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Monday, December 7, 2015

Home- It Takes a Village to Build It

With this end of year post, I'm going to take the liberty to veer from my usual technical "how to" post to reflect on the current state of housing in America. Throughout the year, I have read article after article about America's housing shortage- there's not enough of it, it is too expensive, and as a result, many people don't have it, and others are stuck in a cycle of poverty as they try to hang onto it.

This has become an urgent issue for many cities and their leaders. (Meanwhile, Congress is cutting funding for affordable housing.) Cities like New York, San Francisco and Los Angeles have become economically segregated and prohibitively expensive for a large portion of their workforce. The Mayor of San Francisco recently announced a major initiative to produce more affordable housing, including use of bonds to raise $500 million. The Mayors of Los Angeles and Portland recently declared a State of Emergency due to the homeless problem. But this isn't just a big city problem. The apartment vacancy rate in my town, Chico, California (population approx. 90,000) is under 2%. It's also a statewide problem in California. The 2015 California Economic Summit cited the production of affordable housing as one of the three top priorities for the State in the coming year.

I don't think this issue has started to garner so much attention because leaders have suddenly started to be more sensitive to the needs of poor people. It's because the lack of affordable housing has begun to make an even more evident negative impact on the middle and even upper-middle class (i.e. they can't afford to live where the jobs are), and it effects other things that everyone cares about: economic well-being and the efficient use of public resources. As people appreciate the interconnectedness of the urban environment and the economy, they realize that a housing shortage cannot be isolated or ignored.

In order to refocus our priorities, we need to re-frame the way we think about housing. Since the post-WWII housing construction boom, our American society has viewed housing through the lens of individual choice and responsibility. The single-family home has been personalized like the automobile. This line of thought suggests that the responsibility for securing and maintaining a home lies solely with the head of the household, and it is of no concern to anyone else.

However, the perceived reality of homeowners being fully capable of purchasing and maintaining their home on their own is a myth. An individual's property actually has been everyone else's business for a long time, especially in post-WWII America, where federal stimulus programs (e.g. the GI bill, the mortgage interest tax deduction, government-backed mortgage securities) made it possible for middle America to afford homes. In addition, large-scale government investments in infrastructure, such as the Interstate Highway program, opened access to more land and greater supply, and subsequently more affordable homeownership opportunities. Who paid for those investments? Everyone, especially the wealthy, thanks to a tax structure that was much more progressive than it is now.

In the American experience, safe and sanitary housing has been more available when the government has taken an active role, and less available when that role has been abdicated to private property owners whose primary concern is personal profit. Even the homesteading of the 19th Century was made possible by government investment, such as the U.S. military relocating Native Americans and protecting settlers, and federal investments in rail and land surveying.

What has made a village a "village" from the dawn of civilization has been the communal construction of shelter. Cooperative construction of such shelter was usually the first order of business in establishing the village, and participation in that effort has traditionally been part of the societal social compact.

But even in the age of private property law, a home's monetary value is inexorably linked to developments in the community that surrounds it. If the City decides to put a nice park across the street from your home, you win, whether you did anything to deserve it or not. If the City doesn't help rehabilitate the dilapidated housing across the street from your home, and traffic on your street is awful because most people commute by car instead of living near work, you lose, whether you did anything to deserve it or not.

It's time to start thinking about the availability of affordable housing as a critical common concern of all citizens, and worthy of bold investment on a national scale. I'm not talking about massive communist housing blocks and one-size-fits-all top-down central planning. We already know how to make federal investments in a way that is responsive to markets and sensitive to local decision-making. The Community Development Block Grant (CDBG) program (conceived in the Nixon Administration) provides grants for public improvements benefiting low-income populations to local governments. The CDBG program sets broad spending criteria, and then allows local governments to spend CDBG funds in a way that meets local priorities, fosters local partnerships, and addresses local needs. It has proven to be broadly popular and effective. We need a similar program that will allow local governments to leverage other effective programs such as the Low Income Housing Tax Credit (LIHTC) to stimulate the production of affordable housing.

Unfortunately, Congress is not going to do this on their own anytime soon. In the meantime, housing professionals and activists should recommend and support solutions at the state and local levels. There are many proven models that can be pursued, such as local housing trust funds, social impact bonds, inclusionary zoning, and land use regulatory reform (see Paul Krugman's recent op-ed). We should also ask politicians how they are going to address the housing shortage, and hold them accountable at the ballot box if they do not. As is often the case, change will have to come from the bottom up, in particular from city leaders and their citizens who experience the impacts of the housing shortage on a daily basis.

