EXECUTIVE SUMMARY. Background. Purpose. State Fair Housing Law. Fair Housing Ordinance. Polk County s Housing Market Profile

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1 EXECUTIVE SUMMARY Background The Civil Rights Act of 1968 and the Fair Housing Amendments Act of 1988 are both designed to ensure that individuals of similar income levels in the same housing market have the same housing choices regardless of their race, color, religion, sex, disability, familial status, or national origin. As recipients of federal funds through the Department of Housing and Urban Development (HUD), Polk County and the cities of Lakeland and Winter Haven are periodically required to affirmatively further fair housing. In order to identify appropriate affirmative steps, they must first assess the local status of fair housing. Thus, they undertake an analysis to determine if any impediments exist in the County, and then design a program of affirmative actions to promote fair housing, particularly addressing the impediments. This Analysis is an update of the 1997 Analysis prepared by the County, and of the City of Lakeland s 1998 Analysis. Since the City of Winter Haven will be incorporated into the County s program next year, the recommended actions will only include Lakeland and the County, who will be conducting its actions on a countywide basis. Purpose The purpose of this analysis is to examine a number of public and private policy areas to determine whether housing discrimination exists, including any public policies that may contribute to housing discrimination. If the analysis finds any impediments, the County/City will take positive action to remove or address the impediments. State Fair Housing Law Part II of Chapter 760 of the Florida Statutes outlines the State s Fair Housing Act, which HUD has found to be in substantial compliance with federal statutes. This Act follows federal law and makes it unlawful to discriminate against any person in any aspect of the rental or sale of housing. This Act created a 12-member Commission on Human Relations and is staffed by the Department of Management Services. The Act established a written complaint process with timelines of the Commission to investigate and resolve such complaints; first through voluntary compliance, and then through civil and criminal sanctions. Fair Housing Ordinance Neither Polk County nor the City of Winter Haven has a local fair housing ordinance, but the City of Lakeland does. The City s ordinance is enforced by the City s Code Enforcement Division. All complaints are forwarded to HUD and the state for investigation/resolution. Polk County s Housing Market Profile In 2000, Polk County had 483,924 people, up 19% from Racially, the County is slightly more diverse than the statewide average, but the percentage of Hispanics is far below (9% versus 17%) the statewide average. Executive Summary i

2 Almost half (45%) of the County s households are headed by someone over 55 and 30% are headed by someone over 65. Reflecting its retiree and working-class nature, the County is not affluent. In 2000, the median (half above/half below) household income was $36,036, 86% of the national median. One-third of the County s households had incomes below $25,000 per year. In 2000, there were 226,376 housing units in the County of which 11% (versus 8% statewide) were held for seasonal use. Reflecting the County s rural/suburban nature, there are far less multifamily units and far more mobile homes than the statewide average. Over one unit in four (28%) is a mobile home. When looked at in comparison to state and surrounding regional markets, the County s housing market is more affordable. The median price for a single-family unit in 2000 was $83,300 well below the statewide median of $105,500. However, over the last five years housing prices (in part because of a nationwide speculative housing bubble) have risen dramatically, and home values in the County have risen by a third over that time period. While this has certainly benefited the existing owners, it has also locked many younger and low-income families out of the marketplace. Despite lower overall housing prices, in 2000 one-third (34%) of the County s renters spent over 30% of their incomes on housing and 16% spent over 50%. This is in spite of the fact that 17% of the County s collective rental stock is subsidized through various governmental programs. The County is one of the top ten counties in the state for farmworkers, with almost 5,000 farmworkers. Note: In 2004, the County s housing stock was hit by a number of hurricanes which did significant property damage. Current Fair Housing Program The City of Lakeland has a Fair Housing ordinance, but the County and the City of Winter Haven do not. Polk County s current Fair Housing Program was adopted in 1997 after an analysis of impediments was prepared. Lakeland s Analysis of Impediments was last updated in The City of Winter Haven has not completed an Analysis of Impediments, but is in the process of transferring its CDBG program to the County. The County/Cities maintain fair housing posters and brochures at their housing offices, ensure that all Section 8 landlords are briefed on Fair Housing each year, and receive and forward to HUD all fair housing complaints. The City of Lakeland also maintains a booth and provides fair housing brochures at all City/neighborhood fairs on a continuing basis. Collectively, these programs utilize a number of methods to keep the issue of Fair Housing in the public awareness and to make information about the Fair Housing Act easily accessible to the general public. HUD Sanctions There are no HUD sanctions against Polk County, or the cities of Lakeland or Winter Haven. Executive Summary ii

