Category Archives: Housing

New Haven Housing Authority restructuring for private investment

Source: Mary E. O’Leary, New Haven Register, January 2, 2018
 
The Housing Authority of New Haven will start issuing layoff notices on Friday as it restructures, but said there will be opportunities to seek similar jobs under a new nonprofit company it has formed.  A total of 50 people at the authority will be affected throughout 2018, according to the authority, but it plans to hire between 40 and 45 people for similar positions in a restructuring it said is needed to ensure its financial stability. … The authority already has one affiliate, the Glendower Group, which oversees its construction projects. It now has formed a second nonprofit affiliate, 360 Property Management Co., which eventually will oversee the maintenance and security of 1,300 housing units, as well as handle leasing. … DuBois-Walton said the new jobs, which are almost one for one with the current positions, will reflect private market salaries, which will be less than those negotiated by the two American Federation of State, County and Municipal Employees locals representing workers. …

HUD Secretary Carson launches centers to drive households to self-efficiency

Source: Kelsey Ramírez, Housing Wire, December 7, 2017

U.S. Department of Housing and Urban Development Secretary Ben Carson announced a new initiative to help HUD-assisted families achieve self-efficiency. Carson announced HUD will launch its new EnVision Centers, which will be located on or near public housing developments. HUD explained these centers will be hubs for what it calls the four key pillars of self-sufficiency: character and leadership, educational advancement, economic empowerment and health and wellness. The centers will form partnerships with federal agencies, state and local governments, non-profits, faith-based organizations, corporations, public housing authorities and housing finance agencies. EnVision Centers will utilize public-private resources to impact the community. … Carson previously explained his vision to HousingWire in an exclusive interview with Editor-In-Chief Jacob Gaffney, who wrote: One of Carson’s main initiatives is establishing “envision centers” of learning, especially for teenage mothers who, more often than not, end their educational trajectory once they give birth. New York City is seen as a potential spot for one of the first such centers where young, low-income parents can access day care while learning to code and “balance a checkbook or unclog a toilet,” the secretary told me. … HUD will start by launching ten pilot EnVision Centers across the U.S. …

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America’s public housing crisis may worsen with Trump budget
Source: Lawrence Vale, Associated Press, July 12, 2017
 
… As someone who has spent 25 years researching and writing about the travails of public housing in the U.S., I had this immediate thought: Could the same thing happen here?  Various commentators have pointed out that American regulations require sprinklers and do not permit the use of cladding materials with combustible plastic cores in high-rise structures.  Yet while the facades of American public housing may be less flammable, the system suffers from a toxic convergence of long-deferred maintenance, squeezed budgets and cost-cutting measures. Privatization policies, deeply rooted suspicions about the character of public housing residents and long-term inattention all threaten the capacity of stigmatized low-income families to remain in their homes. …

Ben Carson reckons with proposed HUD budget cuts
Source: Jonathan Easley, The Hill, June 30, 2017

… Now, as HUD secretary, Carson controls the $46 billion government agency that oversees housing for the poor. President Trump’s proposed 2018 budget would cut HUD spending by $6 billion. “We will use whatever resources we have very efficiently,” Carson said. “The other thing to keep in mind is that the traditional view of HUD and government is we ride in on a white horse with a bucket of money … and go off to the next thing,” he continued. “That particular model has led us to the point where we have three to four times as many people in need of affordable housing and it’s getting worse.” Carson, who had no experience in government before becoming HUD secretary, is grappling with decisions about which programs to keep, which to shutter, and how to improve the ones that remain. …

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Phoenix To Outsource Low Income Housing Program

