How To Help Extremely Low Income People In Delaware

Transcription

1 Housing Delaware s Extremely LowIncome Households: A Report from the Housing for Extremely Low-Income Households (ELI) Working Group December 2009 Bethel Villa, a 150-unit Project-Based Section 8 site currently undergoing rehabilitation to preserve affordability. (Wilmington) Vera s Haven, a 12unit transitional housing site. (Dover) Old Landing II, a Low Income Housing Tax Credit site where a subsidy reserve supports 6 units for extremely lowincome households. (Millsboro)

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3 Table of Contents Background...2 Participants...3 Executive Summary...4 Housing Needs...9 Estimate of Units Needed...10 Delaware Affordable Housing Inventory and Resources...13 Subsidized & Restricted Housing...13 Households Served...14 Federal Housing Program Funding in Delaware...17 Resources for the Homeless and Those at Risk...19 Recommendations...20 Short-term/Initiatives with Existing or Potential Resources...20 Long-term Initiatives...24 Page 1

4 Background In Delaware s Statewide Housing Needs Assessment, cost-burden and other housing problems among households with extremely low incomes (below 30% of the Area Median Income by household size, as defined annually by the U.S. Department of Housing and Urban Development) emerged as some of the state s most pressing housing needs. These include households and individuals who are homeless or at risk of homelessness, who are costburdened, paying more than 30% of their income towards housing costs, households and individuals with disabilities, elderly households on fixed incomes, and the working poor. Several existing federal programs public housing, Housing Choice Vouchers, and project-based rental subsidies provide housing assistance to extremely low-income (ELI) households. However, most of these resources have not been expanded in many years even as needs have grown exponentially. The high cost of reaching these households and lack of major funding sources targeted to these needs also unfortunately make these some of the most challenging needs to plan for and address. The sheer volume of the resources required are an initial stumbling block it can be difficult to work past. How can and will we, as a housing community, address these growing needs? To foster conversation and thinking about how to address housing needs of extremely lowincome households in Delaware, the Delaware State Housing Authority (DSHA) convened an informal working group in the summer of This group, the Housing for Extremely Low- Income Households Working Group, has worked together to review housing needs and available resources, brainstorm and pursue new ideas, investigate strategies used in other states, and identify a set of recommendations for Delaware s housing community to take steps towards addressing the housing needs of households with extremely low incomes. The following report and recommendations are the result of this work. Page 2

5 Working Group Participants Patricia Baker, USDA Rural Development Kimberly Brockenbrough, Delaware State Housing Authority Shani Brown, Dover Housing Authority David Buches, Federal Home Loan Bank of Pittsburgh Carrie Casey, New Castle County Department of Community Services Kelly Crumpley, Kent County Department of Planning Services Cindy Deakyne, Delaware State Housing Authority Marlena Gibson, Delaware State Housing Authority Nailah Gilliam, City of Wilmington Karen Horton, Delaware State Housing Authority Patricia Kelleher, ARC of Delaware Rosalind Kotz, University of Delaware Bill Lecates, Sussex County Community Development & Housing Diane Lello, U.S. Department of Housing and Urban Development Joe Myer, NCALL Research Gary Pollio, Interfaith Community Housing Delaware Paul Reynolds, New Castle County Department of Community Services Mike Skipper, WSFS Bank Ken Smith, Delaware Housing Coalition Susan Starrett, Homeless Planning Council of Delaware Leonette Traylor, City of Wilmington Jane Vincent, Delaware Community Foundation Page 3

6 Executive Summary The Role of Federal Dollars and Policy While programs like Tenant Based Rental Assistance (Housing Choice Vouchers), Project Based Rental Assistance, and Public Housing Operations have seen small dollar-amount increases from 2004 to 2009, these have far from kept up with increasing costs or needs. Researchers estimate that federal housing assistance reaches as few as one in four to one in five low income households in need, and growth in some programs has almost always been offset by losses in others: for example, as the Housing Choice Voucher (HCV) program grew in the 1990s, hundreds of thousands of units with project-based subsidies were lost. 1 At the federal level, housing policy has shifted away from expanding deep-subsidy programs targeted to the poorest households toward providing more shallow subsidies to higher-income households via the Low Income Housing Tax Credit (LIHTC) and promoting homeownership. This redirection of federal funding and policy has left state and local government to both direct the use of federal funds to meet local needs as well as develop their own programs and funding sources to meet needs which are no longer met by federal programs and dollars. 2 In addition to inadequate increases for vital programs such as public housing and project-based rental assistance, other critical housing and community development programs have seen reductions. From 2004 to 2009, the Community Development Fund, which includes Community Development Block Grants and a few other smaller programs, fell from $4.9 billion to $3.9 billion. Over the same time period, the HOME Investment Partnership Program fell from $2.0 billion to $1.8 billion. These programs are two critical sources of flexible funds for state and local governments to address housing and community development needs. While HOME and CDBG have received additional funding under the American Reinvestment and Recovery Act, these extra allocations are not permanent. As the role of project-based subsidies (such as public housing, Project-Based Section 8, and Section 202/811) has fallen back in recent decades, the Low Income Housing Tax Credit Program (LIHTC) is one of few programs that have experienced an increase in resources. Over time, it has become the most significant federal program for the production and rehabilitation of affordable housing. As the largest production program, it is understandably often the driving force in state rental housing programs. A central challenge, however, is that the LIHTC targets households at 50 60% of Area Median Income, and it is often not enough on its own to reach households with extremely low incomes. In almost all cases, it must be paired with other sources of project-based (Section 8, etc) or tenant-based subsidies to reach these households. As there are few to no new units being added to federal project-based subsidy programs, this severely limits the LIHTC s ability to add new units restricted and affordable to extremely low-income households. 1 Pelletiere, D., & Wardrip, K.E (2006). Recent Data Shows Continuation, Acceleration of Housing Affordability Crisis (Research Note #06-05). Washington, D.C.: National Low Income Housing Coalition. Also: Rice, D. & Sard, B. (2009). Decade of Neglect has Weakened Federal Low-Income Housing Programs. Washington, D.C.: Center on Budget and Policy Priorities. 2 Mueller, E. and Schwartz, A. (2008). Reversing the Tide: Will State and Local Governments House the Poor as Federal Direct Subsidies Decline? Journal of the American Planning Association, 74(1), Page 4

