$765.9 Million in State and Local Revenue

LIHTC

The Housing Credit provides the private sector with tax credits as an incentive to invest in affordable housing. Over the course of the program's history, the Housing Credit has financed the construction and preservation of more than 2.6 million affordable rental homes nationwide. The Housing Credit is virtually the only source of capital to address the widening gap between the number of affordable apartments and the low-income renters in need of housing.

LIHTC's Success in Virginia:

89,056 affordable apartments

103,305 jobs created

$7.8 billion of local income

$765.9 million in state and local revenue

$2.2 billion in federal revenue

A 2013 Harvard University Joint Center of Housing Studies report found that there are only 6.8 million affordable rental homes for 12.1 million extremely low-income families (meaning they make less than 30% of AMI), resulting in a gap of 5.3 million affordable homes.

The recent Bipartisan Policy Center's Housing Commission recommended a 50% increase in LIHTC funding. The Commission was chaired by former Senators Bond, Mitchell, and Martinez, along with former HUD Secretary Henry Cisneros.

(A) We want overall protection of the Housing Credit Program as tax reform progresses.

LIHTC is at risk of being wiped out with a range of other tax programs as "blank slate" tax bills are developed in both the House and Senate
Over the past 26 years, the Housing Credit program has financed the development of over 2.6 million rental homes throughout the nation
The Housing Credit program creates about 95,000 jobs annually and has leveraged near $100 billion in private investment
Unlike almost every other tax expenditure - which largely subsidize activity that would occur at some level without the tax support - there would be virtually no affordable housing development without the Housing Credit. The reason is that the construction of affordable multifamily housing, rented to lower income families at controlled rents, is fundamentally uneconomic without a subsidy. Repeal of the Housing Credit will end affordable rental housing development, and with it the 100,000 rental units and 100,000 jobs created annually by the program will be eliminated.
The Housing Credit is an efficient means of subsidizing affordable housing, in the 25 year history of the program, only 0.65% of all developments have been in foreclosure, a record unparalleled in real estate.
The revenue raised from repealing the Housing Credit would be minimal, only around 3% of the revenue needed to reduce the top corporate rate to 25%.

(B) We want to fix the floor on Housing Credits

The fixed 9% rate for credits expired on December 31- we would like to get this back and continue receiving a fixed 9% credit rate on LIHTC projects
By moving back to a floating rate, the credits will not go as far and fewer affordable homes will be built in Virginia
Keeping the credit rate at 9% will not cost the Federal Government revenue.
The minimum credit experiment proved successful in increasing the efficiency and effectiveness of the Housing Credit at little or no cost to the government, and should be made permanent in order to maintain the Housing Credit's increased efficiency and effectiveness

ACTION

SenatorsCongressmen:

Make sure that the LIHTC is preserved as a broad based tax program.
Move the credit rate back to a fixed 9% to ensure continued housing development.
The Schumer Bill excluded Virginia, Maryland, and Delaware from disaster relief tax credits due to their status of "public" assistance declaration instead of "individual." We would like to have this bill amended so that Virginia can receive a one time LIHTC increase for natural disasters such as Irene.

GSE Housing Finance Reform

There is a critical need for a reformed homeownership and rental housing financing system to meet the demand for affordable housing. The system must provide access to safe and affordable mortgages for all creditworthy borrowers, including those of low and moderate income.

Virginia is just now recovering from the damage done to the housing market over the last 5 years; there are still 12% of VA's mortgages that are underwater as a result of the impacts of foreclosures and disruptions in housing finance. In order to ensure this doesn't happen again to Virginia residents, we strongly support housing finance reform.

(A)We want to ensure the preservation of the 30 year fixed rate mortgage.

The long-term, fixed-rate mortgage maximizes affordability and economic security for the majority of American homeowners
Adjustable rate mortgages expose borrowers to interest rate risk, forcing borrowers to refinance every 2-7 years
UNC Center for Community Capital's research shows that nearly 50,000 families with a median income of around $35,000 who purchased homes in the decade leading to the bubble and bust had relatively low default rates, despite the fact that most of them put down less than 5% on their homes and half had credit scores below 680. These borrowers would be very unlikely to get approved for a mortgage in today's market, they turned out to be good credit risks even in a major recession, and they were able to build equity. Borrowers who received adjustable-rate and other non-traditional loans defaulted at rates 3-5 times as high.

(B)We want funding for the National Housing Trust Fund.

The Corker-Warner Bill would require annual contributions to the National Housing Trust Fund. This permanent program will have a dedicated source of funding not subject to the annual appropriations process.
The National Housing Trust Fund allows the states to expand the supply of rental housing for those with the greatest housing needs
Targeted toward rental housing, at least 90% of the funds must be used for the production, preservation, rehabilitation, or operation of rental housing. Up to 10% can be used for the following home ownership activities for first-time home buyers: production, preservation, and rehabilitation; down payment assistance, closing cost assistance, and assistance for interest rate buy-downs

(C)We want support for rental housing - especially smaller projects in small towns and rural areas.