3 Lawsuits There are no Fair Housing lawsuits. Fair Housing Complaints HUD s Regional Fair Housing office tracks the number of fair housing complaints received by HUD or by the State of Florida. The number of fair housing complaints HUD received has continued to decline from 15 received in 2002 to 8 complaints in The smaller number of complaints is in some measure a result of HUD s continued public awareness and educational efforts in this area. Outreach and Community Input In order to obtain the widest possible input concerning impediments, four levels of outreach were conducted: l. Public input 2. Staff input 3. Agency interviews 4. Comprehensive survey No specific instances of housing discrimination were received. Staff was also concerned about the supply of adequate farmworker housing, since much of the existing stock was damaged during the Hurricanes. Staff did not believe that housing discrimination was systematic or widespread, but given the rural nature of the County, the number of small landlords, and the large number of low-income households, many have credit problems. Discrimination may still occur. Agency Interviews Three agencies in Polk County play a significant role in the provision of housing and the identification of issues related to fair housing. Each was contacted and requested to provide detailed and specific information for this report. Keystone Challenge Fund, Inc. Jeff Bagwell heads this non-profit housing lender consortium; the organization is a key provider and is recognized statewide as a leader in the provision of affordable housing. Among many other services, Keystone operates the City of Lakeland s home purchase assistance program and homeownership classes. Mr. Bagwell provided general information and insight, but stated that he hasn t heard of any discriminatory practices taking place in the programs or client group that his organization serves. Central Florida Fair Housing Center, Inc. Executive Summary iii

4 Established By H.O.P.E., Inc. in October of 1999, and the recipient of a three-year HUD Fair Housing Initiative Program (FHIP) grant of $400,000 in fiscal year 2001, the Center s purpose was to provide comprehensive fair housing services to Polk County. Funding to the Fair Housing Center was also provided by the City of Lakeland ($5,000 in and $5,000 in ) and by the City of Winter Haven. During its contract period, the Fair Housing Center distributed Fair Housing brochures to 38 social service agencies throughout the County. The Center also trained 16 testers and utilized them to perform fair housing tests at 50 apartment complexes throughout the Lakeland area. After completing a number of re-tests, this project found that a number of discrimination allegations did exist. The organization also provided counseling/referral services to 20 people who had various fair housing concerns. Florida Rural Legal Services, Inc. Headquartered in Lakeland, this is the organization that provides free legal services to lower income residents. It would naturally be the first place that someone would turn if they feel that they have been mistreated in attempts to rent or purchase a home. Mr. Jerome F. Major, Managing Attorney, stated that he has normally referred anyone with a housing question to the Central Florida Fair Housing Center; he was not aware that the Center is no longer active. None of the agencies reported any specific discrimination problems. In 2004, the HUD Fair Housing Initiative Program funded Central Florida Legal Services to create Alianza for Fair Housing, a three-year project to provide services to underserved rural areas and persons who speak limited English in Orange/Lake/Osceola Counties. It will be recommended that the County conduct discussions with Central Florida Legal Services concerning the possibility of expanding Alianza to include Polk County. Community Survey A communitywide six-page fair housing survey was sent to 302 organizations and community leaders to obtain their information, input, and experiences concerning fair housing issues. A copy of the survey form is included in the Appendix section of this report. Of the 20 responses received, only one stated that they were aware of discriminatory practices in Polk County. The comments and suggestions received were utilized in the staff workshop, and incorporated into this study s recommendations. Local Newspapers All of the local/daily newspapers that serve Polk County print HUD s Published Fair Housing Notice at the beginning of the Real Estate section of their newspapers on a daily basis. Housing Opportunities Project for Excellence, Inc., headquartered in Dade County, Florida. Executive Summary iv

5 ANALYSIS OF IMPEDIMENTS Housing Market While the County s housing market is relatively affordable from a regional perspective, it is still unaffordable to many. The combination of rapidly rising home prices and the damage from the hurricanes has increased the need for affordable rental housing (and farmworker housing). Handicapped Accessibility The County and its cities utilize the Florida version of the Southern Building Congress Building Code, and their respective building departments enforce the Americans with Disabilities Act for handicapped accessibility. All of the County s respective housing authorities have handicapped units. Lenders All of the major banks in the County participate in the County s Affordable Housing Consortium and provide low-income households with first-time homebuyer programs. The lenders routinely provide fair housing training to all of their mortgage program personnel. The County/City also work closely with lenders in their own affordable housing programs. Branch Banks Much like other retail facilities, the location of branch banks in an area is often driven by the amount of money flowing into a community. As a result, high income areas tend to have more branch banks than low-income areas. Low-income areas also have a higher percentage of households who do not have checking or savings accounts, and deal in the cash economy. Home Mortgages Under the Home Mortgage Disclosure Act (HMDA), local banks are required to report on their home mortgage loan activity on a yearly basis to the Federal Reserve. This information provides important clues on whether there is any bias or discrimination in local banking practices. An analysis of the HMDA data did not reveal any patterns of red-lining or discrimination in the home mortgage market. While minority acceptance rates were below those for white households, they were primarily driven by the generally lower incomes (acceptance levels rise with income). The primary reason for denial was a poor credit history. Subprime/Predatory Lending The strong surge in home refinancing across the County, whether to achieve a better interest rate or remove equity for other purposes (such as paying off high-interest credit card debt or for family emergencies) has fueled the rise of the subprime refinance market and the practice of predatory lending. The subprime housing refinancing market provides loans to borrowers who do not meet the credit standards for the normal prime lending market. HUD has documented a wave of foreclosures within this market. Predatory lending can most easily be described as lenders that target less-well educated homeowners who are encouraged to refinance their homes, with the intent to charge unusually higher than market interest, or even in some instances, to ultimately foreclose on the property. Executive Summary v

