housing news volume 24, number 1 · west palm beach/south florida jaimie ross, president 1000...

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HOUSING NEWSN E T W O R KThe Journal of the Florida Housing Coalition, Inc.

Volume 24, Number 1

WINTER 2008

$6.2 Billion Stimulus for Florida’s Economy at Stake:

Housing Trust Funds Must be Used for Housing

The cap on the Affordablehousing trust funds went intoeffect in July, 2007. Thatmeans that the distribution of moniescollected from the revenue dedicatedto affordable housing from theSadowski Act is now limited to amaximum of $244 million per year.But in the 2008 legislative session,over $596 million is available forappropriation out of the state andlocal housing trust funds. This is because forseveral years the monies distributed into the trustfunds was not allowed to be spent—a total of$348.8 million. That means the question forthe 2008 Legislature is whether to spend thosehousing monies now and if so, on what.

Why spend all the moniesin the state and local

housing trust funds onhousing?

The monies in the trust funds are there becausethey were collected and distributed into thetrust funds for the express purpose of providingaffordable housing. Those philosophicallycommitted to ensuring that taxes imposed for aparticular purpose should be spent only for thatpurpose would find this enough rationale forspending the monies in the trust funds on

housing. But adherence to thatphilosophy is not necessary toconclude that all the monies inthe housing trust funds shouldbe spent on housing. The morecompelling reason at this particularpoint in Florida’s history is theeconomy. Spending all $596million of this money on housingwould give Florida’s economy a$6.2 billion boost.

Housing is Florida’sEconomic Engine.

Florida is in an economic downturn. And thereis no end to this downturn in the immediatefuture. We need to stimulate the economy.There is no better way to stimulate the economythan to invest money in the housing industry.

• State Housing Dollars Leverage Private SectorInvestment: For every $1 million of statefunding for housing over $6.05 millionof housing is built and/or sold. That meansthat the appropriation of the $596 millionin the trust funds on housing would yield39,005 units.

• State Housing Dollars to Bring in FreeFederal Money: Without sufficient statehousing dollars, our

Continued on page 3

From the Editor - Jaimie Ross President, Florida Housing Coalition

The Sadowski WorkforceHousing Coalition Calls forRepeal of the Cap andAppropriation of the Moniesin the State and LocalHousing Trust Funds forHousing.

Preservation ofAffordable

Rental Housingin the State of

Florida

5

Making the Casefor Preservation

with Data

8

The ForeclosureFreefall inFlorida: AnAffordableHousing

Perspective

11

ForeclosureCounseling

15

The FloridaHousing

Coalition’s 21stStatewide

AnnualConference

16

Community LandTrusts:

On the Move inFlorida

17

The AffordableHousing Advisory

CommitteesMake a

Comeback

24

SHIP Clips

28

Coalition News

30

T H E F L O R I D A H O U S I N G C O A L I T I O N

BOARD OFdirectorsexecutive committeeJeff Bagwell, CHAIRKeystone Challenge Fund, Inc.,LakelandAnnetta Jenkins, VICE CHAIRLocal Initiatives Support Corporation,West Palm Beach/South Florida Jaimie Ross, PRESIDENT1000 Friends of Florida,TallahasseeGregg Schwartz, TREASURERTampa Bay C.D.C.,ClearwaterSophia Sorolis, SECRETARYCity of St. Petersburg,St. PetersburgMelvin Philpot, PAST CHAIRProgress Energy Florida,St. PetersburgMark Hendrickson, AT LARGEThe Hendrickson Company,TallahasseeRobert Von, AT LARGEMeridian Appraisal Group, Inc.Maitland

board ofdirectorsBob AnsleyOrlando Neighborhood ImprovementCorporation, Orlando

Michelle BraunWachovia, JacksonvilleEd BusanskyFirst Housing DevelopmentCorporation of Florida,TampaHolly DuquetteFlorida Power & Light,Juno BeachJames “Jim” DyalAmerican Realty Development, LLC.,TampaCharles “Chuck” ElsesserFlorida Legal Services,Miami Denise FreedmanBank of America,TampaCora FulmoreMortgage & Credit Center,Winter GardenWight GregerCity of Jacksonville,JacksonvilleDan HorvathCommunity Enterprise Investments, Inc.,PensacolaJack HumburgBoley Centers, Inc.St. PetersburgJeff KissKiss & Company,Winter ParkTei KucharskiFlorida Solar Energy Center,Cocoa

Sandra Martin SealsReliance Housing Foundation, Inc.,Ft. LauderdaleWilliam "Bill" O'DellShimberg Center forAffordable Housing, GainesvilleEarl PfeifferFlorida Home Partnership Inc.,RuskinGeorge RomagnoliPasco County CommunityDevelopment,New Port Richey

financial services committeeDana ChestnutWashington Mutual,Atlanta, GADavid ChristianRegions,TampaPeter McDougalCitibank,MiamiRuna Saunders National City,Ft. PierceDeana LewisSunTrust Bank,Pensacola

advisorycouncilHelen Hough FeinbergRBC Capital Markets,St. Petersburg

staffADMINISTRATION

Michael DavisExecutive DirectorPam DavisWorkshop CoordinatorTom FlaggFinancial ManagerDanielle WrightOperations & Conference Manager

TECHNICAL ADVISORS

Aida AndujarSouth Florida OfficeLydia BeltránSouth Florida OfficeMichael ChaneyNorth Florida OfficeHana EskraSouth Florida OfficeStan FittermanCentral Florida OfficeEvelyn RusciolelliCentral Florida OfficeGladys SchneiderSouthwest Florida Office

The Florida Housing Coalition is a nonprofit, statewide membership organization whose mission is to act as a catalyst to bring togetherhousing advocates and resources so that Floridians have a quality affordable home and suitable living environment.The Housing News Network is published by the Florida Housing Coalition as a service to its members and for housing professionals andothers interested in affordable housing issues.

Jaimie Ross, Editor.

Email: [email protected], Web site: www.flhousing.orgFlorida Housing Coalition, Inc., Phone: (850) 878-4219, Fax: (850) 942-6312, 1367 E. Lafayette Street, Suite C, Tallahassee, FL 32301.

The Florida Housing Coalition would like to recognize BANK OF AMERICA, CITIBANK, NATIONAL CITY, WACHOVIA and WASHINGTON MUTUAL,

for their partnership, leadership and support as our PLATINUM SPONSORS. We are deeply appreciative.


private sector developers are unable to access freefederal tax credits- leaving millions of dollars to be usedby other states at Florida’s expense.

• Multiplier Effect: For every million dollars of statefunding, $10.36 million of economic activity is generatedby housing construction. That means that with anappropriation of $596 million, Florida could generate$6.2 billion in economic activity.

• Job Creation: For every every million dollars of statefunding, 106 jobs are created—that means that with anappropriation of $596 million we can expect 63,000 jobsto be created.

• Sales Tax Revenue: For every every million dollars ofstate funding for housing $98,711 of sales tax revenueflows to the state directly from purchase of buildingmaterial and supplies. With an appropriation of $596million that would generate $58.8 million in sales taxesfor Florida.

Economic Impact of Sadowski Act, White Paper analysisperformed by: Mark Hendrickson, the Hendrickson Company.

The Mortgage ForeclosureCrisis and Florida’s Affordable

Housing Programs.

The foreclosure crisis in Florida provides further evidenceof the value in investing in Florida’s affordable housingprograms. Florida has been hard hit by foreclosures due tothe subprime lending crisis. Borrowers who are losing theirhomes because they took out adjustable rate mortgageswithout the ability to make the payments upon reset(without selling or refinancing), are typically not thebuyers in Florida’s affordable housing programs. Florida’shomeownership programs using SHIP or mortgage revenuebonds, receive home buyer counseling and are put into fixedrate long-term mortgages. If they are not qualified for aprime loan they go through credit repair programs until theyare ready to become homeowners. ( See article on page 14 )

Much of the housing stock being foreclosed is beyond thepurchase price of low income buyers. But there are somegood opportunities due to the downturn in the market topurchase land and homes at reduced prices for the benefit

of Florida’s low income population. This is yet anotherreason for the Florida Legislature to appropriate all themonies in the state and local housing trust funds for housing.

2008 Provides a One TimeOpportunity.

We have a one time opportunity in 2008 to stimulate theeconomy with housing money. Because of the cap on thetrust funds, we will never again have anything close to $596million to invest in housing—at most we will have $244million (with negligible annual increases). That means noneof Florida’s programs like CWHIP, or the Preservation LoanProgram to assist the extremely low income (See article onpage 5) will have the opportunity to be funded.

It is not fiscally responsible to use housing dollars to fill thevarious gaps in the budget for programs that could notpossibly boost Florida’s economy the way housing would.Investing housing dollars in housing provides an immediatereturn to the state in increased documentary stamp taxes, inaddition to the ripple effect of creating employment for theconstruction industry and all the other businesses relatedto the production and sale of affordable housing.

There is no “excess” ofSadowski trust fund monies.

Proponents of balancing the budget by raiding Florida’shousing trust funds assert that there is an “excess” ofhousing trust fund monies—“cash that has just beenaccumulating year after year”—implying that somehow thismoney was not needed or spent on affordable housing as itcould or should have been. The fact is that all the moniesin the housing trust funds could and would have been spenton affordable housing if the legislature had appropriatedthose monies. There has been an intentional withholding ofthe Sadowski monies to the detriment of our economy, ourworkforce, and our most vulnerable populations, includingthe elderly, veterans, and people with special needs.

