Tag Archives: production

Building HOME

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housing construction

The HOME Coalition, a coalition of affordable housing organizations, has posted Building HOME: The HOME Investment Partnerships Program’s Impact on America’s Families and Communities, its 2015 report. I don’t think HOME is a household word, at least when it is in ALLCAPS, so here are the basics, taken from the report:

For over 20 years, the HOME Investment Partnerships Program (HOME) has proven to be one of the most effective, locally driven tools to help states and communities provide access to safe, decent, and affordable housing for low-income residents. The U.S. Department of Housing and Urban Development (HUD) reports that since HOME’s authorization in 1990, $26.3 billion in HOME funds have leveraged an additional $117 billion in public and private resources to help build and preserve nearly 1.2 million affordable homes and to provide direct rental assistance to more than 270,000 families. The HOME Coalition estimates that this investment has supported nearly 1.5 million jobs and has generated $94.2 billion in local income.

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With HOME, Congress created a program that provides states and communities with unmatched flexibility and local control to meet the housing needs that they identify as most pressing. HOME is the only federal housing program exclusively focused on addressing such a wide range of housing activities. States and local communities use HOME to fund new production where affordable housing is scarce, rehabilitation where housing quality is a challenge, rental assistance when affordable homes are available, and provide homeownership opportunities when those are most needed. Moreover, this flexibility means that states and communities can quickly react to changes in their local housing markets. (7, emphasis removed)

The report calls attention to the fact that Congress has been making big cuts to HOME funding since 2010. These cuts show the complexities inherent in federal housing policy, coming as they do right on the heels of the creation of the National Housing Trust Fund in 2008.

Congress appears to giveth and taketh away from housing programs in equal measure. As an added bonus for Congress, it taketh away on-budget items (HOME) and giveth off-budget items (NHTF, funded by Fannie and Freddie surcharges), making it an even more politically expedient trade-off. HOME dollars are a lot more flexible than NHTF dollars, so even a dollar for dollar trade has significant downsides for state housing programs. There is a lot not to like about this development in federal housing policy.

Here Comes The Housing Trust Fund

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HUD has published an interim rule in the Federal Register to governing the Housing Trust Fund (HTF). The HTF could generate about a half a billion dollars a year for affordable housing initiatives, so this is a big deal. The purpose “of the HTF is to provide grants to State governments to increase and preserve the supply of rental housing for extremely low- and very low-income families, including homeless families, and to increase homeownership for extremely low- and very low-income families.” (80 F.R. 5200) HUD intends to “open this interim rule for public comment to solicit comments once funding is available and the grantees gain experience administering the HTF program.” (80 F.R. 5200)

The HTF’s main focus is rental housing, which often gets short shrift in federal housing policy

States and State-designated entities are eligible grantees for HTF. Annual formula grants will be made, of which at least 80 percent must be used for rental housing; up to 10 percent for homeownership; and up to 10 percent for the grantee’s reasonable administrative and planning costs. HTF funds may be used for the production or preservation of affordable housing through the acquisition, new construction, reconstruction, and/or rehabilitation of nonluxury housing with suitable amenities. (80 F.R. 5200)

Many aspects of federal housing policy are effectively redistributions of income to upper income households. The largest of these redistributions is the mortgage interest deduction.  Households earning over $100,000 per year receive more than three quarters of the benefits of that deduction while those earning less than $50,000 receive close to none of them.

So, the HTF is a double win for a rational federal housing policy because it focuses on (i) rental housing for (ii) extremely low- and very low-income households.

While not wanting to be a downer about such a victory for affordable housing, I will note that Glaeser and Gyourko have demonstrated how local land use policies can run counter to federal affordable housing policy. Might be worth it for federal housing policy makers to pay more attention to that dynamic . . ..