7 Delaware s Situation As in the rest of the nation, the LIHTC is Delaware s most important resource for the new construction and rehabilitation of affordable rental housing. While it has been an essential tool for the preservation of sites with project-based subsidies, its ability to independently create new units affordable to extremely low income households without subsidies is limited. To improve our understanding of Delaware s situation and inform our recommendations, the ELI Working Group undertook an assessment of resources available to assist extremely low income households with their housing needs in Delaware. What current programs are in operation, and what streams of funding are available? How many households are they assisting, and at what income levels? Key findings of this research included: Delaware has a substantial existing stock of project-based and tenant-based subsidies and units (approximately 19,500 units statewide) assisting low-income households; without these units, the number of extremely low-income households in need would likely double. The annual value of federal subsidies assisting these units is approximately $80 million. The vast majority are in programs no longer being expanded with new units. Public housing, Housing Choice Vouchers, project-based Section 8, and Rural Development Rental Assistance sites all serve a majority ELI households. Programs with higher income limits are also successfully serving extremely low-income households. Analysis showed that as a whole, 40% of households in LIHTC sites in Delaware had incomes below 30% of median. Among households in LIHTC sites with either project- or tenant-based subsidies, 69% of households had extremely low incomes. Flexible funds for housing in Delaware are limited and called upon to address a wide range of additional housing and community development needs. Creating new units affordable to extremely low-income households within the main funding programs available (LIHTC) requires additional project- or tenant-based subsidies from other sources. However, this is not impossible: there are successful examples both nationally and in Delaware. The National Housing Trust Fund, if funded and fully implemented in the coming years, will be a significant new resource targeted to rental housing needs of extremely low-income households. Increasing Housing Needs The recession has led to clear increases in poverty nationally, from 12.5% in 2007 to 13.2% in Projections are for poverty and deep poverty (households with income below 50% of the poverty level) to continue to increase as unemployment rates remain high. 4 In Delaware, unemployment in September 2009 was 8.3%, up from 6.2% in September In that same time period, the state lost 21,200 3 U.S. Census Bureau (2009). Income, Poverty and Health Insurance Coverage in the United States: Washington, D.C.: U.S. Census Bureau. ( 4 Parrott, S. (2008). Recession Could Cause Large Increases in Poverty and Push Millions into Deep Poverty. Washington, D.C.: Center for Budget and Policy Priorities. ( Page 5

8 nonfarm jobs, a -5.4% loss. 5 All of these conditions contribute to housing instability, housing costburden, and a high risk for homelessness. Households that were already struggling are feeling the worst effects of the nation s economic crisis, and reductions in home prices have little impact for those who are severely burdened by unaffordable rents. However, even before the recession, Delaware and the nation have been encountering increasing housing needs, especially among households with extremely low incomes. Long trends of increasing income inequality and job growth concentrated in industries with lower average wages have led housing needs to increase for some time. Key findings of the group s review of housing needs research include: Thousands of Delaware households were facing severe needs before the recession: an estimated 13,422 extremely low-income renter households were cost-burdened paying more than 30% of their income for housing in ,550 of these households were severely cost-burdened paying more than 50% of their income for housing. In all three counties, fair market rents far exceed (by anywhere from $275 to $425 a month) rents affordable to extremely low-income households, minimum-wage workers, and individuals who rely on Supplemental Security Income (SSI) for income. Many of these households include individuals with disabilities, the elderly, or are simply the working poor. Delaware has an immediate and pressing need for at least 13,422 rental units affordable to ELI households, whether through project-based or tenant-based assistance. At least 1,132 of these are needed as new subsidized units to be added to Delaware s housing stock. In addition, there is a need for 2,003 units of project- or tenant-based subsidized housing with supportive services for individuals who are homeless or at risk for chronic homelessness. Recommendations These conditions leave Delaware in a position similar to that of most other states: facing larger, more challenging and expensive housing needs with fewer resources, and few resources targeted or able to meet those most challenging needs. The impact of the recession on state and local government revenues and budgets has made what was once merely very difficult raising state and local sources of funding for housing practically impossible. With these challenges in mind, the ELI Working Group set out to identify strategies both short- and longterm to improve the ability of Delaware and its local jurisdictions to meet the housing needs of extremely low-income households. Some are small, realistic steps within existing resource constraints; some will require long-term initiative to substantially increase resources or redirect some existing sources. Some raise policy questions to consider: for example, would we consider prioritizing creating likely fewer extremely affordable units over creating as many affordable units as possible? A full discussion of the recommendations follows on page Delaware Department of Labor (2009). Delaware Monthly Labor Review, September ( Page 6