The cap of the Sadowski Act trust funds will already sweepapproximately $183.6 million dollars for fiscal year ’07-’08and ’08-‘09 from housing programs to general revenue. TheFlorida Legislature needs to think well about financialinvestment in our state’s economy and use the balance ofhousing trust fund monies for housing.

Senator King Senator Geller Rep. Saunders

Repeal of Cap Bills filed in House and Senate - SenatorGeller and Senator King are co-sponsoring Repeal of theCap legislation, SB 74.

Representative Ron Saunders has the identical bill in theHouse, HB 5.


1. In 1992, the Florida Legislature established a dedicatedrevenue source for affordable housing along with creativeand highly accountable programs for the use of thosemonies, known as the William E. Sadowski AffordableHousing Act. The Sadowski Act state and local housingtrust funds have produced or preserved over 200,000 homesfor Floridians.

2. The Florida Legislature has closely scrutinized both thestate and local housing trust funds and Florida’s housingprograms. These reviews have shown that Sadowski Actmonies have been an unequivocal success in promotinghome ownership, building quality rental housing, leveragingpublic dollars with private investments, and providing aneconomic boost to Florida far in excess of the amount offunds appropriated for housing.

3. The Florida Constitution requires that all trust funds bereauthorized every four years. The state and local housingtrust funds were last reauthorized, by unanimous vote of thelegislature, in 2004. The trust funds must be reauthorizedduring the 2008 session.

4. Beginning July 1, 2007, an arbitrary cap of $243 million peryear was placed upon distributions from doc stamps to thehousing trust funds—$150-$300 million per year less thanthe dedicated revenue would have generated for housing inaccordance with its design.

5. Repeal of the cap will produce significant economicbenefits for Florida. For every $1 million of state funding,over $6.05 million of housing is built and/or sold, $10.36million of economic activity is generated, $4.05 million ofearnings/income are paid, 106 jobs are created, and almost$100,000 of sales tax is paid back to the State, directlyattributable to the purchase of construction materials.Funding at the ten-year average uncapped amount of $580million compared to the $243 million cap each year willproduce 11,184 more housing units, $1.77 billion more

economic activity, $693 million of additional income, 18,114more jobs, and $16.8 million more sales tax revenue.

6. The design of the funding for the trust funds was deliberatelytied to documentary tax revenues so that as real estate costsand population increases drove up doc stamp receipts, themonies available for housing would increase proportionately.

7. Repealing the cap does not tie the hands of thelegislature—if the funds are needed to balance thebudget they can be utilized for that purpose. In fact,the legislature HAS done this in the past, most recently inthe budget crisis that followed post 9-11 revenue shortfalls.

8. Between ongoing successful programs such as SHIP andSAIL, the new CWHIP and ELI Programs, and the everlooming need for funds for post-hurricane housing recovery,the legislature appropriated $393 to $443 million each ofthe past three years. Combined with increasing need toserve additional segments of the workforce, the need forhousing funding will far exceed the $500 million per yearthat would be distributed to the trust funds without the cap.

9. The impact of the cap was not felt in FY07-08, because thelegislature was able to appropriate trust fund balances thataccumulated from the time of a de facto cap beginning in2003, —thus allowing appropriation levels far in excess ofthe cap level. When the existing balances run out either thisyear or next, the combination of needs and current fundingcompared to available capped revenue is a train wreck inthe making.

10. Unlike many a crisis, Florida prepared for this one bycreating an effective housing funding system. TheHousing Trust Funds were designed to have more moneyavailable when more money was needed. Coupled withour innovative housing programs, we have enoughresources to address the housing crisis—but only if thetrust funds are reauthorized and the cap is repealed.

Florida’s Sadowski/Workforce Housing Coalition Calls for Repeal of the Cap on the Housing Trust Funds

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Page 5T H E F L O R I D A H O U S I N G C O A L I T I O N

The Affordable Housing Study Commissionselected the topic of Preservation in2004-2005 due in part to the Commission’sevaluation of strategies for housing extremely lowincome (“ELI”) households the preceding studyyear and in consideration of the significant focuson preservation throughout the country. Timingwas ideal for a comprehensive review given that theaffordability restrictions for thousands of rentalunits were due to expire in the coming years. Given themagnitude and importance of the topic, the Commissionchose to dedicate an additional year to discovery, eval-uation of programs and development of recommendations.This extended review culminated in the Commission’s 2006comprehensive strategy for preserving rental housing inFlorida.

THE EXTENT OF THE PROBLEM – THOUSANDS OFEXPIRING UNITS ON THE HORIZON: To develop effectiverecommendations that encourage preservation of multifamilyunits restricted for low income households, the Commissionstudied each of the programs that fund affordable

housing developments. These programs includeHUD, Rural Development, Florida HousingFinance Corporation and local programs whichserve households with incomes ranging frombelow 30% AMI up to 80% AMI. TheCommission estimates that over the next fiveyears, the affordability periods for 12,958 unitswill expire and over the next 10 years, theaffordability periods for 17,190 units will expire.

A cumulative total of 237,674 units are estimated toexpire over time.

Preservation of Affordable RentalHousing in the State of Florida

By Helen Hough Feinberg

ProjectedExpirations

15,70312,95817,1908,961

AffordabilityPeriods

Already ExpiredWithin 5 yearsWithin 10 yearsWithin 15 years

Cumulative

28,66145,85154,812

INVENTORY

Villa Maria is a 1924 building withclassic Mediterranean structure, and34 one-bedroom and studio unitsserving extremely low income elderly.This beautiful historic property sitsone block from the ocean in an urbansetting among upscale condominiums.

When Roberto Datorre, president ofthe Miami Beach CommunityDevelopment Corporation (MBCDC),first saw the Villa Maria Apartmentshe did not know the scope of the battlehe was about to encounter. Knowingthat this apartment complex wasworth preserving, Datorre used everymeans possible to keep Villa Mariafrom being demolished by the initialbuyer of the property, who plannedto construct a six-story luxurycondominium.


HOUSING NEWS NETWORK

BARRIERS TO PRESERVING AFFORDABLE HOUSING: TheCommission also examined the myriad of barriers topreserving affordable rental units, including:

• Financial Barriers – programs require low rents whichgenerate limited surplus funds to address maintenanceand capital needs issues; limited subsidy,complex rules and sponsoring agencieswith a multitude of rules and limitedflexibility discourage purchasers whodesire to maintain affordability.

• Information Barriers – preserva-tion strategies generally require buyerswith an intent to maintain affordabilityto take a proactive approach before an owner convertsunits to market or sells to a market purchaser.Information on owner strategies and existing fundinglayers is not readily available to assist in creating aviable and specific preservation strategy for a property.Furthermore, programs providing the subsidy that willbe part of any financing plan may not be available whenthe seller markets the property.

• Capacity Barriers – Non-profits and public housingauthorities have the mission to engage in preservationactivities but do not always have the financial resourcesor knowledge of the development process to effectivelyengage in preservation activities.

THE IMPORTANCE OF PRESERVING UNITS WITH PROJECT-BASED RENTAL ASSISTANCE: While the Study Commissionapplied a broad definition of “preservation” to considerany rental units acquired or rehabilitated with programs thatimpose affordable use restrictions, we quickly recognizedthe particular value of units with project-based rentalassistance. These units constitute some of the most

affordable rental housing in the state. The followingrepresent the number of units estimated to be available inthe State of Florida that offer rental assistance:

• Rural Development: 11,171 units• HUD Programs with rental assistance: 28,422

These units enjoy the benefit of significant federal subsidyfunding that will terminate if the units are converted tomarket rate. The units also serve a wide range of householdsincluding elderly, persons with disabilities, families andfarmworkers. Generally, tenants of a project with expiringrental assistance will receive a special “enhanced” voucher.However, some tenants have problems finding appropriateaffordable housing even with this voucher. Moreover, oncea tenant is no longer eligible under the program (for anyreason), the rental assistance is permanently lost and will notbe transferable to another person. This makes preserving

the actual unit important in ensuring the continuation of thesubsidy. Consider the potential loss in federal funding if a100 unit property with project based rental assistance islost to the affordable housing inventory through demolitionor conversion to market rate:

Housing ELI (extremely low-income) households is a veryexpensive proposition. Florida Housing FinanceCorporation Programs are required to fund $85,000 perunit to house ELI and the actual per unit cost issignificantly greater when all factors of the developmentfinancing are considered. Rehabilitating existing projectswith federal rental assistance can be much more costeffective, making it important to ensure that resources areavailable to sustain these development as safe, decent andaffordable housing.

SELECTED RECOMMENDATIONS: The Affordable HousingStudy Commission’s Final 2006 Report should be reviewedfor the complete list of preservation recommendations. Thefollowing represent a few key measures that the Commissionfelt would encourage preservation.