In 2012, over one third of Virginian households were costburdened (spending more than 30% of their income on housing).
71.5% of 474,240 lower-income renter households (60% of Median Household Income or below) in Virginia are cost burdened.
Median gross rent in Virginia has grown continuously over the last 5 years from $938 in 2008 to $1,116 in 2013 (16% growth) while median family income has grown only 9% over the same period.
Based on its Fair Market Rent, Virginia is the most expensive state to rent in the Southeast and the 9th most expensive state to rent in the nation.

Approximately one third of Americans live in rental housing; rental homes provide a starting place for new households, mobility for people who move with their work, convenience to transit, a transition for older adults who no longer need a large home, and affordable shelter for many Americans of low to moderate income.
Construction of new rental properties only occurs if there is permanent mortgage capital available to finance it once construction is complete
To preserve older affordable rental housing, developers often need financing to acquire as well as renovate the properties
Even under normal conditions, private sources of multifamily rental financing cannot provide enough credit in rural areas and smaller cities or produce the long-term, fixed-rate mortgages that attract diverse investors and to produce affordable properties
It is essential that multifamily rental finance needs get explicit attention in housing finance reform so that the eventual new system preserves the strengths that have lasted through the financial crisis to finance affordable rental housing

(D)We want continuing emphasis on making homeownership available to first time homebuyers and low and moderate-income homebuyers.

It is critical for any housing finance system to ensure a level playing field for all creditworthy borrowers, rather than to allow lenders to "cream" the market, leaving perfectly creditworthy lower wealth, lower income, or minority segments underserved.
The system should enhance access and affordability for underserved market segments
First-time homebuyers, young homebuyers and homebuyers of color - the future of homeownership in the US, have largely been shifted out of the conventional mortgage market. The Federal Housing Administration backed financing for 46 percent of first-time homebuyers in 2012 and about half of home purchases obtained by homebuyers of color in 2011
For this reason, we strongly support retaining the FHA in its current form
Homeownership rates for young people (ages 25-34) are among the lowest in decades - which has lead to an increase in renters.
The mortgage market often serves borrowers perceived to be the least risky at the expense of borrowers who are equally able to sustain homeownership but require more customization and consideration due to factors such as self-employment, nontraditional credit histories, the purchase of smaller homes, or living in rural neighborhoods.
Lenders are requiring higher credit scores, larger down payments, and essentially refusing to lend in certain geographies

Bills:

Corker-Warner Housing Finance Bill

Winds down Fannie Mae and Freddie Mac within 5 years
The Federal Mortgage Insurance Corporation (FMIC)will replace them on a smaller scale
Focus on ensuring there is sufficient affordable housing available for lower and middle-income buyers
Requires annual contributions to the National Housing Trust Fund

Delaney-Carney-Himes Housing Finance Proposal:

Housing reform legislation allows the government to expand the capacity of housing finance while allowing the private the private sector to price all of the risk
Creates incentives for private capital's market share in housing to grow over time
Creates a path for Fannie Mae and Freddie Mac to be sold as independent companies without any government support or monopoly status
Creates additional funds for low income housing

ACTION

Senators: Support the Corker-Warner Housing Finance Bill

Congressmen: Support Bill by Congressmen Delaney of Maryland, Carney of Delaware, and Himes of Connecticut that is currently in discussion draft. This bill contains similar ideas to Senator Corker-Warner Bill, and proposes establishing a Ginnie Mae type structure.

We oppose chairman Hensarling's PATH bill and feel that it would eliminate the 30-year fixed-rate mortgage and restrict mortgage credit in many areas.

Budget

In Virginia, there are more than 220,000 renter households that are amongst the lowest income earners, those earning at or below 30% of Area Median Income. There is a shortage of housing for these extremely low-income households, a shortage of more than 147,000 units in the state.

In order for a household to afford to rent a two-bedroom unit in the state and pay an affordable rent (HUD's 30% of income towards rent threshold), a person needs to earn more than $20 per hour. This makes rental housing in the state unaffordable to minimum wage and other low-income households.

We recommend particularly focusing on preserving funding for HOME, CDBG, and Section 8, along with support for Public Housing.

(A) Community Development Block Grants (CDBG)

Over the past 4 years, HUD has cut funding for these grants by 24%

(B) Section 8 Housing

Distribution of housing choice vouchers to very low-income families, the elderly, and disabled to help them afford decent, safe, and sanitary housing in the private market
In FY14 Congress provided funding to restore some, but not all of the vouchers lost due to sequestration. FY14 funding could restore around 50,000 vouchersthat were lost, but more than 50,000 additional vouchers still need to be replaced in FY15.

(C) Public Housing

In FY14, Public Housing Operating Fund was funded at approximately 86% of the total cost of maintaining public housing units. In 2012 HUD estimated that there was already a $26 billion backlog for public housing capital needs and in FY14, there was only $2.8 billion provided.

(D) HOME

Over the past 4 years, HUD has cut funding for this program by 82.5%

(E) Agriculture Appropriations for USDA affordable rental housing programs

In FY13 USDA was unable to make payments to property owners contracted through the Section 521 Rental Assistance program for the month of September.
Congress allocated additional funds for the program in RY14 and we need to ensure FY15 funding is substantial enough to avoid another shortfall in funding for the program.
If property owners aren't paid, USDA risks losing those contracts for units that cannot easily be replaced.

