Millennial Housing Commission Housing Program Tutorial, June 2002 Millennial Housing Commission...

Millennial Housing Commission

Housing Program Tutorial, June 2002

Millennial Housing CommissionFederal Housing

Assistance




Forms of Federal Housing Assistance

• Direct Assistance– Block Grants– Categorical Funding

• Tax Expenditures

• Direct Loans and Loan Guarantees



Others Forms of Federal Support and Intervention

• Government Sponsored Enterprises (GSEs)

• Regulation of Financial Institutions

• Fair Housing

• Consumer Protection and Disclosure



Eligibility for Housing Assistance

•Income eligibility—Gross annual household income defined as percentage of area median income (AMI).

• Rent Calculation—Based on adjusted gross annual income. Income includes pre-tax income, periodic payments (insurance, alimony, etc), or payment in lieu of earnings.

• Income adjustments include a dependent allowance, elderly or disabled deduction, as well as child care and medical expense allowances.



Cost Burdens Fall Heavily on Those With Lowest Incomes (1999)

Notes: Occupied units; includes no cash renters; Severe Cost Burden defined as households paying more than 50% of income for housing cost; ELI defined <30% of Area Median Income (AMI), VLI defined as 30-50% of AMI; LI defined as 50-80% of AMI; MI defined as 80-120% of AMI. Share spending 50%+ defined as households paying more than 50% of income for monthly housing costs; Share spending 30-49.9% defined as households paying 30-49.9 of monthly income for housing costs. Subsidy defined by the AHS.

Source: See Table 1

56%

18%

3% 1% 0%

50%

16%7% 3% 1%

19%

47%

27%

7%2%

21%

24%

22%

14%

4%

25%35%

69%

91%98%

29%

60%

71%

83%

95%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Extremely Low

Income

Very Low Income Low Income Moderate Income High Income Extremely Low

Income

Very Low Income Low Income Moderate Income High Income

Per

cen

t o

f H

ou

seh

old

s

Share w ith Severe Cost Burdens Share w ith Moderate Cost Burdens Share Not Burdened

Renters Owners



Existing Affordable Rental Housing Mismatch(1999)

Notes: Vacant and occupied units; Demand defined as number of households that fall under AMI cutoffs; supply defined asnumber of units priced at under 30% of Income.Source: See Table 2

0

2

4

6

8

10

12

14

16

Supply Demand Supply Demand Supply Demand Supply Demand

ELI VLI LI MI

Un

its

an

d H

ou

se

ho

lds

(m

illio

ns

)

Supply Available to Income Group Share rented by Wealthier Renters



The Nation’s Directly Subsidized Housing

Note: Units and households under assistance net of housing tax expenditures and block grant funded units without other subsidies. Owner Assistance includes Section 235 and Section 502 direct loans.Source: See Table 3

Rental Assistance--4,820,000

Owner Assistance--591,000

Total Direct Assistance

5,411,000



The Nation’s Direct Rental Subsidies

Public Housing

1,274,000

Tenant-Based

1,581,000

Private Project-Based

1,965,000

Total Rental Assistance

4,820,000

Source: See Table 4



The Nation’s Direct Rental Project Subsidies

Total Direct PBA units—1,965,000

Source: See Table 5

S.202/811—83,000S.8 New/Sub. Rehab.- 851,000

S. 515—410,000

S. 236, no S.8—60,000

Other “Older Assist.”-158,000

S. 236, w/S.8—403,000



New vs. Existing Rental Commitments

Source: See Table 6

0

50,000

100,000

150,000

200,000

250,000

1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999

Existing Rental Housing New Rental Construction



$4,202 $3,437$1,526

$20,390

$0

$5,000

$10,000

$15,000

$20,000

$25,000

Older AssistedStock

Newer AssistedStock

FHA InsuredUnassisted Stock

Public Housing

Condition of Assisted Housing Stock

Average Per Unit Un-Funded Backlog of Physical Needs

Un-funded Backlog:

(In Millions)

$540.3$1,255$2,858 $24,600In 1998 dollars

Source: See Table 7



Beneficiary Characteristics—Income

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

221(d)(3)--BMIR

Section 236 Section 8TBA

PublicHousing

S. 8-NewConst. AndSub. Rehab

Section 8Mod. Rehab

Nation

$0-10,000 $10,000-15,000 15,000-20,000 > $20,000

Household Income by Program

Source: See Table 8



0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Section 8 NewConst./ Rehab

Section 236 PublicHousing

Section 8Mod. Rehab

"OlderAssisted"

Units

Section 8TBA

Nation

% 1-parent Household % 2-parent Household Other

Beneficiary Characteristics—Families with Children

Source: See Table 9



Project Locations

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Section515

Section811

Tax credits Section202

Vouchers HOPE VI

Central city Suburban Nonmetro

Source: See Table 10



Incidence of Poverty and Project Location

Distribution of Units by Area Poverty Rate

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Public Housing Project-BasedAssistance

Certificates andVouchers

All Rental Units

<10% 10-29% 30-39% >40%




GAO Program Cost Estimates

* Voucher costs adjusted to account for program location and average bedroom size.Source: See Table 12

First Year Federal Costs: Production and Voucher Programs

$2,610

$6,280

$4,200 $4,440

$2,910

$4,500

$10,210

$6,920 $6,680

$4,960

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

Tax Credit HOPE VI Section 202 Section 811 Section 515

Voucher Cost for Comparable Unit Mix* Production Program



Block Grants-CDBG

• Now assists approximately 185,000 incremental housing units annually. Most for rehab. with 6.1% for homeownership assistance and 7% for new construction.