6 In May 2002, the Center for Community Change prepared a report: Risk or Race? Disparities in the Subprime Refinance Market, that examined this issue on a national and Metropolitan Statistical Area basis. The report found that African-Americans and Hispanics are disproportionately represented in the subprime home refinance market, regardless of income levels. Polk County ranked 22 out of 331 MSAs in the country with 37% of its refinance loans using subprime lenders. Brokerage Services The Polk County Association Board of Realtors (BOR) represents the County s professional real estate community. As part of the services the BOR provides to its membership is an orientation session for all new brokers/realtors. As part of this process the new members are briefed and tested on Fair Housing laws. In addition, yearly seminars and continuing education programs feature fair housing complaints. Apartment Owners The Statewide Apartment Owners Association holds twice yearly seminars for its members at which time national experts on fair housing make training presentations. Home Insurance Homeowners insurance does not appear to be an issue in the County. Vacancy rates are tight and property values are rising. There are more than 100 independent insurance offices located in the County that represent all major insurance companies. Insurance rates in general are rising due to recent hurricanes. Based on this information it does not appear that any insurance carriers are red-lining any areas of the County. Large Families Only 3% of the County s units were found to be overcrowded (1.01 or more persons per room), half the statewide/national rate. Families with children appear to be welcome in all non-senior neighborhoods and types of housing. This does not appear to be a problem. Public Policies Relocation Policies The County and cities, as required by state and federal laws has long standing relocation policies. In addition, the State of Florida has the most liberal condemnation law in the nation to ensure that any resident or business displaced by governmental action is amply compensated. Both the County and cities adopted five-year Consolidated Plans, which do not anticipate activities that would require relocation. Appropriate Siting for Group Homes (single room occupancy) In 1995, both the County and cities amended their Land Development Codes to adopt locational siting criteria Executive Summary vi

7 and to allow group homes as a conditional use in all residential areas as required by state law. The County currently has a wide-range of group homes. Building Codes Polk County and its cities utilize the Florida Building Code, which is an amended version of the Southern Building Code Congress International Building Code, the nation s standard building code. This code was adopted after Hurricane Andrew. Regulatory Reduction As a recipient of state housing funds under the State s Housing Initiatives Partnership program (SHIP) both cities and the County are required to conduct regulatory self review of their local ordinances in order to reduce the cost of providing housing. This self review is officially titled the Affordable Housing Incentive Plan (AHIP), and is consistent with HUD s requirements for regulatory reduction. IDENTIFICATION OF IMPEDIMENTS This analysis found that impediments to Fair Housing continue to exist in two areas: Housing Discrimination Need for Affordable Housing ACTIONS TO CORRECT IMPEDIMENTS Polk County and the cities of Lakeland and Winter Haven will ensure that any complaints that are received are forwarded to HUD for investigation. In addition, the following actions will be taken to raise public awareness on this issue. Polk County 1. Adopt a Fair Housing Ordinance by February Proclaim February of each year Fair Housing Month in January Display fair housing posters in all public buildings and on the County s public access TV channel. 3. Print and distribute (in English/Spanish) fair housing bookmarkers to all the County s libraries by February Provide HUD s Fair Housing Complaint forms at the County s offices and libraries (ongoing). 5. Request HUD to provide the County with copies of their fair housing commercials for continued use on the County s public access TV channel by June Request HUD to provide a brochure (or TV commercial) on the dangers of the subprime home refinancing market for distribution in minority neighborhoods through churches and social service organizations by June Research other sources if not available through HUD. Executive Summary vii

8 7. Discuss with Central Florida Legal Services the possibility of expanding Alianza into Polk County. By June City of Lakeland 1. Proclaim February of each year Fair Housing Month in January Display fair housing posters in all public buildings (ongoing). 2. Print and distribute (in English/Spanish) fair housing bookmarkers in their library by February Provide HUD s Fair Housing Complaint forms at City offices and the library by February Contact the Board of Realtors and the apartment managers association to volunteer to participate in fair housing training at their meetings, symposiums, and housing events. By June Continue the practice of providing Fair Housing information at a booth at public events and symposiums. Ongoing. The actions outlined above will demonstrate the County s and cities commitment to affirmatively further fair housing /executive summary Executive Summary viii