Source: Christina Estes, KJZZ, October 9, 2017
 
Phoenix is looking to outsource daily operations of its most popular low-income housing program. The move will lead to an annual contract worth up to $1 million.  The U.S. Department of Housing and Urban Development (HUD) sends cities money to cover administrative costs for the Section 8 voucher program.  Phoenix Housing Director Cindy Stotler said after years of overfunding, HUD has spent the last seven years reducing the money it sends. She told council members it’s no longer enough to cover the cost of 34 full-time positions. … Frank Piccioli, president of AFSCME Local 2960, thinks outsourcing is a bad idea.  “When you start giving away such control from public servants to a private corporation, you change that basic goal,” he said. “The goal becomes profit and not service.”  Currently, 27 city employees and seven temporary agency staff handle the program. The Housing Department said it will work with affected staffers to fill vacant positions throughout the city. …

How Chicago Learned Privatizing Public Housing Isn’t Enough

Source: Debra Bruno, Politico Magazine, July 20, 2017
 
The city tried, but never managed the fundamental transformation that was so obviously required. Then, slightly more than 15 years ago, Chicago embarked on just such a plan to improve the lives of the families that called public housing home.  Broadly, the new plan introduced three options: vouchers for residents to choose their own homes, mixed-income housing to remove the isolation of many of the most poor residents and improved public housing. But the $1.5 billion Plan for Transformation, which included the demolition of 18,000 units and the rehabilitation or new construction of another 25,000, has had mixed success.  …  Susan Popkin, one of the smartest and most thoughtful observers of Chicago’s housing history has—for the past 30 years—visited families, monitored living conditions and tried to make sense of the ways urban revitalization has created unintended complications. Now, the applied sociologist and senior fellow at the Urban Institute has written No Simple Solutions: Transforming Public Housing in Chicago. She sat down with Politico Magazine to talk about what solutions worked and what didn’t. …

Did Miami’s biggest developer avoid labor taxes? The feds are investigating.

Source: Nicholas Nehamas, Miami Herald, July 6, 2017

Federal investigators are seeking to learn if the Related Group, Miami’s biggest developer, lowered costs on an affordable-housing project by hiring subcontractors who failed to pay employment taxes, the Miami Herald has learned. … Related’s business practices are under scrutiny because of a long-running federal investigation into South Florida’s affordable-housing industry. … Even so, the U.S. Attorney’s Office and IRS are investigating the project’s cost structure to determine if Related padded bills and hung onto profits illegally, violations which could bring criminal charges, sources said. Prosecutors have already successfully targeted three other affordable-housing developers in Miami-Dade — Carlisle Development GroupBiscayne Housing Group and Pinnacle Housing Group — that used federal tax credits. The new investigation focuses on whether developers misused county funds.

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Miami Developer in Hot Seat Over Low-Income Housing Fraud
Source: Samantha Joseph, Daily Business Review, March 21, 2017

A South Florida developer is in the hot seat after an uptick in fraud among developers using government credits to fund low-income housing ventures grabbed prosecutors’ attention. Pinnacle Housing Group Inc. affiliate DAXC LLC is accused of inflating construction costs to gain about $4.2 million from low-income apartment complexes in Miami, Sunrise, Homestead and Winter Haven. It paid $5.2 million, including forfeiture, and a $1 million fine to the federal government under a deferred prosecution agreement released Monday. Pinnacle’s affiliated contractor solicited bids for concrete shell work for housing developments from 2009 to 2011. It received final bids from a subcontractor to build the concrete structures, but instead of signing contracts with that company, it entered agreements with DAXC at rates of up to $1.5 million above the bids. DAXC in turn paid the subcontractor at the lower rates, making net profits of about $3.1 million. … The apartments rose during the housing market collapse, when contractors tasked with creating concrete shells often went out of business, leaving developers on the hook for stranded projects. Pinnacle’s use of DAXC as a middleman might have been part of a strategy to shield the developer from potential liens. The company has developed more than 8,500 affordable housing units over about 20 years in business. …

