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HomeMy WebLinkAbout02-02-2016 Item 02 PresentationLOCAL UPDATE REGARDING FEDERAL AND STATE HOUSING AND COMMUNITY DEVELOPMENT PROGRAMS, INITIATIVES AND BUDGETS City of San Luis Obispo City Council Presentation February 2, 2016 By John Fowler FEDERALISM Federal Budget process includes many initiatives affecting state and local government Process involves agency input as well as regional, statewide and local advocacy regarding final budget development and agency funding allocations For Housing and Community Development, certain programs provide resources for local governments, principally through Housing and Urban Development Department but also through USDA and other agencies HUD programs include among others, Community Development Block Grant, Home Investment Partnership Act (HOME), Emergency Shelter Grant and McKinney-Vento Supportive Housing Program (SHP) funding for homeless persons Federal Discretionary budget items have been subject to sequestration and reductions; growing debt and entitlement programs, Social Security, Medicare, etc. continue to consume a large share of the budget pie. As context for competing priorities: defense spending accounts for 54% of all discretionary spending; the HUD budget 3%; Veterans programs, 1%. Paradoxically, defense spending and military engagement often produces greater need to HUD and Veterans programs to provide resources to returning service personnel. HUD PROGRAMS CDBG: Community Development Block Grant, provide resources for capital/infrastructure development and community programming (local non-profit agency and services); provides 20% administrative allocation to support city staff time and city operating budget, no matching funds requirements HOME: funding for affordable housing development; serves as critical local matching funds for project development; provides 10% administrative allocation to support staff time and city operating budgets; dollar-for dollar match; easily met with other funding resources HUD BUDGET UPDATE Community Development programming will likely see a slight increase over 2015/16 funding levels, congressional advocacy and support has been integral to this, however slight increases are only marginal improvements when viewed historically. For example, the fiscal year 2016 formula program request of $2.8 billion is only $327 million above the $2.473 billion appropriation level in the inaugural year of the CDBG program in 1975. When adjusted for inflation, the fiscal year 2016 request represents approximately one fifth of the fiscal year 1975 funding level, when the number of grantees receiving funds under the program was approximately half of the number of grantees that will be receiving funds in fiscal year 2016. In terms of the HOME program this was initially proposed to be reduced 95% nationally, and would have effectively shuttered and/or hobbled this resource significantly. HOME Program budget increased slightly from $900 million in 2015, to $950 million for 2016, resulting from advocacy and related congressional support. As context of progressive reductions, in 2001, the HOME Program budget was $1.8 billion In Washington D.C. we met personally with congressional delegation as well as key committee members, including chair of Ways and Means committee to advocate support and stress local importance and need for HOME and other HUD programming; We have also advocated through local, state and national interest groups in providing congress and staff with reports in terms of outcomes and results of funding that has been allocated to projects Our elected representatives in Washington and Sacramento consult with us for technical advice and input as to policy changes being considered and potential local impact, both in terms of community and economic development Although budget figures are on the slight increase for these programs, they have been on the decline--some significant reductions-- over the past five years. Even though there has been a slight uptick recently. Budget sequestration has contributed to automatic program cuts. However, as noted, HOME funds increased by $50 million from 2015 to 2016. Should sequestration continue, the annual reductions in discretionary budget allocations will follow suit. HUD BUDGET UPDATE CONTINUED IMPACT OF HOME ON LOCAL CONGRESSIONAL DISTRICT 24 (LOIS CAPPS) : 1992-2015 NUMBER OF GRANTEES 7 TOTAL RENTAL UNITS 1,087 TOTAL HOMEBUYER UNITS 421 TOTAL HOMEOWNER REHAB UNITS 28 TOTAL COMPLETED UNITS 1,536 TOTAL DRAWN AMOUNT $69,549,839 For the period 1992-2015 for our congressional district, the regional impact for affordable housing development has been significant: over this timeframe, seven participating jurisdictions receiving HOME have drawn down almost $70 million in federal funds. When considered how this funding leverages other resources, often up