9 ANALYSIS OF IMPEDIMENTS The purpose of this section is to review whether any impediments to fair housing exist. This section examines the housing market, mortgage lending, subprime lending, lenders, brokers, apartment owners/landlords, home insurance, persons with disabilities, large families and regulatory barriers to affordable housing. Housing Market Countywide, 73% of all households are homeowners, while in Lakeland only 60% are (59% in Winter Haven). The statewide average is 70%. Eleven percent of the County s housing is held for seasonal (snow bird) use, slightly above the statewide average of 8%. The County s median price for a single-family detached house is $83,300.The median gross rent is $501/month. Both are well below the statewide medians. With its high retiree population and large number of mobile homes (28%), the County has a relatively affordable housing stock in comparison to surrounding regions. Both the median rent and median priced home are affordable to a household making the median income With its lower than average housing prices and rents, Polk County is the center for affordable housing in the I-4 corridor between Tampa and Orlando. Despite this, in 2000, one third (34%) of all renters paid over 30% of their income and 16% paid over 50% of their income in rent. Naturally, the lower the household s income the more likely they were to pay over 30% of their income for rent. Fourteen percent of all owners (mostly low-income) paid over 35% a month for housing. In addition to federal funds, Polk County receives affordable housing funds through the State of Florida s SHIP program. Florida is one of only two states in the country to fund affordable housing. The City utilizes these funds to support a number of affordable housing programs. These include homeowner downpayment assistance, housing rehabilitation and construction of rental apartments. All these programs are conducted on a countywide basis. Section 8 Vouchers/Public/Assisted Rental Housing Within Polk County, the cities of Bartow, Haines City Lakeland and Winter Haven have housing authorities with a total of 1,301 public housing units. Collectively, they and the County also oversee 1,287 Section 8 Housing Choice rental vouchers. In addition, there are 5,872 rental units (including farmworker units) subsidized through various federal/state housing programs. Most are located in and around Lakeland or Winter Haven. Collectively, 8,460 rental units or 17% of the rental units in the County are subsidized. All units meet minimum housing quality standards. Each authority has handicapped units and all ground floor units are handicapped accessible. Posters and housing information are displayed in locations throughout the Analysis of Impediments 1

10 authority offices in such a manner that they are easily readable by a person in a wheelchair. Fair Housing laws are part of each authority s family briefing sessions and Fair Housing Information and Discrimination Complaint forms are part of each voucher holder s briefing packet. Each authority has policies and practices to assist persons with disabilities find accommodations to suit their needs. Lenders All of the major banks within the County participate in the County s Affordable Housing Consortium and provide first-time homebuyers programs for low-income households. The lenders routinely provide fair housing training to all their mortgage program personnel. The County/City also works closely with its lenders in its own affordable housing programs. Branch Banks Much like other retail facilities, the location of branch banks in an area is often driven by the amount of money flowing into a community. As a result, high income areas tend to have more branch banks than low-income areas. Low-income areas also have a higher percentage of households who do not have checking or savings accounts and deal in the cash economy. Home Mortgages Under the Home Mortgage Disclosure Act (HMDA), local banks are required to report on their home mortgage loan activity on a yearly basis to the Federal Reserve. This information provides important clues on whether there is any bias on discrimination in local banking practices. The following tables look at the disposition of applicants for home purchase loans by race in As Table 1C displays there were 18,850 applications received within Polk County in Of these 12,715 or 67% were approved. A further 7% were approved but not accepted. Analysis of Impediments 2

11 Table 1A Polk County Disposition Of Applicants for FHA, FSA/RHS and VA Home Purchase, by RACE Approved Race Applications Received Originated % by Race But Not Accepted Denied Withdrawn Closed/ Incomplete American Indian 7 0% 6 86% - 0% - 0% 1 0% - 0% Asian/Pacific Islands 23 1% 20 87% 2 1% - 0% 1 0% - 0% African American 290 8% % 10 7% 34 8% 12 4% 7 7% Hispanic* % % 16 11% 71 17% 39 13% 14 15% White 2,233 63% 1,722 77% 92 61% % % 60 63% Other 77 2% 40 52% 4 3% 14 3% 18 6% 1 1% Joint (White/Minoriy) 94 3% 76 81% 1 1% 6 1% 10 3% 1 1% Race Not Available % % 25 17% 77 18% 81 27% 13 14% TOTAL: 3, % 2,583 73% % % % % 73% 4% 12% 8% 3% * Hispanics can be of any race. Source: Home Mortgage Disclosure Act Table 1B Polk County Disposition Of Applicants for Conventional Home Purchase, by Race Approved Race Applications Received Originated % by Race But Not Accepted Denied Withdrawn Closed/ Incomplete American Indian 68 0% 43 63% 4 0% 19 4% 2 1% - 0% Asian/Pacific Islands 274 2% % 8 1% 54 13% 18 6% 9 9% African American 785 5% % 83 7% % 56 19% 29 30% Hispanic* 1,747 11% 1,041 60% % % % 60 63% White 9,885 65% 6,908 70% % 1, % % % Other 413 3% % 20 2% 50 12% 54 18% 14 15% Joint (White/Minoriy) 265 2% % 23 2% 50 12% 27 9% 3 3% Race Not Available 1,861 12% 1,075 58% % % % 48 50% TOTAL: 15, % 10,132 66% 1, % 2, % 1, % % 66% 8% 16% 8% 2% * Hispanics can be of any race. Source: Home Mortgage Disclosure Act Table 1C Polk County Disposition Of Applicants for Home Purchase, by Race - TOTAL Race Applications Received Originated % by Race Approved But Not Accepted Denied Withdrawn Closed/ Incomplete American Indian 75 0% 49 65% 4 0% 19 1% 3 0% - 0% Asian/Pacific Islands 297 2% % 10 1% 54 2% 19 1% 9 2% African American 1,075 6% % 93 7% 208 7% 68 5% 36 8% Hispanic* 2,227 12% 1,381 62% % % % 74 16% White 12,118 64% 8,630 71% % 1,627 58% % % Other 490 3% % 24 2% 64 2% 72 5% 15 3% Joint (White/Minoriy) 359 2% % 24 2% 56 2% 37 2% 4 1% Race Not Available 2,209 12% 1,227 56% % % % 61 14% TOTAL: 18, % 12,715 67% 1, % 2, % 1, % % 67% 7% 15% 8% 2% * Hispanics can be of any race. Source: Home Mortgage Disclosure Act African-Americans, who make up 13% of the County s population, represented 6% of the applicants. Their overall approval rate of 62% was 93% of the overall approval rate and below the 71% for White households. (Table 1C) As Table 1A displays among those African-American households that sought mortgages through the various federal mortgage programs, the approval rate was significantly higher at 78%. Hispanics, who make up 9% of the County s population, represented 12% of the applicants. Their overall approval rate of 62% was 93% of the overall approval rate and below the 71% for White households. (Table 1C) As Table 1A displays among those Hispanic households that sought mortgages through the various federal mortgage programs, the approval rate was significantly higher at 71%. Analysis of Impediments 3

