2013 Texas Legislative Session Wrap Up

Here’s our wrap up of the major low-income housing issues in the 83rd regular session of the Texas legislature.

TDHCA Sunset:
After Gov. Perry vetoed the TDHCA Sunset bill in 2011, the legislature passed a “stop-gap” two-year extension of the agency.  This session, HB 3361, the bill extending the Texas Department of Housing and Community Affairs for 12 years, passed after differences between the House and Senate bills were resolved in conference.

The disagreement between the chambers primarily revolved around the scoring of letters from Legislators when determining where to fund affordable housing in the state using federal low income housing tax credits.  Experience with the program has shown these letters are a channel for NIMBYism and have negative fair housing impact on the program, and the Sunset Commission and the Senate suggested they should no longer be scored.  The House disagreed, proposing instead an increase in the importance of such letters in the scoring process.

The final compromise lowered the points for letters from State Representatives and eliminated letters from State Senators, but maintained the letters in the scoring system.

The final bill also includes a new “local support” application threshold requirement in the Private Activity Bond (i.e. 4% tax credit credit) program.  This threshold requirement will likely facilitate local NIMBY challenges to developments under that program.

National Mortgage Settlement Fund
Texas received $135 million dollars as part of a multistate settlement with five national banks following those banks’ premature and unauthorized foreclosures on single-family residential mortgages.  Despite language in the settlement directing the settlement’s use “To the extent practicable” to remediate the wrongs of the banks’ actions, this money was classified an undedicated windfall by the state.  Over sixty Texas organizations endorsed the statement “We support using funds from the national mortgage settlement for housing and housing-related activities,” but no legislation was passed to dedicating these funds to remediating the wrongs from whence they came.

Fair Housing / Low Income Housing Tax Credit Rules
The rules of the Low Income Housing Tax Credit program were affected by several bills (in addition to the sunset bill discussed above).
Bills Passed:
HB 429 (Guillen) Tweaks definition of rural by deleting one definition of rural for TDHCA programs, and grandfathering the existing 515 projects so they can continue to apply under the USDA set-aside for tax credits regardless of location.

HB 1888 (Anchia | Alvarado) Expands at-risk set-aside to include public housing authority properties.

SB 659 (West) Allows debarment under tax credit program.

SB 193 (West) Tweaking audit requirements for low income housing tax exemption.

None of the bills passed are likely to have a substantial impact on the program’s overall operations.

Bills Considered but not passed:
HB 3757 (Farrar) Would have changed the QAP definition of “high opportunity area” to include areas in walking distance to a transit center or rail transit. Not passed.

HB 3775-9 (Isaac) Would have made various changes to tax credit and private activity bond rules, some with negative fair housing implications. Not passed, but its proposed new local threshold support requirement in the Private Activity Bond program was amended to the Sunset bill discussed above.

HB 2802 (Johnson) Would have extended 1 mile rule (no new affordable development within one mile of existing development) into perpetuity. Not passed.

HB 2654 (Riddle) Would have prevented HOME funds in the disability set-aside from being used for affordable rental. Withdrawn by Rep. Riddle and not passed.

Tenants Rights
Several adopted bills impact the rights of tenants.

SB 630 (Carona) Establishes the tenant’s right to a copy of the lease.  A bill on this topic was vetoed last session and was adjusted this time around to address the governor’s concerns. Passed.

HB 1772 (Turner, C. | Anchia | Turner, S.) Requires written notice to be provided to tenants and to the municipality in which the apartment complex is located of a pending disconnection in gas or electric utility service. Passed.

HB 1086 (Rodriguez, E. | Bohac) Allows for utility disconnect rather than eviction so long as proper notice is given to the tenant, interruption would not be detrimental to the health of the tenant, and/or repayment options are available. Passed.

Homeless Services
$5 million per year ($10 million /biennium) was included in the budget for the Homeless Housing and Services Program. (HHSP).  Through HHSP, the state provides funding to the eight largest cities in support of services to homeless individuals and families including services such as case management and housing placement and retention.

Disaster Recovery
SB 1120 (West) Limiting a residential tenant’s lease obligation after the loss of the leased premises resulting from a natural disaster. Passed.

