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From: Emily Moser <HUDUSER%GWUVM.BITNET@xxxxxxxxxxxxx>
Subject: Retransmittal of May RRR
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RECENT RESEARCH RESULTS---A NEWSLETTER FROM HUD USER
U.S. Department of Housing and Urban Development
Office of Policy Development and Research
MAY 1994
HUD Publishes Guide to Local Needs Assessment
The flexibility of major HUD housing and community development
programs such as HOME and Community Development Block Grants allow
localities to craft housing strategies tailored to their specific
needs. However, in order to make informed choices among the broad
range of available options, citizens and policymakers must have
timely data on local housing conditions and trends. The
HUD-sponsored National Analysis of Housing Affordability, Adequacy,
and Availability: A Framework for Local Housing Strategies uses
national and regional data from the 1990 Census and other sources
to demonstrate the analysis of local housing needs.
National Analysis is designed to aid housing professionals and
activists in preparing or evaluating their communities'
Comprehensive Housing Affordability Strategy (CHAS). Although it is
not intended to be used as instructions for preparing a CHAS, this
book provides important guidance on systematically examining local
housing conditions and needs. To assist communities in completing
their CHAS, HUD has compiled and distributed special local
tabulations from the 1990 Census. This report uses national
aggregations of these data to illustrate how the special
tabulations can describe local housing markets. This exercise
yields a valuable profile of the Nation's housing stock and its
residents and identifies salient facts concerning the incidence and
distribution of housing problems.
The guide also outlines a process for diagnosing the underlying
causes of market imbalances as the basis for establishing a local
housing strategy. This analytical process is framed as a series of
basic questions and illustrated with national data, producing a
discussion of local policy alternatives that has implications for
Federal policy as well:
~ Which households experience the most severe or
widespread housing problems? Housing needs nationwide are highly
concentrated among households with low or very low incomes. Housing
problems~most often housing costs in excess of 30 percent of
household income~burden over 70 percent of both renters and
homeowners with very low incomes. Almost 40 percent of very
low-income households face "worst case" housing needs.
~ How many households already receive housing assistance?
Approximately 30 percent of income-eligible households receive
Federal rental assistance. Central city residents,
African-Americans, residents of the Northeast, and the elderly are
most often served by these programs.
~ What are the underlying causes of local housing market
problems? Although there appear to be serious problems with
housing availability and adequacy in some areas and among some
segments of the housing stock, the most frequent cause of housing
problems continues to be affordability: high housing costs burden
lower-income renters even in the face of high vacancy rates. In
addition, spatial segregation by race, income, and tenure restricts
the accessibility of housing in many neighborhoods.
~ Which housing problems can be addressed without housing
subsidies or direct financial assistance? Local regulatory and
administrative barriers that drive up the cost of producing housing
can be addressed through local government action. Vigorous
education and enforcement of fair housing laws can reduce the
barriers that discrimination imposes on minorities, families with
children, and the disabled.
~ What groups of households most need public sector
assistance to meet their housing needs? Addressing the housing
needs of very low-income households requires a level of subsidy
that is probably far in excess of the public resources available.
Communities must set their own priorities for allocating scarce
resources, choosing to focus, for example, on households with
"worst case" needs, the homeless, families with children, the
disabled, or on particular segments of the housing stock.
~ What housing activities are best suited to addressing
priority needs for housing assistance in the community? The
combination of an ample supply of adequate, moderately-priced
housing with high cost burdens among very low-income households
suggests that rental assistance offers the most appropriate
strategy for addressing unmet housing needs. However, specific
local conditions~such as a shortage of larger rental units, the
presence of deteriorating neighborhoods, or high levels of spatial
segregation~may demand some combination of new construction,
rehabilitation, and additional homeownership opportunities as an
appropriate remedy.
