The American apartment industry…working together for quality, accessible, affordable housing.

Suite 540 • 1850 M Street, NW • Washington, DC 20036 • (202) 974-2300 • Fax (202) 775-0112 • Web Site:

Millennial Housing Commission DRAFT FOR REVIEW 7-31-01

July 6, 2001

Page 1

JOINT LEGISLATIVE COMMITTEE

Chair

Mary Ann King

Moran & Company

Peter D. Anzo

Vinings Investment Properties Trust

Tom Day

Hepfner, Smith, Airhart & Day

Stan Harrelson

Pinnacle Realty Management Company

Terry B. Schwartz

Brisben Companies

F. Karl Zavitkovsky

Bank of America


JOINT LEGISLATIVE STAFF

Clarine Nardi Riddle

Senior Vice President for

Government Affairs

Jim Arbury

Vice President of Tax

David B. Cardwell

Vice President of Finance & Technology

Kimberly D. Duty

Vice President of Communications

James W. Harris

Vice President of

Property Management

Eileen C. Lee, Ph.D.

Vice President of Environment

Ronald G. Nickson

Vice President of Building Codes

Mark H. Orbrinsky, Ph.D.

Vice President of Research

Karen R. FructuosoAmanda M. Joseph

AIMS Administrator


NATIONAL MULTI HOUSING COUNCIL

Leonard W. Wood

Chairman

Douglas M. Bibby

President


NATIONAL APARTMENT ASSOCIATION

Phil Carlock

President

Douglas S. Culkin

Executive Vice President

August 165430, 2001

D R A F T FOR R E V I E W

Millennial Housing Commission

800 N. Capitol Street, NW

Suite 680

Washington, DC 20002

Dear Commissioners:

As the Millennial Housing Commission (MHC) proceeds with its important mission of developing housing policy recommendations, the National Multi Housing Council (NMHC) and National Apartment Association (NAA) express our support for any effort would like to express our support for efforts that creates more affordable rental housing. NMHC and NAA not only represent the owners, and managers, developers, and financiers of most of the nation’s professionally operated rental properties, but also and these members serve the millions of individuals and families who live in multifamily properties. Our members are committed to providing quality affordable housing, and we welcome the opportunity to contribute to the Commission’s work.

To that end, we have formed the NMHC/NAA Millennial Housing Commission Task Force (“the NMHC/NAA Task Force”). Our task force includes leading multifamily owners and managers; developers/operators of properties that benefit from public subsidy and those whose properties do not receive public subsidy or credit; and representatives of state and local apartment associations across the country. This and this inputletterupdates our July ?? July 6, 2001 submission to include theincorporatesthe review and deliberations of our the NMHC/NAA Task Force.

Balanced Housing Policy, Smart Growth, and Attractive Density

A smarter, more balanced housing policy is critical to meeting the nation’s housing needs. Unfortunately, our housing policy has become increasingly oriented toward homeownership in recent years. The common justification for this is a presumption that homeowners make neighborhoods more stable, are more committed to neighborhood improvement, and are financially better off because they are owners. Unfortunately, though these assertions are common, they are actually more myth than fact. The NMHC and NAA represent not only the owners and managers of the majority of professionally operated rental properties, but they also serve millions of individuals and families who live in multifamily properties. The members of the NMHC and NAA are committed to provide quality affordable housing and welcome the opportunity to provide this input as you develop your report.

Our task force includes: leading owners and managers of multifamily properties; developers and operators of properties that were developed and operated with and without the benefits of public subsidy or credit; individuals who have been engaged in many of the federal, state and local programs to support the finance and production of rental housing; and executives who represent state and local apartment interests across the country.

The American apartment industry…working together for quality, accessible, affordable housing.