Tuesday, November 3, 2015

The Impact of Federal Homeless Policy on Rural Communities

You may have read HUD press releases about progress in eliminating homelessness in the United States. According to HUD, veteran and chronic homelessness have been significantly reduced over the last five years. The reason? The federal government has begun implementing proven, effective models. The key model to this success is "Housing First"- the approach of housing the "Chronically Homeless" (individuals who have been homeless more than a year or who have had four or more episodes of homelessness over the last three years) immediately without placing barriers in their way (such as sobriety, minimum income or criminal record standards), and then after being housed, wrapping those individuals in services that will help them stabilize and maintain housing. This model was first proven to be successful in New York City and other large urban metros. HUD has now tied Housing First implementation to federal homeless funding for the rest of the country.

Yet for the rural Northern California communities in which I work, the decline in chronic homelessness is not evident. On the contrary, it has been on the rise. Our Point-In-Time Surveys show that while the total number of homeless individuals in Butte County has decreased over the last four years as the economy has improved, the number of Chronically Homeless individuals has increased. The visibility of homeless individuals has certainly increased in downtowns and public areas, raising concerns from businesses, chambers of commerce, politicians and the public about the impact of homelessness on the economy and public safety. In Chico and Redding, the increase in homelessness has become a major topic of public debate as those communities seem powerless to stem the tide.

HUD's approach to these problems is to require that all Continuums of Care (CoCs) adopt a specific, prescriptive set of policies and procedures that implement Housing First and an organizational infrastructure to support it. This organizational infrastructure is extensive, with key elements being Homeless Management Information Systems (HMIS) and Community-wide Coordinated Entry into housing and services. This infrastructure involves extensive data collection, monitoring, and evaluation, as well as complex governance structures. (See the HEARTH ActOpening Doors Plan and the CoC Program Toolkit for more on these policy directives.) As a result of these directives, CoCs carry a growing administrative burden. Instead of sharing in the cost of this administrative burden (like the CDBG program), HUD has left it to communities to come up with the funding.

While many large metro areas have been able to mobilize the necessary resources to implement Housing First and its supporting administrative infrastructure, most smaller cities and rural areas have struggled to do so. Resources available to large metro areas that are less available to rural areas include: larger tax bases; constituencies more supportive of funding homeless interventions; and greater concentrations of philanthropic and CRA-incentivized investment.

Looking ahead, I see the following trends growing out of HUD's CoC policy:

  1. Rural communities that do not develop a political consensus to adopt HUD's policies (and raise the resources necessary to implement them) will drop out of the CoC Program and cease to receive competitive federal funding.
  2. While chronic homelessness continues to decrease in metro areas, it will continue to increase in rural areas.
  3. As the imbalance between cities and rural areas in dealing with the homeless problem continues to grow, government will attempt to make policy interventions to correct the imbalance.
  4. The responsibility for implementing HUD directives will increasingly fall to multi-jurisdictional conglomerate rural CoCs with private funding support, and State governments, as these will be the only entities with adequate capacity to maintain the CoC infrastructure required by HUD.
HUD policy is strongly influenced by who occupies the White House, so there is always the possibility of change with election cycles. However, I do not see federal homeless policy changing any time soon. The U.S. Interagency Council on Homelessness within the Bush Administration initiated some of the current policies that have continued under the Obama Administration. Further, the CoC Program is one of the few domestic programs that has had bi-partisan support over the past four years, as CoC funding has not been cut nearly as drastically as other HUD programs such as HOME.

If you live or work in a rural area other than Northern California, I would be interested in knowing what trends in homelessness you see there. My perspective is based on what is happening in Northern California, but there may be other factors at work in rural areas that I am not aware of. Thanks for sharing your insight!

Tuesday, September 8, 2015

The National Disaster Resilience Competition

The National Disaster Resilience Competition (NDRC) is a HUD funding program that reflects Congress's response to the natural disasters of 2011-2013, starting with Hurricane Sandy. It is funded out of the Community Development Block Grant (CDBG) program, and is called CDBG-DR, or CDBG-Disaster Recovery. Toward the end of this year, HUD will allocate $1 billion in CDBG-DR to successful NDRC applicants. This will have a huge impact on disaster recovery efforts across the country, with an aim of mitigating the impacts of future natural disasters. Here are the basics about NDRC.