HB 835 (Eiland) Passed via amendment onto to HB 585.  Caps per-year increase of property taxes if home is improved due to repairs under a federal natural disaster assistance program.

System Benefit Fund
The System Benefit Fund, the state program created to help the low-income Texans with their deregulated energy bills, will be wound down in the next three years and then cease to exist.

Colonias
HB 611 (Guillen) This bill, an effort to roll back the model subdivision rules preventing the creation of new colonias, did not pass after a House floor fight on the issue.

HB 2091 (Canales | Walle | Lucio III) a bill with positive changes to Contract for Deed laws, did not pass.

SB 1551 (Lucio) a bill to study current development issues in Lower Rio Grande Valley, did not pass.

Manufactured Homes
Several bills were filed impacting consumers of manufactured homes.

HB 944 (Riddle) Increasing the number of unlicensed sales per year form 1 to 3.  Passed. (Passed language was an improvement from the filed language, which allowed five unlicensed sales.)

HB 2210 (Naishtat) Would have increased consumer disclosure upon sale of manufactured homes.  This bill did not pass.  This bill was filed in reaction to a high-profile series of manufactured housing sales fraud case in La Feria, the “Park Girl” cases.

Two modular housing bills, HB 578 (Guillen), limiting warranties on modular homes, and HB 2955 (Guillen) moving modular home regulation from DLR to TDHCA, also did not pass.

TSAHC:
SB 286 (Bonnen) Consolidating the loan programs at the Texas State Affordable Housing Corporation; passed.  This bill addressed the expiration of one of the TSAHC loan programs.

Misc:
Other issues:
HB 1191 (Burkett) Making information about housing for persons with mental illness available via 211. Passed.
SB 109 (West) Adding veterans, farmworkers, youth who are aging out of foster care; and elderly individuals to state low income housing plan. Passed.
SB 247 (Carona) relating to the transfer of property tax liens (i.e. Property Tax Loans), adding disclosures. Passed.
Amy Young Barrier Removal Program–Extra funds referenced in Article XI but not adopted in final budget.

 

 

Review shows some progress in border housing since 1997

It will be seventeen years next month since the Border Low Income Housing Coalition was established and proposed a plan to address the substandard living conditions on the Texas side of the Texas- Mexico border. In preparing for a convening of people concerned with the living conditions today along that border, I got out the 1997 plan and reviewed what has taken place over those seventeen years.

The good news is that there has been significant progress. The bad news is that the lack of affordable housing and the number of substandard housing units has increased.

Here are the eleven recommendations from the 1997 plan and my view of what happened to each of those recommendations… Continue reading

TDHCA Sunset Recommendation #2: Create a program category for Texans earning between 0 and 110% of SSI.

As previously discussed here at Texas Housers, TDHCA is currently undergoing Sunset Review.  We are presenting recommendations for ways to improve TDHCA that have been endorsed by a broad range of stakeholders in TDHCA’s activities.

Issue:

TDHCA’s activities fail to reach Texans living on fixed income programs

Background:

TDHCA presently tracks three categories of low income households: Low Income: those earning 80% AMFI or below; Very Low Income: those earning 50% AMFI or below; and Extremely Low Income: those earning 30% AMFI or below. These categories are used to evaluate the housing needs of households within different income strata.  These categories are also used for program targeting.  When used for targeting, the income thresholds chosen for the categories are crucial to the actual allocation, as funds targeted at a given income group are typically claimed by the highest income household within a group.

The 2009 Comprehensive Housing Affordability Strategy data from HUD demonstrates that there is significant unmet housing need in households making below 30% AMFI.  Many of these households have incomes too low to qualify for or access the TDHCA programs targeted at households close to the 30% threshold.  Specifically, those living on Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI), or other government-funded programs may not qualify for housing programs targeted at 30% AMFI households.  While AMFI varies by area, federal SSI benefits are often 15% of AMFI or less.