Suite 540 • 1850 M Street, NW • Washington, DC 20036 • (202) 974-2300 • Fax (202) 775-0112 • Web Site:

Millennial Housing Commission DRAFT FOR REVIEW 8/2/01

August 106, 2001

Page 1

Balanced Housing Policy, Smart Growth, and Attractive Density

A smarter, more balanced housing policy is critical to meeting the nation’s housing needs. Unfortunately, our housing policy has become increasingly oriented toward homeownership in recent years. The common justification for this is a presumption that homeowners make neighborhoods more stable, are more committed to neighborhood improvement, and are financially better off because they are owners. Unfortunately, though these assertions are common, they are actually more myth than fact.

National survey data from the General Social Survey conducted by the University of Michigan (confirm) show that apartment residents are more socially engaged thanthan single-family home owners. They are equally involved in community groups and similarly attached to their communities and religious institutions. In other words, there is no basis in fact for the implied claim that renters are somehow badless desirable for a community.

Credits for first time home buyers, down payment assistance, preferential loan programs, homeownership outreach and educational programs targeted to generating homeownership enhance the perception that renting an apartment is neither positive nor desirable. Efforts to promote families to move into homeownership have increasingly become a major focus of our housing policy, and we concur that homeownership is an important part of providing safe, decent and affordable housing. However, the continued preferential message and investment of resources to facilitate this advocacy furthers many of the misperceptions and negative images associated with apartment living. Our country is facing a long list of housingrelated problems that higher homeownership rates simply cannot solve,, problems likesuch as our growing affordable housing crisis, suburban sprawl, urban decay and even the housing needs of our aging parents. Some of the often-overlooked benefits of apartment homess include the following:

  • tThey promote balanced suburban development;.
  • Tthey help revitalize urban neighborhoods;.
  • Tthey conserve land and help promote open space.;
  • Tthey use municipal infrastructure more efficiently than single family houses;
  • Tthey reduce demand for new road and school construction;
  • Tthey help create the pedestrian-friendly neighborhoods so many citizens are calling for; and.
  • Tthey provide necessary housing for millions of public service employees, such as teachers, nurses, and public safety officials.

Nevertheless, we continue to allocate the lion's share of our housing resources, and our housing rhetoric, toward further increasing the homeownership rate, and we continue to attach a stigma to renting.

The nearly exclusive public policy bent toward homeownership has other costs as well. A recent report by the Research Institute for Housing America (RIHA), a research organization founded by the Mortgage Bankers Association, finds that lowerincome families tend to over-invest in housing and live in neighborhoods that have more volatile house prices. They also note that owning a home reduces the labor mobility of these households, making it difficult for them to move to areas with better job opportunities. They conclude that unsustainable homeownership is in no one's interest, and that many of the recent gains in homeownership among lowerincome and minority households "hinge on highly leveraged mortgage products."

Finally, a homeownership-focused housing policy fails to reflect the changing housing preferences of our citizens. Renting is no longer housing of the last resort. A growing number of upscale and moderate households are opting to rent even though they could afford to own because renting better fits their busy lifestyles or makes more financial sense. For the past three years, the fastest growing segment of renters is households making $50,000 or more. Many of these renters are actively engaged in improving their communities.

I recommend eliminating the preceding paragraph. We should be biased and paint the AH picture, and not highlight the demand for median income units - (yes $50,000 per year for empty nester with limited other living costs would put them in units renting for $1,500-2,100/ for a one bedroom unit) Except for high cost areas, these would be relatively

We agree that homeownership is an important part of providing safe, decent and affordable housing,. bBut, programs such as tax credits for first time home buyers, down payment assistance, preferential loan programs, and homeownership outreach and educational programs fail to address some of our most pressing housing needs; may inadvertently push some families into unsustainable homeownership; and reinforce the misperception that renters are second -class citizens.