100 Units X $300 (Assumed Average Operating Subsidy) = $30,000 per month

$30,000 per month X 12 months = $360,000 annually

$360,000 annually X 20 years = $7,200,000 over 20 years

Present Value of Federal Rental Assistance = $4,129,171 at a PV Rate of 6.00%

43,830 units at risk by 2015

• Highest concentrations in 5 counties

• 75% of total in 13 counties

• Families and the elderly are most affected

• 120,000 Floridians (est.) affected

EXPIRING PROPERTIES 2007-2015:

• Florida Housing Finance Corporation shouldcreate a Preservation Set-Aside for 9% HousingCredits: The Commission deliberated extensivelyover this particular recommendation. At that time,Florida was the only statein the nation not prioritiz-ing preservation in itshousing credit program,by using a set aside,additional points orsome other form ofprioritization. Florida’slong standing strategyof encouraging new con-struction has served thestate well, but the timehad come to address theescalating loss of projectswith expiring subsidies.In the end, theCommission determined there was significant riskassociated with changing the existing point system–we would either over-compensate and disadvantagenew construction properties or under-compensateand not achieve the intended goal. The Commissionrecommended a set-aside in the competitive 9%housing tax credit program as the best solution. Thisapproach would likely result in a minimum number ofpreservation units being funded, as well as encouragean increase in preservation applications which mightenjoy alternative funding if 9% credits were not received.The Commission was pleased to see Florida Housingincorporate such a set aside in the Universal Cycle.

• The Florida Legislature should appropriate $25million for the creation of an affordable housingpreservation bridge loan program to be matchedby private lenders to create a program totaling aminimum of $50 million. This appropriationshould not supplant funding for existing afford-able housing programs. The Commission arrivedat this recommendation after noting a lack ofaffordable housing friendly bridge loan programsin the private sector, and hearing from theWisconsin Housing and Economic DevelopmentAuthority on the success of their bridge loanproduct. Some of the obstacles to usingprivate bridge loans for preserving affordablehousing include: Private loans are generally 75%-

80% of a property’s value before considering the costof additional rehabilitation; a private lender may notbe willing to underwrite 9% or 4% low income housingtax credits as “take-out” financing; and it is rare to find

a seller content to wait up to ayear while a prospective buyerapplies for funding throughthe lengthy universal cycle.The Commission believesthere is significant value in abridge loan program orientedtowards preservation, whichwould use a one-time appro-priation of state dollars toleverage significant privateand foundation sources for arevolving program. TheCommission was pleased tosee SB 1362 filed by SenatorFasano (R) to fund a bridge

loan program and we are hopeful that this proposedlegislation will be passed in the 2008 session.

• Full Funding Remains Critical: In closing, preser-vation of affordable housing cannot occur withoutavailability of subsidy from the State and LocalGovernment Housing Trust Funds. Full funding ofthe Trust funds and full utilization of funding isnecessary not only to preserve affordable units, but toensure progress towards the goal that all Floridianshave access to safe, decent and affordable housing asset forth in the Florida Statutes Chapter 420.0003.

For a copy of the Commission’s complete preservation strategy,as well as previous annual reports, please visit the StudyCommission’s website at www.floridahousing.org/AHSC.

HELEN HOUGH FEINBERG serves as Manager of the Housing Groupfor RBC Dain Rauscher. She has been responsible for structuring housingtransactions for state and local issuers totaling approximately $7 billionfor over 20 years. Helen has structured many types of mortgage-backedfinancings including open indenture single family issues, REMIC CMOs,tax-exempt and taxable refundings, mortgage portfolio sales, 501(c)(3)multi-family open indentures, as well as virtually every type of multi-familytransaction. Helen has a B.A. in economics and Spanish from Wake ForestUniversity, and has completed graduate work in finance at the University ofSouth Florida. She is a registered General Securities Representative and aregistered Municipal Securities Representative as well as a registeredMunicipal Securities Principal. Helen has served as a member of FannieMae’s Housing Impact Advisory Council and serves as a member of theFlorida Housing Coalition Advisory Council. She currently serves as thechair of the Affordable Housing Study Commission.


• Florida loses 2 units for every one it builds

• Preserving one unit costs 1/3 to 1/2 the cost ofbuilding one new unit

• Preservation can extend the useful life ofthousands of existing units in “good bones”buildings already paid for by taxpayer dollars

• Preservation prevents displacement of thousandsof low, very low and extremely low incomefamilies and individuals

WHY PRESERVATION MAKES SENSE


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Making the Case for Preservationwith Data

By Patricia Roset-Zuppa

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Preservation of the affordable housing stock hasbeen a major research focus for the Florida HousingData Clearinghouse at the Shimberg Center forAffordable Housing at the University of Florida. Thisfocus grew out of a mounting concern at the federal andstate level about the loss of units in the assisted housingstock, and the impact this has on residents and localcommunities. To underpin the anecdotal evidence ofproperties already lost and to enhance the understandingof properties at risk of loss, the Clearinghouse started aneffort to collect preservation-related data three years ago.In 2006, we developed a broader research agenda aroundthis topic and partnered with the Florida Housing FinanceCorporation to undertake a research project with supportfrom the John D. and Catherine T. MacArthur Foundation.The project has two major objectives: to improve theavailability of data at the national level and to enhanceFlorida’s capability to produce information that willcontribute to solutions to the housing supply challenges.

Preservation Defined andDefended

Preservation of assisted multifamily housing means bothmaintaining affordability for low income households foran extended period, and keeping these properties in goodphysical and financial condition. Assisted multifamilyproperties have finite periods of affordability under theterms of their subsidies and use restrictions. At the endof the period of affordability, when market rents can becharged, the housing will likely be lost to low incomefamilies unless other funding can be secured to keep itaffordable. Affordable housing developments can be atrisk of loss prior to maturity of a subsidized mortgage ifan owner decides to prepay the loan, which can be afinancially attractive option in a strong local market. Aproperty is also at risk if it faces large capital needs andrepairs, but lacks the reserves and cash flow to addressthese. This situation can lead to default and foreclosure.

NUMBER OF UNITS IN ASSISTED MULTIFAMILY PROPERTIES WITH AFFORDABILITY TERMINATION BY YEAR IN FLORIDA

Source: Florida Housing Data Clearinghouse, Shimberg Center for Affordable Housing (2007)



In Florida, nearly two out of three low income renterhouseholds pay more than 40 percent of their income forrent. Preservation is an important strategy to address theexisting and growing demand for affordable housing bylow-income families. While new construction efforts alsocontribute to the supply of affordable units, new construc-tion alone cannot catch up to the housing need and is oftennot as cost efficient as preservation of existing properties.

Florida’s Assisted HousingInventory

The cornerstone of our research has been the AssistedHousing Inventory (AHI) that is available on our website atflhousingdata.shimberg.ufl.edu/AHI_introduction.html.This is a database of multifamily properties in Florida thatare privately-owned and funded underprograms by the U.S. Department ofHousing and Urban Development(HUD), U.S. Department ofAgriculture Rural Development (RD),Florida Housing Finance Corporationand Local Housing FinanceAuthorities. AHI currently reports on23 housing programs and lists morethan 2,200 developments with over272,000 units. In addition to generaldevelopment data such as address,target population and housingprograms, the AHI holds preserva-tion-specific information such asexpiration year of funding or userestriction, type of ownership andapproximate year built.

Lost HUD-Assisted Properties

The preservation discussion has long focused on olderassisted HUD properties built during the 1960s and early1970s under the Section 221(d)(3) Below Market InterestRate and Section 236 programs. The earliest properties firstbecame eligible for prepayment in the 1980s and severalowners decided to convert to market rate housing at thattime. The preservation discussion was extended to theso-called newer assisted properties funded with HUDSection 8 project-based rental assistance and constructedbetween the mid 1970s and the early 1980s. Many of theseolder and newer HUD-assisted properties now not only havethe option to prepay the subsidized mortgage or opt-out of arental assistance contract, but are also in a state of physical

deterioration. In Florida, an estimated 5,800 units in theseHUD-assisted properties have already been lost to theaffordable housing stock as a result of mortgage prepaymentor rental assistance opt-out since the 1990s. This figureunderestimates the total number of HUD-assisted units lostto the affordable inventory, since it does not include unitslost to foreclosure and demolition.

Geographic Concentration ofAt-Risk Properties

A simplistic approach to assess the number of units atrisk of loss is to base the analysis only on the end dateof the subsidy or period of affordability. This analysis issomewhat complicated for subsidized properties withmore than one funding layer and multiple end dates,

which applies to more than half ofthe subsidized properties in AHI.To address this challenge, the enddate of the most restrictive fundingprogram was used. The 2007 datashow that the largest number ofunits are at risk during 2046-2055(63,774 units), followed by 2026-2035 (50,930 units) and 2007-2015(43,830 units). The majority ofunits at risk after 2025 are fundedby Florida Housing FinanceCorporation programs. Prior to2025, the majority of at-risk unitsare funded under HUD. Thisimplies that many extremely low-income households are at a highrisk of displacement in the next

two decades, since more than 76 percent of all HUDunits are estimated to serve this income group.

The immediate concern is for those units at risk to loseaffordability restrictions by 2015. Almost 50 percent ofthese units are concentrated in five counties: Miami-Dade,Duval, Hillsborough, Pinellas, and Orange. An additional25 percent of units at risk by 2015 are located in thefollowing eight counties: Palm Beach, Broward, Brevard,Escambia, Polk, Alachua, Lee, and Seminole.