Those Texans living on SSI can be more difficult to locate, contact, and market to than their higher income counterparts, and programs for such fixed income households must be structured differently than those designed for higher income households.  For these reasons, money earmarked for below 30% AMFI largely goes to the population nearest the 30% threshold, leaving a large portion of the state’s lowest income housing need unmet.

Recommendation:

Create a program category for Texans earning between 0 and 110% of SSI.

The State should recognize the distinct needs of those living on fixed incomes. We propose that the Texas Department of Housing and Community Affairs, along with other State agencies, develop a target income category of between 0 and 110% of the level of SSI. Setting a threshold below “Extremely Low” will allow the State to monitor, plan for, and allocate resources to a group that is currently slipping through the cracks of our housing and human service programs.

This Recommendation is Endorsed By:

  • Advocacy, Inc.
  • Association of Rural Communities in Texas
  • Center on Disability and Development – Texas A&M University
  • Easter Seals Central Texas
  • Habitat Texas
  • Motivation Education & Training, Inc.
  • Texas Association of Community Development Corporations
  • Texas Association of Local Housing Finance Agencies
  • Texas Council for Developmental Disabilities
  • Texas Center for Disability Studies-UT
  • Texas Low Income Housing Information Service

Government housing programs can and do help the poorest families in Texas

I blogged last week about the need for housing programs to recognize the housing needs of families well below 30 percent of the area median income and suggested a new category of housing need called “below poverty income.” In response I received a question this morning that I thought deserved to be answered here. The question is…

Please provdie a list of what a county or city government can do to enhance rental units that serve the 30% and below families? Are there good examples of local governments serving this population?

I have to admit that my view of housing programs is somewhat parochial, being very Austin and Texas centric. Yet, even within such a limited limited geographical scope there are some really good programs to mention.

The major housing resources for families living near the poverty level are, of course public housing and Section 8 Housing Choice Vouchers. I can’t think of any public housing authority in Texas that could not use some financial help for cities and counties to maintain, preserve or improve their aging stock of public housing. Many PHAs are under great pressure to demolish public housing units that are obsolete or that the PHA can no longer afford to maintain. I have always thought it tragic and strange that cities and counties do so little to support their public housing authorities. Yet there are exceptions. In a handful of cases local governments have provided their public housing authorities critical funding to use in conjunction with Hope VI public housing revitalization projects.

Section 8 Housing Choice Vouchers are funded by HUD. The problem many extremely low-income families who get a Section 8 voucher face is finding a decent apartment in a quality neighborhood they can rent using the voucher. The City of Dallas funds a very useful and innovative program called the Inclusive Communities Project (although they only fund it because of a federal court order). The program helps families who receive Section 8 vouchers to find apartments in desegregated communities near good schools, jobs and community services. The result is an immense improvement in the quality of life for these extremely low income families. There should be similar programs in every Texas city.

The State of Texas and several Texas cities provide direct rental assistance to extremely low income families in the form of tenant-based rental assistance. These programs operate very similar to Section 8 Housing Choice Vouchers and are often contracted for administration to local public housing authorities. In the case of the State’s tenant-based rental assistance program, the beneficiaries are extremely low income people who are moving out of state institutions into private housing. A number of Texas cities provide tenant-based rental assistance to individuals and families transitioning from homeless shelters into permanent housing.

In most cases the beneficiaries of funding made available to homeless programs and transitional housing programs have extremely low incomes.  Single Room Occupancy (SRO) housing has recently received significant funding from city governments in Dallas, Houston and Austin. This housing provides an alternative to homelessness to single individuals with extremely low incomes. Community-based transitional housing for people leaving homeless shelters, such as that created with funding from the City of Austin through the Blackland Transitional Housing Program is one example.

Too little attention has been paid by cities and counties to funding traditional rental housing for extremely low income households but, nevertheless, there are examples. Most recently the City of Austin used local bond funds to finance the acquisition of land for multifamily rental development being undertaken by private developers. In exchange for the city funding, the city received a share of the development and a portion of the apartments were dedicated to housing families with incomes below 30% of the median. Funds have also been used to provide additional equity to developers of low income housing tax credit developments in which a small number of the apartments have been set aside for extremely low income households.

