NCSHA Washington Report | August 6, 2021
A worrisome trend may be making it harder to build affordable housing, especially in Black and Brown neighborhoods already dealing with disinvestment: insurance company “crime scores.”
The scores supposedly assess and price predictions of criminal activity around a development site. Higher scores mean higher costs — so high as to sometimes delay or even cancel creation of new affordable housing.
“Many insurance carriers purchase third-party crime scores to further evaluate an insurance portfolio’s exposure to criminal risk,” according to one analyst, who has heard from developers about “situations where insurance carriers precluded multifamily property owners from obtaining insurance coverage since the property had a crime score above an arbitrary threshold…[or] resulted in higher general liability insurance premium costs.”
According to a 2020 study sponsored by Virginia Tech’s Center for Real Estate Excellence, “These underwriting practices are especially impactful to the affordable housing community because affordable housing may be in areas with higher crime scores when compared with traditional multifamily properties.”
A Virginia Tech researcher argues there is no evidence to “directly test” whether crime scores are “a reliable predictor of criminal activity at the site level and can accurately identify property-specific general liability risk.” The National Multifamily Housing Council bluntly asserts, “Insurance carriers often use risk characteristics such as crime statistics in the community to justify increased premiums.”
Insurance is often the glue that holds affordable housing development deals together. Anyone on the line to cover financial losses should be compensated fairly for the risk. Yet developers and state HFAs have virtually no visibility into how insurance company analysis of crime affects premiums. More transparency would be in everyone’s interest.
Crime scorers should also acquaint themselves with the evidence that affordable housing development reduces crime, especially in more distressed neighborhoods. A 2019 review of 16 studies of Housing Credit-financed development found, in part, that it generally resulted in lower crime, and higher property values, in distressed neighborhoods.
One of the studies found “low-income housing development, and the associated revitalization of neighborhoods, brings with it significant reductions in violent crime that are measurable at the county level.” Another found “[Housing Credit] development causes declines in both violent and property crime within low income areas, but not does not increase crime in high income areas.”
Rehabilitation of existing units can also make neighborhoods safer. According to a new study published through the American Medical Association, structural home repairs are “associated with a modest but significant reduction in crime…in neighborhoods that are still experiencing the lasting consequences of structural racism and segregation.”
Americans are increasingly concerned about violent crime, and both parties see it as a major issue in the 2022 mid-term elections. As the issue impacts our business, better data and more disclosure should help everyone differentiate the signal from the noise.
Stockton Williams | Executive Director
State HFA Emergency Housing Assistance
In This Issue
- There’s Still Time for House Democrats to Sign “Dear Colleague” Letter Supporting Housing Credit Legislation
- Treasury Releases Additional HAF Guidance
- CDC Issues New Eviction Moratorium; Alabama, Georgia Realtor Groups Sue to Block
- Senate to Hold Vote on Key Infrastructure Bill Saturday, Then Consider Budget Resolution
- Senate Appropriations Committee Marks Up FY 2022 Rural Housing Funding Bill
- Senate Banking Committee Approves Smith Nomination to HUD General Counsel, Considers Gordon and Greene Nominations
- IRS Issues Disaster Housing Credit Authority Guidance
- ACTION Campaign Extends Deadline for Video Contest
- Bollinger Foundation Accepting Nominations for Scholarship Grants
- NCSHA in the News
- Looking Ahead
There’s Still Time for House Democrats to Sign “Dear Colleague” Letter Supporting Housing Credit Legislation
Representatives Suzan DelBene (D-WA) and Don Beyer (D-VA) have extended until at least Friday, August 13, the deadline to sign onto the letter they are circulating to House Democrats in support of the Affordable Housing Credit Improvement Act (AHCIA; H.R. 2573). The letter, which will be sent to House Speaker Nancy Pelosi (D-CA) and House Minority Leader Kevin McCarthy (R-CA) urges them to include the AHCIA in reconciliation legislation later this year. We urge Washington Report readers to contact Democrats in their House delegation and ask them to sign the letter.
Treasury Releases Additional HAF Guidance
The Treasury Department posted to its website on Monday updated Homeowner Assistance Fund (HAF) guidance, as well as the HAF Plan Template and Sample Term Sheets for HAF Program Design Elements. The update said HAF grantees may submit their plans only through Treasury’s online portal, which Treasury opened today. States now will have 14 days to either submit their plans or inform Treasury of the date by which their plans will be submitted. In its updated guidance, Treasury clarified, among other things, that HAF assistance may be used to bring current arrearages of qualified expenses that predate January 2020 and that a loan secured by a manufactured home or a contract for deed may be included in the definition of ‘mortgage.’
CDC Issues New Eviction Moratorium; Alabama, Georgia Realtor Groups Sue to Block
This week, the Centers for Disease Control and Prevention (CDC) issued a new order temporarily halting evictions for nonpayment of rent in communities with substantial or high levels of community COVID-19 transmission. The order cites the increase in COVID-19 cases and the public health impact evictions would have due to increased movement and shared and congregate housing situations into which evicted tenants may be forced to enter. The order is intended to give Emergency Rental Assistance (ERA) grantees more time to distribute funding to eligible households. The order is in effect until October 3. The day after the order was issued, the Alabama and Georgia chapters of the National Association of REALTORS® filed a motion in federal court to vacate the CDC order. The same groups led legal action against the prior CDC eviction moratorium. For more information on the CDC order, see NCSHA’s blog.
