TxLIHIS Files Comments on Sunset Staff Report on TDHCA

We recently signed on to two sets of comments on the Sunset Staff report on TDHCA.  The first set was submitted with Texas Appleseed, and focused on Disaster Recovery programs in the state.  The second set was submitted in conjunction with a large set of TDHCA stakeholders and focused on many of the recommendations previously discussed here at Texas Housers.  In general, both sets of comments concurred with most Sunset staff recommendations.

The full text of both sets of submitted comments are available after the jump.


Dear Mr. Levine:

Texas Appleseed and Texas Low Income Housing Information Service (TxLIHIS) appreciate both the work of the Sunset Advisory Commission staff on this report, and the opportunity to comment on the staff’s analysis and recommendations.  We were particularly pleased to see a detailed analysis of TDHCA’s disaster recovery programs, and strongly agree with the recommendation that the State needs to conduct pre-disaster planning and training in order to improve long term disaster recovery.

Texas Appleseed is a non-partisan non-profit public interest law center founded in 1996. Texas Appleseed promotes social and economic justice for all Texans by leveraging the skills and resources of volunteer lawyers and other professionals to identify practical systemic solutions to difficult social problems.  TxLIHIS is the state’s foremost expert on the housing needs and housing programs for low-income families. The mission of the TxLIHIS is to support low-income Texans’ efforts to achieve the American dream of a decent, affordable home in a quality neighborhood. Texas Appleseed and TxLIHIS have worked on issues related to post-disaster housing recovery since Hurricanes Katrina and Rita in 2005, and continue to work on disaster recovery issues related to Hurricanes Dolly and Ike in 2008.

Issue 1: Lack of State Planning Delays Funding to Hard Hit Texas Communities Recovering From Major Disasters

TxLIHIS and Texas Appleseed strongly concur with staff recommendations that Texas needs a clear and consistent long-term disaster recovery plan, and that lack of planning has impeded efficient and effective use of long-term disaster recovery funds.  As the staff report notes, Texas is likely to face major hurricanes or other large scale natural disasters again in the future.  It is also likely that Congress will continue to use the Community Development Block Grant (CDBG) program as the primary vehicle for delivering long-term disaster recovery funding to states, as it has since 1992.  Texas has put significant effort into coordinating and improving its immediate response to major disasters since 2005; it is long past time to do so for long-term disaster recovery.

The federal government has a large role in the administration of disaster recovery funds, and federal regulations and rule changes do impact the ability of states to distribute disaster recovery funds efficiently.[1] These federal issues are generally beyond the scope of Sunset review.  The Staff report provides a valuable analysis of structural and procedural issues within the State’s control that cause delays and problems in the administration of CDBG disaster recovery dollars.  Texas has five years of experience in administering CDBG disaster recovery dollars. TDHCA’s Round 2 program to rebuild single family housing destroyed by Hurricane Rita, for example, while not perfect, represents a far better and more effective approach to disaster recovery than that employed by other Gulf Coast states in the wake of Hurricanes Katrina and Rita. Regardless of issues at the federal level, incorporating lessons learned and using them to create a clear and uniform model for allocating and administering federal disaster recovery funds will both move funds more quickly and ensure that they are used most effectively to rebuild both families and communities in Texas.

Recommendation 1.1: Require TDHCA, in consultation with the Texas Department of Rural Affairs and the Governor’s Office, to develop a comprehensive long-term disaster recovery plan.

We concur with Staff recommendations that the State should develop a regularly updated long-term disaster recovery plan including the elements listed in the report.  Recommended elements like clear and consistent program guidelines, training, and standard forms will not only improve the State’s ability to administer CDBG disaster recovery funds, but also increase local capacity to administer these programs, and ensure greater equity between disaster affected communities and individuals.

Appleseed and TxLIHIS further recommend that the state establish an objective and data-based funding allocation formula for the distribution of disaster recovery funds as part of its disaster recovery plan.

Recommendation 1.2: Require the Governor to designate the State’s lead agency for administration of any potential long-term disaster recovery funding by May 1 of every even numbered year.