9 Short-term / Initiatives with Existing or Pending Resources Low-Income Housing Tax Credit Program o Expand on the model used at Old Landing II, where a subsidy reserve was established to subsidize 6 of 24 units to reach ELI households. Allow use of 30% boost or other sources to create subsidy reserves to reach households with extremely low incomes. o Allow points in Qualified Allocation Plan for projects incorporating units for special populations within larger projects as well as in 100% special populations projects. o Consider setting a minimum percentage of LIHTC units (5-10%) required to be affordable to ELI households in each new site. o Target tenant-based rental assistance programs to use LIHTC units. Formalize ELI Needs as Priorities: Target Flexible Funding Sources o Identify a set percentage of funds to be targeted to housing or assistance for ELI households. o Establish a regular grant process for flexible funding sources to establish priorities, guidelines, and processes for ranking applications. Statewide Commitment to ELI Needs o Identify a state and local government-wide commitment to serving ELI housing needs. National Housing Trust Fund o Plan strategically, cooperatively, and in advance for how these resources may be most effectively invested to serve ELI households in Delaware. ELI Homeowners o Further examination of ELI homeowner needs. o Investigate and identify strategies for elderly homeowner needs. o Housing Rehabilitation o Advance successful strategies for sustainable Very and Extremely Low-Income Homeownership which provide support for homeowners and preservation of subsidies. Long-term Initiatives Low-Income Housing Tax Credit Program o Expand on the subsidy reserve model used at Old Landing II with additional resources. State Tax Credit Program o Pursue the creation of a state tax credit program to supplement the federal LIHTC program and help it to reach lower-income households. Public Housing Authorities o Preserve and support the preservation of Delaware s public housing. o Improve communication and cooperation among public housing authorities. Inclusionary Housing Programs o Advocate for the inclusion of rental housing and targeting of lowest possible incomes in the development of inclusionary housing programs. Page 7

10 o o Pursue opportunities to combine units created through inclusionary housing programs with other sources of assistance to reach lower income households. Advocate for inclusion of right to purchase provisions allowing local housing nonprofits or public agencies to purchase units to increase affordability. Source of Income Discrimination o Pursue the addition of source of income as a protected class in the state s fair housing laws. State Rental Assistance Programs o Pursue continued expansion of existing programs targeting rental assistance with supportive services to the homeless and those at risk of homelessness, maintaining a focus on permanent supportive housing, flexibility for providers, and coordination of resources. o Pursue creation and funding of a general rental assistance program for Delaware prioritizing extremely low-income households, possibly on a pilot-program basis. Page 8

11 Housing Needs The need for rental units affordable to extremely low-income households is one of the Delaware s most pressing and severe housing needs, both due to the magnitude of the need and the difficulty and lack of funding targeting these needs. Extremely low-income is defined as 30% of the Area Median Income as set by the Department of Housing and Urban Development (HUD) annually. Affordability for Extremely Low Income Households (30% AMI), 2009 Household Size % AMI Aff. Rent 30% AMI Aff. Rent 30% AMI Aff. Rent 30% AMI Aff. Rent 30% AMI Aff. Rent Kent County 12, , , , , New Castle County 16, , , , , Sussex County 12, , , , , Source: U.S. Dept. of Housing and Urban Development, 2009 Fair Market Rents. Affordable rent calculated as 30% of monthly income. For a household of four, 30% of HUD Area Median Income ranges from $17,600 in Sussex County to $23,350 in New Castle County. Both of these are close to the 2008 poverty threshold as defined by the U.S. Census Bureau, $21,910 for a family of four. Incomes may flex up or down a small amount, but extremely low-income households are essentially households in or very close to poverty, and the number of these households in Delaware is high: as of the 2008 American Community Survey, there were an estimated 85,094 individuals with income below poverty level in Delaware, or 10% of the population. A full-time worker earning the minimum wage in Delaware ($7.15/hour) would have an annual pay of $14,872 barely above the poverty threshold and, depending on if the worker was supporting a family, at or below 30% of Area Median Income in all three Delaware Counties. An individual with a disability relying $1,200 $1,000 $800 $600 $400 $200 $0 Affordability Gap for Extremely Low-Income Households $446 $774 $584 $1,005 $440 on Supplemental Security Income (SSI) has an annual benefit of only $674 a month enough to afford a monthly rent of only $ Many of these households successfully find and maintain housing in the private market or have housing assistance through federal or state programs. However, the rent affordable at 30% of Area Median Income is very low. A family of four in Kent County would only be able to afford a rent of $446 a month, compared to a fair market rent in the area of $774 for a two-bedroom apartment. As a result, extremely low-income households are particularly vulnerable to cost-burden paying more than 30% of their income for housing costs and other housing problems, including substandard housing and overcrowding. Many are precariously housed and at high risk for homelessness. $714 Kent County New Castle County Sussex County Rent Affordable at 30% AMI for Household of Fair Market Rent for 2-BR Apt. 6 Wardtrip, K., Pelletiere, D., and Crowley, S. (2009). Out of Reach 2009: Persistent Problems, New Challenges for Renters. Washington, D.C.: National Low Income Housing Coalition. ( Page 9