to a 10:1 ratio, this greatly benefits our region and local economies; not to mention local low-income residents (below statistical data obtained from HUD website). OTHER AFFORDABLE HOUSING FUNDING SOURCES Federal Low-Income Housing Tax Credits, inception: 1985 Tax incentive for investors to invest in affordable housing developments; largest single financial resource for most affordable housing development nationally Overseen through Internal Revenue Service National allocation of tax credits to State Housing Agencies who fund projects across the state through largely competitive process; some regional apportionment Provides most significant source of financial capital for affordable housing; HOME is a critical local match for this funding. Federal resources funneled locally and to state of California are crucial; local resources such as affordable housing In-Lieu Fees and Housing Trust Fund financial support are also important. Bi-partisan support for continued funding Emergency Shelter Grant (HUD): Provides resources for homeless programs and direct services to homeless persons, including rental assistance; no matching funds requirement McKinney-Vento (HUD): (funding through County of SLO, under Continuum of Care) provides funding for homeless programs and services, outside of emergency shelter funding, transitional housing, permanent supportive housing; matching funds requirements may be met with in-kind services Cap and Trade: State of California Strategic Growth Council, 20% set-aside of Cap and trade allocated to Affordable Housing and Sustainable Communities; this year $320 million is available, new funding, second year of program Guidelines favor projects in larger urban areas and we have advocated and received a 10% set-aside for rural communities and are advocating for changes that will benefit other areas of the state outside larger urban areas. Goal is to reduce greenhouse gas emissions. IMPORTANCE OF CONTINUED FUNDING FOR HUD PROGRAMS Federal funding is significant and leverages additional resources by serving as matching funds, or providing programming that state and local governments lack resources for Example: McKinney-Vento for Homeless Persons provides approximately $2.5 billion annually supporting 8,000 programs nationally that address homelessness; this has been in place since 1985 and is the only real resource for assisting homeless persons Matching requirements are low and may be in-kind, non-cash Very few other local and/or state resources that allocate funding specifically for this purpose, particularly in these amounts. No free lunch, requires local leadership, organization and Continuum of Care planning to realize ongoing annual funding such as data collection, e.g. Homeless Point-in Time Counts, local strategic planning, resource coordination, grant administration, and performance reporting. ADVOCACY: TAX CREDITS Congress recently passed legislation providing increased certainty as to funding and value of tax credit pricing. Pricing for 9% tax-credits is now fixed at a baseline minimal level and advocacy efforts are underway to negotiate similar fixed-minimum pricing of 4% tax-credits as well. As pricing of tax-credits varied nationally, this created uncertainty in amount of financial subsidy that projects could rely on with confidence; problem became acute with housing meltdown and recession. No one was purchasing tax credits, their value declined and projects languished. Based on this, program advocates and interested parties informed that certainty in this program would better allow projects to move forward and relieve pressure on local government and/or other agencies to identify additional financial resources to make up the difference when fluctuations occurred. Legislation was recently passed insuring program sustainability and certainty, allowing for increased reliability in identified resources to construct affordable housing In 2015, California allocated $91,543,345 in federal 9% tax-credits. Combined with $112,795,659 in state credit awards this funded 90 projects throughout the state that will result in 4,943 affordable housing units being built. These are considerable resources and HOME and other local affordable housing funds serve as leveraged resources to acquire these tax credits. Local in-lieu fees are also an important source of matching funds for Tax Credits. OTHER ADVOCACY EFFORTS –GSE’S Government Sponsored Enterprises : Fannie Mae and Freddie Mac Advocated for proceeds-based funding from Freddie and Fannie loan portfolio to support new federal affordable housing fund under National Housing Trust Fund (NHTF); NHTF, based on housing market crash in 2008 and Freddie/Fannie’s financial position, has not received funding from proceeds and hence implementation has been in abeyance. Efforts to not implement the National Housing Trust Fund were unsuccessful, hence