• Since 1975 about 28% of CDBG funds have gone to housing.

• In FY2001, about 35% of CDBG funding went to housing.



Block Grants-HOME

• Since 1990 about 650,000 housing units have been acquired, rehabbed or newly built and about 78,000 tenants have received rental assistance.

• About 55% of funds have gone to rental of which 46.3% was for new construction and 48.6% was for acquisition and rehab.

• The remaining 45% of funds went to homeowner and homebuyer assistance.



Low-Income Housing Tax Credit

• GAO estimates 752,000 LIHTC units were produced.

• NCSHA estimates about 67% of allocated Tax Credit units receive other subsidies.




Private Activity Bond Housing Programs


•Mortgage Revenue Bonds (MRBs)

• Assisted over 2 million households through 2000.

• Annual originations now average over 100,000 loans.

• Multifamily Bonds

• Funded about 780,00 units through 2000.

• Annual originations now average 48,000 units with an average value of $2.7 billion.



Tax Expenditures

In billions

FY 2001 Housing Tax Expenditures

$121.2


Mortgage Interest Deduction-$64.5

Real Estate Tax Deduction-$22.4

Exclusion of Capital Gains-$19.1

Deferral of Income from installment sales-$1.0

Exclusion of Bond Int. for Rentals-$0.2

Exclusion of Bond Int. for Owners-$0.8

Exception from passive loss rules-$4.8

Low Income Housing Tax Credit-$3.2

Depreciation of rental housing-$5.2



0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

FHA-Single Family Insured Loans

Number of Loans Originated




FHA-Multi-Family Insured Loans

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

220,000

240,000 Number Units Originated




Veterans Loan Guarantees

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000 Number of Loans Originated




RHS Single-Family Loan Guarantees

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Number of Loans Originated




Federal Housing Assistance-FY 2001

Source: See Tables 15, 21, and 22.

Tax Expenditures$121.22 B

Direct Spending$34.28 B



$0.0

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

$140.0

$160.0

$180.0

1976 1980 1984 1988 1992 1996 2000 2004 2006

Tax Expenditures Assisted Housing BA

Federal Housing Spending

Spending for Housing, 1976-2006

In Billions of 2001 dollarsSource: See Table 20



HUD Budget Outlays-FY 2001

Section 8-$16,579

In millions

CDBG--$4,826

Public Housing-$7,435

HOME--$1,734

Special Pop.--$1,014

Other--$2,061

Total Program Outlays

(FY2001)

$33,649




RHS Budget Outlays-FY 2001

S. 521--$634

In millionsS. 502 (Guarantee) $186

S. 538--$2

S. 502 (Direct) $147

S. 515--$59Other*--$24

Total FY 2001 Program Outlays

$1,052




Budget Process

• Discretionary spending is capped and budget authority annually appropriated

• Budget authority to cover long-term costs of credit programs must be appropriated upfront

• OMB estimates long term costs of credit programs• Subsidy rate is expressed as a share of loan

volume • Positive subsidy rate programs constrained by

budget authority• Negative subsidy rate programs constrained by

enacted loan volume limits



Budget Process

• Program changes that add to collections allow equivalent spending increases elsewhere

• Tax expenditures and cuts are capped • Revenue loss estimates must be included in budget• Fannie Mae, Freddie Mac, and FHLB system are

outside the federal budget system



Housing Budget Issues

• Funding expiring S. 8 long-term contracts – budget authority from $4.2 billion to $5.4 billion by 2005–approx 800k expired headed to approx 900k

• Switching from 15-20 year commitments to 1-year and some to 5-year renewal “subject to availability of the funds”

• FHA not a dedicated trust fund—cannot reinvest receipts or get a lock on program changes that raise revenue

• Subsidy rate assumptions and fund structures• Exit tax expenditure assumptions



Subsidy Rates and Loan Volume

Source: FY 2003 Federal Credit Supplement, Congressional Budget Office, April 2002.

FY 2002 CommitmentsProgram Subsidy Rate (in thousands)Direct Loans:Section 502-Single Family 13.2% $1,082,122Section 515-Multi-Family 42.3% $114,069Guarantees and Insurance:Section 502-Single Family 1.3% $3,137,429Multi-Family Development -0.14% $3,000,000HFA Risk Sharing -1.55% $650,000GSE Risk Sharing -0.57% $100,000FHA MMIF -2.07% $147,338,727Veterans Housing Benefit Program 0.39% $32,066,793



Additional Information

• This information as well as additional baseline information is available on the Commission’s website (www.mhc.gov)

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