  • The application consists of two phases. Phase I applications, submitted earlier this year, framed unmet recovery needs and described an overall approach to address them. HUD invited Phase I applicants to submit a Phase II application (due Oct. 27th) that proposes specific projects to receive CDBG-DR funds.
  • All states with counties that experienced a Presidentially Declared Major Disaster in 2011, 2012 or 2013 were eligible to submit a Phase I application.
  • CDBG-DR eligible projects include housing, infrastructure, community facilities and watershed restoration. At least half of the funds must benefit Low and Moderate Income Households, as defined by HUD.
  • The program seeks to fund proposals that further "resilience", meaning that the community will resist and rapidly recover from disasters with minimal outside assistance.
  • The NDRC also prioritizes projects that fully engage and inform community stakeholders, address the specific needs of vulnerable populations, and leverage investments from the philanthropic community.
Housing Tools has experience developing applications for this competition, so please contact me if you have any questions.

Tuesday, August 4, 2015

Staying on Top of HOME Deadlines

HUD's HOME Investment Partnerships Program enforces strict deadlines for committing funds, expending funds, starting project construction, and closing out a project. A Participating Jurisdiction (PJ) that receives an annual entitlement HOME grant (also called a Formula Allocation) may lose its funds if it does not meet these deadlines. It can be a challenge to keep track of these deadlines because the clock re-starts every year that the PJ receives a new Formula Allocation. A PJ usually has multiple deadlines for different years of Formula Allocation that have not been entirely committed or spent.

The HOME deadlines became more stringent a few years ago when the legislature sought to improve the timely use of funds, resulting in the 2013 HOME Rule. Below is a summary of HOME Deadlines.
  • Expenditure— PJ’s must spend HOME funds within five years of receiving their Formula Allocation.
  • Commitment— PJ’s must commit HOME funds to a specific project with a binding legal agreement within 24 months of receiving their Formula Allocation.
  • Project Commencement— HOME-funded projects must begin construction within 12 months of receiving a HOME commitment, as documented with building permits.
  • Project Completion— HOME-funded projects must be completed within four years of commitment, as documented with certificates of occupancy. Any project that is not completed in this timeframe will be terminated and PJs will be required to repay HOME funds drawn.
  • Lease-up— HOME-assisted rental units must be occupied by income-eligible households within 18 months of project completion. If this requirement is not met, PJs must repay HOME funds for the vacant units. For units that remain vacant six months following completion, the PJ must develop an enhanced marketing plan and report this information to HUD.
  • Home purchase— A HOME-assisted homebuyer unit must have a ratified sales contract within nine months of construction completion.
HUD does provide a 120-day notice when a deadline is approaching that has not yet been met. Deadlines are also tracked on HUD's HOME Deadline Compliance Status Reports online. However, it may often be too late for a PJ to line up or complete a project by the time the 120-day notice has arrived. Real estate projects often require long timelines and a more proactive approach.

To initiate a planning process to meet deadlines, it is a good idea to set up a timeline for each year's HOME allocation and each HOME-funded project. Housing Tools uses Smartsheet cloud-based project management software to make these timelines available to all team members on the Internet, allowing them to access and update timelines at any time. This software also offers tools to make assignments, notify team members when tasks are completed, and send automated reminders via email. This helps PJs stay on top of HOME deadlines. Let me know if you would like to find out more about these systems.

Tuesday, July 7, 2015

How to Become a Community Housing Development Organization

A Community Housing Development Organization, or CHDO, is an entity that is prioritized to receive funding from HUD's HOME Program. States, cities and counties across the country receive an annual allocation of HOME funds from the federal government to produce affordable housing. HUD requires that at least 15% of their annual allocations fund CHDO projects. In this post I summarize the most important steps an organization needs to take in order to qualify as a CHDO.

HOME Participating Jurisdictions (PJs) are responsible for certifying entities as CHDOs in accordance with HUD regulations. In order to be certified as a CHDO, an organization must meet standards in three general areas:
  • Mission- the organization's mission must include the provision of affordable housing for low income households. This mission must be documented in the organization's articles of incorporation or bylaws. In addition, CHDOs must have a policy and process for incorporating input from program beneficiaries.
  • Board Composition- at least 1/3 of the organization's Board of Directors must represent the community's low-income population, either as a low-income resident, a resident of a predominantly low-income census tract, or a representative of a low-income neighborhood organization. In addition, no more than 1/3 of the Board of Directors can be affiliated with a public entity, as an elected representative, an appointed representative, or as an employee.
  • Capacity- the organization must demonstrate capacity to develop housing by documenting financial health, accomplishments and staff qualifications. The organization must also have experience serving in the PJ that is certifying it. A new requirement that came with the 2013 HOME Interim Rule is that CHDOs must have paid, full-time staff involved in housing development.
Feel free to contact me to get more details on becoming a CHDO, or to use my cloud-based checklists for certifying CHDOs.