Cities and counties sometimes fund residential architectural barrier removal programs that are available to both renters and homeowners. Most of these households are elderly or disabled. The great majority have extremely low incomes and are able to remain in their existing affordable housing only because of the physical modifications funded by the program, such as ramps and widened doorways.

Single-family owner occupied housing rehabilitation programs, often referred to as “standard rehabilitation,” are generally targeted at the homes of persons with disabilities and the elderly. A great number of these families have extremely low income. These programs allow people to receive essential repairs to their homes to prevent them from being displaced into institutionalized housing such as nursing homes and state-funded institutions.

In Texas, state government even provides a way for extremely low income households to become homeowners. The vehicle is a “self-help housing” program called the Bootstrap Owner Builder Housing Program. Through this program low income households, working through a nonprofit organization, work together in teams of families to build their own homes utilizing a loan for materials that is funded by the government and provided interest-free. Homeownership programs operated by Habitat for Humanity also often serve extremely low income households.

These are just a handful of examples of government funded efforts within Texas that provide housing assistance to families with incomes below 30% of the area median. They are proof that this most needy population can be effectively assisted if the will to do so is there on the part of city, county and state government officials.

The case for a new category of housing need — below poverty income

I have made myself an annoyance to many in the for-profit housing development industry by my constant insistence that housing funded with public resources be created that is affordable to families with incomes at 30% of the area median family income. Recently, I attended a meeting on the uses of the Texas Housing Trust Fund at which advocates for people with disabilities made the case that the focus should be on even poorer people, with incomes below 16% of the median.

In the state statute governing the Texas Department of Housing and Community Affairs (TDHCA) income levels of program beneficiaries are defined. These beneficiary groups begin with Moderate Income (120% of median) and Low Income (80% of median) and continue to Very Low Income (60% of median) and end at Extremely Low Income (30% of median). There is no income category below that. This is ignoring a huge number of the Texas households most in need the disability advocates were saying. And they are correct.

The  housing programs available to state, and to local governments for that matter, provide significant funding through mortgage revenue bonds to households earning the top two levels of income. The bulk of the housing resources are targeted to families in a narrow income band immediately below the Very Low Income (60% of median) category through the Low Income Housing Tax Credit program (LIHTC).

For decades I have advocated for increased funding for families with Extremely Low Incomes (30% of median). I have enjoyed only limited success. The fact is state and local government depends principally upon federal housing resources to fund their housing programs. State and local governments are given flexibility by the federal government in most programs to use them to serve Extremely Low Income households, but seldom do so. Government officials cite the claims of housing developers that they cannot produce housing with rents affordable to families with such low incomes without additional financial subsidies. While this is not always correct, is is true that the State of Texas puts only about $22 million per year in state funds for affordable housing. At these levels the additional state subsidies necessary to house the poorest and most needy are not available in sufficient amounts to have a major impact.

I’ve elected to focus my advocacy toward housing Extremely Low Income families because, frankly, getting any significant amount of public funds for families that poor has proven to be extremely difficult. And the lower rents you advocate the more expensive it to the government is to get them.

The comments of the advocates for people with disabilities was a wake-up call however. I, along with almost all government officials have been pretending that 30% of median income is the bottom of the housing ladder — but it is not. There is a huge population of people at or below the poverty line in Texas who cannot even afford the rents for housing programs aimed at Extremely Low Income families. Thirty percent of median family income in Dallas ranges from $14,580 for a one-person household to $20,820 for a four person household.  With rents set at one third of income, this would work out to be an apartment that rents for $405 for a single person and $578 rent for a four person household. With significant public subsidies these rants are marginally achievable while maintaining a minimal replacement and operating reserve (despite the arguments of many in the private housing development industry).

When you step down to 16% of median family income, the rents the disability advocates are pointing out the need for, the need for subsidies increases significantly. This is a single person household in Dallas earning $7,776 per year and a four person household with an income of $11,104. This translates into a rent for the single person of $216 per month and $308 per month for a household of four. These rent levels are actually below the levels necessary to pay operating costs and replacement reserves. So in theory, even if the cost of the housing development were 100% funded with a government grant there would still be a need to provide a rent subsidy in order to operate and maintain the rental unit.

