Bullish on mobile homes

fair housing, home ownership, housing, modular homes, predatory lending, reverse redlining, Vermont, , , , , ,

It seems that the wide-ranging portfolio of Warren Buffett, investment sage and one of the world’s richest men, includes a mobile-home empire that’s coming under fair-housing scrutiny.buffett1

That’s Clayton Homes Inc., the leading maker of mobile homes, which Buffett’s Berkshire Hathaway bought in 2003. A Clayton affiliate is also the leading lender to purchasers of mobile homes.

Now comes an investigative series by the Seattle Times, the Center for Public Integrity and BuzzFeed alleging exploitative lending to minorities, not to mention racist employment practices. One of the key predatory-lending allegations is summed up by this sentence, the series’ third article published the other day:

“The company’s in-house lender, Vanderbilt Mortgage, charges minority borrowers substantially higher rates, on average than their white counter parts. In fact, federal data shows that Vanderbilt typically charges black people who make over $75,000 a year slightly more than white people who make only $35,000.”

To this and the series’ accusations launched beginning in April, Clayton issued a “categorical” denial in a press release dated Dec. 26, stating, among other things:

“(I)n 2015, for borrowers with credit scores less than 600 who chose to purchase a home-only placed on private land, and borrowed less than $50,000, the average note rate from Vanderbilt was the same for white and non-white borrowers. For borrowers with credit scores greater than 720, the note rate for non-white borrowers was 0.07 percent less than for white borrowers.”

Buffett stands by the company and told shareholders this past spring that he “makes no apologies whatsoever for Clayton’s lending terms.”buffett2

Most of the alleged depredations highlighted in the articles have taken place in the south and on native American reservations in the Southwest. Clayton does have a presence in Vermont. The company’s website lists two sales outlets in the state – in Montpelier and White River Junction – out of more than a thousand dealerships nationwide.

If the series’ allegations have legs, one might expect they’ll prompt a federal investigation or a reverse-redlining lawsuit of the sort that was lodged against Wells Fargo for preying on minority home-buyers in Baltimore and Memphis in the years leading up to the housing bust. 

Not so easy

affordable housing, Baltimore, fair housing, housing, housing subsidies, housing vouchers, income inequality, integration, public housing, renters, Section 8, segregation, Vermont, , , , , , ,

A key goal of affirmatively furthering fair housing (AFFH), as it’s envisioned playing out around the country, is to break up concentrations of poverty and to promote socioeconomic and racial integration. That means ensuring opportunities for lower-income people and racial minorities to live in wealthier, “high opportunity” neighborhoods with access to jobs, goods schools and public services.

Two ways to facilitate those opportunities:

  • Promote regional mobility among people with Section 8 vouchers, enabling them to leave high-poverty areas and move into more well-to-do communities. This can require increasing their housing allowance so that they can afford higher suburban rents.
  • Build affordable, multifamily rental housing in those same, heretofor exclusive neighborhoods.

Both of these approaches deserve consideration around here, as Vermonters contemplate how to make their communities more socioeconomically inclusive. Meanwhile, it’s interesting to see how they’ve played out in an entirely different environment: metropolitan Baltimore.Baltimore1

First, some background: Baltimore has a long history of racial segregation (click here for a trenchant account), and in the mid-1990s, the Department of Housing and Urban Development was sued by city residents (Thompson vs. HUD) for its failure to eliminate segregation in public housing. In 2005, a federal judge found that HUD had violated the Fair Housing Act by maintaining existing patterns of impoverishment and segregation in the city and by failing to achieve “significant desegregation” in the Baltimore region.

Seven years later, a court-approved settlement resolved the case in a way that anticipated the AFFH rule that HUD issued this past summer.

The settlement called on HUD to continue the Baltimore Mobility Program, begun in 2003 in an earlier settlement phase. The program has provided housing vouchers to more than 2,600 families to move out of poor, segregated neighborhoods and into areas with populations that are less than 10 percent impoverished and less than 30 percent black. The program provides counseling before and after the move and has received high marks from evaluators who cite improved educational and employment outcomes for beneficiaries. A similar regional program is underway in Chicago.

The settlement also called for affordable-housing development in these “high-opportunity” suburban communities – 300 units a year through 2020. To make this happen, HUD was to provide new financial incentives for developers.