Risk Profiles to TargetResources

The Assisted Housing Inventory is a useful tool for creatingnuanced risk profiles that, in turn, can inform policy

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In Florida, an estimated

5,800 units in these

HUD-assisted properties

have already been lost to

the affordable housing

stock as a result of

mortgage prepayment or

rental assistance opt-out

since the 1990s.


decisions about how to preserve affordable housing andwhich communities to target. We created two risk profilesof properties at risk by 2015, based on specific propertycharacteristics (instead of only considering the end ofthe subsidy restriction). The first risk profile identifiesproperties at high risk of conversion to market rate housing.The second risk profile determines which properties are athigh risk of deterioration and default.

The risk profile for conversion to market rate housing isbased on three parameters: ownership is for profit or limiteddividend, target population is family, and the project rentas a percentage of the Fair Market Rent is below 100percent. As found by a 2006 HUD study, these arecharacteristics of properties that prepaid or opted outof a rental assistance contract. It confirms the generalassumption that profit-motivated owners are driven byfinancial returns. If the project rent is lower than FairMarket Rent, the market offer opportunities to improvecash flow when converting to market rate housing. Ouranalysis identified 136 developments with 16,803 units at

risk of loss by 2015. Of these, atotal of 98 developments with10,499 units are exclusively fundedby HUD.

The risk profile for deteriorationand default is built on the followingparameters: ownership is non-profit, target population is family,and the approximate year built isprior to 1987. These characteristicsare deemed indicators of higherrisk of deterioration and default.The 2006 HUD study found thatthe majority of developments inforeclosure served families and hadlower physical condition scores.This risk profile also assumes thatthe risk of deterioration and defaultmostly affects non-profit entities,because of the lack of capitalreserves and limited access tocapital from other sources. Theanalysis identified 37 developmentswith 4,928 units at risk. Of these,a total of 25 developments with2,578 units are exclusively fundedby HUD.

Estimating the number of units at risk based on affordabilityexpiration dates and property characteristics is by nomeans an exact science that can predict owners’ decisions.Also, not every property identified to be at risk will be worthpreserving. But the judicious use of data can provide ageneral picture of the extent of the potential problem andthe opportunity to preserve much needed affordable housing.

The Florida Housing Data Clearinghouse is a joint project ofthe Shimberg Center for Affordable Housing at the Universityof Florida and the state of Florida through funding fromFlorida Housing Finance Corporation.

PATRICIA ROSET-ZUPPA works as a Research Analyst for theShimberg Center for Affordable Housing. She brings to her role morethan ten years of experience in research on urban planning issues andanalysis of development feasibility in the private and non-profit sector.She is also enrolled in the Ph.D. program of the College of Design,Construction and Planning at the University of Florida. She can bereached at [email protected].

Risk Profile 1Expiring Multifamily Rental Units

“AT RISK OF CONVERSION” 2007-2015

01 to 100101 to 250251 to 750751 to 1,5001,501 to 3,474

Total Units at Risk for Conversion 2007 - 2015

Data Source: Shimberg Center for Affordable Housing, University of Florida, 2007Notes: 1) Risk of conversion for units assisted through local, state and federal housing programs is based on: expiration of affordability between2007 and 2015, ownership is for-profit/limited dividend/‘other’, target population is family, and HUD project rent to Fair Market Rent percentageis below 100 percent. 2) This risk profile is an assessment of risk developed by the Shimberg Center for Affordable Housing based on available data.The risk profile is a general indicator of heightened risk that a property may leave the affordable housing stock.

“AT RISK OF CONVERSION”

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The Foreclosure Freefallin Florida: An Affordable

Housing PerspectiveBy Gladys Schneider

Florida Housing Coalition

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Introduction

It has been called a “tsunami of foreclosure”nationwide and Florida is among five states atthe epicenter. Expected to crest in 2008-09, theworst is yet to come with most experts blaming thecrisis on weakening the economy domestically aswell as negatively affecting institutional trading andthe international banking industry. It is estimatedthat over two million homes in America will go into fore-closure by 2008-09. It seemed like a fairy tale as Florida’shomeowners and real estate investors watched home pricesskyrocket from 2003 to 2006. Construction was boomingand lines formed for pre-sales at condominiums andsubdivisions. For homeowners, their equity ballooned,causing many to treat their homes as ATM machines,drawing out cash for home improvements, investing insecond homes, and consumer spending. New homeownersjumped into the game, able to obtain financing from hybridtype mortgages with adjustable rates. Investors played aflipping game, buying homes with equity only mortgages,expecting to sell at a profit a few weeks or months later asvalues continued to spiral upward. Websites such aswww.condoflip.com flaunted the reckless market wherehomes were purchased sight unseen by investors usingonline mortgage and real estate products. Vacant landwas also gobbled up with most vacant lots in the hugepre-platted subdivisions of the 1970’s being traded at leastonce during the 2003-2006 period.

Financing for the real estate bubble came from a favorablecredit market. Interest rates were low which made purchas-ing more attractive. Mortgage backed securities increased

the secondary market for mortgages, providingmore credit. Lenders were encouraged to belenient with buyers, overlooking their actualincome and ability to repay. The subprimemortgage market, serving those with lower creditrating and with looser lending criteria, offeredexotic products, such as the 2/28 adjustable ratemortgage, Hybrid Arms and Option Arms. A lowfixed teaser rate was in effect for the first two years,

which was reset to a much higher amount that increasedmonthly payments by over 30 percent. Prepaymentpenalties of up to 15 percent of the loan principal were ineffect during the low interest period, severely discouraging arefinance to avoid the interest rate reset. The predatorynature of these loans led them to buyers with poor credit andlower ability to repay once the rates reset. According to theCenter for Responsible Lending, there is a preponderance ofsubprime and predatory loans among minority communitiesand within inner city areas.

The high volume of these mortgages began to reset in 2006and 2007, leaving thousands of buyers in homes they wereunable to pay for or sell. The perfect storm occurred whenhome appreciation ground to a halt and lenders tightenedcredit. At the same time, the construction boom flooded themarket with vacant inventory, dooming the upward price ofhomes and limiting the ability to sell. Since the loans hadalready been sold into the secondary market, there were nooriginal lenders to negotiate with and foreclosure ensued.

The negative effects of the foreclosure crisis carry over intomany sectors. Local governments will see a decline in thetax base as values fall and economic production will suffer


due to construction, spending andemployment slowdowns. InFlorida, where housing starts havefallen from 272,000 in 2005 to just90,000 in 2008, the potentialchange in property taxes will be aprojected loss of $589 million.State sales taxes will be reduced by$148 million or more. On a locallevel, neighborhoods that saw themost speculation will suffer withempty homes boarded up with forsale, for rent and public noticesigns dotting the streetscape. Theclustering of foreclosures leads tofurther decline in property valuesand damages the quality of neigh-borhoods. Unemployment has beengradually increasing but the trendis becoming clearly evident withthe precipitous drop in construc-tion. Even school districts are see-ing a drop in enrollment as familiesrelocate to find work. (GlobalInsight, The Real Estate Bubble)

The NationalResponse.

The national response began onSeptember 20, 2007, when theFederal Reserve Chairman, BenBernanke testified before theHouse of RepresentativesCommittee on Financial Serviceson subprime mortgage lending andmitigating foreclosures. In hisstatement he urged cooperationamong holders of mortgage backedsecurities and loan servicers, aswell as federal action to encouragethe Federal HousingAdministration to “collaborate withthe private sector to expedite therefinancing of creditworthy sub-prime borrowers facing largeresets.” To prevent inflation andloosen credit, the Fed has mademinor reductions in the prime inter-

est rate. (Testimony, Chairman Ben S.Bernanke, Subprime MortgageLending and MitigatingForeclosures, Before theCommittee on Financial Services,U.S. House of Representatives,September 20, 2007).

The Joint Economic Committeeof the U.S. Congress prepared areport in October, 2007 with abroad overview of the problem withspecific recommendations. Thestudy clearly showed that the sub-prime mortgages were the source ofthe foreclosure problem. Between1998 and 2007, prime fixed ratemortgages had a fairly steady rateof foreclosure of two percent.Adjustable rate prime mortgageshad a slightly higher rate of 4percent. The subprime fixed ratemortgages fluctuated from 8 per-cent to 15 percent and down to 10percent by 2007. But the subprimeadjustable rate mortgage foreclosurerate grew steadily upward from 14to 16 percent. The report notedthat in Florida there were 708,195outstanding subprime loans with athird quarter estimate of 157,341subprime foreclosures, or 22percent. The fact that the majorityof resets started in 2007 and 2008indicates that there will be an evenhigher percentage of foreclosureamong this loan category. By the3rd quarter the report estimated thatthe cumulative loss in propertyvalue in Florida was over $12billion and the cumulative loss inproperty taxes was $89 million.

The report recommendationsinclude increased funding forcounseling, statutory reform andstreamlined conversion to FHAloans. An important reform thataffordable housing providers


• Massachusetts passed a 60-90 day delayon foreclosures to allow a review forpredatory or unfair treatment. Thestate also entered into an agreementwith the largest subprime lender in thestate to immediately stop foreclosuresuntil the Attorney General is providedwith documentation. The state has alsobanned predatory foreclosure rescueschemes. The Boston Bar is providingtraining for pro bono lawyers willing toassist homeowners facing foreclosure.The Massachusetts legislation is specifi-cally restricted to foreclosures of pri-mary residences where the mortgagorowns no other real estate.