12 Fair Market Rents by Number of Bedrooms, BR 1 BR 2 BR 3 BR 4 BR Kent County $642 $699 $774 $1,012 $1,359 New Castle County $736 $842 $1,005 $1,203 $1,431 Sussex County $590 $643 $714 $977 $1,005 Source: U.S. Dept. of Housing and Urban Development, 2009 Fair Market Rents A key indicator of rental housing needs is the number of cost-burdened renter households. The Department of Housing and Urban Development s CHAS data are the only local-level data available examining cost burden and other housing problems for households by HUD s income categories, allowing us to identify need by the typical 30%, 50%, and 80% of HUD AMI categories. These data are tabulated from the 2000 Census and unfortunately updated data from the new American Community Survey will not be available until However, a 2007 study commissioned by the Delaware Housing Coalition updated the 2000 CHAS data to 2005, providing some more updated figures for Delaware. 7 Cost-burdened Extremely Low Income Households Estimate, Delaware and Counties, 2005 Cost Burden (over 30%) Severe Cost Burden (over 50%) Rental Owner Total Rental Owner Total Kent County 1,974 2,932 4,906 1,879 2,021 3,900 New Castle County 9,595 6,529 16,124 9,157 5,588 14,745 Sussex County 1,854 4,980 6,834 1,522 3,735 5,257 Delaware 13,422 14,414 27,836 12,550 11,127 23,677 Source: Housing Needs of Extremely Low Income Households in Delaware, Delaware Housing Coalition, 2007 Updated to 2005, the HUD CHAS data indicate 13,422 cost-burdened extremely low-income renter households in Delaware, households paying more than 30% of their income for housing. In addition, there are also 14,414 cost-burdened extremely low-income homeowner households in Delaware. Estimate of Units Needed As noted above, the number of cost-burdened renter households is a key indicator of rental housing needs. Cost-burdened renter households are in need of either a new subsidized unit or new unit of subsidy, such as a voucher, to be used in market rate housing. There is a need for 13,422 rental units affordable to ELI households in Delaware. This is a mix of need for new units to be added to Delaware s housing stock and households who are currently housed but in need of rental assistance. Using CHAS information about household size, this study was also able to estimate rental need by unit size. Estimate of Rental Units Needed for ELI Households by Number of Bedrooms BR 2 BR 3+ BR Total Units Kent County ,974 New Castle County 3,163 2,604 3,828 9,595 Sussex County ,854 Delaware 4,488 3,625 5,310 13,422 Source: Housing Needs of Extremely Low Income Households in Delaware, Delaware Housing Coalition, Kotz, R. (2007). Housing Needs of Extremely Low Income Households in Delaware. Dover, DE: Delaware Housing Coalition. ( Page 10

13 The Delaware State Housing Authority s Statewide Housing Needs Assessment also included projections for rental housing needs. 8 This analysis, which included household growth projections as well as estimates of cost-burdened households currently in substandard housing, identified a need for 1,132 new units affordable to ELI households. This need is for new subsidized units to be added to Delaware s housing stock. The study included a similar analysis for cost-burdened renter households using the 2000 Census, and identified 24,901 renter households as at-risk, with income less than $20,000, cost burdened, or on public housing authority waiting lists. It is difficult to clearly separate the needs of households and individuals who are homeless or at risk for homelessness, including those with disabilities, and the general population of ELI households. Indeed, there is much overlap. Households or individuals who are homeless or at risk for homelessness almost always have extremely low incomes and, were they housed, would likely be costburdened. The housing situations New Rental Units Needed Affordable to 30% AMI Units Kent County 240 New Castle County 687 Sussex County 205 Delaware 1,132 Source: Mullin & Lonergan Associates, Statewide Housing Needs Assessment 100% 80% 60% 40% 20% 0% Rental Units Affordable to ELI Households Needed by County and Bedroom Size 759 3, , , Kent County New Castle County Sussex County of extremely low-income individuals or households who are cost-burdened are often insecure, putting them at high risk for homelessness. Homelessness is a complex issue with many causes, solutions, and potential outcomes, but a key part of addressing homelessness is increasing the housing stock affordable to households with extremely low incomes. Ultimately, homelessness is an affordable housing issue. The need for 13,422 rental units affordable to households with extremely low incomes as identified in the Housing Needs of Extremely Low Income Households study includes an estimate for units needed for the homeless. Using household size data and counts from the 2006 Point-in-Time study, the study estimates that 923 of the 13,422 units needed are required for homeless households, the majority of these (738) 0-1 bedroom units for individuals. Using a nationally recognized formula, the Homeless Planning Council of Delaware s 2009 Point-in-Time study projects the number of people who are homeless in a year. In 2009, this projection is 3+ BR 2 BR 0 1 BR 8 Mullin & Lonergan Associates (2007). Delaware Statewide Housing Needs Assessment Dover, DE: Delaware State Housing Authority. ( Page 11