Lawmakers Question Trump’s Stake in Subsidized Housing Complex

Source: Yamiche Alcindor, New York Times, July 10, 2017
 
Two congressional Democrats are demanding more information about President Trump’s potential conflicts of interest stemming from his part ownership of the nation’s largest federally subsidized housing complex, which they say could benefit financially from decisions made by the Department of Housing and Urban Development. … Mr. Trump stands to make millions from his 4 percent stake in Starrett City, a sprawling affordable housing complex in Brooklyn, according to a 10-page letter written by Representative Elijah E. Cummings of Maryland, the House Oversight Committee’s top Democrat, and Representative Hakeem Jeffries of New York, whose district includes the complex. … The men added that they also worry that Mr. Trump’s proposed budget would make steep cuts to many housing programs but “would leave the type of federal aid that flows to the owners of Starrett City mostly intact.” … Mr. Cummings and Mr. Jeffries are also concerned about the appointment of Lynne Patton, a longtime Trump family associate, to lead the department’s New York and New Jersey office.

Trump Administration, Senators Put Fannie, Freddie Overhaul Back in Play

Source: Andrew Ackerman, Wall Street Journal, May 11, 2017
 
The Senate Banking Committee has begun behind-the-scenes work on the issue of how, exactly, to revamp the companies. The senators want to develop a framework to decrease the government’s outsize role backstopping the nation’s $10 trillion mortgage market. On Thursday, the panel will hear testimony from Mel Watt, the director of the Federal Housing Finance Agency, which controls Fannie and Freddie, in the first step of a process that could play out in the coming months.  It remains unclear if policy makers can overcome philosophical differences and hammer out a final deal. Conservative Republicans have called for a private market with no new federal guarantees. Some centrist Republicans and many Democrats have said a federal role is needed to preserve liquid markets for the popular 30-year fixed-rate mortgage that drives home buying. …

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Fannie, Freddie shares dive after U.S. appeals court ruling
Source: Nathan Layne and Svea Herbst-Bayliss, Reuters, February 21, 2017

Shares of Fannie Mae and Freddie Mac tumbled more than 30 percent on Tuesday after a U.S. appeals court shut down efforts by hedge funds and other investors to pursue numerous legal claims accusing the U.S. government of seizing their profits following taxpayer bailouts. By a 2-1 vote, the U.S. Circuit Court of Appeals for the District of Columbia said a lower court had correctly barred claims that the government overstepped its authority in 2012 by eliminating dividend payouts to various shareholders and requiring the companies to pay the U.S. Treasury an amount equal to their quarterly net worth. … Both stocks are still up by about two-thirds since Donald Trump won the U.S. presidential election on Nov. 8. Investors said part of that rally stemmed from comments that month by then-Treasury Secretary-nominee Steve Mnuchin that both companies should be privatized. Mnuchin, however, said in January he was against such a plan. … Both companies have since become profitable under the conservatorship of the Federal Housing Finance Agency. According to court papers, they have returned roughly $68 billion more to the government than they drew down during the financial crisis. … Analysts said the ruling was consistent with others on FHFA’s guardianship of Fannie and Freddie, making it less likely the Supreme Court would take the case. …

The Time Is Ripe: MBA Introduces GSE Reform Proposal
Source: Patrick Barnard, MortgageOrb, February 1, 2017

With government-sponsored enterprise (GSE) reform highly likely under the new administration, the Mortgage Bankers Association (MBA) is wasting no time and yesterday introduced its own proposal for what should happen to Fannie Mae and Freddie Mac. Similar to previous proposals that have been floated about during the past several years by various groups (including the association), the MBA’s plan calls for the GSEs to be “congressionally re-chartered” – in other words, re-privatized – and, importantly, calls for an “explicit guarantee” on the mortgage-backed securities they issue. The MBA’s plan, as outlined in a soon-to-be-released paper, calls for the establishment of a “new, durable foundation for the secondary mortgage market,” the MBA says in a release. … Consistent with the MBA’s previous recommendation, the paper calls for an “end-state that would encourage multiple guarantors” that “would be organized as privately owned utilities with a regulated rate of return.” …

