and those on fixed incomes living in Washington County.

The Community Housing Fund has operated since 2003 as a 501c3 non-profit revolving loan fund, located in Beaverton. The CHF has raised over $1.25 million during that period and has assisted in the creation or preservation of over 400 units of housing affordable to those with limited incomes in Washington County. The county is projected to grow by 70 to 80% over the next 25 years, for an additional 300,000 to 400,000 additional residents by 2030. With this immense growth, the work of the Community Housing Fund is increasingly important to the economic viability of the county, which is among the most expensive in the state.

The practical impact of the certification is that the CHF is now eligible to apply to Treasury for a federal investment in the CHF that will match every dollar raised by the Fund in either grants or loans over a prescribed period. The leveraging effect is equivalent to doubling any particular investment. Certification status will continue for three years and may be extended by Treasury based on performance and compliance with federal requirements. Designation as a CDFI will also be helpful in the other fundraising endeavors of the CHF with all areas of the community, including local government, foundations, corporations, individuals and members of the faith community.

“We are thrilled with this recognition by Treasury,” said Ramsay Weit, the Executive Director of the Fund. “It takes the Fund to the next level as a community lender and sends a clear message that the federal government will entertain requests to match the financial investments made by our public and private partners in Washington County. And the families and low-income individuals we’re here to serve will see more housing produced in years to come as the trust fund grows into a more sustainable community asset.”

The Community Housing Fund’s revolving loan fund provides predevelopment loans at below-market interest rates to nonprofit developers of affordable housing throughout Washington County. These early loans allow developers to leverage other funding sources. Without the Community Housing Fund, many local affordable housing would stall at the conceptual level because the nonprofits lack funds to cover early expenses such as market studies, soil samples, and permit fees.

To become certified the CHF demonstrated that it is a financial entity, not controlled by a governmental agency, which provides development services to support those underserved elsewhere in the community.