14 approximately 6,759 individuals facing homelessness. 9 In 2007, the Delaware Interagency Council on Homelessness (DICH) released a Ten Year Plan to End Chronic Homelessness. 10 While specific to chronic homelessness defined by HUD as unaccompanied persons who have been homeless for twelve consecutive months, or four times over the last three years, and who have a diagnosable mental health or substance use condition, developmental, physical or other disability the plan includes an assessment of resources and needs. It identifies a need for 2,003 units to provide housing for individuals who are chronically homeless or at risk for chronic homelessness. Units Needed Chronically Homeless Type # of Beds Supportive housing units 648 Rental subsidies 1,000 Statewide crisis intake system 25 Maintenance of existing beds at risk due to federal match requirements 330 Total 2,003 Source: Delaware Interagency Council on Homelessness, To summarize these needs, Delaware has an immediate and pressing need for at least 13,422 rental units affordable to ELI households, whether through project-based or tenant-based assistance. At least 1,132 of these are needed as new subsidized units to be added to Delaware s housing stock. And in addition, there is a need for 2,003 units of project- or tenant-based subsidized housing with supportive services for individuals who are homeless or at risk for chronic homelessness. 9 Homeless Planning Council of Delaware (2009). Homelessness in Delaware: Summary of the 2009 Point in Time Study and Comparison of 2006, 2008 and 2009 Data. Wilmington, DE: Homeless Planning Council of Delaware. ( 10 Delaware Interagency Council on Homelessness (2007). Breaking the Cycle: Delaware s Ten Year Plan to End Chronic Homelessness and Reduce Long-term Homelessness. Dover, DE: Delaware Interagency Council on Homelessness. ( Page 12

15 Delaware Affordable Housing Inventory and Resources Subsidized & Restricted Housing - Delaware Numerous federal programs and state funding have created and continue to support thousands of assisted rental units in Delaware. Combined, there are approximately 19,500 assisted rental units in the state, including public housing, Housing Choice Vouchers, project-based subsidies such as Section 8, Rural Development Rental Assistance, and HUD Section 202/811, and income-restricted Low Income Housing Tax Credit units. All of these units and streams of rental subsidy are vitally important to helping Delaware households attain and maintain safe, decent and affordable housing. Combined, the total value of rental subsidies for the Housing Choice Voucher, public housing, project-based Section 8 and RD programs exceeds $80 million dollars. By county, 62% of units are located in New Castle County, 19% in Sussex, and 18% in Kent County. Subsidized & Restricted Housing - Delaware Approximate Population Served Annual Federal Units Subsidy Housing Choice Vouchers 4,735 Households with income <80% of Median $32,426,526 Public Housing Units 2,682 Households with income <50% of Median $11,657,600 LIHTC Units* 4,602 Households with Income <50 60% of Median n/a Section 202/ Elderly and Individuals with Disabilities not available Project-based Section 8 Units 4,721 Households with income < 50% of median, many elderly $31,703,521 Rural Development Units 1,695 Households with income <50% of median $4,763,251 Other Income-Restricted 121 Mixed n/a Total 19,447 $80,550,898 Source: DSHA, Public Housing Authorities, Delaware Housing Services Directory, and Center for Budget and Policy Priorities *1,248 LIHTC units also have Section 8 and 614 also have Rural Development subsidies. There are a total of 6,484 LIHTC units, but 1,862 are counted under Project-based Section 8 or Rural Development. Preservation of this existing stock of subsidized and income-restricted housing has been a priority in Delaware for several years. Most existing project-based subsidy programs, such as Project-based Section 8, Rural Development Rental Assistance, and public housing have had no or very small allowances for the creation of new units in many years. Existing units are at risk of loss of affordability to market rate if owners opt to leave programs, or loss of the subsidy contracts or units themselves in cases of physical deterioration. These streams of rental assistance are especially valuable to the state, as they allow sites to reach lowerincome households the extremely low-income households which are otherwise difficult to reach with the programs available for new construction, such as the LIHTC. These streams of subsidy with an annual subsidy value of over $35 million for Project-based Section 8 and Rural Development - are quite literally irreplaceable in the state. While there are extensive needs for the addition of new units to serve extremely low-income households, thousands of extremely low-income households who would otherwise be in dire need of housing are currently being assisted by this existing stock. Maintaining and preserving the condition and affordability of this existing stock is crucial to continuing to meet the state s housing needs. Page 13

16 Subsidized & Restricted Housing Delaware by County Kent Sussex New Castle Total Housing Choice Vouchers* ,610 4,735 Public Housing ,896 2,682 LIHTC** ,602 Section 202/ Project-based Section ,721 Rural Development ,695 Other Income-Restricted Total 3,534 3,767 12,146 19,447 Source: DSHA, Public Housing Authorities, Delaware Housing Services Directory * Number of vouchers for Kent and Sussex is an even split of vouchers administered by DSHA, as the program covers both Counties. Kent County s total also includes vouchers administered by the Dover Housing Authority. Federal Housing Subsidies Passed Through Public Housing Authorities Vouchers Annual Value Public Housing Units Public Housing Ops Support Total Units Delaware State Housing Authority (Kent and Sussex) 905 $6,514, $2,166,980 1,413 Dover Housing Authority 220 $991, $1,178, Sussex & Kent County Subtotal 1,125 $7,505, $3,345,355 1,935 Newark Housing Authority 209 $597,838 56* $235, New Castle County 1,824 $14,312,219 0 n/a 1,824 Wilmington Housing Authority 1,577 $10,010,598 1,816 $8,076,563 3,393 New Castle County Subtotal 3,610 $24,920,655 1,872 $8,312,245 5,482 Total 4,735 $32,426,526 2,682 $11,657,600 7,417 Source: HUD Office of Public Housing Philadelphia, FY 2008 Funding, Delaware Housing Services Directory, and Delaware public housing authorities. * Newark Housing Authority has funding approval for another 42 units that are currently being redeveloped, and are not in use. Households Served While a few specific programs can serve ELI households, these programs also can reach above 30% of AMI to higher income levels, and there may even be incentives to do so. Similarly, some programs which typically target somewhat higher income households also have the capacity to reach lower when paired with other resources. These issues raised important questions for the Working Group about how these existing 100% 80% 60% 40% 20% 0% Subsidized and Income-Restricted Housing by County Other Income-Restricted Rural Development Project-based Section Section 202/ LIHTC Public Housing Housing Choice Vouchers Kent New Castle Sussex Page 14