• In New York, a one year moratoriumhas been proposed on court orderedforeclosures.

• Buffalo, NY is requiring banks holdingforeclosed properties to maintainthem to protect neighborhoodappearance and property values.

• In Ohio, local sheriffs have been askedto give homeowners a 60 day foreclo-sure abatement on auctioning thehomes they occupy. A similar effortallows homeowners to remain in theirhomes as renters or tenants at will.This prevents clusters of vacant homesthat become a public safety hazard.

• The City of Baltimore, filed suit againstWells Fargo Bank for predatory anddiscriminatory lending. The city claimsthat the bank was steering minorityhome buyers into high-cost subprimeloans.

• In Cleveland, the city filed against 21banks claiming that subprime lendingin inner city neighborhoods has createda nuisance and damaged propertyvalues and city tax collections.


consider a standard practice is that the federal governmentshould require lenders to determine that the borrower hasthe ability to repay a loan at the fully-indexed rate andassume fully amortized payments. (The SubPrime LendingCrisis: The Economic Impact on Wealth, Property Valuesand Tax Revenues, and How We Got Here. Report andRecommendations by the Majority Staff of the JointEconomic Committee. Sen. Charles E. Schumer and Rep.Carolyn B. Maloney. October, 2007.)

The U.S. Treasury respondedwith a three part plan tocounter the expected 1.8million interest rate resetsamong subprime mortgages.The first part is mortgagecounseling through the HOPENOW alliance to avoidpreventable foreclosures.The HOPE NOW alliance hasgrown to include as members90 percent of the subprimeservicing market includingthe major non-profit mortgage counseling organizations,trade associations and investors.

Second, the mortgage industry is encouraged to developnew products that will enable people to stay in their homes.An example already implemented is the FHASecureprogram which allows eligible borrowers to refinance intoFHA loans. Congress passed the Mortgage ForgivenessDebt Relief Act, which prevents borrowers who receive areduction in their interest rate and debt to avoid having topay income taxes on the relief.

Third, a systematic streamlining process is envisioned thatwill help borrowers quickly navigate a workout solutionthat follows a loss mitigation strategy for the mortgageindustry. This streamlining walks a fine line withabrogating the contracts among investors in mortgagebacked securities, who use a strategy for mortgagemodifications provided by the American SecuritizationForum. This system is a myriad of complications bothoperationally and financially as loan originators must belocated to help fast track troubled homeowners intorefinancing, rate freezes and term modifications.(Remarks by Treasury Secretary Henry M. Paulson, Jr. onHousing and Capital Markets before the New York Societyof Securities Analysts, January 7, 2008)

The plan has been criticized as “too little, too late,”particularly by the Center for Responsible Lending. TheCRL estimates that only 7% of holders of subprimemortgages will qualify for the program. Hundreds ofthousands of 2/28 ARM’s made in 2005 will have alreadyreset and will not be eligible for a modification. Also,those who have already fallen behind in their paymentswill not qualify as the program is only for those loans notin delinquency. Finally, the plan is in effect voluntary.

Lenders and services havehad the opportunity to modifymortgages yet according to aMoody’s Investor Servicesstudy, only 1 percent ofresetting subprime mortgageshad been modified throughJuly of 2007. There is little toguarantee that those borrowerswho receive modifications willnot lose the equity in theirhomes due to pre-paymentpenalties or be put intoanother bad loan. There

remains the business as usual incentive for servicers,lawyers and lenders to reap the profitable fees generatedfrom the foreclosure process. (Statement of Center forResponsible Lending in Response to President Bush'sPlan to Address Foreclosure Crisis, December 6, 2007)

The Florida Experience.

Florida’s foreclosure rate has landed it second in the nation.Florida has experienced foreclosure filings for over 200,000properties in 2007, according to Realtytrac, a company thatpublishes the largest database of foreclosure properties.Realtytrac, the foreclosure data provider for the Wall StreetJournal’s Real Estate Journal, estimates that when year endactivity is collected, it is likely that 14,000 homeowners willhave lost their Florida homes to foreclosure sales. Florida’sforeclosure rate ranks it second highest in the nation,based on November activity, with one foreclosure filing forevery 282 households. In comparison, the U.S. rate wasone foreclosure for every 555 households.

How has this Affected theAffordable Housing Industry

Two questions emerge for the Florida situation. How manyof the foreclosures are for non-homesteaded, that is investorowned properties? And to what extent are the foreclosures

HOW FLORIDA HOUSING PROGRAMSBUCK THE FORECLOSURE TREND

Lee County Housing Development Corporation hasbuilt over 200 homes for very low and low incomebuyers. Applicants must complete a homebuyertraining course plus undergo any credit rebuild-ing needed to qualify for a first mortgage from afinancial institution. All loans are fixed interestwith reduced closing costs. Foreclosure ratesamong these homeowners is almost nonexistent.



affecting subsidizedhomes- properties pur-chased with some type ofprogram assistance suchas SHIP, HOME, orHOP? The use of bestpractices among SHIPand other affordablesubsidized housingincluding homebuyercounseling and the useof prime, fixed ratemortgages protectedthese homeowners. Datafrom some areas indicatethat investor propertiesare the majority shareof the foreclosures. Forexample, of the 1,441foreclosures filed in LeeCounty in December,2007, 433, or 31 percent,were for primary, home-steaded residences. Thisdoesn’t lessen the painfullosses experienced bythose households wholose their homes. (News-Press, January 9, 2008)

During the bubble, resi-dential prices increasedover 80 percent in Floridawhile incomes remainedrelatively flat. Florida’saffordable housingproviders watched landcosts spin out of reachwhile at the same timepreviously subsidizedhomes were sold off asbuyers cashed in on thebounty. While subsidieswere repaid and recap-tured, the returns were nolonger adequate to subsi-dize new buyers. Manycommunities resorted toshared equity mortgages

and community landtrust models to preservethe affordable housinginventory.

Foreclosure rate increasesamong SHIP subsidizedhomes is not expected tomimic the national trend.Most first mortgageswith SHIP assistancehave fixed interest ratesand are not part of thesubprime market. Thepre-purchase homebuyercounseling process thatis commonplace with theSHIP program gives theSHIP homebuyer abetter understanding ofmortgage responsibilities.

Conclusion

While foreclosure isalways a reality in thehomeownership busi-ness, the typical causesare unexpected medicalexpenses or loss ofemployment. Just asFlorida has weathered itsshare of natural disas-ters, it will recover fromthe subprime mortgagecrisis eventually and withsignificant intervention.The good news is thatthe assisted inventory isminimally affected, dueto the best practices fol-lowed by the state’saffordable housingproviders, both publicand private.

"Foreclosure calls to ushave skyrocketed in justthree months. We arenow getting up to 50 newcalls a day from familiesfacing foreclosure. Justshy of 100% of those callsare from families we didnot counsel or train orfinance. In most cases,when a family is properlytrained, counseled, andfinanced, they do not gointo default. The bestforeclosure preventioninitiative is pre-purchasetraining and counseling.Our comprehensive home-ownership services nowinclude foreclosure inter-vention clinics gearedtoward quick collection offamily data for negotiationwith the lender."

Arden ShankExecutive Director & President

Neighborhood Housing Services

"Like most housing counselingagencies we have seen amarked increase in foreclo-sure clients from 2006 to2007. We have experienceda 222% increase during thattime period (148 foreclosureclients in 2006, 328 in2007). The majority, if notall of these homeownershave not had the benefitof pre-purchase counselingor first time homebuyereducation. According to ourfigures, the foreclosureclients that have receivedeither homebuyer educationor pre-purchase counselingis less than 1% of our totalforeclosure clients. Thisstatistic validates theeffectiveness of pre-purchaseeducation and counseling.Since the inception of ourforeclosure program we haveprovided services to 1,168area residents."

Gregg SchwartzPresident & CEO, Tampa Bay CDC

HL ike HomebuyerC o u n s e l i n g ,F o r e c l o s u r eCounseling requiresone-on-one relation-ships that require trustand confidence in thecounselor, the familyin foreclosure and theprocess. Foreclosurecounselors are seen bylenders as facilitatorsto mitigate losses,while buyers andowners see the counselor as an advocate. Counselors mustdesign a plan that achieves the objective of the ownerbased on their willingness and capability. The counselorestablishes a course of action with specific tasks to befollowed. Knowledge of the servicing practices, foreclosurelaws and options are essential for the counselor. Thecounselor must start by evaluating the situation to determinewhere in the process a delinquency or default might be.Since Florida requires a judicial process for the foreclosureof a real estate mortgage, the counselor needs to understandthe timeframe and procedures involved.

The foreclosure counselor will be familiar with the causesof delinquency. These include divorce, marital problems,or the death of a family member. Job loss or reduction inincome can trigger foreclosure as well as a major illness andmedical bills. Other causes include excessive financial

obligations, poor moneymanagement, unex-pected repairs orother problems suchas substance abuse.The consequences offoreclosure are dire:the loss of shelter,loss of credit, extremestress on the family,and unexpected taxconsequences. Thecounselor mustevaluate the financial

picture and pinpoint the time constraints with regard to latepayments and reinstatement. The homeowner needs to begiven realistic advice and to understand if the problem iscurable or not.