12 The following Table 2 examines the disposition of mortgage applications by income level, by type of mortgage. Table 2A Polk County Disposition Of Applicants for FHA, FSA/RHS and VA Home Purchase, by INCOME Approved Income Applications Received Originated But Not Accepted Denied Withdrawn Closed/ Incomplete Less than 50% of MSA Median % 15 5% 72 22% 60 18% 8 2% 50% to 80% of MSA Median 1, % 58 5% % 76 6% 41 3% 80% to 100% of MSA Median % 21 3% 55 8% 40 6% 18 3% 100% to 120% of MSA Median % 17 4% 46 10% 28 6% 14 3% Over 120% of MSA Median % 32 4% 90 11% 67 8% 12 2% Income Unavailable % 7 10% 23 32% 25 34% 3 4% TOTAL: 3,552 2,583 73% 150 4% % 296 8% 96 3% Source: Home Mortgage Disclosure Act Table 2B Polk County Disposition Of Applicants for Conventional Home Purchase, by INCOME Approved Income Applications Received Originated But Not Accepted Denied Withdrawn Closed/ Incomplete Less than 50% of MSA Median % 90 10% % 74 8% 26 3% 50% to 80% of MSA Median 2,779 1,672 60% 246 9% % 206 7% 63 7% 80% to 100% of MSA Median 1,837 1,217 66% 150 8% % 126 7% 49 5% 100% to 120% of MSA Median 1,732 1,136 66% 139 8% % 144 8% 41 4% Over 120% of MSA Median 6,981 4,951 71% 542 8% % 515 7% % Income Unavailable 1, % 53 5% % 25 2% 26 3% TOTAL: 15,298 10,132 66% 1,220 8% 2,388 16% 1,090 7% % Source: Home Mortgage Disclosure Act Table 2C Polk County Disposition Of Applicants for Home Purchase, by INCOME - TOTAL Approved Income Applications Received Originated But Not Accepted Denied Withdrawn Closed/ Incomplete Less than 50% of MSA Median 1, % 105 8% % % 34 3% 50% to 80% of MSA Median 3,994 2,571 64% 304 8% % 282 7% 104 3% 80% to 100% of MSA Median 2,492 1,738 70% 171 7% % 166 7% 67 3% 100% to 120% of MSA Median 2,214 1,513 68% 156 7% % 172 8% 55 2% Over 120% of MSA Median 7,778 5,547 71% 574 7% % 582 7% 161 2% Income Unavailable 1, % 60 5% % 50 5% 29 3% TOTAL: 18,850 12,715 67% 1,370 7% 2,815 15% 1,386 7% 450 2% Source: Home Mortgage Disclosure Act As Table 2C displays, the higher the income level of the applicant, the more likely the mortgage application will be approved. The approval rate for low-income applicants is only 51% and this rises to 71% for upper income households. This is even true for those mortgages backed by federal programs. (Table 2A) Clearly, income is a major factor in obtaining a mortgage. As the following table displays, much like the State and the nation, African-American and Hispanic households tend to have lower incomes than the countywide median. Polk County Median Incomes All African- American % Hispanic % Florida US Housheold $ 36,036 $ 25,289 70% $ 31,101 86% $ 38,819 $ 41,994 Family $ 41,442 $ 28,045 68% $ 31,578 76% $ 46,625 $ 50,046 Source: 2000 Census. Analysis of Impediments 4