ACTION:

Congress: Recommendations for FY15 appropriations:

Increase the FY15 THUD 302(b) subcommittee allocation to ensure sufficient funding is available for the HUD rental assistance programs. Without an increase to the 302(b) level, HUD would have to work with the same amount of funding as in FY14 even though the cost of administering housing programs increases with inflation annually.
Enact a FY15 THUD appropriations bill that:

--Fully funds current Tenant-Based Vouchers and restores funding for vouchers lost due to sequestration.

--Funds 100% of Public Housing operating costs, prevents further capital erosion, and addresses the backlog of existing capital needs;

--Provides Project-Based Rental Assistance contracts for a full-year for all current property owners. HUD has only been able to offer owners of HUD contracted properties partial year contracts and is risking the participation of private market owners in this program.

Enact a FY15 Agriculture appropriations bill that provides sufficient funding to the Department of Agriculture (USDA) affordable rental housing programs and prevents funding short-falls experienced in FY13.

Homelessness

(A) McKinney-Vento Funding

HUD's McKinney-Vento Homeless Assistance Grants program is the primary source of funding for programs serving the homeless
In 2009, the HEARTH Act made significant improvements to this program
Securing funding for implementation is still ongoing
McKinney-Vento funding has helped reduce homelessness in Virginia by 16% in the past 3 years
There are still approximately 40,000 people who experience homelessness over the course of a year according to Virginia Coalition to End Homelessness. 24% of them are veterans

(B) Nonprofit Administration of Rental Assistance

Language in the budget that was recently passed included a temporary fix allowing nonprofits to administer rental assistance
The temporary fix will be in place until 2015 funds
HR 2790 authorizes private non-profits to administer permanent housing rental assistance provided through the Continuum of Care Program
HR 2790 was introduced by Scott Peters (CA) has been cleared by House Financial Services Committee but needs more co-sponsors to clear the floor

(C) HUD Housing Choice Vouchers

While some of the sequestered funds for Housing Choice Vouchers were restored in the 2014 budget, more vouchers are needed in order to help chronically homeless and disabled homeless individuals obtain permanent affordable housing
Supplemental Security income for disabled individuals is less than $800 per month, which is less than Fair Market Rent for a 1-bedroom apartment in Virginia

ACTION

Congressmen: We thank you for maintaining the same level of funding as years prior and not cutting funding. In order to continue the good work that has happened in VA, we need increased funding for Continuum of Care and ask that you support increases in this year's budget negotiations.

-We also need members to co-sponsor HR 2790

RD Programs

Virginia's performance on Rural Development Single Family Mortgage Programs does not compare well to our neighboring states - especially the 502 direct program that serves the lowest incomes. Lower income families in Virginia are paying the price by not having access to homeownership.

(A)Processing delays and prioritizing applicants for RD loans is unfair to lower income households and Virginia taxpayers.

There is no better mortgage loan product than the USDA RD 502 Direct (502 D) program in rural areas. Funded at a fraction of the USDA RD 502 Guaranteed (502 G), with less than $1 billion compared to $24 billion annually. The 502 D targets household incomes below 80% Area Median Income; the 502 G targets incomes at 100% AMI and up.
In November, 2013, applicants to RD for the 502 D in Virginia loan were notified that their application would be delayed up to 180 days, as “RD can not continue to process your application at this time due to the lack of availability of funds for households within your income category.” We believe there is funding availability and are not sure the reason for the delay.
Delays cause problems with processing. Loan docs do not last 180 days; credit and debt ratios can change; purchase contracts will expire as no seller will tie up their property for that long.
The national RD office tells us that states are free to set their own policy on matters such as this.
A review of state by state utilization of both the RD 502 D and 502 Gshows Virginia's performance does not measure up to that of neighboring states, including those in the FAHE Packaging Demonstration.

ACTION:

Congressmen & Senators:

Ensure adequate funding for RD homeownership programs

Bring Virginia's RD loan activity in line with our neighboring states.

Flood Insurance

Many of our communities in Virginia have housing that was developed years ago in flood plains. The Biggert-Waters Flood Insurance Reform Act of 2012 requires that flood insurance premiums that have traditionally been subsidized go to market rate over time. This is having a very negative impact already on housing and redevelopment efforts in these communities with the specter of dramatic increases in flood insurance premiums.

On Oct 1st properties that are in the flood zone and transfer ownership will be required to pay market rate flood insurance premiums. All bank-mortgaged properties are required to have flood insurance. The premiums are projected to increase dramatically some premiums exceeding the mortgage payment. This is decreasing property values in some locations and has affected the housing market by discouraging re-sales.
Coastal areas are most impacted but inland flow plans are also negatively impacted. This is not a problem that affects only high price waterfront homes. Many low and moderate-income homeowners will be affected.

(A)SB 1846: Homeowner Flood Insurance Affordability Act (PASSED)