Historic housing law creates opportunities for Habitat affiliates
July 30, 2008: Sent on behalf of Habitat for Humanity International's Government Relations and Advocacy Office
Congress and the President have enacted the largest federal housing package in decades. The Housing and Economic Recovery Act of 2008 (HR 3221) includes two important items for which Habitat has advocated extensively: a new affordable housing fund and neighborhood stabilization funding. Both of these provisions will provide new opportunities for affiliates to access federal funds to support their work.
The affordable housing fund will be financed through a 4.2 basis point tax on new business by Fannie Mae and Freddie Mac. Two-thirds of the fund will be used to finance a national housing trust fund administered by the U.S. Department of Housing and Urban Development (HUD). Trust fund formula grants to states may be used to serve those earning less than 50 percent of the area median income, but no more than 10 percent of trust fund dollars may be used for homeownership purposes. The remaining third of the affordable housing fund will be used for a new capital magnet fund administered by the Treasury Department. This fund will make competitive grants to community development financial institutions (CDFIs) and affordable housing developers for the development, preservation, rehabilitation, or purchase of affordable housing and for economic development activities or community service facilities, such as day care centers, workforce development centers, and health care clinics, which in conjunction with affordable housing activities implement a concerted strategy to stabilize or revitalize a low-income area or underserved rural area. Both the trust fund and the capital magnet fund will provide new opportunities for affiliates to partner with government to serve more families in need of adequate, affordable shelter. Funding is unlikely to become available until late 2009. HFHI’s Government Relations and Advocacy Office will provide additional guidance to affiliates regarding these programs as information becomes available.
Neighborhood stabilization grants, provided through an emergency allocation of Community Development Block Grant (CDBG) funding will also provide Habitat affiliates with new opportunities to serve more families. The bill includes $4 billion in CDBG grants to states and local communities to support the purchase, rehabilitation, and resale of discounted vacant properties that are driving down neighborhood property values and eroding local tax bases. These grants will provide Habitat and other affordable housing developers opportunities to acquire properties at well below market value.
Neighborhood stabilization grants are likely to be the first to become available, since they are being distributed through the existing CDBG program, but the exact timing is difficult to project. The bill requires HUD to write the formula within 60 days of enactment and to distribute grants within 30 days of promulgating the formula, but HUD sometimes fails to meet such deadlines. The best case scenario is that funds will reach states and cities around November 1st. States and cities will then have 18 months to spend their grants. Cities with more than 50,000 people and counties with more than 200,000 will administer their own vacant property acquisition initiatives. States will administer the program for smaller towns and rural areas. HFHI's Government Relations and Advocacy Office will provide additional guidance to affiliates regarding these grants as information becomes available. For general information regarding the CDBG program, please visit http://www.hud.gov/offices/cpd/communitydevelopment/programs/index.cfm.
Other provisions of the Housing and Economic Recovery Act of 2008 include modernization of the Federal Housing Administration, reform of the regulation of the government sponsored enterprises (GSEs)—Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, enhancements of mortgage disclosure rules, foreclosure protection for veterans, and expansion and enhancement of the Low-Income Housing Tax Credit and Mortgage Revenue Bond programs. For a full summary of the bill, please visit http://www.house.gov/apps/list/press/financialsvcs_dem/press0723082.shtml.
Questions? Please contact Christopher Ptomey in HFHI’s Government Relations and Advocacy Office at cptomey@habitat.org or 800-HABITAT, ext. 4911.
