Category Archives: Housing

Rob Astorino Westchester privatization deals under review by George Latimer

Source: David McKay Wilson, Lohud, March 29, 2018
 
Rob Astorino’s Westchester privatization legacy hangs in limbo. Three months into County Executive George Latimer’s tenure, a list of Astorino’s ambitious privatization plans is teetering on collapse. Proposals for Westchester County Airport, Playland amusement park and the county’s deteriorating WestHELP affordable housing complex are all under reconsideration. Astorino’s airport privatization deal stands as Latimer’s biggest challenge in this arena. Latimer has huge revenue needs, such as the long overdue Civil Service Employee Association contract, which could cost as much as $60 million to settle. There’s the temptation to pursue Astorino’s 40-year lease proposal with Macquarie Infrastructure Corp., which Astorino announced the day after Latimer vanquished him in the November election. … The Playland privatization deal, one of Astorino’s major legislative victories in 2016, remains in flux, two years after the county and Standard Amusements agreed on a 30-year deal. … Legislators also wants committees to review the 2016 contract to determine if extensions granted by Astorino were valid. … At WestHELP in Greenburgh, Latimer’s pledge to promote affordable housing in stands its first test at the deteriorating 108-unit complex. He’s up against the town of Greenburgh, and Supervisor Paul Feiner, who has failed to rent out the apartments since the town took over management of the complex for 20 years in 2011. The Latimer administration wants to expand the plan proposed by Astorino in late October 2017, which would give Marathon Development Group a 65-year lease….

More about Westchester airport privatization.

More about Playland privatization.

Largest Public-Housing System in the U.S. Is Crumbling

Source: Mara Gay and Laura Kusisto, Wall Street Journal, March 18, 2018
 
New York City’s public housing is literally falling apart. The sprawling network of 176,000 apartment units across the five boroughs needs an estimated $25 billion of repairs, up from $6 billion in 2005. Yet annual federal funding for the nation’s largest public-housing program hasn’t kept pace. Residents of decaying brick towers battle leaking roofs and moldy walls, broken elevators and aging infrastructure. This winter, the housing authority’s ancient boilers gave out, leaving more than 320,000 people without heat or hot water. … Mayor Bill de Blasio has blamed public-housing problems on decadeslong funding declines from Washington. The New York City Housing Authority is overseen by HUD. Housing authorities in other major cities, such as San Francisco, Chicago and Atlanta, now manage a vanishingly small share of their units. In some cases, cities have continued to own the land or buildings and they are run largely by private real-estate companies, while in other cases the original buildings are demolished completely. Tenants typically are given Section 8 rental-subsidy vouchers. Critics say New York was too slow to adopt this model. … Bringing in private partners to rehabilitate and manage public housing could generate millions of dollars of new investment but raises fears of privatization in the eyes of many tenants and advocates. Mayor de Blasio was initially resistant to that approach, embracing it only after appeals from Obama administration housing officials and NYCHA Chairwoman Shola Olatoye, according to people familiar with the matter. … So far, the city has transferred one traditional public-housing complex with some 1,400 units over to private management and has plans to complete the same process for 15,000 units over the next decade. …

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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. …

Cities experiment to reduce homelessness with “pay for success” finance

Source: Carey L. Biron, Reuters, February 1, 2018
 
Although he had tried to find a home during that time, he was discouraged by the paperwork and process. But shortly after Easter last year, a social worker contacted him and said he had been selected to participate in a new housing program.  “Within two weeks, I had a place to stay,” Cushinberry told the Thomson Reuters Foundation from Denver. “They gave me housing first, and then we tried to work out all the other kinks in my life.”  The program is one of a rising number of initiatives around the world bringing together government departments, service providers, foundations, banks, pension funds and more to address complex social problems.  The key innovation is how they these programs are financed.  Rather than rely on handouts by cash-strapped governments, private investors step in to provide money through a financing tool known as a social impact bond. …

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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