In working with the lender or servicer, the counselor willbe able to determine if the property should be sold andwhat type of sale. Other options include a deed in lieuof foreclosure or a short sale. All of this is based on thefinancial condition of the owner.

The role of the counselor will be greater with the systematicstreamlining of mortgage modifications proposed by the U.S.Treasury. If the loan servicer is willing and the originator ofthe mortgage can be located, there is a complex plan formodifying mortgages. This will be advanced territory forthe state’s mortgage counselors.


H

Training Foreclosure CounselorsBy Cora Fulmore

Cora Fulmore, President of the Mortgage and Credit Center and Florida HousingCoalition Board Member, provides homebuyer counseling and foreclosure preventiontraining with the Florida Housing Coalition.

The next Foreclosure Prevention Workshop offered by the Florida HousingCoalition will be on April 1, 2008 at the Crowne Plaza Hotel inWest Palm Beach.

For those working toward the joint homebuyer counseling certification from and the FloridaHousing Coalition and NeighborWorks, attendance at this workshop will serve as one of therequired courses for that certification.

This workshop will address:• Foreclosure prevention through best practices for homebuyer counseling, underwriting, and

subordination policies, so that barring unexpected illnesses or loss of employment, there wouldbe no foreclosure.

• Foreclosure intervention and the foreclosure counselor’s role, for those rare instances whenassisted housing is in trouble, and for the all too common instances when those who did nothave the benefit of affordable housing assistance, entered into the sub-prime mortgage market.

• Changes to the credit market that will affect future low income affordable housing buyers.

Who Should Attend:

There is no fee for this training. Go on-line www.flhousing.org or Call 1-800-677-4548to register.

* Housing Counseling Providers* Community Lenders

* Local Government Housing Administrators* Nonprofit Affordable Housing Developers

Our annual conference would not be possible without our Partners for Better Housing at all levels. We especially recognize our

THANK YOU

PLATINUM SPONSORSBANK OF AMERICA • CITIBANK • NATIONAL CITY • WACHOVIA • WASHINGTON MUTUAL

Community Land Trust InstituteNetworking Reception for

Community Land Trusts

FEATURING State of the StateAddress by Tom Pelham,Secretary, FloridaDepartment ofCommunityAffairs

andSteve Auger,ExecutiveDirector, FloridaHousing FinanceCorporation

GREEN HOUSING TRACKBuilding green is an integral component to buildingaffordable. The 2008 conference will highlight GreenHousing with an entire track devoted to what it meansto build green, providing practical guidance from thecost benefit analysis and financing of green housing towhat strategies and products make the most sense.Workshops will feature speakers from Florida andaround the nation who can model best practices fromtheir own experience.

PUBLIC POLICY PLENARYNational and state experts engage in a lively discussionabout the new environment for affordable housing,including what effect the market rate housing slumphas on affordable housing, climate change and greenhousing, and what our industry should be doing to moveaffordable housing to the forefront during this time ofbudget deficit.

....AND DOZENS OF WORKSHOPSESSIONS COVERING NUTS ANDBOLTS AND CUTTING EDGEAFFORDABLE HOUSINGISSUES.

SEPTEMBER 15-17TH, 2008SEPTEMBER 15-17TH, 2008

The Florida Housing Coalition’s 21st Statewide Annual Conference

page 16 T H E F L O R I D A H O U S I N G C O A L I T I O N

In addition to our traditional expo showcasing a variety of financial resources foraffordable housing, we will have a green expo. Contact the Florida HousingCoalition at 850/878/4219 if you are interested in reserving an exhibit space.

GOLD SPONSORSCredit Union Housing Partners, LLC. • FHL Bank of Atlanta • Progress Energy of Florida • Regions • SunTrust

S AV E T H E D AT ES AV E T H E D AT E


HJust one year ago in Florida, there were 17community land trusts and the formationof 12 more were being considered byvarious local governments or housing nonprofitorganizations. This year, 24 community landtrusts are in operation and 10 are in exploratorystages. The Florida Community Land TrustInstitute and the Florida Housing Coalition havebeen assisting both established and exploratory CommunityLand Trusts around the state, with particular emphasis onthose issues raised at the Florida CLT caucus.

At the Florida Community Land Trust Caucus, sponsored bySunTrust and held at the Florida Housing Coalition’s annualconference last September, participants addressed a varietyof issues of common concern. The most pressing was the advalorem tax issue, which is presently being re-addressed bythe 2008 legislature (see sidebar on page 23). The caucusparticipants also touched on the critical need for CLThomebuyer education, sufficient operating funding for thecommunity land trust, and the know-how to set pricepoints. At the caucus, we announced the launch of theFlorida CLT blog, hosted by the Florida Community LandTrust Institute. This site is an opportunity for communityland trusts and the curious to post questions and commentsas well as link to valuable sites and resources.

Community Land TrustsCoordinated with

Inclusionary HousingPrograms

Community land trusts were formed andconsidered for many reasons. Over the pastthree years CLTs were contemplated in

Florida as a response to out of control property valueinflation. They were also viewed as an adjunct toinclusionary housing ordinances under considerationaround the state. One of the most important rationalesfor the community land trust model is to provide apermanent inventory of affordable housing.

Many Florida communities are examining inclusionaryhousing ordinances not only to create a more balancedshare of affordable housing, but also to create a sustainableinventory. Several communities, including the City ofDestin, Palm Beach County, Martin County, and St. LucieCounty view the community land trust as the receiving endof housing units that are mandated under some type of landuse requirement for the production of affordable housingunits. In Monroe County, funds that have been generatedfrom a fee in lieu provision have been transferred to theMiddle Keys Community Land Trust to offset impact fees forthe Woods Corner Plantation CLT project. In Lee County,linkage fees have been considered for both residential andcommercial projects, with the funds used for CLT activities,including land acquisition.

Community Land Trusts:On the Move in Florida

By Gladys SchneiderFlorida Housing Coalition

How to use the blog

Log on to our website, www.flhousing.org and click onNonprofit Developer Tools. Scroll down to theCommunity Land Trust Blog link which will take you tofloridacltinstitute.blogspot.com.

One of the 10 homesbuilt for and sold bythe Hannibal SquareCommunity LandTrust in Winter Park;highlighted in theSummer Conference06’ issue of theHousing NewsNetwork Journal.

Continued on page 18



Resale Formulas Favored inFlorida: Appraisal, Index, and

Hybrids

As any community land trust enthusiast has learned, thedevelopment of the ground lease is an extensive exercisein legal, economic, and organizational planning. Thisdocument provides for the renewable 99 year term for theland beneath the affordable unit. The resale formulacontains the specific language required to establish theshared equity position of the land trust. This identifies howmuch the community land trust homebuyer can expect toreceive upon resale of the home. An informal survey ofFlorida’s community land trusts indicates that most employan appraisal method to establish the proportionate share ofthe appreciation that will belong to the home seller. Manyutilize a simple 25 percent of appreciation share. That is,the home is appraised at initial purchase and again at thetime of resale. If the initial appraisal of the improvedportion of the home is for example, $150,000, and bythe time of the resale, the appraisal is $200,000, thenthe appreciation amount is $50,000. The seller would beentitled to 25 percent of $50,000, which is $12,500. Thepurchase proceeds will also cover the first mortgage balanceand in some optional cases the down payment and equity ofthe buyer. Several CLTs who utilize the appraisal methodallow for an increasing share the longer the home is owned.

For example, in Citrus County, the share is 25 percent forthe first five years. After that, the share increases annuallyuntil it is capped at 50 percent after 10 years of ownership.This method encourages stability and rewards the CLThomeowner for longevity in the home. An alternative that isless frequent is the index method. An index factor, forexample, income level or CPI is applied on an annual basis.This method encourages long-term ownership but since theamount is basically guaranteed, there must be incentivesbuilt in to ensure that the homes are properly maintained. Inone CLT, an index method of 3 percent annually isemployed, which caps in ten years. This will encourageshort term stability and encourages residents to move intoother housing choices after a decade.

Publicly Owned LandSubleased to Community

Land Trusts

Not all land that is developed for affordable housing mustbe owned by the CLT. In fact, land can be owned by a localgovernment, leased to a CLT, who then subleases the landto its lower income buyers. While this might sound like“public housing,” it is in effect a great way to ensurepermanent affordability and tax exempt status for theground portion of the property.

SOUTHWEST FLORIDA

CHARLOTTE COUNTY: PEACE RIVER COMMUNITYHOUSING TRUST. In just over one year, the land trust usedHurricane Housing Recovery and Homeownership Pool(HOP) funds to purchase land and build 10 homes inPunta Gorda and Charlotte County. Buyers tend to havevery low or low incomes and did not income qualify formore costly housing solutions.

LEE COUNTY HOUSING DEVELOPMENT CORPORATION/CLT. Using funding from the Florida Housing FinanceCorporation CLT demonstration program, the CLT ispreparing to close on the first of seven homes in FortMyers. Partners also include Lee County SHIP,Homeownership Pool (HOP), and the City of Fort Myers

SHIP. These scattered site single family homes will servebuyers with very low to low income ranges with firstmortgages of approximately $52,000.

C L T S T O R I E S F R O M A R O U N D T H E S T A T EC L T S T O R I E S F R O M A R O U N D T H E S T A T E

Charlotte County puts community in community land trust.