Senate to Hold Vote on Key Infrastructure Bill Saturday, Then Consider Budget Resolution
The Senate will vote Saturday to end debate on the bipartisan infrastructure bill. It seems certain Senate Majority Leader Chuck Schumer (D-NY) has enough votes to meet the 60-vote threshold to end debate and advance the bill. The Senate will then be on track to complete action on the bill early next week. The Congressional Budget Office published an estimate of the bill’s cost, saying it would add $256 billion to the deficit over the 10-year period 2021 – 2031. As soon as the Senate passes the infrastructure bill, it will take up the FY 2022 budget resolution, setting the stage for a reconciliation bill in the Fall, which is expected to include tax and spending provisions to support affordable housing, including many NCSHA priorities. The budget resolution will allow for up to $3.5 trillion in spending in a reconciliation bill, though much of that would be offset. Once passed, both the infrastructure bill and the FY 2022 budget resolution will be sent to the House, which has already left for the August recess.
Senate Appropriations Committee Marks Up FY 2022 Rural Housing Funding Bill
The Senate Appropriations Committee on Wednesday morning advanced its FY 2022 appropriations bill for Agriculture, Rural Development, and the Food and Drug Administration. The bill contains substantial funding increases for several USDA rural housing programs, including $30 billion for Section 502 Guaranteed Single-Family loans, up $6 billion from FY 2021, and $1.45 billion for rural rental assistance, an increase of $40 million. The committee voted to favorably report the bill by a vote of 25–5, with all Democrats and all but five Republicans voting in support. Those who voted no said they have no objection to the specific bill but are concerned about overall spending levels in all the appropriations bills being considered.
Senate Banking Committee Approves Smith Nomination to HUD General Counsel, Considers Gordon and Greene Nominations
The Senate Banking Committee Tuesday voted unanimously to favorably report the nomination of Damon Smith to serve as HUD General Counsel. Smith currently serves as Acting General Counsel and was Principal General Deputy Counsel for HUD during the Obama Administration.
Yesterday, the committee held a hearing to consider several other HUD nominees, including Julia Gordon as Assistant Secretary of Housing – Federal Housing Commissioner, David Uejio as Assistant Secretary for Fair Housing and Equal Opportunity, and Solomon Greene as Assistant Secretary for Policy Development and Research. Committee Democrats, including Chair Sherrod Brown (D-CA), were largely supportive of the nominees, citing their experience and expertise in housing and community development policy. Ranking Member Pat Toomey (R-PA) and other committee Republicans raised concerns the nominees lacked the temperament and judgment for the roles for which they were nominated, focusing specifically on social media comments previously made by Gordon and Greene that were critical of law enforcement and Republican politicians.
IRS Issues Disaster Housing Credit Authority Guidance
The Internal Revenue Service published Notice 2021-45 this week advising the 12 Housing Credit allocating agencies that qualified for additional Housing Credit authority under the Taxpayer Certainty and Disaster Tax Relief Act of 2020 of the population residing in qualified disaster zones, which is used to determine the authority amount for each agency. For details, see NCSHA’s blog.
ACTION Campaign Extends Deadline for Video Contest
The ACTION Campaign, which NCSHA co-chairs with Enterprise Community Partners, has extended the deadline to submit video clips in support of the Housing Credit and provisions of the Affordable Housing Credit Improvement Act. The new deadline is August 30. Videos received by the deadline will be eligible for prizes. Videos should illustrate the real-life impact of the Housing Credit and the need to strengthen and expand it through enacting the AHCIA. Contest details can be found here.
Bollinger Foundation Accepting Nominations for Scholarship Grants
The Bollinger Foundation is accepting nominations for its 2021 scholarship grants through September 1. Families in which a deceased parent worked — or the surviving parent continues to work — in the field of housing or community development are eligible to apply. Grants may be used for a child’s education-related expenses, including college tuition. The Foundation has awarded more than $1.1 million in scholarships and helped more than 150 families. For more information, contact Chanell Hasty.
NCSHA in the News
The Washington Informer, 8.5.21, Despite CDC Short-Term Rental Eviction Reprieve, No Permanent Solution Found
BisNow, 8.4.21, The State of Illinois Is Getting Its Rental Assistance Dollars Out and May Avoid an Eviction Tsunami
Politico, 8.3.21, State, local aid bottlenecks leave renters exposed
PolitiFact, 8.3.21, What’s happening with the federal eviction moratorium and rental assistance?
CBS News, 7.31.21, These states will still have protections for renters when the federal eviction moratorium ends
Legislative and Regulatory Activities
- August 9 | Comments Due | Ginnie Mae Request for Input on Net Worth and Liquidity Standards
- August 12 | USDA Multifamily Housing Partnership Updates | Live via MicroSoft Teams
- August 24 | Comments Due | HUD Proposed Rule on Reinstatement of HUD’s Discriminatory Effects Standard
NCSHA, State HFA, and Industry Events
- August 9 – 12 | HUD’s Office of Housing Counseling: Housing Counseling Community Conference | Virtual
Glenn Gallo will participate in this event. - August 13 | NCSHA hosts USDA Rural Development Program Update | Webinar Registration
- August 18 – 20 | Arizona Housing Forum | Tucson, AZ
Jennifer Schwartz will speak at this event. - August 27 | Discounted Early Registration Deadline and Room Block Closes | NCSHA’s 50th Annual Conference
- August 30 | EXTENDED Entry Deadline | ACTION Campaign Housing Credit Video Contest
- September 1 | Special Purpose Credit Programs ‒ A Virtual Forum
- September 7 – 8 | 2021 HousingIowa Conference | Cedar Rapids, IA
Stockton Williams will speak at this event. - September 26 – 28 | NCSHA’s 50th Annual Conference | Detroit
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