Here is where the story takes a dispiriting turn. Three years later, not a single developer has applied for the incentives. No affordable housing projects are even in the pipeline. That’s according to an eye-opening story the other day in the Baltimore Sun.Baltimore2

So, what happened? Why haven’t developers shown any interest? HUD had no explanation, according to the story, which suggested that perhaps the program hadn’t been well-enough publicized: a prominent builder of affordable housing admitted he didn’t even know about the incentives. Could it be that they weren’t generous enough?

Whatever the reason, the Baltimore experience reflects how difficult it can be to introduce affordable housing to privileged enclaves. No one should underestimate the AFFH challenge.

Something out of nothing

affordable housing, artists' housing, artists' studios, economic growth, housing, housing crisis, urban renewal, Vermont, , , , , ,

Here’s an intriguing strategy for revitalizing moribund downtowns that doesn’t cost anything and bypasses political machinations:  renew3 It’s called “Renew,” and it was first employed in the decaying Australian city of Newcastle several years ago — with notable success.

The basic idea is to install artists or craftspeople in vacant storefronts and let them work, market, or exhibit in exchange for their paying the utility bills. renew1 In other words, let them dress the places up and draw people in… until the spaces are commercially leased, at which point the artisans have 30 days to vacate. A nonprofit organization facilitates these pop-ups.

Renew Newcastle spread to other cities, gave rise to Renew Australia, and was the subject of an article in The New Republic earlier this month, “Hacking the City: A New Model for Urban Renewal.” There’s no reason, the article suggests, why “Renew” couldn’t work in American cities, and not just big ones. Renew’s creator, Marcus Westbury, offers an aphorism – “Activity creates activity, and decay creates decay” — that would seem to apply anywhere. Even in small-town Vermont, where vacant storefronts are a common sight in many municipal centers — St. Johnsbury or Barre, Springfield or Rutland. Eastern Avenue in St. Johnsbury, for example, has a stretch of empty, eye-averting properties that could theoretically — with a Renew-style makeover — become a destination.

What does any of this have to do with housing? A downtown commercial/cultural revival might produce a hub of burgeoning activity where all sorts of people might want to live, thus drawing housing developers to a municipality they might otherwise be inclined to avoid.

https://www.youtube.com/watch?v=6n0ADYyy28w

A little holiday cheer

elected leaders, fair housing, housing, housing crisis, New Jersey, NIMBYism, Portland, renters, Vermont, workforce housing, , , , , , ,
  • Portland, Ore., has come up with a new funding source for affordable housing: tourists! Sunflower on fence The city council has voted to dedicate a share of the tax on Airbnb-type rentals to the city’s Housing Investment Fund — $1.2 million a year. That’s a drop in the bucket in a city where the affordable housing shortfall amounts to about 24,000 units, but it’s better than nothing.
  • Jackson Hole officialdom has agreed to consider a plan that would dial back commercial growth in favor of housing, with density bonuses offered for workforce housing. A citizen campaign bearing slogans like “Housing not hotels” apparently got a receptive hearing.
  • The Republican leadership of Howell, N.J., is backing an affordable housing project despite, and in the face of, some unusually ugly civic opposition — in a state where support for affordable housing is typically associated with Democrats.howell1 This profile of courage, in the Atlantic, includes a fine summary of the tortuous (and torturous) fate of affordable housing in New Jersey after the landmark Mount Laurel decisions. Another example of how good intentions and a supportive legal infrastructure are not enough.
  • The “recapitalization” of Freddie Mac and Fannie Mae, as proposed by two economists, would direct a flood of new money to the states for affordable housing via the Housing Trust Fund and the Capital Magnet Fund.fanniemae Vermont would get $4.6 million a year for affordable housing for 20 years under this scheme. Sounds great, but whether this proposal has any legs is an open question. Some members of Congress would just as soon do away with Freddie Mac and Fannie Mae altogether.
  •  A community of 15 tiny houses is scheduled to open later this month in Seattle to provide transitional quarters for homeless people. Granted, this isn’t exactly cheerful news, but at least it’s different.

With sadness – but with some hopefulness

News, Uncategorized, ,

Alas dear friends, December 31, will be the last official day of work at the FHP/Thriving Communities campaign for the wonderfully talented, informative, and entertaining Blogger and journalistic seeker of truth, Tim Johnson. Tim is one of a kind and is an irreplaceable human resource. We offer Tim our deepest felt thanks and all best wishes. Of course Tim will be missed greatly, both his personal presence in our office and his many professional  contributions to the cause of promoting Thriving Inclusive Communities in Vermont and as far and wide as our campaign is reaching beyond the state.