13 As this table displays, in 2000 the median income for African-American households was $25,289, only 70% of the countywide median. African-American median family income was $28,045, 68% of the countywide median. In 2000, the median household income for Hispanics of $31,101 was 86% of the countywide median, and their median family income of $31,578 was 76% of the countywide median. This information clearly displays that the generally lower incomes within the County, especially for minorities are a factor in obtaining home mortgages. This is further supported by the HMDA data s examination of the reasons why households were not approved. A poor credit history was the major reason. Subprime/Predatory Lending The strong surge in home refinancing across the County, whether to achieve a better interest rate or remove equity for other purposes (such as paying off high-interest credit card debt or for family emergencies) has seen the rise of the subprime refinance market and the practice of predatory lending. The subprime housing refinancing market provides loans to borrowers who do not meet the credit standards for the normal prime lending market. However, HUD has documented a wave of foreclosures within this market. Predatory lending can most easily be described as banks that seek out less-well educated homeowners, who are encouraged to refinance their homes with the intent to charge unusually higher than market interest; or even in some instances, to ultimately foreclose on the property. In May 2002, the Center for Community Change prepared a report: Risk or Race? Disparities in the Subprime Refinance Market, that examined this issue on a national and Metropolitan Statistical Area basis. The report found that African-Americans and Hispanics are disproportionately represented in the subprime home refinance market, regardless of income levels. This report looked at two key issues: 1. The percentage of loans made to minorities versus White households; and 2. The geographic dispersal patterns for these loans. Key national findings: 1. There are significant racial disparities in subprime lending. African-Americans receive three times and Hispanics 2.1 times as many subprime loans as Whites with comparable incomes. Analysis of Impediments 5

14 2. Subprime loans are geographically concentrated in high minority concentration neighborhoods. Some other causes for this discrepancy include: The absence of mainstream prime lenders in minority markets. A lack of understanding this market. Freddie Mac has estimated 10-30% of subprime borrowers could have qualified for conventional loans through Prospector Freddie Mac s automated underwriting system. Subprime refinancing lending tends to be sold to customers rather than being sought by them. Minorities (who are often less educated) are more likely to use subprime lenders. The following table shows Florida MSA s overall rankings among the 331 MSA s in America. As this table displays nine of Florida s 20 MSAs are among the top 50 MSAs in subprime loans. Only four MSAs are below the national average. National Ranking of Subprime Refinance by MSA Total # Metropolitan Statistical Area Refinance % Subprime Nation MSAs Miami 10, Daytona Beach 3, Lakeland - Winter Haven 3, Orlando 10, Jacksonville 7, Tallahassee 1, Pensacola 2, Ocala 1, Tampa - St. Petersburg - Clearwater 17, Fort Lauderdale 8, Fort Myers - Cape Coral 3, Melbourne - Titusville - Palm Bay 2, Punta Gorda 1, Gainesville 1, Sarasota - Bradenton 3, West Palm Beach - Boca Raton 6, Naples 1, Fort Pierce - Port St. Lucie 2, Panama City 1, Fort Walton Beach 1, Source: "Risk or Race? Disparities in The Subprime Lending Market", Center For Community Change The Lakeland-Winter Haven (Polk County) MSA was 22 nd in the nation for subprime loans. Thirtyseven percent of the County s home refinance loans were subprime, far above the national average of 25%. Analysis of Impediments 6

15 As shown in the table below, 17 of Florida s MSAs were in the top 50 of 154 MSAs with high African-American concentrations. Only four MSAs in Florida were below the national average. National Ranking of Subprime Refinance for African-Americans by MSA Total # Metropolitan Statistical Area Refinance % Subprime Nation MSAs Sarasota - Bradenton Lakeland - Winter Haven Pensacola Tampa - St. Petersburg - Clearwater 1, Miami 1, Daytona Beach Tallahassee Jacksonville 1, Orlando Gainesville West Palm Beach - Boca Raton Fort Lauderdale 1, Ocala Fort Pierce - Port St. Lucie Source: "Risk or Race? Disparities in The Subprime Lending Market", Center For Community Change The Lakeland-Winter Haven (Polk County) MSA ranked 8 th out of 153 MSAs in the percentage of subprime loans among African-American refinancing their homes. Almost two-thirds (64%) were subprime, versus the national average of 49%. As the following table displays, in the 99 MSAs with high Hispanic concentrations, the Lakeland- Winter Haven (Polk County) MSA ranks 21 st. Thirty-six percent of Hispanics had subprime refinance loans, above the 30% national rate. National Ranking of Subprime Refinance for Hispanics by MSA Total # Metropolitan Statistical Area Refinance % Subprime Nation - 99 MSAs Fort Myers - Cape Coral Daytona Beach Naples Jacksonville Orlando Lakeland - Winter Haven Miami 4, Tampa - St. Petersburg - Clearwater Fort Lauderdale West Palm Beach - Boca Raton Source: "Risk or Race? Disparities in The Subprime Lending Market", Center For Community Change Analysis of Impediments 7