For these reasons, we We strongly urge recommend that the Millennial Housing Commission to include a call for a balanced housing policy in its recommendations. The primary objective of our national housing policy should be to ensure that everyone has access to decent and affordable housing, regardless of whether that housing is owned or rented. (See enclosed brochure “Towards a More Balanced Housing Policy”) Other key trademarks of a balanced housing policy include:

  • It should respect the -- rights of individuals to choose housing that best meets their financial and lifestyle needs.
  • It should one that promote livable communities by encouraging responsible land use.
  • It should recognize that all decent housing, including apartments homes, and all citizens, including renters, make positive economic, political and social contributions to their communities.
  • It should balance the expected benefits of regulations with their costs to minimize the impact on housing affordability and production.

Because of the attention the Commission has given to the housing needs of our low-income and moderate-income citizens, the promotes housing choice for both rental housing and home ownership; one that recognizes the benefits of renting as well as owning a home; and one that illuminates how communities benefit from rental housing in providing a variety of housing choices. Research repeatedly has shown that apartments are a positive component to the development of our communities and, therefore, decisions that are exclusionary or biased against multifamily housing must be challenged.

The Millennial Housing Commission will undoubtedly make many multifamily-related recommendations. related to multifamily housing issues affecting the population with the greatest need for housing, including the poor and others. In fact, much of the Commission’s work likely will revolve around multifamily housing. Therefore, the Commission has an the opportunity, and an the obligation, to inform policymakers that present a message that multifamily housing is critical to our housing policy and our communities.

The content rhetoric and rhetoric content of our federal housing policy is not the only obstacle to promoting a more balanced housing policy. Local development policies, escalating land costs and development barriers all have had a profound impact on rental housing production. “Not-in-my-back-yard” (NIMBY) attitudes and exclusionary zoning policies make it difficult, if not impossible, to expand the supply of moderate-income housing. A recent survey of NMHC members said that high land costs were the primary impediment to expanding the supply of ; in fact, that multifamily rental housing is a viable choice for millions of Americans and more than just an economic means to meet the housing needs of the economically disadvantaged. Multifamily development involves prudent use of our land and is an effective means seeking to provide housing for the millions of persons employed in public service such as teachers, nurses, and public safety officials. It also provides housing for a growing number of elderly residents seeking a higher quality of life within their economic needs, and facilitates economic development as an effective response to greater sprawl and other poor planning in our metropolitan areas.

NMHC/NAA advocacy for a balanced housing policy respects the rights of individuals to choose housing that best meets their financial and lifestyle needs. Such policy should:

Ensure that everyone has access to decent and affordable housing, regardless of their housing choice;

Promote healthy and livable communities by encouraging responsible land use and promoting the production of all types of housing;

Recognize that all decent housing, including apartments, and all citizens, including renters, make positive economic, political and social contributions to their communities; and

Balance the expected benefits of regulations with their costs to minimize the impact on housing affordability and production.

By ignoring apartments in our housing policy debates, policy makers overlook the fact that apartments are and can continue to be a part of the solution to several modern-day problems, such as suburban sprawl, urban decay, the affordable housing crisis, and even the housing needs of our aging parents. In addition, the provision of affordable housing in our inner suburban locations is becoming less feasible. According to NMHC members in a survey this past spring, high land costs are the primary obstacle to expanding the supply of moderate-income housing. Even more disturbing, fully 20 percent said that even . These high costs drive construction costs beyond the rent levels affordable to such households. Almost two-thirds of respondents said that moderate-income apartments only make economic sense in locations farther away from downtown urban centers and/or employment areas, where land is less expensive. Another 20 percent said that even where moderate-income apartments make economic sense, developers they are all but blocked by zoning restrictions and “NIMBY” (not-in-my-backyard) attitudes and policies. (See enclosed NMHC “Research Notes” article)

Only five percent consider moderate-income apartments feasible in a wide variety of locations.

