Connecting State Housing Policy to Local Contexts:

1
Connecting State Housing Policy to Local
Contexts Rethinking Partnerships for Success
By Kil Huh, Ph.D. Director, Policy and
Consulting Fannie Mae Foundation August 24, 2006
2

• Housing Challenges Facing Working Families
• The homeownership rate stands at 56 among low-
  to moderate-income familiesa full percentage
  point below the homeownership rate of the same
  group 25 years ago
• Rental market offers no relief no where in the
  country today can a minimum-wage earner afford a
  two-bedroom apartment
• 1 in 8 American families spend more than 50 of
  their incomes on housing
• 1 of every 3 families spend more than 30 of its
  income on housing
• 2.5 million families live in crowded or
  structurally defective housing immigrant
  households comprising about 1 million of these
  units

Source Solving Americas Shortage of Homes
Working Families Can Afford Fifteen Success
Stories A Homes for Working Families Research
Report. Prepared by Urban Land Institute and
Fannie Mae Foundation. March 2006.
3
Housing Challenges Facing Working Families

• In Arizona, according to the 2000 Census, over
  47 percent of Arizona renters and 27 percent of
  homeowners are paying more than 30 percent of
  income for housing, or are living in overcrowded
  or inadequate conditions.
• Exacerbating these challenges is the fact that
  housing prices in Arizona have increased
  exponentially since the 2000 Census.
• From 2002 to 2005, average home prices in the
  State rose 55 percent.
• In 2005 alone, Arizona ranked first in the
  nation in home-price appreciation, up 30 percent
  from the previous year
• Rising home purchase costs, have tightened the
  rental market
• From 2002 to 2005, median family income has
  increased just 2.7 percent for homebuyers and
  renters

4
Housing Challenges Facing Working Families
As a result of these converging trends, thousands
of Arizona households are struggling to find an
affordable home and are facing the following
tough choices Work two or more jobs or have
two or more wage earners Double up with another
family Live in poor conditions Pay a
disproportionate share of their income for
housing (more than 30) Receive some sort of
housing assistance Drive long distances where
housing is more affordable Choose between
paying for utilities, prescription drugs, or
their rent or mortgage Face homelessness, in
the most extreme cases
5
Confronting the Housing Challenge A
Solutions-based Approach
The guiding principles developed by the Task
Force were two-fold 1) no one stakeholder should
bear the burden alone in addressing the growing
affordability challenge and 2) solutions should
recognize that all types of housing, including
single-family, multifamily, and mass-produced,
have a role to play -- while taking into account
current market conditions -- in expanding the
availability of housing that is
affordable. Governor Janet Napolitanos
Task Force on Incentives for Affordable
Housing June 2006
6
A Task Force Approach A Framework for Success
and Partnership

• A special group convened by a Governor with the
  goal of reviewing, amending, streamlining, and
  recommending new state affordable housing
  policies and programs. A task force is a means
  to bring together and engage a wide array of
  stakeholders around the issue of affordable
  housing.

7
A Task Force Approach A Framework for Success
and Partnership

• Identify housing problems and opportunities
• Task Force has very little political risk, with
  significant potential benefits
• Streamline existing programs better allocate
  existing resources
• Maximize efficiencies
• Rarely requires any new costs or expenditures,
  and can often save money

8
A Task Force Approach A Framework for Success
and Partnership

• Review and create new state housing policy
• Bring attentionand allocate new resourcesto
  housing
• Bring together and engage disparate agencies and
  stakeholders around common issue
• Ability to address wide range of housing issues
• Engage broad array of participants
  (professionals, business leaders, citizens,
  experts, government, etc.), representing entire
  spectrum of the housing issue

9
A Task Force Approach A Framework for Success
and Partnership

• Often structured into a number of smaller working
  groups or subcommittees, each focusing on a
  specific issue or set of issues
• Most have a limited lifespan and are charged with
  establishing a set of recommendations for the
  Governor (Florida is the exception, which has a
  standing task force dealing with annual issues)
• Task Force can open up new opportunities for
  increased coordination between state and local
  governments and improve understanding of the
  unique challenges facing varying levels of
  government and other key stakeholders

10
Governors Task Force on Incentives for
Affordable Housing

• Finance
• Develop, expand and market Employer Assisted
  Housing (EAH) strategies throughout the state and
  provide tax benefits for participating employers
  and employees.
• Enhance the ability to use both Greater Arizona
  Development Authority (GADA) and Water
  Infrastructure Finance Authority (WIFA) financing
  on a single project.
• Standardize the property tax valuation processes
  for housing developed through the Low Income
  Housing Tax Credit (LIHTC) program to ensure
  consistency throughout the State.
• Investigate the possibility of using interest
  earned on earnest monies from the resale of
  residential and commercial real estate
  transactions to dedicate to affordable housing.