16 The following table displays the Lakeland-Winter Haven (Polk County) MSA ranks 128 th among the MSAs with high African-American concentrations. The County s disparity ratio of 2.23 is below the national rate of Ranking by Disparity in the Percentage of Subprime Lending for African- Americans Compared to Whites # Metropolitan Statistical Area Disparity Ratio Nation MSAs Sarasota - Bradenton Gainesville Tallahassee Pensacola Fort Pierce - Port St. Lucie West Palm Beach - Boca Raton Tampa - St. Petersburg - Clearwater Miami Melbourne - Titusville - Palm Bay Orlando Lakeland - Winter Haven Ocala Fort Lauderdale Daytona Beach 1.96 Source: "Risk or Race? Disparities in The Subprime Lending Market", Center For Community Change As the following table displays the Lakeland-Winter Haven (Polk County) MSA ranks 19 th out of the 98 MSAs with high concentrations of Hispanics. The MSA s disparity ratio of 1.26 is below the national rate of Ranking by Disparity in the Percentage of Subprime Lending for Hispanics Compared to Whites Disparity # Metropolitan Statistical Area Ratio Nation - 98 MSAs Naples Fort Myers - Cape Coral Jacksonville Orlando West Palm Beach - Boca Raton Miami Tampa - St. Petersburg - Clearwater Fort Lauderdale Daytona Beach Lakeland - Winter Haven 1.26 Source: "Risk or Race? Disparities in The Subprime Lending Market", Center For Community Change In conclusion, within Polk County a significantly high number of minority households who refinanced their homes used subprime lenders, which increased their risk of falling victim to predator lending. This issue is clearly a problem within the County. Analysis of Impediments 8

17 Brokerage Services The Polk County Association Board of Realtors (BOR) represents the County s professional real estate community. As part of the services the BOR provides to its membership is an orientation session for all new brokers/realtors. As part of this process the new members are briefed and tested on Fair Housing laws. In addition, yearly seminars and continuing education programs feature fair housing complaints. A copy of the National Association of Realtors fair housing training brochure is included in the Appendix. Apartment Owners The Statewide Apartment Owners Association holds twice yearly seminars for its members at which time national experts on fair housing make training presentations. Home Insurance HUD has found that a number of insurance carriers have in effect red-lined poorer neighborhoods, especially those whose property values are declining, or the area could be described as blighted. The nation s low-income households occupy low cost housing, which is also often aging housing with higher maintenance costs. Much of this older stock is reaching the end of its useful life, and unlike the larger, better constructed historic housing, these smaller, older units are not desirable in today s marketplace. These obsolete areas often quickly become rental housing and over time property values decline. Areas slowly become blighted and units are abandoned, which further lowers property values. Insurance companies are naturally reluctant to provide insurance. The insurance issue in Florida is further compounded by the state s location in a Hurricane zone, which after the huge damage claims from the recent Hurricanes prompted many major insurance companies to try to withdraw from the state or limit the number of policies. Homeowners insurance does not appear to be an issue in the County. Vacancy rates are tight and property values are rising. There are over 100 independent insurance offices located in the County that represent all major insurance companies. It is anticipated that rates will rise as a result of the 2004 hurricane season, but it does not appear that any insurance carriers are red-lining any areas of the County. Persons with Disabilities The County/City of Lakeland utilize the South Florida version of a national building code, which incorporates all of the requirements of the Americans with Disabilities Act (ADA). The County/City s Building and Zoning Departments are charged with enforcing these requirements. Analysis of Impediments 9

18 Over half (56%) of the units in the County s housing stock are single-family units. These units are typically built at grade level, which would facilitate their conversion to handicapped-accessible. An additional 5,468 units (2%) are 50+, which are typically served by elevators. Large Families and Families with Children Only 3% of the County s units were found to be overcrowded (1.01 or more persons per room), half the statewide/national rate. This does not appear to be a problem. Families with children appear to be welcome in all (non-senior) neighborhoods and types of housing. Public Policies Relocation Policies The County and City of Lakeland, as required by state and federal laws has long standing relocation policies in place. In addition the State of Florida has the most liberal condemnation law in the nation to ensure that any resident or business displaced by governmental action are more than amply compensated. Both the County and City s adopted five-year Consolidated Plans did not anticipate nor propose any activities that would require relocation. Appropriate Siting for Group Homes (single room occupancy) In 1995, both the County and City amended their Land Development Codes to adopt locational siting criteria and to allow group homes as a conditional use in all residential areas as required by state law. The County currently has a wide-range of group homes. Building Codes Polk County and Lakeland utilize the Florida Building Code, which is an amended version of the Southern Building Code Congress International Building Code, the nation s standard building code. This code was adopted after Hurricane Andrew. Regulatory Reduction As a recipient of state housing funds under the State s Housing Initiative Partnership program (SHIP) both City and County were required to conduct a regulatory self review of its local ordinances in order to reduce the cost of providing housing. This self review was officially titled the Affordable Housing Incentive Plan (AHIP). Barriers to Affordable Housing In 1997, Polk County updated its 1993 Affordable Housing Incentive Program. Summary: Sets the definition of affordable housing at 90% of median area purchase price as established by the US Treasury or a rental unit where the tenant pays no more than 30% of their income for housing. Affordable Housing Developments are those where at least 25% of the units are affordable housing. Expedited Permit Reviews All affordable housing developments receive priority review and processing. Analysis of Impediments 10