We concur with this recommendation as a complement to a clear and detailed long-term disaster recovery plan that includes defined roles.

Recommendation 1.3: Require communities to add a long-term recovery component to existing emergency management plans.

We strongly concur with this recommendation.  Disaster recovery funds often flow to communities that do not normally administer this type of complex federal program, and the more devastating the disaster, the less capacity affected government entities will have to engage in the kind of planning and administration activities necessary to use CDBG disaster recovery funds quickly and effectively. Requiring communities to identify key staff, agencies, and processes for the planning and administration of long-term recovery programs will allow them to identify resource gaps and seek technical assistance or other alternatives to increase capacity before a disaster, instead of mid-crisis.

The timing of this sunset process presents the State with an opportunity not only to improve the ability of TDHCA to meet its mission, but to improve long-term disaster recovery and the State’s ability to rebuild stronger communities.  We believe the adoption of the recommendations discussed above will help the state do so, and encourage their incorporation in the Sunset process.

Thank you for the opportunity to provide input on the Sunset staff report on TDHCA.

Sincerely,

Madison Sloan                                                            John Henneberger

Staff Attorney                                                            Co-Director, TxLIHIS

Texas Appleseed


Dear Mr. Levine,

The undersigned stakeholders appreciate the research, outreach, and analysis of Sunset staff incorporated into the Texas Department of Housing and Community Affairs (TDHCA) Sunset report, and support many of the recommendations within.  We respectfully submit the following comments on the staff report for consideration by the Commission.

Staff Issues:

Staff Issue 1:  Lack of State Planning Delays Funding to Hard Hit Texas Communities Recovering from Major Disasters

We concur in principle with staff recommendations that Texas needs a clear and consistent long-term disaster recovery plan that designates a lead agency and requires local communities to add a long-term recovery component to existing emergency management plans.  Several members of the stakeholder group intend to comment in more detail on this issue.

Staff Issue 2:  Certain Statutory Requirements Impede Texas’s Administration of the Housing Tax Credit Program.

We concur that there is too much power in neighborhood associations under the current statutory scoring framework.  The breadth and fairness of local participation in many neighborhood associations can be difficult to evaluate, and the current framework for local input fails to ensure the process is not a barrier to furthering the fair housing goals of the state.

Staff Issue 3: The Department’s Processing of Single-Family Loans is Slow and Inefficient, Causing Families to Wait for Needed Assistance

We agree with Staff’s identification of this issue and encourage close legislative oversight on management’s action to create a faster and more efficient system for the Single Family Loan program.

Staff Issue 5:  Inconsistencies in the Department’s Enforcement Process Wastes Resources and Contribute to Lingering Compliance Problems

Program non-compliance can directly impact the quality of life of the residents of affordable housing in Texas, and we strongly agree with staff’s identification of this issue, as well as its proposed recommendations.  Tolerating multi-year non-compliance is not fair to program residents nor the other program participants that maintain their properties and stay in program compliance.

While we support staff’s recommendation regarding the use of Administrative Law Judges for penalty appeals we also recommend a reform of non-penalty appeals.  This is discussed below in our recommendation C.

Staff Issue 6:  Using State Employees to Inspect Manufactured Housing Installations Is Inefficient and Does Not Provide Adequate Statewide Coverage.

We strongly support the staff recommendation to require the TDHCA Board, by rule, no later than December 1, 2011 to establish guidelines for the inspection of all manufactured housing installations using third-party inspectors.

Half of all deaths due to tornadoes occurred in manufactured homes:  NOAA data shows that of 479 tornado-related deaths from 2002 to 2009, 249, or 52% of the deaths, occurred in mobile homes.[2] For comparison, the 2005 American housing survey found only 6.6% of the housing units in the US were mobile homes.  Proper installation and anchoring is an important factor in the ability of a manufactured home to withstand a high-wind event such as a tornado or a hurricane.

In addition to endangering its residents, an improperly installed home may damage other homes, especially in high-density manufactured home parks.  The National Hurricane Center reports: “debris from the damaged or destroyed homes will become missiles that have the potential to substantially damage other units…[3]

Nevertheless, the Manufactured Housing Division currently completes inspections of less than half of new installations.