11
Governors Task Force on Incentives for
Affordable Housing

• Finance (contd)
• Seek out Community Reinvestment Act-related
  partnerships with financial institutions to
  increase affordable housing investments. Create
  partnerships with financial institutions where a
  percentage of government funds are invested at
  below market rates and in exchange, the financial
  institutions commit to passing on these savings
  to borrowers in the form of low-interest loans
  for housing related activity.
• Explore financial incentives to municipalities
  and counties to encourage the establishment of
  local housing trust/resource funds.
• Establish state and local tax incentive programs
  to encourage the development of affordable
  housing.
• Dedicate a portion of State Transaction Privilege
  Tax (TPT) collections from the prime contracting
  classification, above a determined threshold, to
  affordable housing.

12
Governors Task Force on Incentives for
Affordable Housing

• Barriers and Incentives
• Improve procedures at the local level to reduce
  housing costs, such as processing time,
  development process, development standards,
  financial requirements, and market
  considerations.
• Identify strategies for greater collaboration
  among state agencies, such as the Departments of
  Housing, Commerce, Transportation, Land and
  Corrections, around land use and housing
  development.
• Establish consistent methods locally to determine
  development/impact fees so that builders can plan
  for the cost of fees at the development stage.

13
Governors Task Force on Incentives for
Affordable Housing

• Education
• Create and maintain a clearinghouse for resource
  material and model strategies relating to housing
  affordability.
• Begin a public awareness, education and
  communications effort relating to affordable
  housing.

14
Governors Task Force on Incentives for
Affordable Housing

• Land/Land Planning
• Expand the investment authority of the State
  Treasurer to permit a portion of the Permanent
  Fund to be invested into loans for affordable
  housing.
• Permit beneficiaries of the sale of State Trust
  land to use earnings from the Permanent Fund to
  finance Employer-Assisted Housing programs for
  their employees.
• Prioritize the sale of State trust land so as to
  facilitate planned growth rather than speculate
  on growth (i.e. leap-frog development). Provide
  the State Land Department with increased
  flexibility and resources to carry out this goal.

15
Governors Task Force on Incentives for
Affordable Housing

• Land/Land Planning (contd)
• Include affordable housing goals and strategies
  as an element addressed in municipal and county
  general and comprehensive plans.
• Inventory existing real-estate assets (e.g.
  parking structures, buildings, land) owned by
  municipalities, counties, and State that are
  underutilized, vacant, or have multiple uses, for
  consideration in affordable housing development.
• Increase the supply of land for housing that is
  affordable.

16
Lessons Learned from Around the Country Notable
Task Force Examples

• Floridas Affordable Housing Study Commission
• Created in 1986, under Governor Bob Graham
• Standing commission of 21 citizen members
  (serving 4 year terms), appointed by the Governor
• Charged with evaluating the states affordable
  housing programs and making policy
  recommendations to the Governor and Legislature
• Focus given to one or two specific topics each
  year

17
Lessons Learned from Around the Country Notable
Task Force Examples

• Floridas Affordable Housing Study Commission
• Primary scope
• Encouraging public-private partnerships
• Enhancing government coordination
• Finding opportunities to streamline regulations
  that deal with affordable housing
• Promoting strategies that comprehensively
  address the affordable housing issue
• Promoting new research on affordable housing
• Educating the government and citizens about the
  importance of affordable housing

18
Lessons Learned from Around the Country Notable
Task Force Examples

• Floridas Affordable Housing Study Commission
• Recommendations from the Commission have resulted
  in several key policy changes in the state
• Key successes, based on Commission
  recommendations
• Establishment of the Florida Housing Data
  Clearinghouse
• Amendments to the Florida Fair Housing Act,
  incorporating anti-NIMBY safeguards for
  affordable housing projects
• Strengthening Floridas inclusionary housing
  policies
• Expedited permitting for affordable housing
  projects

19
Lessons Learned from Around the Country Notable
Task Force Examples

• Hawaii (proposed legislation)
• Illinois (extension of the State Affordable
  Housing Tax Credit)
• Iowa (establish Housing Trust Fund, Tax Exempt
  Bond)
• Massachusetts (Amend 40 B)
• Maryland (legislation producing workforce housing
  program)
• Ohio (creation of independent HFA)
• Wisconsin (proposed legislation)