19 The County s Land Development Code was amended to allow: - Density bonuses for affordable housing - Accessory apartments, garage apartments, and guest houses in all residential districts - Zero lot line developments - Group homes with less than six beds are allowed in all residential districts as a conditional use (to avoid over-concentration). Maintains a list of any vacant County-owned property available for development as affordable housing. All new proposed regulations are reviewed (prior to adoption) by the Affordable Housing Advisory Committee for their impact on affordable housing. In conclusion the County has conducted a rigorous regulatory review, adopted incentives and streamlined its development regulations for affordable housing. The City of Lakeland adopted its Affordable Housing Incentive Program in Summary: Sets the definition of affordable housing at 90% of median area purchase price as established by the US Treasury or a rental unit where the tenant pays no more than 30% of their income for housing. Affordable Housing Developments are those where at least 25% of the units are affordable housing. Expedited Permit Reviews All affordable housing developments receive priority review and processing. The City s Land Development Code was amended to allow: - Density bonuses for affordable housing - Accessory apartments, garage apartments, and guest houses in all residential districts - Zero lot line developments - Group homes with less than six beds are allowed in all residential districts as a conditional use (to avoid over concentration). Maintains a list of any vacant city-owned property available for development as affordable housing. All new proposed regulations are reviewed (prior to adoption) by the Affordable Housing Advisory Committee for their impact on affordable housing. Analysis of Impediments 11

20 In conclusion the City has conducted a rigorous regulatory review, adopted incentives and streamlined its development regulations for affordable housing /aoi Analysis of Impediments 12

21 ACTIONS TO CORRECT/IDENTIFY IMPEDIMENTS LAKELAND Discrimination Based on Race/National Origin or Disability The City will ensure that any complaints that are received are forwarded to HUD for investigation. In addition, the City will take the following actions to raise public awareness on this issue. 1. Proclaim February of each year Fair Housing Month in January Display fair housing posters in all public buildings (ongoing). 2. Print and distribute (in English/Spanish) fair housing bookmarkers in their library by February Provide HUD s Fair Housing Complaint forms at City offices and the library by February Contact the Board of Realtors and the apartment managers association to volunteer to participate in fair housing training at their meetings, symposiums, and housing events. By June Continue the practice of providing Fair Housing information at a booth at public events and symposiums. Ongoing. Affordable Housing The City will continue to provide education and outreach to landlords, property owners, realtors, developers, banks and non-profit organizations who provide or develop affordable housing. In addition, the City will continue to seek ways to assist developers and all of those involved in affordable housing in locating land, providing waivers of fees, grants and low interest loans and technical assistance to encourage the development of affordable housing and compliance with fair housing laws. Any agreements executed with affordable housing providers will incorporate the requirements of the equal opportunity and fair housing laws. Financial Plan for Accomplishment The City will continue to set aside funds each year from its entitlement grant to fund Fair Housing activities on an annual basis. Mechanism for updates The Housing Program Office is the lead contact agency, and as such maintains up to date information on all changes of federal, state and local rules. This office will maintain and keep track of changes in legislation and any required applicable actions to ensure compliance with HUD goals and rules. Actions to Correct/Identify Impediments Lakeland 1

22 Commitment from Local Officials The City Commission through both its proclamation and funding will provide proof of its commitment to fair housing /impediemnts/lakeland/actions to correct Actions to Correct/Identify Impediments Lakeland 2

23 IDENTIFICATION OF IMPEDIMENTS LAKELAND The 1998 update of the City s Analysis of Impediments found impediments in three areas. Discrimination Based on Race/National Origin or Disability The number of fair housing complaints from Polk County received by HUD or the State of Florida declined from 15 in FY2002 to 8 in FY2004. However, based on the fair housing testing conducted by the Central Florida Fair Housing Center, Inc. and the large number of small landlords in Lakeland, this still remains a problem. Affordable Housing Although the City has a relatively affordable housing market, the City has a high proportion of lowincome working-poor households, who will continue to need affordable housing. At present, 17% of Polk County s renters receive a housing subsidy from a governmental program. A number of these complexes are located in Lakeland. Public Policy Since 1997 the City has amended its zoning regulations to allow group homes in all residential zoning districts. The City through its building codes ensures that all structures meet the Americans with Disabilities Act (ADA). The City has also conducted its state-mandated Affordable Housing Regulatory Reduction Program and reviews all new ordinances for their impact on housing. Current Analysis This analysis found that impediments continue to exist in one area: discrimination based on race/national origin or disability. This analysis also found that a new impediment might exist in the subprime home-refinancing market where minority homeowners are being targeted by lenders, some who practice predatory lending /impediemnts/actions/lakeland/identification of impediments Identification of Impediments Lakeland 1