After tornadoes killed 6 mobile-home residents in Mississippi last spring, Mississippi moved to a 100% inspection standard for manufactured home installations.  Texas should not wait until after the next death to do the same.

Staff Issue 7:  Key Elements of the Manufactured Housing Division’s Functions Do Not Conform to the Common Licensing Standard.

We concur with staff’s recommendations on this issue, and strongly urge the commission to adopt its recommendations to make the division effective in its mission to “improve the general welfare and safety of purchasers of manufactured housing in this state.”

A simple, but important, recommendation of commission staff is for the Manufactured Housing Division to make its enforcement actions easily available to the public.  In general, we believe the Department should proactively use its licensee and complaint information to inform the public about the marketplace.

The department should notify consumers in the promulgated consumer disclosure notice about the public availability of information regarding complaint and enforcement activity against licensees.  The department should design its web interface for easier consumer reference by integrating complaint, violation, and enforcement information with the licensing database.  This information should not be limited to un-resolved complaints that rise to the level of enforcement actions. The fact that a consumer needed to file a complaint with the department about a particular licensee is relevant, and public, information about consumer experience in the manufactured home market.

Stakeholder Group Issues

In addition to the issues and recommendations identified by Sunset Staff, we recommend the following actions:

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

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.

B)             Clarify that Housing Trust Fund programs with less than $3 million are exempt from the Regional Allocation Formula.

Background:

TDHCA does not interpret the Regional Allocation Formula statutory provisions for the Housing Trust Fund as intended.  The statute excludes Housing Trust Fund funds less than $3 million from the RAF and was intended to be interpreted on a program basis.  The Agency is interpreting the $3 million exemption as the total amount in the Housing Trust Fund.  The net result is that funding in smaller programs is needlessly delayed in getting allocated as grantees wait for small regional allocations to collapse into useable sums.

Recommendation:

Amend the Housing Trust Fund in 2306 to clarify that Housing Trust Fund programs with less than $3 million are exempt from the Regional Allocation Formula.

C)            TDHCA’s appeals process should be separated from scheduled board meetings.

Background:

In addition to setting policy, the TDHCA board both finalizes adoption of staff recommendations regarding the allocation of program funds and oversees appeals of all departmental decisions.  While Sunset staff recommendation #5 addresses the compliance appeals process, we also recommend changes for non-penalty appeals.

For example, at the April 23, 2009 meeting the transcript[4] shows the board spent the majority of the meeting listening to appeals of staff decisions. One case dealt with enforcement of the application deadline (p. 137) for an applicant who claimed technical difficulties in the application process.  An appeal of a missed application deadline is not the optimal use of board time and resources.

Another case that day (p. 116) involved second-guessing the staff’s enforcement of the requirement of ceiling fans in tax credit properties and a request for an exemption from that requirement for a specific property.  While re-consideration of the general requirement of ceiling fans in participating properties could be considered a policy matter, the specific exemption of a single property is not.  Examining individual claims for exemption is not the optimal use of board time and resources.

Recommendation:

Separate the appeals process from the scheduled board meetings.

We recommend the creation of a TDHCA appeals board.  One member of the TDHCA board (“the appeals board liaison”) would sit on the TDHCA appeals board. Each TDHCA board member other than the appeals board liaison would appoint one other member of the appeals board.  The chair of the appeals board should be an appeals board member other than the appeals board liaison.

This board would provide a mechanism for oversight of staff decisions while allowing the TDHCA board to focus on setting policy for the department.  The appeals board can meet on a regular basis, with additional meetings around important dates in the funding cycle of the department.  The meetings should be webcast in a similar manner to regular board meetings.

D)            Amend the government code to ensure the state complies with all current legal requirements regarding board composition

Background:

Texas local government codes governing housing authorities provides for the appointment of at least one board member who is a recipient of the public housing authority.  This is also required by the Quality Housing and Work Responsibility Act of 1998, a federal law which requires that the board of directors of a PHA include at least one member who is directly assisted by the PHA.  The Texas Department of Housing and Community Affairs board operates as a public housing authority and consequently a position should be designated in its statute in a manner which ensures the position does not remain empty indefinitely.