As the authors point out, every community's strategy will be
different, reflecting variations in local housing market
conditions, financial and institutional capacities, and local
political decisions. Nevertheless, developing a factual baseline of
information on housing conditions and trends is indispensable to
any informed public discussion of local housing needs and
strategies. National Analysis shows participants in the planning
process how they can build this capacity. It is an important
resource for those concerned with shaping their community's future.
National Analysis of Housing Affordability, Adequacy, and
Availability: A Framework for Local Housing Strategies is available
from HUD USER for $4. Please use the order form to obtain copies.
Making Impact Fees Equitable and Effective
During the past two decades, impact fees have emerged as an
important source of funding for public infrastructure improvements
needed to accommodate new development. Although their use by local
governments is widespread, many developers and affordable housing
advocates have disputed both the theory and the application of
impact fees. They have argued that impact fees can have a negative
effect on the supply and cost of housing and are too often
exclusionary in intent, inequitable in practice, and burdensome and
open to abuse in their administration. Impact Fees and the Role of
the State: Guidance for Drafting Legislation, a report prepared for
HUD by the National Association of Home Builders Research Center,
outlines a set of criteria and standards to guide State legislators
in drafting impact fee enabling legislation that would ensure
consistency and minimum standards among local ordinances.
The report's review of the extensive case law on impact fees shows
the tremendous variation among local ordinances. Generally, the
courts have upheld impact fees as a proper exercise of the police
power, provided that they are explicitly sanctioned under State law
and maintain a "rational nexus" between the imposition of the fee
and the use of the revenues. The report encourages States to adopt
enabling legislation for impact fees as the most effective means of
limiting legal challenges to this essential local financing tool
while insisting on fee equity, fairness, uniformity, and
nondiscrimination.
The report's specific recommendations address the longstanding
concerns of developers and affordable housing advocates by urging
that States require local governments to design and administer
their impact fee ordinances in such a way as to maintain a
compelling relationship among "the new development's need for the
facility (needs test), the amount of fee charged to develop the
facility (proportionality), and the benefits that accrue to new
development from the facility (benefits test)." Accordingly, the
report advocates State action that would require local ordinances
to clearly specify:
~ The types of jurisdictions that may impose impact fees.
~ The types of development that may be subject to fees and the
basis for the assessment.
~ The types of improvements that can be funded through impact
fees, as well as the service area in which funded activities may
occur and the time period for spending fees.
The report also urges that enabling legislation permit or require
localities to exempt affordable housing and types of development
that respond to community priorities, promote coordination of
funded improvements and existing capital improvement plans, and
provide credits for in-kind contributions and revenue payments from
the developer.
Impact Fees and the Role of the State offers thorough analysis of
an issue with far-reaching implications for the nature and course
of local development. It is important reading for State and local
policymakers, development professionals, planners, and others
committed to regulatory reform. Please use the order form to obtain
copies from HUD USER for $4 each.
HUD Urges Reform of FHLB System
A newly released report from HUD's Office of Policy Development and
Research (PD&R) offers a detailed examination of the policies,
structure, and operations of the Federal Home Loan Bank (FHLB)
System, as well as recommendations intended to help the FHLBanks
adjust to fundamental changes in the Nation's housing finance
system and expand their support of community development lending.
Report to Congress on the Federal Home Loan Bank System proposes
specific strategies for increasing access to FHLBank services,
safeguarding the financial soundness of the System, and refining
its membership and governance structure.
Since the Great Depression, the FHLB System has enhanced the
capacity of member financial institutions to hold residential
mortgages in portfolio by providing them with loans called
advances. However, profound market changes over the past decade
have challenged this historic function. The savings-and-loan crisis
of the late 1980s reduced the FHLBanks' core constituency, the
growing influence of the secondary mortgage market has diminished
demand for portfolio lending, and the integration of financial
markets has eroded the competitive advantages of advances.