Our loss of funding from HUD, compounded by no forthcoming funding commitment from the Vermont Department of Housing and Community Development, is forcing CVOEO to eliminate not only Tim’s position but to substantially reduce the funded hours for my position as director at the Fair Housing Project. However, all is by no means gloom for the New Year ahead!

The hopeful part comes from the following:

  • The Thriving Communities: Building a Vibrant Inclusive Vermont campaign will continue with current, and perhaps new partner organization in the future!
  • The Fair Housing Project of CVOEO, lead organization for the Campaign will continue albeit with reduced staffing/capacity.
  • We are receiving some private and organizational contributions to the project budget and continue to welcome such generosity.
  • More people continue to be interested and involved in our Campaign’s variety of social media outreach and we will build upon that.
  • We will be planning and working toward another successful art and education oriented celebration of April – Fair Housing Month in 2016.

What you can do to help continue to build our campaign:

  • Read, write comments, and engage in discussion on this Blog page.
  • Write a guest blog for us to post!
  • Contribute money to the Campaign and suggest possible foundation or other sources of funding for us to pursue.
  • Get involved in every way possible helping promote inclusive, thriving communities, affordable housing and funding/public policies that make more affordable and better located housing possible.

Finally – HAPPY HOLIDAYS ALL!

 

Nagging question

affirmatively furthering fair housing, affordable housing, fair housing, housing, housing crisis, income inequality, middle class, Mount Laurel, renters, segregation, , ,

How does an affordable housing development affect surrounding property values?

There’s no simple answer to this question, in part because of the many variables that come into play– the siting, for example, and the nature of the neighborhood (blighted? well-to-do?), the scale of the development, the design, and so on. affordable1

Not surprisingly, though, the question has spawned a large literature. A rather dated survey of the research, from the Furman Center at NYU, found that “the vast majority of studies have found that affordable housing does not depress neighboring property values, and may even raise them in some cases.” A “Field Guide to Effects of Low-Income Housing on Property Values,” put out by the National Association of Realtors and citing numerous references, updated last year, agrees: “Most studies indicate that affordable housing has no long term negative impact on surrounding home values.”

Indeed, that’s the standard pitch that affordable-housing advocates make in the face of NIMBY opposition: The notion that affordable housing drives down property values is a “myth.”affordable3

Then, along comes a study with an inconvenient conclusion, seemingly muddying the water. That would be “Who Wants Affordable Housing in their Backyard? An Equilibrium Analysis of Low Income Property Development,” by Stanford economists Rebecca Diamond and Tim McQuade. Their finding is that, within a 0.1-mile radius, Low Income Housing Tax Credit-financed developments raise property values over the long run in low-income neighborhoods but lower them in higher-income neighborhoods. They conclude: “Given the goals of many affordable housing polices is to decrease income and racial segregation in housing markets, these goals might be better achieved by investing in affordable housing in low income and high minority areas, which will then spark in-migration of high income and a more racially diverse set of residents.” affordable2

This conclusion runs contrary to the spirit of affirmatively furthering fair housing, which advocates a balanced approach for affordable housing investment: revitalizing blighted areas, on one hand, and desegregating higher-income areas, on the other. This dual approach also has the imprimatur of the U.S. Supreme Court, which effectively endorsed it in its ruling this summer upholding the disparate impact doctrine. (For our previous post on this, click here.) The court’s ruling favored a Texas plaintiff who argued that affordable housing projects should NOT be disproportionately sited in low-income minority neighborhoods.

While we await critiques of the Stanford study from the affordable-housing commentariat, we take note of various examples where affordable housing has not depressed property values in higher-income communities: Places such as Mount Laurel, N.J., epicenter of New Jersey’s fair/affordable housing movement, where a Princeton study found that values in surrounding neighborhoods were unaffected (for the New York Times account, click here). Or Weston or Wellesley, two of Massachusetts’ wealthiest communities, where a Tufts study found that mixed-income developments had no effect on surrounding property values, as reported via Shelterforce.

One factor that might well have a bearing, and that would not show up in the Census-tract-type data used by the Stanford researchers, is design. Affordable housing doesn’t have to look cheap or barracks-y. In fact, if the design is done well, affordable units can be hard to distinguish from market-rate units.