SARASOTA COMMUNITY HOUSING TRUST. The CHT hascompleted 10 homes and is working on development plansfor 82 new townhomes and condominiums in threelocations in downtown Sarasota. Two of the projects will belocated on County-owned land, the third on City-ownedland. The City and County have offered to assist withpredevelopment expenses. Two of the projects are fundedby the CWHIP program. The CHT also provides homebuyertraining and credit counseling. The CHT works with localhousing providers such as Goodhomes of Manasota andHabitat for Humanity.

SOUTH FLORIDA

MIDDLE KEYS COMMUNITY LAND TRUST. Recentlyhonored as one of the area’s “Unsung Heroes” by theCommunity Foundation of the Florida Keys, the land trustis completing a 16 unit complex called Woods Corner inIslamorada. Part of the impact fees on this project arebeing offset by a transfer from Monroe County ofinclusionary housing fee proceeds in the amount of$53,000. Woods Corner is also a “green” communityfor low and moderate income households with units pricedfrom $130,000 to $190,000. Partners in the Woods Cornerproject include the Village of Islamorada, which donatedthe land, the Florida Housing Finance Corporation (HOME),and Monroe County (SHIP). When Woods Corner iscompleted, the land trust will have constructed 24homeownership units. In addition, they own and managean affordable rental property with 14 units.

HABITAT FOR HUMANITY OF KEY WEST AND THE LOWERKEYS. Habitat uses the CLT model for its homes and hasjust been awarded a 99 year lease on land and is working ona similar arrangement made last year on two tracts thatwould result in 12 and 16 homes.

BAHAMA CONCH VILLAGE COMMUNITY LAND TRUST, KEYWEST. Florida’s oldest CLT, this organization was recentlyawarded a 99 year lease from the City of Key West todevelop 6.6 acres of land for 60-70 units of affordablehousing and other mixed uses. The CLT has completed 7out of 15 single family homes plus owns and manages avariety of apartments and single room occupancy units inthe village at the heart of old Key West.


Middle Keys Community Land Trust Woods Corner underconstruction.

Habitat for Humanity Community Land Trust Triplex

Habitat for Humanity Community Land Trust Duplex


SOUTHEAST FLORIDA

COMMUNITY LAND TRUST OF PALM BEACH COUNTY, INC.This CLT has an agreement with Palm Beach County foroperations funding and has hired its first executivedirector, Cindee LaCourse-Blum. The CLT is planning aboard retreat and has asked the Florida Housing Coalitionto facilitate the meeting. The CLT of Palm Beach isseeking opportunities for land trust projects throughout thecounty and will be in a good position to manage propertiesdeveloped pursuant to Palm Beach County’s inclusionaryhousing ordinance.

NORTHWOOD RENAISSANCE CLT. This neighborhoodbased CLT is completing 14 single family homes in WestPalm Beach. This organization has a well roundedbank of activities including economic development andneighborhood work. Its housing programs includemultifamily ownership and scattered site infill housing.There is a monthly CLT orientation meeting for prospectivebuyers to learn about the program.

DELRAY BEACH COMMUNITY LAND TRUST

2007 was been a great year for the Delray Beach CommunityLand Trust! We achieved a level of success that exceededeveryone’s expectations. The tremendous level of support thatwe have received from all corners of the community is theprimary reason for all of our accomplishments during oursecond full year of operation. The City of Delray Beach andthe Community Redevelopment Agency have been the primarysponsors of the DBCLT, providing land, financing for homeconstruction and acquisition, and technical support. Ourmembership ranks swelled to over 450 members this year, andreflects the wonderful diversity of the City of Delray Beach.

The DBCLT has received a total of 46 single family lots fromthe CRA and the City. Twenty-one new homes have beenconstructed to date, and another 16 homes are currentlyunder construction. Over 200 individuals and familieshave applied for DBCLT home ownership opportunities, sinceour inception and we have been able to secure mortgagecommitments for a large percentage of those families. Wecontinue to provide counseling and support to the rest ofthe families that applied as they pursue the dream ofhome ownership.

Joseph E. GrayExecutive Director

Delray Beach Community Land Trust

Delray Beach CLThouse warming.

621 32nd Street: recently completed Northwood Renaissance CLThome in West Palm Beach.

Lafrance Sr. ApartmentsGrand Opening- aDelray Beach CRAproperty managed bythe Delray BeachCommunity Land Trust.

HOUSING PARTNERSHIP, INC. This Palm Beach Countyorganization is using funds provided through the FloridaHousing Finance Corporation CLT demonstration loanproject for ten new homes in Jupiter. Four of the 10homes have now closed.

THE COALITION FOR ATTAINABLE HOMES, INC., INDIANRIVER COUNTY, will use the community land trustmodel to work with Indian River County as well asmunicipalities to use surplus land for affordable housing.The organization is researching multiple opportunities forsingle family land trust ownership as well as town homesand condos. The Coalition for Attainable Homes is abroad representation of lenders, service providers andbusinesses including real estate. The Florida HousingCoalition recently provided technical assistance on amixed use project in the community of Gifford thatwould provide 14 CLT units on site with a commercialgrocery and office facility. The CLT hopes to work withprivate sector developers to fulfill affordable housingmitigation requirements.

NORTHEAST FLORIDA

ESCAMBIA COUNTY COMMUNITY LAND TRUST. The landtrust has a variety of activities including housing, bothowner and rental, education- life skills and credit counseling,and child care. These ambitious tasks form the organiza-tion’s mission to build and strengthen the community inPensacola and Escambia County. The CLT has purchaseda 144 unit apartment building used for rental housing andoperating support. The organization has acquired 10parcels of land totaling 9 acres for future housing andcommunity development. Ten families are in the processfor homeownership.

FRANKLIN COUNTY HOUSING COALITION. This is ahousing organization hoping to use the CLT ground leasemodel to provide housing for lower income families. As acoalition, the organization is working in a grass rootsmanner. The City of Carabelle recently donated two lots,one of which will have a home built by Habitat for Humanity.



The Alphabet Street CLT is a program of Adopt-A-Family and I am excited to report that we sold ourfirst house in May of 2007. Our CLT is a neighbor-hood based CLT that has received support from theCity of Lake Worth, The Lake Worth CommunityRedevelopment Agency as well as from the TropicalRidge Neighborhood Association. Cristina andRigoberto Araujo overcame tremendous odds to maketheir dream of home ownership a reality. The Araujo'swere able to purchase the home with a mortgageamount just under $100,000 - truly affordablehousing. Since purchasing the home Cristina hasbeen selected to serve as the Secretary of the TropicalRidge Neighborhood Association and they recentlywere awarded the coveted "Tropical Ridge Yard of theMonth." (the sign in the photo).

Matt Constantine, Director of Housing for Adopt-A-Family

of the Palm Beaches, Inc.

TheAraujo's

and theirnew home.

THE ALPHABET STREET CLT


CENTRAL FLORIDA

WESTSHORE ALLIANCE COMMUNITY DEVELOPMENTCORPORATION. This project is a CWHIP participant andwill produce 57 Community Land Trust town homes inTampa. Along with the Florida Housing FinanceCorporation, partners include Neighborhood LendingPartners, and the Federal Home Loan Bank. The townhous-es will sell for $150,000 to $160,000 with down paymentassistance from the City of Tampa.

PINELLAS COUNTY. The Housing Finance Agency ofPinellas County has established a land trust programutilizing the 99 year ground lease for use with its forand nonprofit partners for a variety of owner or rentaldevelopments.

FLORIDA LOW INCOME HOUSING ASSOCIATES, INC.CITRUS COUNTY. This project involved the purchase of 10existing homes from a builder utilizing funding from theFlorida Housing Finance Corporation CLT demonstration.The homes were resold to buyers in the low to very low incomerange with a below market interest rate of 2 or 3 percent.

These homes have been closed and occupied as land trusthomes. This project is an example of how to use the currentmarket downturn to increase the supply of housing that ispermanently affordable.

IN SUPPORT OF CLT SUCCESS

As communities in Florida continue to develop and usecommunity land trusts as an integral part of their continuumof housing, we will continue to provide assistance, withparticular attention to the following:

H Community Land Trust homebuyer counseling.In addition to the counseling that all first time homebuyers must have, it is essential that specializedtraining be available to ensure that homebuyersunderstand the differences between fee simpleownership and the restrictions on ownership presentin the ground lease. It is also important to providemarketing materials that clearly differentiate betweenland trust housing and market rate housing.

GENERAL HOME DEVELOPMENT, Two projects as they relate to Community Land Trusts

Our first is with Workforce Housing Ventures, a longrunning non profit serving both Pasco and PinellasCounty. We are currently in the works for a number ofNew Homes with this partnership, utilizing the CLTformulas that were taught and discussed during theworkshops offered by the Florida Housing Coalition.The CLT formula, combined with our attractivelydesigned, energy efficient homes makes the opportunityof affordable units a reality.

Another project is with St. Petersburg NeighborhoodHousing Services. Having worked with SPNHS overthe years they turned to GHD for our guidance andresources, helping them secure the 10 lots for theirCLT. SPNHS needed not only the backing to securethese lots but the builder who could construct andcarry this project.