Monday, June 1, 2015

Getting a Handle on the Analysis of Impediments to Fair Housing

HUD requires each entitlement jurisdiction to update its Analysis of Impediments (AI) to fair housing every five years, concurrent with the update of the Consolidated Plan. Unlike the Consolidated Plan, the AI is not submitted through IDIS to HUD, but is kept on file at the jurisdiction. Five years is a long time, so here's a refresher (or introduction) on how to approach the AI.

 I recommend you review HUD's Fair Housing Planning Guide to make sure you are addressing all of the relevant topics. The AI can be organized in five general sections:

  1. Goals and Process- definition of Fair Housing Impediments, AI goals, and process, including description of entities consulted (government agencies, housing authority, lenders, real estate agents, landlords, legal services, services for disabled persons, advocacy groups, etc.);
  2. Background Data- demographics (population, race, ethnicity, household characteristics), household income, employment, transportation, and housing (type, rents, vacancies, condition). 
  3. Potential Public Impediments
  4. Potential Private Impediments
  5. Summary of Impediments and Plan to Address Them
While all of the sections are essential, most of the effort should be focused on the potential Impediments (Sections 3 and 4). In researching potential Impediments, here are some of the key questions to consider with respect to the Public Sector:

Are building and zoning codes in compliance with State and Federal Law with regard to fair housing?

Do building or zoning codes make it more difficult for protected fair housing classes to access housing than other populations?

Are low-income or racial minority populations concentrated in particular neighborhoods? Do these neighborhoods have good access to transportation, amenities, public services and employment? Are there public policies that intentionally or unintentionally lead to low-income or racial minority population concentrations?

Do zoning or building codes present impediments to building affordable housing throughout the jurisdiction or in particular communities (e.g. minimum lot sizes, excessive parking requirements, lengthy review processes)? Are there policies that treat affordable housing different than market rate housing?

Are financial resources made available for affordable housing?

Do planning and zoning boards reflect the community's diversity? Is the board member selection process open, transparent and fair?

Are Section 8 voucher holders concentrated in particular neighborhoods, or are they broadly distributed throughout the jurisdiction? If concentrated, what are the conditions in these neighborhoods? Is the Housing Authority making efforts to open access to new neighborhoods?

Does the Housing Authority provide implement reasonable accommodation procedures, pursue tenant access to a variety of neighborhoods, empower residents to help shape their communities, and provide opportunities for tenants to move to homeownership?

Good data sources for the Background Data section include:
I hope this helps you get started. Give me a call if you need further assistance. Good luck with your AI!

Tuesday, April 7, 2015

Consolidated Plans: Bringing It All Together

In many ways, HUD has simplified the Consolidated Planning process with the new eCon Planning Suite. It has a standardized format, and much of the data (albeit a bit out of date) is already provided in tables within the forms. Rather than interpreting HUD regulations, the form asks specific questions, taking a great deal of guesswork out of the process. In addition, all information can be input into IDIS, where plans, disbursements and reports are now stored in one place.

These are all welcome developments. Still, when the Consolidated Plan is printed out, it is well over 100 pages and not in the most readable format. One can easily get lost in the numerous forms and tables. To gain some perspective and strategic direction, I have found it helpful to take a step back and look at the big picture.

In summary, the Consolidated Plan consists of the following elements:

1.              Executive Summary
2.              The Process - a description of your consultation with other agencies, and the public outreach process.
3.              Needs Assessment - an analysis of housing, community development, and economic development needs.
4.              Market Analysis - an assessment of market conditions.
5.              Strategic Plan - a plan of action for the 5-Year planning period.
6.              Annual Action Plan - a plan of action for the first year of the 5-Year planning period.

After completing Sections 1-4, I recommend you summarize your findings by listing the Priority Needs identified through the following processes:
·                Consultation and Public Outreach
·                CAPER review
·                Analysis of Impediments to Fair Housing (HUD is putting a strong emphasis on this)
·                ConPlan Needs Assessment
·                ConPlan Market Analysis

After listing your priorities, you will find some overlap and duplication between the different processes. Through this analysis, you will be able to assemble the overall Priority Needs list required in the Strategic Plan. You can then formulate your Strategic Plan’s goals and Annual Action Plan Projects, based on the Priority Needs, available resources (i.e. budget constraints), and past performance (as documented in the CAPER).

So here's the ConPlan big picture process, as we formulated it for the City of Chico:

Good luck navigating through the IDIS weeds and keeping your focus! You can do it!

Do you have any helpful tips or tricks for navigating the Consolidated Process? Post your comments below!

