How Much the RDA’s mattered (UPDATED!)

In March I posted a chart that showed how severe a shift has occurred since 2005 in the funding sources for 9% tax credit developments. Tax credit equity has decreased by one-third and public agency soft loans have doubled as a share of total development costs (TDC). CTCAC released its 2011 Annual Report last month, and the trend has continued. While the average TDC for the 121 awarded projects fell by 4.2% from 2010 to 2011, tax credit equity and public agency soft loans both declined less than 1% – the major decline was in commercial loans, and there was some new funding from “Tranche B” loans, backed by Section 8 rental subsidies.

% TDC           2005      2006      2007      2008      2009      2010      2011
Soft Loans    17.8%     14.7%     16.4%     21.2%     29.2%     39.8%     38.1%
TC Equity      67.5%     68.7%     64.2%     57.1%     50.5%     47.3%     46.7%

The chart above clearly shows the continuing trend, which will probably be evident through 2012 as well. The table above shows the percentage of TDC that soft loans and equity covered over the past seven years and how pronounced the trend toward public agency loans has been – more than doubling from 2007 to 2010! Read more

Mixed-Income Housing…Will it Finally Be Favored?

Two of Century’s largest clients, Meta Housing and AMCAL Multi-Housing, are featured in an article about mixed-income housing in the March/April 2012 issue of Urban Land. The author, Patricia Kirk, highlights several public-private ventures in Portland (OR), Austin, and especially Southern California, where public agencies financial assistance made vibrant communities with a range of income levels possible.

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Meta Housing received financial help from the city of Tustin for Coventry Senior Apartments

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Did the First-time Homebuyer Tax Credit Help?

When the Housing Bubble popped, and home sales and prices started dropping like a stone, Congress enacted the American Recovery and Reinvestment Act of 2009 (ARRA), a stimulus package to try to stem the growing recession.  A big part of ARRA was a first-time homebuyers tax credit.  This gave people buying their first home, or who had not been homeowners for three years, with a tax credit equal to 10 percent of the purchase price of the home, up to $8,000.  Because California’s home prices are so much higher than those in other regions, the $8,000 cap was reached by almost all homebuyers here.

The tax credit was intended to spur home buying and stop the precipitous drop in home prices, which were plunging at almost 20 percent per year at the time.  According to a report by the Government Accountability Office (GAO), about 2.3 million taxpayers took advantage of the credit, which cost $16.2 billion in direct tax expenditures.

So, what was the real effect? Did the credit do what Congress intended?  And who really benefitted from that $16.2 billion? Read more

Should Housing Destruction Be Part of the Recovery Plan?

Everyone is familiar with the collapse of the Housing Bubble, even if we don’t all agree on what caused it. There seems to be a consensus that, like an alcoholic, the Housing Market will not begin to recover until it hits bottom and takes responsibility for its own future, instead of manipulating and cajoling others to support it.  And most people realize that the Housing Market has not yet hit bottom–even though no one seems to know how far down the bottom really is.  In California, the Housing Market has only fallen back to 2003 price levels, which were considered too high then.

When the Housing Market was higher than a kite, everyone was saying that the laws of economics were out of kilter, that housing was too expensive and regular working folk couldn’t afford to buy or even rent a place to live that was within their ability to pay.

Here in California the Housing Market was considered so far out of balance that, in 2002 and 2006, the voters approved Housing Bonds totaling $4 billion to pay for homeless shelters, affordable apartments, and to subsidize first-time homebuyers.

Today, many people are saying that housing is too cheap, despite all evidence to the contrary (more on that another time).  Public agencies at all levels, financial institutions and the real estate industry are doing everything they can to enable the Housing Market to get high again.  And they have come up with a remarkable tool to do that.  Read more

How Much the RDA’s Mattered

The dissolution of California’s redevelopment agencies has caused great consternation about how apartment developments that are deeply affordable will get financed, as RDA’s annually contributed several hundred million dollars to create or preserve several thousand affordable apartments. CTCAC reported that in 2011 in the competitive 9% LIHTC rounds, 63 of 101 (62%) awarded projects included RDA financing. With those funds no longer available, how much will development decline in 2012 and 2013? The average RDA loan was $5.8 million, 32% of the total cost of a development in 2011 – how can a project happen with 1/3 of its funding is goes missing?

 

 

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Transit Oriented Development and the H+T Index

MoveLA held their 4th Annual Transportation Conversation last week, and, as usual, it was filled with golden nuggets of knowledge delivered by the wise men and women who work in the fields of transportation, urban development and housing.

One of the themes was the need to link new transit with the businesses, workers and residents of the communities being served by LA’s growing fixed guideway public transportation system.  It is recognized that transit location has an effect on property values and development patterns.* (See the post Getting Ahead of the TOD Train in this blog for some examples of how Century has worked with developers in this arena.)  There was some discussion on how LA can accelerate its transit construction program and how best to plan for the kinds of development that will optimize the use of the transit and benefit the community, without leading to gentrification. We will be talking more about some of those ideas in the coming weeks and months. Read more

Redevelopment – Looking Through a Thick Fog

The California Supreme Court’s ruling in CRA v Matosantos has been widely reported and is beginning to be digested by the more than 400 redevelopment agencies (RDAs) and cities that have to begin unwinding their agencies, accounting for all of the funds on hand, projects in progress, debts owed (mostly bonds), and determine the best course for their city (or county). There are, of course, several emergency legislative efforts underway to delay and/or soften the blow from dissolving every RDA in California, especially with the potentially huge impact on affordable apartment development. But there doesn’t seem to be serious effort to reverse the decision, which is wise – the Senate and Assembly votes to end redevelopment agencies are on record, very difficult to walk those back (from David Smith’s learned Affordable Housing Institute blog).

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Redevelopment’s Demise – a Blessing in Disguise?

Well, unfortunately, our prognistication (or at least alertness to the possibility) was correct – the CA Supreme Court split the baby and ruled to kill RDA’s without allowing a quick-and-easy means for their rising from their own ashes (does Phoenix have a redevelopment agency? Phoenix Lake doesn’t.). The reaction by many parties will be to try and reestablish the status quo – is this a good thing? I think that there is an opportunity here for a new and more effective use of affordable housing subsidy funding, as was debated at the May 2011 California Housing Consortium Policy Forum. It seemed very hypothetical at the time, concentrating funding decisions at the state level, but that may be the outcome of this ruling. Much more to come….

Are We Already Pumping Up the Next Housing Bubble?

Ed Pinto thinks so.  Ed Pinto is a scholar at the American Enterprise Institute, a conservative think tank in Washington, DC, who writes on housing issues.  In a recent op-ed published by Bloomberg, Mr. Pinto observes that:

Twice in the last 20 years we have seen spectacular failures of U.S. housing finance, each at enormous cost to taxpayers. Both the savings and loan crisis, and the Fannie-Freddie bailouts can be traced to congressional support for, and subsidization of, the 30-year fixed-rate mortgage.

But is it clear that the pattern of 30-year, fixed-rate mortgages is unsustainable?  Read more

How Much Have We Lost, Really?

Today’s headline from Zillow, a well-respected online real estate marketplace with a good research arm, was:

“U.S. Homes Expected to Lose Nearly $700 Billion in Value in 2011”

That’s pretty alarming, but not much different from what others have been telling us for the past five years of so.   Everyone knows the housing bubble popped and home values across America have deflated, setting off one of the worst recessions since the 1930s.  Right?  I mean, isn’t that right?  Aren’t we all poorer and hasn’t the wealth of the nation been decimated?  Read more