Planning consultant Julie Campoli demonstrates this in her “Thriving Communities” webinar/seminar presentation. She shows each of the following two slides of four photos each and asks viewers to guess which is affordable and which market-rate. We’re giving the answer away by showing the labeled versions here, but her point should be obvious.julie1

 julie2

Renters’ agenda

fair housing, housing, housing crisis, housing subsidies, housing vouchers, income inequality, mortgage-interest deduction, renters, Section 8, segregation, tax policy, tax reform, Vermont, , , , , ,

The Center for American Progress has put out a report that nicely ties together, in summary fashion, the current status of fair housing and unaffordable housing. These are the mainstay, overlapping concerns of the “Thriving Communities” campaign. If you’re looking for a fairly brief (33 pages) treatment of where things stand, complete with an array of federal policy recommendations, “An Opportunity Agenda for Renters” is worth a look. rent2

The report touches on many of the topics we’ve mentioned in this blog — the persistence of racial and socioeconomic segregation, the barriers to mobility from impoverished to high-opportunity areas, the growing financial burdens on the growing class of renters in the face of woefully insufficient public subsidies.

One of the policy recommendations, naturally, is that the primary federal vehicle for creating or preserving affordable housing be expanded. That’s the Low Income Housing Tax Credit, which accounts for about 110,000 residential units a year, according to the report. But even if that program were increased by 50 percent, as called for by the Bipartisan Policy Center’s Housing Commission, the total number of units created or preserved would still be way too few, considering “the current shortage of 4.5 million units that are affordable to extremely low-income households.”

As things stand, the federal tax code benefits homeowners in several ways, and disproportionately the wealthier ones. The mortgage-interest tax deduction alone costs the government about $70 billion a year. By contrast, increasing funding of the Section 8 program to cover 3 million eligible low-income renters who are shut out of the program now would cost just $22 billion.

Here’s another proposal in renters’ favor: creating a federal renters’ tax credit. A modest tax credit benefiting the lowest income renters could cost a mere $5 billion.

Vermont’s renter rebate is better than nothing, but it still doesn’t go very far. In 2012, according to a 2014 report to the Legislature, 13,541 claimants (about one-fifth of the state’s renting households) received a total of $8.7 million in rebates, for an average of $641. That $641 was not enough to unburden the typical claimant.

“On average,” the report stated, “Vermont’s renter rebate program reduces gross rent as a percent of household income from 36.7 percent to 33.6 percent.” rent1

In other words, the average renter was living in an unaffordable place even after the rebate.

 

The economic damper

Burlington, California, housing, housing crisis, News, renters, Vermont, workforce housing, , , , , ,

If  a crisis isn’t mentioned in a presidential debate (as the national housing crisis was not, in either of the televised colloquies over the past week), does that mean it doesn’t exist?bench2

Of course not. Whether the candidates are willing to discuss it or not, the affordable housing shortage remains a damper on economic vitality and job creation. Burlington’s latest housing market analysis (July 31) gets to this point right in the first paragraph:

“Burlington’s housing market is marked by an imbalance between supply and demand. … The rental housing imbalance translates into high housing costs (relative to income) and lower quality rental housing stock. … An imbalanced rental housing market also impedes economic growth since employers have trouble recruiting and retaining their workforce.”

The same can be said for many other communities in Vermont and beyond, as seen in these news bulletins from the last few days:employment4

  • Toyota Financial Services decided to pull out of Los Angeles and move to Plano, Texas, in part because of LA’s high housing costs and rent burdens.
  • Well up the coast, in northwest Oregon, the lack of affordable housing “threatens the viability” of major cheese company that is subsidizing a housing task force in a county, beset by negligible development.bench3
  • In Key West, the Naval Air Station has trouble retaining civilian employees because of high housing costs. About half the base’s firefighter recruits wind up leaving after a few months’ training because they can’t afford to live there, according to the chief.
  • In Travers City, Mich., the housing shortage repels new workers, in a kind of vicious cycle. bench1 “Builders can’t construct housing because they lack works and workers won’t relocate to the area because they can’t find housing,” The Traverse-City Record-Eagle laments.
  • Colorado, the rental market is so tight in some ski towns that some workers are living in their cars or in temporary shelters. Several hundred Vail Resort workers recently confronted another kind of indignity: they were informed that they’d have to share rooms in the employer’s housing complexes.employment3

Capital ideas

affordable housing, Burlington, EB-5 program, elected leaders, housing, housing crisis, housing subsidies, News, renters, Vermont, workforce housing, , , , ,

This country’s shortage of affordable rental units runs into the millions, and Vermont’s is in the thousands. Where’s the money going to come from to build or rehab our way out of this hole? Government spending falls chronically and abysmally short, but there’s a glimmer of hope that a growing fraction of the massive need can come from an unlikely source: private investors. finance1

But first, consider the scale of the need. According to the recent Harvard report on rental housing, 11.4 million renter households are “severely burdened,” paying more than 50 percent of their income for housing. (An additional 9.9 million are simply “burdened,” paying more than 30 percent.)