Monday, January 26, 2015

Tips for Labor Compliance on HUD Projects: Part 3

Welcome to my final installment of HUD labor compliance tips. Part 1 provided an overview, and suggestions on complying with federal prevailing wages. Part 2 dealt with integration of requirements into contracts. Part 3 will focus on Equal Employment Opportunity and Section 3 requirements. Relevant regulations include Section 3 of the Housing and Urban Development of 1968, 24 CFR Part 135, Executive Orders 11246, 11375, 12086, and 41 CFR Part 60 1.4(b).

Equal Employment Opportunity (EEO) 
These requirements are often called MBE/WBE (Minority and Women Owned Business Enterprises). The purpose of these requirements is to involve minority and women owned businesses in contracts to the maximum extent possible. Grantees and general contractors must demonstrate that they have implemented policies and procedures to meet this goal. It isn't enough to say you tried. You must document efforts, and this post will help you understand how this can be done.

Section 3
These requirements generally apply to any contract funded by HUD that is $100,000 or greater. The purpose of these requirements is to involve local low-income persons in contracts to the maximum extent possible. Similar to EEO requirements, grantees and general contractors must demonstrate that they have taken steps to meet this goal.

EEO and Section 3 compliance has three elements: recruitment, documentation and contract management. Below is a summary of each.

  • Prepare a EEO/Section 3 Plan and send it to the General Contractor. It should consist of hiring goals and resources, including contact info for: the local government, developer, and HUD labor representatives; local unions and trade associations; local community organizations and media for affirmative recruitment; and in-house or local apprenticeship and trainee programs for referral.
  • Send letters to the local labor representative and local unions and trade associations requesting feedback on the EEO/Section 3 Plan.
  • Post a project sign at the project site, place notices in community papers, and send letters to community organizations and businesses identified by local government with the following information: Section 3 regulations; contact information for employment opportunities; and the list of apprenticeship and training programs from the EEO/Section 3 Plan.
  • Maintain a file documenting all EEO/Section 3 implementation efforts.
  • Maintain a list of all lower income residents, women and minority owned businesses that have applied for a job, and referral sources.
  • Provide an annual report on EEO/Section 3 progress to the HUD Administrator.
Contract Management
  • Notify potential subcontractors of EEO/Section 3 goals and requirements.
  • Incorporate EEO/Section 3 requirements and goals into all subcontracts.
Be aware that some local or State governments will add their own requirements on top of the base federal requirements. Feel free to contact me if you need assistance with putting together plans and templates. 

So go out there and have a blast with HUD labor compliance.....which really isn't possible. But at least you can move forward with confidence and a plan.

Tuesday, January 13, 2015

Tips for Labor Compliance on HUD Projects: Part 2

Happy New Year! I took a long holiday break from the blog, but now I'm back at it. In my last post, I focused on wage compliance for HUD Projects. In this post, I will address contract conditions.

When it comes to "CYA" for labor requirements, documentation is your friend, particularly contractual documentation. Far too often, the project team catches up with the labor requirements after the contracts are already signed, or after construction has already begun. You can always add addenda, but contractors will have already initiated their hiring and subcontracts. At that point, it's always challenging to get everyone to understand their obligations and implement them into their work programs. It's much better to start on the right foot and on the same page.

In this regard, I have assisted a general contractor that does a lot of HUD work. I drafted form letters for their subcontractors that accompanies the contract for execution, and requires incorporation of the HUD-92554M form into the contract. The letter explains key labor conditions of HUD-92554M, as described below. In this way, the general contractor and the subcontractors have the same requirements incorporated into their contracts, and those requirements are brought to their attention.

  • Davis-Bacon Wages: Inform contractor that they must pay Federal Prevailing Wages to all workers on the project, as determined by the U.S. Department of Labor (DOL). Refer to and attach the DOL Wage Determination to the contract. See my last blog post for more information about wage determinations.
  • Apprenticeships: Describe the process for requesting approval to use an apprenticeship program that is not listed on the Office of Apprenticeship website.
  • Copeland "Anti-Kickback" Act:  It is a federal crime for anyone to require any laborer to kickback (give up or pay back) any part of wages (29 CFR Part 3).
  • Contract Work Hours and Safety Standards Act (CWHSSA):  Overtime must be paid at 150% of the basic pay rate for all hours worked over 40 hours in a week. Proper health and safety standards must be maintained on the job site.
  • Equal Employment Opportunity and Section 3: Federal law requires that contractors implement a plan to affirmatively recruit low-income residents, minorities and women to work on the project. 

This is a summary of the major elements of the HUD-92554M form "Supplementary Conditions of the Contract for Construction". I recommend that you outline these clearly for your general contractor in a letter so that they understand the obligations they are taking on. In my next blog, I'll have more information about implementing Equal Employment Opportunity and Section 3 requirements.