20
Key to Success Coordination between State and
Local Governments

• Michigan - Cool Cities Program
• Started in 2003 under Governor Jennifer Granholm
• Comprehensive quality of life and economic
  development strategy to help revitalize urban
  communities, with a specific focus on retaining
  knowledge workers and supporting innovation and
  creativity
• Direct outreach from the Granholm administration
  to all Michigan mayors

21
Key to Success Coordination between State and
Local Governments

• Michigan - Cool Cities Program
• Main elements include
• Supporting innovation
• Growing talent
• Embracing diversity
• Investing in and building on quality of place
• Thinking regionally and acting locally
• Making new connections
• Three year pilot program initiated in 2004
• Resource Toolbox a clearinghouse of over 100
  of the state's community improvement grants, tax
  credits, loans, and assistance programs that can
  be used by local governments for revitalization
  projects.
• "Catalyst Grant" state-funded program providing
  a flexible financing tool for organizations
  engaged in neighborhood revitalization projects

22
Key to Success Coordination between State and
Local Governments

• Michigan - Cool Cities Program
• Projects are chosen based on their vision for
  creating compact, walkable, mixed-use
  neighborhoods, their ability to leverage
  additional funding, and the feasibility of their
  implementation
• In 2004, 20 Cool Cities pilot projects received
  catalyst grants of up to 100,000 and were given
  access to more than 100 million in other state
  grants
• In 2005, an additional 30 Cool Cities pilot
  projects were awarded, offering catalyst grants
  and priority access to other state funding and
  programs

23
Key to Success Coordination between State and
Local Governments

• States have the ability to assist local
  governments by providing them with the tools to
  better address an array of issues on their own.
  Notable examples of such proactive state policy
  in this regard include state enabling legislation
  that allows localities to use tax increment
  financing, or laws that give local governments
  the tools to put vacant and abandoned properties
  back into productive use.

24
Key to Success Coordination between State and
Local Governments

• New Jersey Abandoned Properties and Receivership
  Laws
• Abandoned Property Rehabilitation Act enacted
  into law in January 2004
• New laws dovetail with New Jerseys overall state
  planning and smart growth vision, designed to
  encourage redevelopment and improve the quality
  of life in urban areas
• Abandoned and vacant properties negatively impact
  neighborhood health
• New laws establish a toolkit for cities within
  New Jersey, giving them the means to gain control
  of abandoned properties and restore them to
  productive use

25
Key to Success Coordination between State and
Local Governments

• New Jersey Abandoned Properties and Receivership
  Laws
• Encourages cities to create a list of abandoned
  properties to assist planning process
• Provides process for accelerated foreclosure of
  abandoned properties
• Allows municipalities to use spot blight eminent
  domain
• Municipalities may seek receivership rights from
  superior court to renovate vacant properties
• Allows municipalities to designate qualified
  entities to undertake renovation efforts
• Establishes process to ensure that abandoned
  properties are renovated for the greater public
  good, generally avoiding the speculative reuse of
  such properties

26
Key to Success Coordination between State and
Local Governments

• State of Florida
• The State Housing Initiatives Partnership (SHIP)
  channels funds directly to local governments for
  the purpose of increasing affordable housing
  opportunities in their communities.
• SHIP is designed as an incentive to promote and
  fund the formation of locally-based
  public-private partnerships for the construction,
  preservation, and rehabilitation of affordable
  housing.
• One of the key elements of the SHIP program
  dictates that expedited permitting is mandatory
  for all affordable housing land use decisions in
  every Florida county and SHIP entitlement city,
  applying to any building permit, zoning permit,
  subdivision approval, rezoning, certification,
  special exception, variance, or any other
  official action of local government having the
  effect of permitting the development of land.

27
KnowledgePlex?
28
KnowledgePlex? Week in Review
29
DataPlace?
30
FMF Advisory Services

• Engage key partners (including housing
  developers, financiers, and policy-makers) to
  conceptualize, formulate, and scale out effective
  strategies for change and impact in the
  affordable housing sector.
• Technical assistance based on teamwork and
  collaboration.
• Advisory services include
• Research
• Highlight best practices
• Develop new approaches to increase housing
  production and preservation
• Elevating housing on state and local policy
  agendas

31
khuh_at_fanniemaefoundation.org www.fanniemaefoundat
ion.org www.knowledgeplex.org www.dataplace.org