This does not mean that we can ignore these household however. There is a tremendous need for housing in Texas for families at these rent levels. The US Census Bureau defines a one-person household living in poverty at $11,201, well below the $14,580 a single person in Dallas at 30% of median would earn. In the last census, 12% of all Texas households lived at or below the poverty level. That translates into more than 634,000 Texas households.

All of this leads me to suggest that we need to adopt an official category of family incomes to describe this population with incomes below the poverty level. That is the first step to recognizing that this population exists and deserves to be acknowledged and planned for as state and local housing programs are developed and funded.

Our ten point plan for rehousing low income Hurricane Ike survivors

Under the current system of FEMA housing assistance low-income families get trapped in temporary housing. This is bad for these families and expensive to the government.

There are many critical housing needs facing Hurricane Ike survivors of all incomes.  Our focus is on the area of housing for low-income families.  This is our ten point plan to rehouse low income Hurricane Ike survivors.

We learned a lot about how low-income families fare in the wake of natural disaster through the Hurricane Katrina and Hurricane Rita.  Here are the things we have to do differently this time.

The most important lesson we have learned from long-term housing recovery in the wake of Hurricane Rita is that the housing needs of low-income disaster survivors are profoundly different from those of higher income families. Government-sponsored disaster assistance provided under the Stafford Act fails to give long-term housing stability to low-income families.

The long-term housing needs of low-income families have not been a priority under the federal disaster assistance system. Federal law contemplates the provision of only temporary housing relief. The Federal Emergency Management Agency (FEMA) is prohibited from paying for what is considered “permanent housing.” Similarly, charitable organizations such as the Red Cross direct the bulk of their resources toward providing temporary housing  assistance to disaster survivors.

Temporary assistance, coupled with private homeowners’ insurance and direct public assistance is often all that is needed to help middle and upper income families reestablish their lives. But low-income families, who typically lack homeowners insurance and lived in unaffordable or substandard housing before a disaster, are not well-served by the existing disaster housing assistance system. This system fails to offer low-income families a clear path to permanent recovery.

Continue reading

Texas should prioritize energy efficiency in low income housing development

A solar water heater being readied for installation on a low-income house in Austins Blackland neighborhood
A solar water heater being readied for installation on a low-income house in Austin's Blackland neighborhood

Utility costs are a large and growing problem for low income families. We need to explore the cost effectiveness of building major energy efficiency technologies and solar in low income housing in Texas.

Traditionally in Texas we have built low income housing with a focus on keeping the construction costs down. Super high efficiency appliances and heating and cooling systems have been deemed to be an unsupportable expense. Solar panels are almost never provided. Yet with the exploding cost of electricity we need to rethink our policy.

The fact is that rising energy costs have had such a devastating impact on low income households that many cannot afford the rent. HUD now tells us that the second highest cause of homelessness, behind not being able to afford rent, is the inability of families to pay their utility bills.

While a typical middle income household spends about 5 percent of its income on utilities, the typical low income household spends about 20 percent.  On average the typical retired elderly household spends over 25 percent on utilities.

Texas has some of the highest residential electric rates in the US. The national average is 10.4 cent per kilowatt hour while the average Texas residential rate is 12.96 cents. According to government statistics the average Texas monthly electric bill is a whopping $149.29. Since deregulation took effect in Texas in 2002, the four power companies that control 70 percent of the Texas residential electricity market have increased their rates an average of 83.7 percent.

Here are some facts from recent studies of energy consumption among low income households…

  • Lower-income households are more likely to live in electrically heated homes and to use inefficient appliances.
  • When confronted with an increase in energy costs, lower-income families tend to make “lifestyle cutbacks”, while higher-income families tend to invest in energy conservation measures.
  • Renters are not likely to invest in energy efficiency and therefore curtailment is the only option to reduce consumption.
  • 70 percent of low-income households report reducing spending on food because of high energy costs.
  • 31 percent of low-income households have reduced spending on medicine because of increased energy prices.
  • 29 percent of low-income homes report risking loss of home energy service due to skipped or partial energy bill payments.

Continue reading