Recommendation:

Amend the government code to ensure the PHA board seat does not remain unfilled.

In addition to the federally-mandated TDHCA public housing authority voucher recipient, individual signatories to this letter believe that TDHCA would benefit from additional diversity on the board, including a designated representative from Rural areas (defined as a city less than 10,000 in population not adjacent to a MSA or an unincorporated area of a county less than 20,000 in population) and people with disabilities.

E)             Broadcast all TDHCA and Manufactured Housing Division meetings proceedings via webcast and make the archived webcasts immediately available to the public.

Background:

Transcripts of TDHCA board meetings are not generally made available until at least a week after the meetings are held.  Stakeholders who are not in the Austin area or not able to attend meetings have historically had no way of monitoring the proceedings in real or near-real time.

Since March 2010, TDHCA has begun web broadcasting the proceedings of full TDHCA board meetings in Austin.  Meetings of the Audit Committee, the Manufactured Housing Division Board, and TDHCA board meetings located outside of Austin have not been broadcast.

Recommendation:

Broadcast all TDHCA and MHD meeting proceedings via webcast and make the archived webcasts immediately available to the public.

While we commend TDHCA for diversifying the location of its meetings, moving the board meeting outside of Austin does not reduce the need for public access to the proceedings.  And as an independent board, the activities of the MHD board should be equally accessible to the public.

F)            Manufactured Housing Division should regulate lease-purchase transactions at the time of contract execution

Background:

The Manufactured Housing Division regulates the sale of manufactured homes in Texas.  Sellers of manufactured homes may structure a sale as a “lease purchase” to avoid the proof of ownership, departmental licensing, and disclosure requirements of a conventional sale.  Currently, the department does not provide oversight of lease-purchase transactions at the time the contract is initiated.  Consumers may pay years on a home before they discover the seller does not have a Statement of Location (which functions similar to a title in conventional housing) clear of liens and eligible for transfer.  At that point, sellers may use eviction under tenant statutes to avoid their obligations under the lease-purchase contract.

Recommendations:

The Department should regulate lease-purchase transactions at the time of contract execution.

The department should apply all licensing and disclosure requirements under the Manufactured Housing Standards Act to lease-purchase contracts at the time of contract execution, including licensing requirements for high-volume sellers, the use of standardized forms and sales disclosures, and proof of a clear statement of location held by the seller.  The department should be given authority to review evictions on homes under lease-purchase contract to ensure landlord-tenant law is not being misused to void a valid sales contract.

Conclusion:

The sunset process is an opportunity for the state to improve the ability of TDHCA to meet its mission to help Texans achieve an improved quality of life through the development of better communities.  We believe the adoption of the recommendations discussed above will help the state do that, and encourage their incorporation in the Sunset process.

Thank you for the opportunity to provide input on the Sunset staff report on TDHCA.

Sincerely,

Advocacy, Inc.

Association of Rural Communities in Texas

Center on Disability and Development – Texas A&M University

Easter Seals Central Texas

Habitat for Humanity of 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


[1] The Government Accountability Office (GAO) has in fact recommended that HUD engage in parallel activities to those suggested by Sunset staff for TDCHA, including developing written program guidance, clarifying regulations, and coordinating with other federal agencies. GAO 09-541, Gulf Coast Disaster Recovery: Community Development Block Grant Program Guidance to States Needs to Improve, Report to the Committee on Homeland Security and Governmental Affairs, U.S. Senate, June, 2009.

[2] See http://www.spc.ncep.noaa.gov/climo/torn/fataltorn.html

[3] “Hurricane Loss Reduction for Residences and Mobile Homes in Florida.”  The International Hurricane Center. May 2001. Internet Source: http://www.ihrc.fiu.edu/lwer/docs/DELIVERABLE7structural.pdf

[4] April 23, 2009 Board Meeting Transcript. Texas Department of Housing and Community Affairs. Internet source: http://www.tdhca.state.tx.us/pdf/transcripts/090423-board.pdf

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