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Policy Update 3-14-19

Federal Update

White House Releases 2020 Budget

The White House released the President’s Budget this week, containing the administration’s requests for Fiscal Year 2020. Similar to the last three proposed budgets, this one includes significant cuts to housing and community development programs that help millions of low-income seniors, people with disabilities, families with children, veterans, and other vulnerable people afford their homes. Overall, the administration proposes to:

  • Cut HUD by $8.6 billion or 16.4% below 2019 enacted levels;
  • Eliminate the Public Housing Capital Fund;
  • Eliminate the HOME Investment Partnerships program;
  • Eliminate the Community Development Block Grant program;
  • Eliminate the Self-Help Homeownership Opportunity Program (SHOP) and Section 4 capacity building grants;
  • Eliminate allocations made to the National Housing Trust Fund.

To read more go to NLIHC or Enterprise. In the past two years, Congress has largely rejected these proposed cuts and maintained or expanded funding for critical housing programs.

NC Housing Finance Agency Executive Director Testifies Before THUD

Last week, North Carolina Housing Finance Agency Executive Director Scott Farmer brought the issue of affordable housing production to the US House of Representatives’ Appropriations Subcommittee on Transportation, Housing and Urban Development, and Related Agencies. With a focus on local success in North Carolina, Farmer provided a stakeholder perspective about how state Housing Finance Agencies utilize federal programs to leverage private market resources to create and preserve affordable housing. You can read his remarks here.

CFPB Plans to Roll Back Payday and Car-title Lending Protections

The Consumer Financial Protection Bureau (CFPB), under the direction of Director Kathy Kraninger, released its plan to roll back the central protections of the agency’s 2017 payday and car-title lending rule. Kraninger’s plan is to eliminate the rule’s underwriting standards — the widely supported heart of the rule – which require lenders to verify a borrower’s ability to repay their loan. This proposed rollback would result in more Americans falling into debt traps. The predatory, payday lending business model relies heavily on a borrower’s inability to repay their loans, which leads to financial consequences that include bank penalty fees, delinquency on other bills, and even bankruptcy. The 2017 payday and car-title lending rule had support from over 170 NC organizations.

House Committee Discusses Nation’s Infrastructure

Last week, the House Ways and Means Committee held a hearing entitled “Our Nation’s Crumbling Infrastructure and the Need for Immediate Action.” Chairman Richard Neal (D-MA), stated in his opening remarks that “we must reinvest in our urban and rural communities through successful programs like the Low-Income Housing Tax Credit and New Markets Tax Credit.” Representative Don Beyer (D-VA) also emphasized the importance of affordable housing, stating that the working men and women of America “not only have to get to work but also have stable and reliable homes that are a reasonable distance from work.”

Who Benefits Most from Federal Aid After Natural Disasters?

According to an NPR investigation, federal aid after natural disasters often disproportionately benefits wealthier and predominantly white communities. The investigation points out that “federal aid isn’t necessarily allocated to those who need it most; it’s allocated according to cost-benefit calculations meant to minimize taxpayer risk.” NPR examined one federal disaster program that uses federal and local funds to purchase homes that have flooded or been affected by other natural disasters and permanently turn the lots into green space to reduce flood risk. NPR analyzed records of about 40,000 voluntary property buyouts funded by FEMA and state and local governments and found most were in neighborhoods that were more than 85 percent white and non-Hispanic.

Housing Tenure Trends Report Q4 2018

Enterprise’s Policy Development and Research (PD&R) has released their latest report on housing tenure – the share of households owning and renting their homes – trends, based on data provided by the U.S. Census Bureau’s Housing Vacancy Survey (HVS). The report finds that homeownership rates increased again in Q4 2018 to 64.6 percent on a seasonally adjusted basis, marking the 10th-straight quarter of growth. The number of owning households a reached 79 million for the first time in U.S. history. These gains have not been distributed evenly, however, as the share of Black households owning their homes remained stagnant on an annual basis, and the gap between Black and White homeownership rates increased to its largest level in the 25-year HVS series. The report also points out disparities in tenure rates and trends by age and income and makes the case for more tenure-neutral approaches to addressing housing affordability and supply constraints. Read the full report here.

Homeownership Among Black Households Declining

Recent homeownership studies note that homeownership among black households has been on the decline since 2004. A Washington Post article points out that despite record low unemployment and higher wages for black workers, homeownership levels among black households have dropped incrementally almost every year since 2004, virtually erasing all of the gains made since the enactment of the Fair Housing Act in 1968. According to housing experts, the reasons for this decline are varied and complex, including real estate discrimination and challenges in securing mortgages. Fair housing advocates criticize HUD for suspending and weakening fair housing policies, including suspending the 2015 Affirmatively Furthering Fair Housing rule, which requires communities receiving HUD funds to examine patterns of segregation and set fair housing priorities, as well as withdrawing a computer assessment tool that provides communities with data to help gauge neighborhood segregation.