In Vermont, 26 percent of the 75,000 renter households are severely burdened — that’s 19,500 households living in places that are far beyond their means. And in Burlington, 35 percent of the 9,500 renter households are in that position – about 3,300 households.

The federal government’s primary subsidy for affordable housing development is the Low Income Housing Tax Credit, which produces in about 100,000 affordable rental units a year. Then of course there’s the challenge of maintaining affordability for units whose tax credits expire, a challenge that Vermont’s housing nonprofits and state agencies contend with annually as they marshal limited public resources to preserve the affordability of what’s here. And even though they’ve been largely successful, what’s here isn’t anywhere near enough. Yes, the private market is turning out new rental housing to meet the growing population of renters, but the great majority of those new units are high-end.

A new report from the Urban Land Institute and NeighborWorks America, “Preserving Multifamily Workforce and Affordable Housing,” describes a range of new financing vehicles that seek to create or preserve affordable housing. Sixteen partnerships o investment companies – some new, some well-established — are profiled. One thing they have in common is that they offer returns to their investors– who include philanthropies, university endowments, pension funds and private individuals in the single digits, below what the typical real-estate investor might expect to receive. These entities include private equity funds and two real estate investment trusts (REITs) that focus on affordable multifamily developments.

The hook is that this investment sustains a social good: affordable housing. If “socially responsible investing” is popular among Vermont’s progressive monied class, why can’t affordable housing be one of their fiduciary causes? A creative financier might even find some way to enlist the UVM endowment or the state pension fund in support of affordable housing development.finance2

The report also mentions another possible funding source for affordable housing — the EB-5 program, which pulls in big investments from foreigners (typically from East Asia) in exchange for green cards, and which we’ve harped on before. Yes, EB-5 is supposed to be a job-creation program, but it turns out that real estate development developments are among the most popular EB-5 projects, in part because the construction jobs count. (Check out this article, “Real Estate: Still the Darling of EB-5.”) True, affordable housing isn’t the typical EB-5 project, but it has been done – in San Francisco’s Hunter’s Point Shipyard, and in Seattle, near the Seahawks’ stadium. Next up, Miami.

How about Newport, Vt.? 

Shameless begging…

program funding, , ,

OK – “Shameless begging?” I’m talking about me, Ted Wimpey, director of the CVOEO Fair Housing Project, and I am appealing to all friends of the Thriving Communities campaign and the Fair Housing Project of CVOEO; the primary organizing program for the Thriving Communities Campaign.

First, some not so good news: 1) The Fair Housing Project’s grant from HUD to “Affirmatively Furthering Fair Housing” in Vermont  ends December 31, and due to changes in HUD’s funding priorities for fair housing programs we were not able to apply for another round of funding from HUD. 2) We have been informed that the State of Vermont will not be providing any funding for the Fair Housing Project or our campaign next year.

Now some better news: 1) We have received a challenge donation of $20,000 that will help us maintain the campaign as we seek other alternative funding sources. 2) We intend to keep the Thriving Communities campaign and the Fair Housing Project alive, albeit at a reduced staffing level, by all means possible.

OK, here comes the begging part:

Below is a very easy way to contribute (a tax deductible Holiday gift perhaps?) to the Fair Housing Project and the Thriving Communities campaign:

1) Go to the CVOEO donation web page – the link is below these instructions

(Note: the CHAMPLAIN VALLEY OFFICE OF ECONOMIC OPPORTUNITY INC has partnered with “Network for Good” to securely process your online credit card payment via Network for Good (tax ID 68-0480736). This transaction will appear on your credit card statement as “Network for Good.” This transaction is subject to Network for Good’s Privacy, Security & Disclosure Statement and the Charitable Solicitation Disclosure.)

2) Select from the |”How Much Would You Like to Donate Today?”| choices at the top of the page; any amount will help – more is even better than less 😉

3) Next choose donation frequency: |”ONE TIME“| or |”MONTHLY“|

4) Next scroll down to |”Payment Information“| and choose: |”Credit/Debt“| or |”PayPal“|

5) Then – IMPORTANTLY – scroll down to: |”If you have a special purpose for your donation, please let us know“| and from the drop-down list there please Choose the |”FAIR HOUSING PROJECT“|  .

6) Click the |”DONATE NOW“| button!!

***CVOEO Donation Page “DONATE NOW”: click this Link****
We will be very grateful to you. THANK YOU!