As part of a wide-ranging review of the System and its future,
Congress directed the Secretary of HUD, the Comptroller General,
the Federal Housing Finance Board, the Director of the
Congressional Budget Office, and a Study Committee representing
member institutions to report on a diverse set of 14 topics
concerning the System's structure, function, and mission. HUD and
its contractors conducted an indepth study of each mandated topic.
These studies, which are reproduced in the second volume of the
Report to Congress, form the basis for the comprehensive analysis
of the System presented in the first volume.
In addition to recommendations on each of the mandated study
topics, HUD makes three general policy recommendations. The first
strongly affirms that collateralized lending in support of
residential mortgage financing should remain the core function of
the Federal Home Loan Banks, arguing against fundamental
diversification into securitization or direct mortgage lending. At
the same time, however, HUD emphasizes that the FHLB System "should
have a specific mandate to facilitate mortgage lending for housing
to be owned or occupied by low- and moderate-income families, and
community development lending . . . serving identified investment
areas or targeted populations." Although the FHLBanks already
administer two highly promising programs that promote affordable,
low-income housing, HUD discusses additional strategies for making
such activities an integral part of the System's operations.
The report's other policy recommendations acknowledge the System's
changing membership base, which in 1989 was expanded from thrift
institutions to include interested commercial banks and credit
unions. The FHLBanks currently operate as cooperatives, raising
capital through members' mandatory stock purchases. However,
commercial banks and credit unions, which now comprise a majority
of the membership, are free to withdraw and redeem their stock.
This potential volatility in the System's capital stock increases
the financial vulnerability of the FHLBanks. Therefore, HUD urges
that the FHLBanks "be restructured to provide permanent capital
through nonrefundable, tradeable stock, retained earnings, or other
capital instruments."
Rules governing membership in the System and terms of access to
advances also perpetuate disparities among members, allowing
seemingly arbitrary competitive inequities between commercial banks
and thrifts, for example, and preventing some member institutions
from managing their businesses efficiently. HUD recommends that
conditions of access to advances be equalized across all classes of
members.
This report represents an important contribution to our knowledge
of this federally sponsored institution. Its recommendations
outline thoughtful strategies for ensuring that the FHLB System
continues to play a valuable supporting role in the Nation's
housing finance system well into the next century. Report to
Congress on the Federal Home Loan Bank System~Volume I: Summary
Analysis and Policy Recommendations and Volume II: Analytical
Studies is available from HUD USER for $4 per volume. Please use
the order form to obtain copies.
Order Form 5/94
Impact Fees and the Role of the State: Guidance for Drafting
Legislation (ACCN~HUD)$4.00
National Analysis of Housing Affordability, Adequacy, and
Availability: A Framework for Local Housing Strategies
(ACCN~HUD)$4.00
Report to Congress on the Federal Home Loan Bank System Volume 1:
Summary Analysis and Policy Recommendations (ACCN~HUD6370)$4.00
Volume 2: Analytical Studies (ACCN~HUD6371)$4.00
ALL ORDERS MUST BE PREPAID (with VISA/MasterCard or a check or
money order)
VISA/MC Acct. No.:
Expiration Date:
Name:
Title:
Organizations:
Mailing Address:
City:
State:
ZIP:
Phone:
Please mail this form with payment to HUD USER, P.O. Box 6091,
Rockville, MD 20850; or call 1-800-245-2691 or (301) 251-5747 (fax)
11-MAY-1994 20:08:27.12
To: IN%"URBAN-L%TREARN.BITNET@xxxxxxxxxxxxx" "Multiple recipients of list
URBAN-L"
CC:
Subj: Retransmittal of May RRR
Return-path: <@PSUVM.PSU.EDU:owner-urban-l@xxxxxxxxxxxxxxxxx>
Received: from psuvm.psu.edu by ARCH.PSU.EDU (PMDF #12866) id
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4018; Wed, 11 May 94 20:02:41 EDT
Received: from PSUVM.PSU.EDU (NJE origin LISTSERV@PSUVM) by PSUVM.PSU.EDU
(LMail V1.2a/1.8a) with BSMTP id 1294; Wed, 11 May 1994 15:17:39 -0400
Date: Wed, 11 May 1994 15:14:21 EDT