Lead Safe Housing for Kids Act to be Reintroduced in Congress

The Lead Safe Housing for Kids Act of 2017 (S.1845) will be reintroduced in the 116th Congress.The Lead Safe Housing for Kids Act of 2019, which would amend the Lead-Based Paint Poisoning Prevention Act to provide for additional procedures for families with children under the age of 6, is identical to the 2017-2018 bill and may be introduced as early as this month.

HUD Initiative Announcements

HUD has issued a new standard that inspections of public housing and properties with rental assistance contracts will now be done with 14 calendar days’ notice.  This is a change from the previous policy which allowed up to four months lead time for inspections, negotiated between HUD and the owner or PHA. This is part of what HUD describes as a “wholesale examination of REAC’s inspection process” that includes listening sessions in Philadelphia, Fort Worth, Atlanta, Detroit and Seattle.

HUD has also announced the expansion of a pilot program to shorten the processing times for FHA mortgage insurance for housing developments that have LIHTC equity.  In 2012, FHA began the pilot to eliminate redundant underwriting for mortgage refinancing under Section 223(f) for LIHTC projects.  This new announcement expands the expedited processing times for LIHTC projects to loans for new construction and substantial rehabilitation under Section 221(d)(4) and Section 220.

National Consumer Law Center’s Energy System Inequity Report

The National Consumer Law Center’s “Reversing Energy Systems Inequity: Urgency and Opportunity During the Clean Energy Transition,” examines fundamental inequities of the current energy landscape, which can lead to dangerous repercussions, and the unprecedented opportunities arising to address the issue while our nation undergoes sweeping changes to its power sector. Through a series of visuals, broken down by region, the report illustrates that while it’s widely recognized that access to electric service is vital to health and safety, affordable access is not an equal opportunity proposition. Roughly 30 percent of households with incomes below $40,000 forego or cut back on other basic necessities — such as food, clothing or medicines — in order to pay energy bills and maintain service. As many as 40 percent of households with incomes below $20,000 suffered the same consequences of high energy burdens. The brief report looks at three keys to succeed in creating opportunities to improve equity for lower-income households amidst technological advancements and a public appetite for a clean energy transition: data collection and distribution, an inclusive regulatory process, and education with the full range of programs and best practice protections to address economic inequities for low-income consumers. While the list is not exhaustive, the points highlighted are foundational for getting decisions right for residential customers with the least means. Read the full report here.

State Update

Governor’s Budget Released

Governor Roy Cooper has released his recommended budget for 2019-2021, Investments for a Determined North Carolina. The budget allocates $25.2 billion and makes crucial investments in education and job training, health care, economic development, and public safety. Gov. Cooper’s proposed budget adds an extra $2.3 million for the Housing Trust Fund, $20 million for the Workforce Housing Loan Program, $7.2 million for the Community Living Housing Fund to increase access to housing for people with disabilities, and $6.5 million for Rural Neighborhood Revitalization grants to help local governments improve neighborhoods.

NC Housing Finance Agency’s 2018 Investment and Impact Report

The North Carolina Housing Finance Agency has released its 2019 Investment and Impact Report, “Housing Drives.” NCHFA financed $2 billion in real estate activity in 2018. This represented an increase of 50 percent in just three years and nearly 100 percent since 2014. Read the full report here.

Local Update

Village of Clemmons Settles Discrimination Complaint Over Affordable Housing

On January 28, 2019, the Village of Clemmons and Village of Clemmons Village Council agreed to settle a fair housing discrimination complaint brought by two affordable developers over the Village’s refusal to allow an affordable housing community to be built. As part of the settlement, the Village has paid $150,000 to compensate the developers for their losses and for their attorney’s fees. Members of the Village Council will also attend fair housing trainings sponsored by the North Carolina Human Relations Commission. The complainants were represented by Legal Aid of North Carolina’s Fair Housing Project and the North Carolina Justice Center. The case was filed with the North Carolina Human Relations Commission in December 2015 on behalf of Sylvan Road Partners, LLC and Allegro Investment Properties, LLC. The complaint alleged that the Clemmons Village Council’s actions in 2015 violated the Federal Fair Housing Act and the North Carolina State Fair Housing Act, because the proposed housing community contained affordable housing units and because of the race of the perceived future occupants of the proposed development.

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