funding proceed keep accumulating until a decision is reached; Now that Freddie and Fannie are in a better financial position, proceeds should fund this new resource; NHTF moneys will be allocated to states, with tax credits, and awarded through competitive application process once NHTF is funded and implemented; When/if projects in our region do not receive funding under this initiative we advocate for geographic equity and apportionment. Advocating for program changes that benefit our communities for example Affordable Housing and Sustainable Communities funding (Cap & Trade) BANKING ADVOCACY/CONSULTING: CRA Community Reinvestment Act requires lending institutions to provide resources for reinvestment into community programming benefitting low-income communities; May include lending, financial support, first mortgage and construction loans for affordable housing development and other requirements When significant bank mergers are on the table, this year we have worked with the Office of the Comptroller of Currency, the Federal Reserve and the FDIC to advise as to what potential impacts a significant bank merger might have on CRA and offered advice and conditions to insure that merger would benefit, or not be to the detriment, local and regional areas Example: When Union Bank was initially proposing acquisition and merger with the local financial institution Santa Barbara Bank and Trust, PSHHC was at the table informing Congress, interested committees and federal regulatory agencies as to potential local impact. The merger and acquisition moved forward and Union Bank has become an integral partner in meeting local needs as well as advancing their internal CRA goals and objectives. We assess performance and offer input into decisions affecting community and economic development. STATE ADVOCACY AND CONSULTING Participated in working group advocating for legislative language that insured smaller, rural communities would receive consideration in Affordable Housing and Sustainable Communities (AHSC) funding Uncertainty of hundreds of millions of dollars the Governor has earmarked for Cap & Trade in his State of the State Address Resulted in 10% of funds being reserved for these communities whereas prior none had been allocated Working on developing alternative methodologies and metrics in regard to measuring Greenhouse Gas Reduction and carbon footprint in Rural and smaller urban areas; current methods only consider methods associated with Large Urban areas. Met with state director of Housing and Community Development and director of State Director of Environmental Protection Agency to advocate and provide input as to needs of local areas in addition to major urban centers in the state, Los Angeles, San Francisco, etc. Worked with state assembly staff in informing legislative policy and language insuring that funding being proposed was well-crafted as well as available and beneficial to all regions Provided technical assistance and expertise where this knowledge was sought out to inform public policy development. Advocated for AB 35 and SB 1335 to increase funding for affordable housing, unfortunately neither of these bills were approved IT TAKES A SMALL VILLAGE We represent our local communities in federal, state and regional community and economic development and work with other interested parties to coordinate messaging, technical resources, and policy guidance on programs beneficial to our cities and region Policy work is informed by local needs and agency experience Focus is on resources coming into local communities that provide funding and resources to local government as well as policy that addresses, includes and considers local needs Affordable housing developments infuse millions of dollars into local economies, create jobs and support commerce and economic development Other interest groups we work with include: NeighborWorks, California Housing Partnership, Enterprise Community Partners, National Low-Income Housing Coalition, California Rural Housing Coalition, state and local homebuilders associations, local Housing Trust funds, Housing Authorities, among others Our efforts over the past years have included letter-writing, informing legislation and policy development, providing verbal and written comment to administrative and regulatory policy changes, meeting with agency directors, congress members and congressional committee and subcommittee members and staff, and as noted, informing and advocating for sustainable financial resource base to support local government and community. City County Affordable Housing for area residents CDBG HOME Continuum of Care Cap & Trade Tax Credits State & Federal In Lieu Fees HA Section 8 Vouchers State Budget RAD VA NHTF THANK YOU! John Fowler, President/CEO Peoples’ Self-Help Housing 3533 Empleo Street San Luis Obispo, CA 93401 johnf@pshhc.org 805-540-2452