From: Emily Moser <HUDUSER%GWUVM.BITNET@xxxxxxxxxxxxx>
Subject: Retransmittal of May RRR
Sender: Urban Planning Discussion List <URBAN-L%TREARN.BITNET@xxxxxxxxxxxxx>
To: Multiple recipients of list URBAN-L <URBAN-L%TREARN.BITNET@xxxxxxxxxxxxx>
Reply-to: Urban Planning Discussion List <URBAN-L%TREARN.BITNET@xxxxxxxxxxxxx>
Message-id: <01HC84HCVOGG8ZFPFS@xxxxxxxxxxxx>
RECENT RESEARCH RESULTS---A NEWSLETTER FROM HUD USER
U.S. Department of Housing and Urban Development
Office of Policy Development and Research
MAY 1994
HUD Publishes Guide to Local Needs Assessment
The flexibility of major HUD housing and community development
programs such as HOME and Community Development Block Grants allow
localities to craft housing strategies tailored to their specific
needs. However, in order to make informed choices among the broad
range of available options, citizens and policymakers must have
timely data on local housing conditions and trends. The
HUD-sponsored National Analysis of Housing Affordability, Adequacy,
and Availability: A Framework for Local Housing Strategies uses
national and regional data from the 1990 Census and other sources
to demonstrate the analysis of local housing needs.
National Analysis is designed to aid housing professionals and
activists in preparing or evaluating their communities'
Comprehensive Housing Affordability Strategy (CHAS). Although it is
not intended to be used as instructions for preparing a CHAS, this
book provides important guidance on systematically examining local
housing conditions and needs. To assist communities in completing
their CHAS, HUD has compiled and distributed special local
tabulations from the 1990 Census. This report uses national
aggregations of these data to illustrate how the special
tabulations can describe local housing markets. This exercise
yields a valuable profile of the Nation's housing stock and its
residents and identifies salient facts concerning the incidence and
distribution of housing problems.
The guide also outlines a process for diagnosing the underlying
causes of market imbalances as the basis for establishing a local
housing strategy. This analytical process is framed as a series of
basic questions and illustrated with national data, producing a
discussion of local policy alternatives that has implications for
Federal policy as well:
~ Which households experience the most severe or
widespread housing problems? Housing needs nationwide are highly
concentrated among households with low or very low incomes. Housing
problems~most often housing costs in excess of 30 percent of
household income~burden over 70 percent of both renters and
homeowners with very low incomes. Almost 40 percent of very
low-income households face "worst case" housing needs.
~ How many households already receive housing assistance?
Approximately 30 percent of income-eligible households receive
Federal rental assistance. Central city residents,
African-Americans, residents of the Northeast, and the elderly are
most often served by these programs.
~ What are the underlying causes of local housing market
problems? Although there appear to be serious problems with
housing availability and adequacy in some areas and among some
segments of the housing stock, the most frequent cause of housing
problems continues to be affordability: high housing costs burden
lower-income renters even in the face of high vacancy rates. In
addition, spatial segregation by race, income, and tenure restricts
the accessibility of housing in many neighborhoods.
~ Which housing problems can be addressed without housing
subsidies or direct financial assistance? Local regulatory and
administrative barriers that drive up the cost of producing housing
can be addressed through local government action. Vigorous
education and enforcement of fair housing laws can reduce the
barriers that discrimination imposes on minorities, families with
children, and the disabled.
~ What groups of households most need public sector
assistance to meet their housing needs? Addressing the housing
needs of very low-income households requires a level of subsidy
that is probably far in excess of the public resources available.
Communities must set their own priorities for allocating scarce
resources, choosing to focus, for example, on households with
"worst case" needs, the homeless, families with children, the
disabled, or on particular segments of the housing stock.