17 resources of units and funding in Delaware are serving ELI households now. Where possible, the group gathered information about average incomes and households served. Where average tenant income information could be gathered, it is clear that public housing and the Housing Choice Voucher programs are reaching their target population and serving extremely lowincome households. As reported in DSHA s 2010 Moving to Work Annual Plan, average tenant income in DSHA public housing was $13,970 as of February New Castle County found that a sample of 1,130 of Housing Choice Voucher holders in their HCV program in FY 2009 had average income of $13,458, well under 30% of the County s Area Median Income. The Dover Housing Authority similarly reported an average annual income of $13,500 in their public housing and Housing Choice voucher programs as of July Encompassing all LIHTC units, the LIHTC program has a much higher average tenant income, $21,995 across all units in November However, LIHTC units with other sources of subsidy, such as Section 8, Rural Development Rental Assistance, or Housing Choice Vouchers, served a much lower average tenant income, $12, % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1,454 1,043 1, ,387 All LIHTC Units Households Served by Income, LIHTC ,003 LIHTC Units with Project-based or Voucher Assistance 1, Units with LIHTC Only >50% AMI 40-50% AMI 30-40% AMI 20-30% AMI <20% AMI Data released by Rural Development in its 2009 Multi-Family Housing Annual Occupancy Report indicate that overall, Rural Development sites in Delaware are serving extremely low income households, with an average tenant income of $10,651 across all of Delaware s 54 RD sites as of April This compares to a national average of $11,258 across all RD units. For households in units with RD s Rental Assistance subsidy (76% of households at the time of data collection), the average tenant income is even lower, $9,745. While RD s income limit is 50% of AMI, the average tenant incomes suggest that the program is often reaching much lower. While detailed data by household size and county is not available, even for a household of one, $10,651 is well below 30% of median in both Kent and Sussex Counties. The lower incomes served in RD sites may also be affected by the geographic distribution of units; almost all of Delaware s Rural Development units are in Kent and Sussex Counties, where incomes are markedly lower in general. Across all sites in Delaware, 96.04% of households in 2009 had income below 50% of Area Median (very low-income), compared to 93.7% nationally. Unfortunately, similar tenant income information is not available for all Delaware s project-based Section 8 sites, but anecdotal and site-level information strongly suggest that these sites also are successfully serving and targeting households with extremely low incomes. 11 U.S. Department of Agriculture (2009) Multi-Family Housing Annual Fair Housing Occupancy Report. Washington, D.C.: U.S. Department of Agriculture, Rural Development Housing and Community Facilities Program. ( Page 15

18 Average Tenant Incomes Program Average Tenant Year/Point in Income Time DSHA Public Housing Sites $13,970 Feb New Castle County Housing Choice Voucher $13,458 FY 2009 Dover Housing Authority $13,500 July 2009 Newark Housing Authority $17,520 Sept Rural Development All Section 515 and 514 $10,651 April 2009 Rural Development Households with Rental April 2009 $9,745 Assistance (RA) LIHTC All Households $21,995 Nov LIHTC Households with Rental Assistance Nov $12,709 (Section 8, RD RA, or HCV) Sources: DSHA 2010 Moving to Work Annual Plan; 2009 Rural Development Multi-family Housing Annual Occupancy Report; Public Housing Authorities; DSHA LIHTC Data The LIHTC program was of particular interest, as it targets households at 50-60% of median, but for many years has been the main program available for construction of new affordable housing and rehabilitation of existing affordable housing. In Delaware, we have long cited that the program was in many cases reaching ELI households through combination with other programs and as a result of rents often lower than the maximum allowed under the program. New monitoring and data compilation software at DSHA allowed an in-depth analysis of LIHTC units, combination with other programs, and households served. While still incomplete and not yet including all units, the software at the time of the analysis (November 2008) included 5,914 of 6,484 units, 91% of all units. LIHTC All Households LIHTC Households with Rental Assistance (HCV, S8, RD) Households Served by Income Range Total Less than 30 50% Households 30% AMI AMI >50% AMI Missing Info Households 5,914 2,349 2,104 1,454 7 Percent 100% 40% 35% 25% <1% Households 2,183 1, Percent 100% 69% 24% 6% <1% Sources: DSHA analysis of LIHTC site data, November 2008 This analysis indicated that the LIHTC program is indeed reaching ELI households when combined with other sources of rental assistance, and in some cases even without other sources of rental assistance where rents are low enough to serve households with extremely low incomes. Of all LIHTC units, 40% were occupied by tenants with incomes below 30% of AMI for the county where the unit is located. For LIHTC units with an associated Section 8 or Rural Development project-based subsidy, or where the tenant had a Housing Choice Voucher, 69% of these units were occupied by households with extremely low incomes. In some cases, rents set in LIHTC sites are well below the maximum rents allowed under the program, thus allowing the sites to reach lower-income households without cost burden or additional subsidies. However, it is important to note that these units are not restricted to serving extremely low-income households; they can just as easily be rented by any household meeting the LIHTC income guidelines for the unit (under 50 or 60% of median). Page 16