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Federal Cuts Could Force N.Y.’s Creative Hand

Source: Paul Burton, Bond Buyer, March 24, 2017

The specter of massive cuts in federal domestic aid could force New York City officials to think outside the box about how to salvage programs now financed by the feds. … The New York City Housing Authority alone could lose up to $150 million in operating funds and up to $220 million in capital funding. … “The biggest issue for New York City is the housing program,” said Howard Cure, director of municipal bond research for Evercore Wealth Management. One creative option, according to Cure, is to convert some properties to the federal Rental Assistance Demonstration, or RAD, program, which the Department of Housing and Urban Development operates. It allows public housing agencies to fully own their public housing units and to renovate or redevelop the housing using private financing sources. The renovated or new housing receives rental support for the residents through a project-based Section 8 subsidy. … While Trump has called for more public-private partnerships, New York and other Empire State cities still need approval from state lawmakers to execute P3s. …

Deep in debt, flood insurance program expected to boost rates

Source: Dylan Baddour, Houston Chronicle, March 17, 2017

The cost of federal flood insurance will likely rise for thousands of Houston-area homeowners after Congress hits its September deadline to renew and reform the deeply troubled program. The National Flood Insurance Program was created because private insurers couldn’t bear the risk of catastrophic loss, but the program is $24.6 billion in debt and struggling to remain solvent. “The program offers rates that do not fully reflect the risk of flooding.” the U.S. Government Accountability Office concluded in a report last month. … Congress tried to fix the problem in 2012, but the program lapsed for a month amid the effort, stalling home sales in flood-prone areas. The reforms that finally passed caused some rates to soar, so they were swiftly repealed. Now, a five-year extension is set to expire this fall, demanding fresh action. No one can say exactly what measures lawmakers will take, but one thing seems probable: rates will rise, especially in flood-prone places.

… The most likely outcome of flood insurance reform will be increased privatization of the program to relieve FEMA’s burden of risk. In a letter to flood-weary constituents last week, U.S. Rep. Ted Poe, R-Kingwood, wrote that Congressional committees are beginning work on flood insurance renewal, and that “preliminary plans allow private insurers greater and easier access to the marketplace.” … Virtually all reform proposals issued by industry groups call for increasing privatization of flood insurance, but that won’t be cheap. The federal program was created precisely because private insurers couldn’t bear the risk of catastrophic loss. A small number of private insurers have begun offering their own insurance in recent years, mostly for extremely high-value properties. … FEMA acknowledged in a statement that private carriers offer a viable alternative to the federal program. Still, without a renewal of the program this year, the agency noted it would stop selling and renewing policies for millions of properties nationwide. …

Law Firm sues FEMA, seeks agency’s records on Sandy Claims Review program

Source: David Yates, SE Texas Record, March 7, 2017

In late February, the D.C. law firm Weisbrod Matteis & Copley filed a complaint for injunctive relief against FEMA, asserting the federal agency has withheld records related to the agency’s Sandy Claims Review program. WMC represents more than 1,200 Sandy claimants who purchased flood insurance through the National Flood Insurance Program. FEMA administers the NFIP with the aid of private insurance companies participating in the Write Your Own program. According to the lawsuit, Sandy litigants uncovered significant evidence of misconduct by WYO insurers and others working on the agency’s behalf that led to the improper denial or underpayment of many Sandy flood insurance claims. … FEMA’s combination of “delay and deliberate underpayment” has resulted in aggregated payments of more than $500 million to federal contractors, while homeowners received less than $200 million during the same period, according to the suit. … WMC submitted Freedom of Information Act requests on Jan. 6, 2016 and Feb. 9, 2016 to unearth documents “concerning these troubling aspects of the SCR” but FEMA has apparently “failed to respond or even to acknowledge these requests for more than a year,” the suit states. …