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A Perspective: Impact of Federal Cuts

A Perspective: Impact of Federal Cuts. Virginia Municipal League July 25, 2013. DHCD federal programs Statewide Some restricted to non-entitlement localities Particularly CDBG and HOME Developing local community based assets

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A Perspective: Impact of Federal Cuts

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  1. A Perspective: Impact of Federal Cuts Virginia Municipal League July 25, 2013

  2. DHCD federal programs Statewide Some restricted to non-entitlement localities Particularly CDBG and HOME Developing local community based assets Produce local housing, community services, labor and contracting benefits Focus

  3. CDBG • Flexible, address a wide-range of needs, including • Housing rehabilitation • Water / sewer • Support of new affordable housing • Downtown revitalization • Economic development • Job creation • Entrepreneurship • Blight removal • Critical community needs, such as healthcare and Last Mile telecommunications

  4. HOME • Homeowner Rehabilitation • Homebuyer Activities • Rental Housing • Tenant-Based Rental Assistance • Community Housing Development Organizations (CHDO)

  5. Housing and financial market collapse Stimulus Program scrutiny and increased regulations Federal cuts

  6. Reduced development activity Fewer proposals Financing packages taking longer to pull together Homeownership freeze Qualifying standards Fair Mortgage Lending Act More risk adverse potential homebuyers DHCD 15 -20 HOME development projects per year to a fewer than 10 350 homeownership assistance (HOME) per year projects to less than 50 Market Collapse

  7. Homeownership development projects stuck in the pipeline Requiring project work outs Closer scrutiny of homeownership proposals (focus on pipeline of buyers and overall local market) No homeownership projects funded for three year period Retraction in funding allocated to Homeownership assistance (down payment and closing cost assistance) Prior funding offers fall short of need (tax credit adjustments etc… needed) Much of rental development activity nearly back to pre-collapse activity, but NOT homebuyer Market Collapse

  8. Stimulus: DHCD Administered

  9. Huge influx of funding with strict deadlines for committing and expending Increase administrative needs Lots of scrutiny (media and state and federal monitoring) Finite end dates coinciding with recent federal cuts: HPRP (finished 2012) Weatherization (wrapping up now) NSP (wrapping up now) What will the new normal be (post-stimulus)? Stimulus

  10. CDBG –large cut 2010 HOME –Washington Post Stalled projects debacle HUD Significant changes in system tracking of projects Increased and standardized monitoring Regulatory changes New regulations Stall project issue Underwriting Developer capacity Program Scrutiny

  11. Funding Cuts: Total Virginia CDBG Down 22%

  12. Funding Cuts: Total Virginia HOME Down 49%

  13. Currently fund projects statewide (possible change to non-entitlement areas only) DHCD HOME funds reduced by 52 percent Will impact the number of projects and units produced. Typical investment: $500,000 per rental development $10,000 per household down payment assistance for low/moderate income first time homebuyers $60,000 per housing unit –homeowner rehabilitation for low income households lacking indoor plumbing DHCD’s Reduced HOME funds

  14. Reduction in the funding available to oversee and manage the investment of HOME funds, which coincides with increase regulations (administrative burden) HOME has significant long term compliance requirements 15-20 years for every investment in a rental project DHCD’s Reduced HOME funds

  15. End of stimulus funding a factor too Change in data source (Census 2010) for formula is also a factor for some areas Retraction of government (staff positions and other administration resources) Moving some prior ADM costs to project related expenses (impacts amount available for projects) Less available for technical assistance Shift away from homeownership Federal Cuts

  16. Less new construction or adaptive reuse Less mixed income Neutral or negative impact of de-concentration of poverty Less local business benefit Federal Cuts

  17. The aftermath of sequestration could disproportionately impact community development programs Need advocacy, but there are visibility issues: Projects/activities tend to be slow moving, longer term, but significant impact Most don’t understand what or how these activities are funded HUD has NOT done a great job of highlighting results We don’t do a good job of spotlighting our successes Big problem -It doesn’t feel like a crisis yet! Conclusion

  18. Contact Information • Lyndsi Austin • Housing Division • Associate Director-Policy and Planning • (804) 371-7122 • Lyndsi.Austin@dhcd.virginia.gov

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