19 Delaware s Public Housing and Housing Choice Voucher programs are also successfully reaching ELI households. Across the public housing authorities for which information was available, more than 65% of households served have incomes below 30% of Area Median Income. While eligibility for these programs reaches up to 80% of AMI, across the state, PHAs are vital sources of housing assistance for households with extremely low incomes. Delaware State Housing Authority Dover Housing Authority Newark Housing Authority Households Served by Income Range: Public Housing and Housing Choice Vouchers Total <30% w/ Households AMI AMI 50% 80% Elderly AMI Disabilities Housing Choice Households Voucher Program Percent 100% 66% 30% 4% - - Households Public Housing Percent 100% 66% 24% 7% - - Housing Choice Households Voucher Program Percent 100% 74% 21% 6% 11% 2% Households Public Housing Percent 100% 79% 17% 4% 8% 3% Housing Choice Households Voucher Program Percent 100% 68% 26% 5% 18% 32% Households Public Housing Percent 100% 71% 18% 7% 62% 15% Housing Choice Households 1, Voucher Program Percent 100% 80% 18% 2% 4% 35% New Castle County* Sources: DSHA Moving to Work FY 2010 Annual Plan, Public Housing Authorities * New Castle County information based on a sample of 1,130 clients for FY As of Date 2/09 2/09 7/09 7/09 9/09 9/09 FY 09 Federal Housing Program Funding in Delaware In addition to federal programs operated by public housing authorities (Public Housing and the Housing Choice Voucher program) and rental subsidies through the Project-based Section 8, RD Rental Assistance, and Section 202/811 programs, jurisdictions in Delaware also receive funding for various housing and community development activities through numerous HUD grant programs. Some flexible, some specialized, these programs are similarly important housing resources in the state and total approximately $13 million annually. Federal Funding Sources Passed Through Jurisdictions (FY July 1, 2008 June 30, 2009) Program DSHA (Kent City of City of City of New Castle and Sussex) Dover Newark Wilmington County Total CDBG $1,982,003 $278,978 $255,758 $2,427,208 $2,355,523 $7,299,470 HOPWA $179,000 n/a n/a $604,000 n/a $783,000 ESG $99,187 n/a n/a $108,873 $105,458 $313,518 HOME $3,000,000 n/a n/a $654,769 $1,128,046 $4,782,815 Total $5,260,190 $278,978 $255,758 $3,794,850 $3,589,027 $13,178,803 Source: Jurisdiction HUD Annual Action Plans Jurisdictions use these funds in different ways in response to their community needs. Typically, the Community Development Block Grant (CDBG) program tends to be strongly used for homeownership Page 17

20 rehabilitation programs, but also providing support to housing and services for the homeless and grants to various community development activities. It can also be used for demolition and infrastructure improvements. In Delaware, CDBG is an important program for helping low-income homeowners rehabilitate and maintain the condition of their homes, particularly very- and extremely low-income homeowners. Housing Opportunities for Persons with AIDS (HOPWA) in Delaware is used to provide tenant-based rental assistance, homelessness prevention and services to individuals with HIV/AIDS. The Emergency Shelter Grants (ESG) program is also a targeted program, providing funding for emergency shelters and homelessness prevention activities. The HOME Investment Partnerships Program is a flexible program, supporting a range of activities to build, buy or rehabilitate affordable housing for rent or homeownership or to provide direct rental assistance. In Delaware, jurisdictions use HOME to support multifamily rental projects, homeownership projects, and some homeowner rehabilitation. Not shown in the above table are several programs funded by the Housing and Economic Recovery Act (HERA) of 2008 and American Recovery and Reinvestment Act (ARRA) of These include: Neighborhood Stabilization Program support to bring abandoned and foreclosed-upon homes back to active use to reduce the impact of foreclosures on communities. ($19,600,000 total: Delaware) Public Housing Capital Fund provides funds for capital and management activities of PHAs, with priority to projects that can be quickly implemented, are already underway, or included in the PHA s 5-year capital fund plans. ($7,067,910 total: Delaware) Homelessness Prevention and Rapid Re-housing Program provides financial assistance and services to prevent homelessness and assist those who are homeless to be quickly re-housed and their housing situation stabilized. ($2,921,322 total: Delaware) Tax Credit Assistance Program provides grant funding for capital investment in LIHTC projects, distributed competitively according to existing Qualified Allocation Plans. These funds were allocated in order to advance the numerous LIHTC projects that were struggling to secure investors due to the recession and to counteract the sharp reductions in value of tax credits, which provide equity to projects. ($6,608,893: Delaware) Community Development Block Grant (CDBG) provides additional formula funding to CDBG jurisdictions for CDBG-eligible activities, with a priority on projects which can award contracts quickly. ($1,909,598 total: Delaware) While these stimulus and recovery programs are providing much-needed funding and program support, all are one-time or otherwise time-limited investments, not long-term sources of funding. National Housing Trust Fund One bright spot on the horizon for federal funding for housing is the National Housing Trust Fund (NHTF). For many years, national advocates have been working to create this new federal source of funding for housing development. It will be the first major new federal housing program and stream of funding in well over a decade, and was created in the Housing and Economic Recovery Act of 2008 (HERA). Unfortunately, it still lacks a dedicated revenue source as the original plan called on contributions from Fannie Mae and Freddie Mac, and these are on hold indefinitely. However, it is Page 18