We are quite excited to be a part of these projects aswe see this as a start to the solution in ever risinghome costs.

Jerome Hendrickson GHD of Pinellas, Inc.

H Structuring subsidies for CLT units. Sincesubsidies are often needed for both the buyer and theland portion of the project, it is important to ensure thatfunding requirements are met. For example, if SHIPfunds are to be used for land acquisition, it is importantthat the jurisdiction’s Local Housing Assistance Planallow for subsidy to remain with the property througha series of potential income eligible buyers. Whensubsidy is provided to the buyer for the improvement, itis important that resale formulas account for either therepayment of the subsidy amount or its re-assignment tothe new income eligible buyer. The market downturnhas presented challenges to land trusts as market ratehomes can now compete with appreciated restrictedhomes, reducing the pool of interested buyers. Mostland trusts continue to serve very low and low incomebuyers rather than those with higher incomes.

H Education of lenders, appraisers, originators,processors, title professionals. These services areavailable but the staff are often unfamiliar with thepeculiarities of closing a land trust deal. A trainingsession for lenders and other closing professionals isrecommended. Closing involving layered funding plusground leases and other CLT documents can be cumber-some for even the most experienced housing provider.

H CLT stewardship and operating fund. Keeping theorganization financially stable is an ongoing challenge.Community land trusts need sources of money for theirown organizations, as well as a stewardship fund forassisting CLT homeowners with unexpected expenseswhich may arise from time to time. Sources of operatingincome include transfer fees on re-sales, developerfees, and community based fund raising activities.

H CHDO training. Many CLTs have been encouragedto become Community Housing DevelopmentOrganizations. Benefits include eligibility for HOMEset-asides as well as board representation by home-owners or low income representatives. The FloridaHousing Coalition provides CHDO training as well asboard of directors orientation and strategic planningworkshops.

H Emphasizing a sense of community. The communityland trust is a legal tool but the foundation for successfor community land trusts is based on local supportand homeowner participation. Neighborhood stability,pride, and a sense of belonging embody the spirit in thetraditional land trust model.



1) As used in this section, the term "community land trust" means a non-profit entity that is qualified as charitable under s. 501(c)(3) of theInternal Revenue Code and has as one of its purposes the acquisition ofland to be held in perpetuity for the primary purpose of providingaffordable homeownership.

2) A community land trust may convey structural improvements located onspecific parcels of land to provide affordable housing, which areidentified by a legal description contained in and subject to a groundlease having a term of at least 99 years, to natural persons or familieswho meet the extremely-low, very-low, low, and moderate income limitsspecified in s. 420.0004, or the income limits for workforce housing, asdefined in s. 420.5095(3). A community land trust shall retain apreemptive option to purchase any structural improvements on the landat a price determined by a formula specified in the ground lease which isdesigned to ensure that the structural improvements remain affordable.

3) In arriving at just valuation under s. 193.011, a structural improvementthat provides affordable housing on land owned by a community landtrust and subject to a 99-year or longer ground lease shall be assessedusing the following criteria:

(a) The amount a willing purchaser would pay a willing seller islimited to the amount determined by the formula in the ground lease.

(b) If the ground lease and all amendments and supplements thereto,or a memorandum documenting how such lease and amendments orsupplements restrict the price at which the improvements may besold, is recorded in the official public records of the county in whichthe leased land is located, the recorded lease and any amendmentsand supplements, or the recorded memorandum, shall be deemed aland use regulation during the term of the lease as amended orsupplemented.

Section 2. This act shall take effect July 1, 2008.

SENATOR BENNETT AND REPRESENTATIVE FITZGERALD HAVE FILED IDENTICALBILLS (SB 796, HB 431) TO PROVIDE DIRECTION ON PROPERTY ASSESSMENT OF

COMMUNITY LAND TRUST PROPERTIES.

193.017 Assessment of structural improvements on land owned by a community land trust used to provide affordable housing.


HAlong with a multitude of housing mandatespassed in the 2007 legislative session, HB1375 also requires SHIP communities toappoint an Affordable Housing Advisory Committeethat will deliberate on an incentive package mainlytargeting regulatory reform. Many will rememberthe initial SHIP enacting legislation that required anine member affordable housing advisory committeeto recommend specific initiatives to encourage or facilitateaffordable housing. That nine member AHAC had torecommend at a minimum, two incentive strategies to beadopted by local governments; expedited processing ofdevelopment orders or permits for affordable housingprojects and a process to consider, before adoption,policies, procedures, ordinances, regulations or planprovisions that increase the cost of housing. Many localgovernments took this requirement seriously, adoptingordinances and appointing an ombudsman to assistaffordable housing developers through the process. Butmany others adopted the required incentive languagewithout an enacting resolution or ordinance that wouldput the incentive to work. Local governments were allowedto sunset their AHAC after completing their review,but some kept their AHAC, seeing them as an opportunityto assist housing staff and foster the public’s opinion onaffordable housing.

This new AHAC grows from nine members to 11,with some leeway for committee size given tolocal governments that receive the minimum SHIPallocation. Incentive review areas are relatively thesame except for one additional incentive: “(k) Thesupport of development near transportation hubsand major employment centers and mixed-usedevelopments.” But now, the Committee does not

sunset. It is required to review the established policies andprocedures, ordinances, land development regulations, andadopted local government comprehensive plan and recommendspecific action or initiatives to encourage or facilitateaffordable housing triennially. The AHAC must also reviewand evaluate the implementation of affordable housingincentives and submit that report triennially. Localgovernments that receive the minimum SHIP allocation mayopt out of the triennial review. Another key improvement tothe process is a new requirement that the advisory committeebe cooperatively staffed by the local housing department andthe local planning department to ensure an integratedapproach to the work of the advisory committee.

As the SHIP Administrator, what does all this mean to you?Let’s take a look at the necessary steps, you and counterpartfrom the planning department need to take and when youneed to take them, the resources you will need, and how youcan make this committee work most effectively.

The Affordable Housing AdvisoryCommittees Make a Comeback

SHIP Administrators, Are You Ready?by Evelyn Rusciolelli

Florida Housing Coalition


Step 1– Consider Staffing the AHACWHEN: Now420.9076 (9) requires a cooperative staffing of theAHAC by department or divisions having authorityto administer local planning or housing programs toensure an integrated approach to the work of theadvisory committee. Now is the time to sit downwith your Planning Department and design astaffing plan. The advisory committee is goingto require a lot of planning information and theywill have many questions of both planning andhousing staff. It is imperative to have a staff memberfrom both venues present at all meetings. Otherthings to consider are scheduling and advertisingmeetings, recording minutes, preparing agendasand materials. Have these duties outlined andassigned before the first Committee Meeting.

Step 2– Recruit your members. WHEN: NowIf local government waits until the June 30, 2008deadline the advisory committee will only have sixmonths to complete its review, write the report, holda public hearing and submit its recommendations tothe commission/council.

Although your local government probably has anadvertisement and application process for seekingmembers to local committees, both housing andplanning staff should assist by recruiting citizensthat not only meet membership requirements buthave also been active supporters in the affordablehousing and planning incentive areas. It is alsohelpful if they have a rapport with thecommission/council and or planning department.Ask existing members of any active housing orplanning committees to apply if the appropriateareas of professional interest are matched. YourEconomic Development Council (EDC) may alsobe a good source for recommendations. The EDChas a large membership with various backgroundsand they understand the correlation between newbusiness recruitment and employer housing needs.

If your local government administers the SHIPprogram under an inter-local agreement for otherlocal governments under one local housingassistance plan, you may request approval fromFlorida Housing Finance Corporation to use thesame advisory committee.


Continued on page 26

FEBRUARY – JUNE 2008 OCTOBER – NOVEMBER 2008 DECEMBER 31, 2008 MARCH 31, 2009 MAY 2, 2009 FEBRUARY 2011

Designatestaff and

select AHACmembers

Complete draftreport scheduleand advertisepublic hearing

Submit reportto local

government governing

board

Submit amendedLHAP with proof

of boardapproval to

FHFC

GoverningBoard Appoints

members toAHAC by

resolution

Local government adopts

amendments to LHAPto incorporate

strategies

Public hearingAHAC approveslocal housing

incentive

Repeat processin preparationfor triennial

report

HOUSING INCENTIVE PLAN AND AFFORDABLE HOUSING ADVISORY COMMITTEE TIME LINE

Dates in teal are reccomended timeline to meet deadlines. Dates in blue are statute or rule deadlines.



Step 3– Governing Board of a county or munic-ipality shall appoint the members of theaffordable housing advisory committee byresolution. WHEN: By June 30, 2008Ensure that there is at least one applicant for eachof the eleven positions. Prepare your agenda andresolution appointing the members of your AHAC.

Step 4– Schedule meeting of AHAC and Noticemeeting of AHAC which is subject toGovernment in the Sunshine rules. WHEN: Within two weeks of appointment speak

with members of the AHAC to determinewhat days and times are best for them tomeet.

Schedule the first meeting and advertise as requiredby your local government. In preparation for thisfirst meeting, think about electing a Chairman aswell as decide which staff will attend to takeminutes, gather technical information, schedulespeakers and assist with other committee requests.Plan to review Government in the Sunshine meetingrequirements and consider product dea

housing news volume 24, number 1 · west palm beach/south florida jaimie ross, president 1000...

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