The Commission should recognize the local nature of barriers to providing affordable, decent and safe multifamily housing and call upon the resources of the federal government to study and evaluate the policies not only at the national level, but also at all levels of government. This The evaluation should identify look at which the factors contribute to the that are contributing to the rising cost of multifamily development and which ones inhibit that are inhibiting prudent policies that could provide appropriate incentives for to meeting rental housing needs as part of sound urban development and growth. Issues such as the costs and benefits associated with impact fees or the incentives created by the reduction of such fees have in exchange for development The Commission should focus on the true costs and benefits associated with impact fees and recommend an evaluation of whether or not such fees are inhibiting the development of mixed-income rental housing or the rehabilitation and preservation of affordable housing should be an area of focus of such research. Local development policy, escalating land costs, and development barriers all have had a profound impact on rental housing production. Solutions related to debt financing, resident subsidy and improved equity capital have not been enough to overtake the rising cost of land and development, especially in our urban areas. Smart growth and responsible density actions, when properly showcased, provide a greater awareness of how communities can manage the issues associated with growth.

. (See enclosed brochure “Growing Smarter with Apartments”)’s ( of ),

Consumer-Based Assistance

As the Commission well knows, our nation is facing a crisis-level shortage of affordable housing. Housing vouchers can be an effective means of providing rental housing assistance to low-income residents. Unfortunately, the current program is plagued with regulatory requirements and administrative problems that discourage private owners from participating in it. To be effective, the Section 8 Housing Choice program needs to provide incentives to rental property owners; offer residents a broad choice of housing options; and ensure that, as a national program, it is administered in a consistent, efficient, and effective manner.

The goal of this reform should be to make Section 8 voucher holders indistinguishable from non-subsidized residents. Such transparency protects both residents and property owners from being stigmatized because they participate in the program. Put simply, transparency means:

The Section 8 Housing Choice Voucher Program needs reform. The goal of this reform is to obtain transparency between the Section 8 voucher program and non-subsidized residents. This transparency is aimed at protecting tenants and the property owners from the stigma and “pain” of participating in the program. Among other things, transparency means:

  • Other property residents should not be able to identify Section 8 residents.
  • Property managers should not be subjected to additional administrative burdens because they rent to Section 8 voucher recipientss, and voucher recipients should not, in turn, be viewed as less desirable because of the extra burdens they indirectly cause for on-site staff. While recipients are not directly responsible for the administrative efficiencies of the voucher program, it is a truth of human nature that on-site staff inevitably associate these residents with the additional workload and special requirements they bring (e.g, different lease provisions, different monthly payment processing and special unit turnover protocols).

The resident receiving the Section 8 assistance should be transparent to other residents at the property, as well as to property management. They should not be viewed differently by other residents because differently is different or that their

  • You are right. The issue is perception on the part of on-site management personnel due to the added regulatory requirements, monthly payment processing and unit turnover issues associated with units that provide housing for voucher residents. As with any resident, such problems, while no fault of the resident, are often associated with the resident. This is an unintended negative, but reality associated with the generally poor administration by the PHA of the voucher program. As a result, it further that diminishes the desired transparency of the program.All rResidents, including voucher holders, , regardless of their receipt of a housing subsidy, should be held accountable to common standards and laws that are established by states and localities. at the state and local levels.
  • Owners should be able to expect The owner should expect timely rent payments for rent payments in a timely manner on behalf of a subsidized residents, and they should have the . In addition, the owner should have the right to expect timely compensation in the event that payment is delayed.
  • The owner should be able to have the ability to turn a subsidized the unit over upon vacancy in a reasonable time frame, comparable to the time required to turn over , consistent with non-subsidized units. Government-caused dis at the property, and disruptions in such turnover caused by the government should result in reasonable compensation.

Housing vouchers clearly are an effective means to provide rental housing assistance to low-income residents. The current program, however, is plagued with regulatory requirements that prohibit its wide acceptance among rental property owners, inconsistency and administrative problems. The Section 8 housing choice voucher program needs reform to provide incentives to the rental property owner, to ensure that the residents are afforded the broadest housing options and, as a national program, to be administered in a consistent and effective manner.