~ What housing activities are best suited to addressing
priority needs for housing assistance in the community? The
combination of an ample supply of adequate, moderately-priced
housing with high cost burdens among very low-income households
suggests that rental assistance offers the most appropriate
strategy for addressing unmet housing needs. However, specific
local conditions~such as a shortage of larger rental units, the
presence of deteriorating neighborhoods, or high levels of spatial
segregation~may demand some combination of new construction,
rehabilitation, and additional homeownership opportunities as an
appropriate remedy.
As the authors point out, every community's strategy will be
different, reflecting variations in local housing market
conditions, financial and institutional capacities, and local
political decisions. Nevertheless, developing a factual baseline of
information on housing conditions and trends is indispensable to
any informed public discussion of local housing needs and
strategies. National Analysis shows participants in the planning
process how they can build this capacity. It is an important
resource for those concerned with shaping their community's future.
National Analysis of Housing Affordability, Adequacy, and
Availability: A Framework for Local Housing Strategies is available
from HUD USER for $4. Please use the order form to obtain copies.
Making Impact Fees Equitable and Effective
During the past two decades, impact fees have emerged as an
important source of funding for public infrastructure improvements
needed to accommodate new development. Although their use by local
governments is widespread, many developers and affordable housing
advocates have disputed both the theory and the application of
impact fees. They have argued that impact fees can have a negative
effect on the supply and cost of housing and are too often
exclusionary in intent, inequitable in practice, and burdensome and
open to abuse in their administration. Impact Fees and the Role of
the State: Guidance for Drafting Legislation, a report prepared for
HUD by the National Association of Home Builders Research Center,
outlines a set of criteria and standards to guide State legislators
in drafting impact fee enabling legislation that would ensure
consistency and minimum standards among local ordinances.
The report's review of the extensive case law on impact fees shows
the tremendous variation among local ordinances. Generally, the
courts have upheld impact fees as a proper exercise of the police
power, provided that they are explicitly sanctioned under State law
and maintain a "rational nexus" between the imposition of the fee
and the use of the revenues. The report encourages States to adopt
enabling legislation for impact fees as the most effective means of
limiting legal challenges to this essential local financing tool
while insisting on fee equity, fairness, uniformity, and
nondiscrimination.
The report's specific recommendations address the longstanding
concerns of developers and affordable housing advocates by urging
that States require local governments to design and administer
their impact fee ordinances in such a way as to maintain a
compelling relationship among "the new development's need for the
facility (needs test), the amount of fee charged to develop the
facility (proportionality), and the benefits that accrue to new
development from the facility (benefits test)." Accordingly, the
report advocates State action that would require local ordinances
to clearly specify:
~ The types of jurisdictions that may impose impact fees.
~ The types of development that may be subject to fees and the
basis for the assessment.
~ The types of improvements that can be funded through impact
fees, as well as the service area in which funded activities may
occur and the time period for spending fees.
The report also urges that enabling legislation permit or require
localities to exempt affordable housing and types of development
that respond to community priorities, promote coordination of
funded improvements and existing capital improvement plans, and
provide credits for in-kind contributions and revenue payments from
the developer.
Impact Fees and the Role of the State offers thorough analysis of
an issue with far-reaching implications for the nature and course
of local development. It is important reading for State and local
policymakers, development professionals, planners, and others
committed to regulatory reform. Please use the order form to obtain
copies from HUD USER for $4 each.
HUD Urges Reform of FHLB System
A newly released report from HUD's Office of Policy Development and
Research (PD&R) offers a detailed examination of the policies,
structure, and operations of the Federal Home Loan Bank (FHLB)
System, as well as recommendations intended to help the FHLBanks
adjust to fundamental changes in the Nation's housing finance
system and expand their support of community development lending.
Report to Congress on the Federal Home Loan Bank System proposes
specific strategies for increasing access to FHLBank services,
safeguarding the financial soundness of the System, and refining
its membership and governance structure.