21 included in the federal FY 2010 budget with an allocation of $1 billion, and the administration has expressed a commitment to funding it. As of fall 2009, there are various proposals for a dedicated funding source being considered. HUD is working on draft allocation formula and regulations for the program. Even if funding does not materialize in 2010, the dedication of national advocates to this project, its creation in 2008 and the administration s support all suggest it likely will move forward to funding in the future. The National Housing Trust Fund is of particular interest to the ELI Working Group as it is targeted to ELI households: at least 75% of the funds must be used for housing for ELI households, and 100% of the funds must assist households with income below 50% of Area Median Income (very low-income households). With a projected minimum state allocation of $3 million, this could be a tremendously important new resource for Delaware to help fill the gap that makes it so difficult for many existing funding programs to reach ELI households. Resources for the Homeless and Those at Risk The Homeless Planning Council of Delaware s 2009 Point-In-Time study identified 1,517 units of housing for the homeless in Delaware, the majority of these emergency shelter or transitional housing programs. The greatest need is for new units of permanent supportive housing. In the three years since the 10-Year Plan was approved, Delaware has created 230 of the identified 2,003 units needed. Facilities Serving the Homeless in Delaware, 2008 Type of Facility # of Beds Emergency Shelters 501 Transitional Housing Programs 725 Permanent Housing Programs 291 Total 1,517 Source: Homelessness in Delaware: Summary of the 2009 Point-in-Time Study. Homeless Planning Council of Delaware, An analysis conducted in 2006 as part of the Interagency Council on Homelessness planning process shows the resources required to serve Delaware s homeless. Federal sources of assistance are crucial, making up over half the total funding. Funding for Housing and Services for the Homeless in Delaware, 2006 Federal State Other Total Sources Sources Sources Emergency Shelter $2,224,783 $2,044,561 $1,731,420 $6,000,763 Transitional Housing $3,546,004 $1,091,504 $2,745,131 $7,382,639 Permanent Supportive Housing $3,001,821 $2,316,118 $1,304,514 $6,622,453 Rental Housing/Tenant-based Rental Assistance $1,429,829 $1,697,107 $2,224,000 $5,350,936 Total $10,202,437 $7,149,290 $8,005,065 $25,356,791 Federal Sources: HOPWA, CDBG, CSBG, Medicaid*, HUD Supportive Housing Program, and other programs State Sources: DHSS, Grant in Aid, Medicaid* Other: Contributions, Program Income, and Other Sources * Medicaid amount is split evenly between the Federal Sources and State Sources category, as it is a 50/50 match of state and federal funds. Page 19

22 Recommendations Short-term / Initiatives with Existing or Pending Resources Low-Income Housing Tax Credit Program In past two decades, the LIHTC has emerged as the most significant federal program for the new construction and rehabilitation of affordable rental housing. It is one of very few programs to experience an increase in resources, however marginal. From 2000 to 2009, Delaware LIHTC allocation increased from $2 million to $2.665 million. Even in the current challenging market for tax credits, Delaware s 2009 allocation of $2.665 million is expected to result in an approximate $17 million in equity for projects. In recent years with higher demand for credits among investors, this would have been closer to $21 million. Still, this by far makes the LIHTC the state s largest source of funding for rental housing. Reaching ELI households with the LIHTC requires additional resources to make it possible, plus either a strong points incentive or a mandate. Resources can take the form of: Upfront capital funds for the project; Funds to form a subsidy reserve for a set number of units; or A separate stream of rental assistance funding targeted to LIHTC units. There are successful models of all three approaches in various states. In Delaware, the model of creating a subsidy reserve has proved successful at Old Landing II, a LIHTC site in Millsboro where a $500,000 reserve was created to provide rent subsidy for 6 units to reach households with incomes below 30% of AMI. 1) Expand on the subsidy reserve model used at Old Landing II. Allow use of 30% boost to create subsidy reserves. Allocating agencies can now set their own priorities for awarding projects a 30% boost in credits that was previously limited to Qualified Census Tracts or Difficult to Develop Areas. Evaluating some recent projects, a 30% boost in credits would be enough, depending on the site, to create a subsidy reserve to fund 10% ELI units. This is not necessarily resource-neutral, as projects using a 30% boost in credits means fewer credits available for other projects. However, sites targeting higher income levels may have a somewhat easier time raising other capital than sites including units for ELI households. 2) Allow points in Qualified Allocation Plan for projects incorporating units for special populations within larger projects as well as in 100% special populations projects. The QAP could encourage new partnerships and innovative projects by also providing points to developments that include units for special populations in broader projects. The current QAP special populations set-aside and points are limited to projects with 100% special populations units. 3) Consider setting a minimum percentage of LIHTC units (5-10%) required to be affordable to ELI households in each new site. Page 20