Since the Great Depression, the FHLB System has enhanced the
capacity of member financial institutions to hold residential
mortgages in portfolio by providing them with loans called
advances. However, profound market changes over the past decade
have challenged this historic function. The savings-and-loan crisis
of the late 1980s reduced the FHLBanks' core constituency, the
growing influence of the secondary mortgage market has diminished
demand for portfolio lending, and the integration of financial
markets has eroded the competitive advantages of advances.
As part of a wide-ranging review of the System and its future,
Congress directed the Secretary of HUD, the Comptroller General,
the Federal Housing Finance Board, the Director of the
Congressional Budget Office, and a Study Committee representing
member institutions to report on a diverse set of 14 topics
concerning the System's structure, function, and mission. HUD and
its contractors conducted an indepth study of each mandated topic.
These studies, which are reproduced in the second volume of the
Report to Congress, form the basis for the comprehensive analysis
of the System presented in the first volume.
In addition to recommendations on each of the mandated study
topics, HUD makes three general policy recommendations. The first
strongly affirms that collateralized lending in support of
residential mortgage financing should remain the core function of
the Federal Home Loan Banks, arguing against fundamental
diversification into securitization or direct mortgage lending. At
the same time, however, HUD emphasizes that the FHLB System "should
have a specific mandate to facilitate mortgage lending for housing
to be owned or occupied by low- and moderate-income families, and
community development lending . . . serving identified investment
areas or targeted populations." Although the FHLBanks already
administer two highly promising programs that promote affordable,
low-income housing, HUD discusses additional strategies for making
such activities an integral part of the System's operations.
The report's other policy recommendations acknowledge the System's
changing membership base, which in 1989 was expanded from thrift
institutions to include interested commercial banks and credit
unions. The FHLBanks currently operate as cooperatives, raising
capital through members' mandatory stock purchases. However,
commercial banks and credit unions, which now comprise a majority
of the membership, are free to withdraw and redeem their stock.
This potential volatility in the System's capital stock increases
the financial vulnerability of the FHLBanks. Therefore, HUD urges
that the FHLBanks "be restructured to provide permanent capital
through nonrefundable, tradeable stock, retained earnings, or other
capital instruments."
Rules governing membership in the System and terms of access to
advances also perpetuate disparities among members, allowing
seemingly arbitrary competitive inequities between commercial banks
and thrifts, for example, and preventing some member institutions
from managing their businesses efficiently. HUD recommends that
conditions of access to advances be equalized across all classes of
members.
This report represents an important contribution to our knowledge
of this federally sponsored institution. Its recommendations
outline thoughtful strategies for ensuring that the FHLB System
continues to play a valuable supporting role in the Nation's
housing finance system well into the next century. Report to
Congress on the Federal Home Loan Bank System~Volume I: Summary
Analysis and Policy Recommendations and Volume II: Analytical
Studies is available from HUD USER for $4 per volume. Please use
the order form to obtain copies.
Order Form 5/94
Impact Fees and the Role of the State: Guidance for Drafting
Legislation (ACCN~HUD)$4.00
National Analysis of Housing Affordability, Adequacy, and
Availability: A Framework for Local Housing Strategies
(ACCN~HUD)$4.00
Report to Congress on the Federal Home Loan Bank System Volume 1:
Summary Analysis and Policy Recommendations (ACCN~HUD6370)$4.00
Volume 2: Analytical Studies (ACCN~HUD6371)$4.00
ALL ORDERS MUST BE PREPAID (with VISA/MasterCard or a check or
money order)
VISA/MC Acct. No.:
Expiration Date:
Name:
Title:
Organizations:
Mailing Address:
City:
State:
ZIP:
Phone:
Please mail this form with payment to HUD USER, P.O. Box 6091,
Rockville, MD 20850; or call 1-800-245-2691 or (301) 251-5747 (fax)