uli_presentation_10_2008

							Billion Dollar Federal Rescues from Main Street to Wall
                         Street
          Urban Land Institute Fall Meeting

  Ali Solis, Vice President, Public Policy & Industry
                        Relations
                   October 29, 2008
                   The Enterprise Mission

Enterprise’s mission is to see that all low-income people in the
United States have the opportunity for fit and affordable
housing and to move up and out of poverty into the mainstream
of American life.
How We Do It



 We advise, finance and assist in the
 construction and rehabilitation of
 affordable housing and economic
 development projects.

 We create community development
 models and policies that can be
 replicated.
                What We’ve Accomplished


More than $9 billion in equity,
loans and grants invested since
1982.


More than 240,000 affordable
homes created.


Investing $1 billion in equity, loans
and grants annually.
           Foreclosure Crisis – Why we care

 Unprecedented Housing Crisis:
    Foreclosures have increased by 71% since last year

    1.2 million REOs by the end of 2008

 Enormous impact on entire communities
    40.6 million homes in neighborhoods surrounding
     foreclosed homes will suffer price decline

    $352 billion total decline in property values

    Localities will lose $4.5 billion in property taxes and other
     local tax revenue
    Housing and Economic Recovery Act of 2008

HERA provides 3 major new sources of affordable housing
  and community development funding:
   1. Neighborhood Stabilization Funds
       $3.92 billion in one-time emergency grants to states and cities
       $180 million in counseling through NeighborWorks America

   2. Housing Trust Fund
       $150 - $350 million per year in block grants to states to finance affordable
        housing

   3. Capital Magnet Fund
       $75 - $200 million per year in competitive grants to CDFIs and qualified
        nonprofits to finance affordable housing, economic and community
        development
             Allocation of NSP Funds


 Allocation Formula - Grants were targeted to
  approximately 300 cities, counties, and states
  based on:
      Number and percent of foreclosures
      Subprime loans
      Loans in default
      Loans delinquent


 Local Priorities - States and local governments
  are required to give priority to areas with the
  greatest need.
                      Allocation Example: Florida
                                               State of Florida
                                                $91,141,478
Total FL Allocation:
   $541,364,779



                                                            Miami-Dade County
                                                               $62,207,200




  44 Other Florida                                          City of Miami
Cities and Counties                                         $12,063,702
    $294,174,969
                                                      Jacksonville-Duval
                                                         $26,175,317

                                                 Orange County
                                                  $27,901,773


                                        Palm Beach County
                                           $27,700,340
           Eligible Uses of NSP Funds


 Establish financing mechanisms for purchase
  and redevelopment of foreclosed homes
 Purchase and rehabilitate properties that have
  been abandoned or foreclosed
 Establish land banks for homes that have
  been foreclosed

 Demolish blighted structures

 Redevelop demolished or vacant properties
               Regulations on NSP Funds

 Discount requirement
    Purchases of foreclosed homes must be at a discount from the
     current market appraised value

 Resale restriction
    Resale of rehabbed homes and redeveloped properties must be
     equal or less than the cost to acquire and rehabilitate
    No profit is allowed
    Developer Fees are permitted

 Ineligible activities
    Foreclosure prevention
    Demolition of non-blighted structures
    Purchase of properties no abandoned or foreclosed upon
             Regulations on NSP Funds


 Income targeting
   All funds must be used for families whose income
    does not exceed 120% AMI
   At least 25% must be used to purchase and
    redevelop housing for families below 50% AMI

 Reinvestment of profits
   For the first five years, states and communities must
    reinvest all profits into additional eligible
    redevelopment activities
        NSP: An Opportunity for Developers


 Local municipalities need a lot of help to address
  the magnitude of this crisis

 Limited capacity on the part of non-profits

 Joint venture partnerships needed

 Big need for expert scattered site asset
  managers
          NSP: An Opportunity for Developers


 Developer’s Fee is permitted under HUD NSP
    But no profit may be earned on the sale of a rehabilitated home
    Program revenue must be reinvested for eligible uses

 HUD encourages funds to be used for Green
  rehabilitation
    Includes energy efficiency and conservation improvements

 Funds may be used for non-residential uses
    Example: public parks, commercial uses
    Must still adhere to income requirements
                   Accessing NSP Funds

 Tight timeframe:
    Action Plan due to HUD December 1, 2008
    All funds must be obligated within 18 months of receipt and
     spent within 4 years

 Opportunities for builders will vary depending on how
  local or state government chooses to implement NSP

 Contact local government, county or state
    NSP funds will be distributed through Community Development
     Block Grant (CDBG) grantees
    NSP grantees are required to post their action plan on their
     websites
                   HUD NSP Website


 http://www.hud.gov/offices/cpd/communitydevel
  opment/programs/neighborhoodspg/

 Useful Resource for:
     Local allocation amounts
     FAQs
     Training webcasts
     Federal Register Notice
     Goals of a Community Stabilization Strategy
 Keep residents in their homes

 Restore market confidence

 Prevent and eliminate blight

 Preserve property values

 Renovate and sell/rent vacant properties

 Create land banks for obsolete properties

 Reduce holding periods of REOs by lenders/servicers

 Target communities to stop downward cycle
       Successful Community Stabilization Initiatives

Good data and mapping critical
Precise geographic targeting
Sustain at-risk owners through workouts
Demolish obsolete & blighted properties
Renovate and sell/rent vacant properties
Provide quality counseling
Vacant land banking/reutilization
Public/private partnerships with flexible
       subsidies to fill development gaps
    Enterprise City & State Partners on the Foreclosure Crisis

   Atlanta
   Baltimore
   Cleveland
   Columbus
   Dallas
   District of Columbia
   Los Angeles
   NYC
   Rochester
   State of Mississippi
      Enterprise’s Role in Target Communities

 Leveraging Public Funds through Innovative
  Financing
 Property Valuation Assistance
 Program Design Expertise
 Integration with Local Efforts
 Assistance to state/local government partners
  on developing NSP Action Plans
 Experience with REO-Rehab-Disposition
  Programs
 Access to REO Properties through National
  Community Stabilization Trust
Concentration Example: Cleveland
       Cleveland Foreclosure Response Pilot


3-Year Pilot Plan impacting on 750 homes in six
  Cleveland neighborhoods:

 Help 300 families at risk of foreclosure stay in
  their homes

 Demolish 300 obsolete, blighted structures

 Redevelop 150 vacant homes for
  homeownership, lease/purchase or rental
  housing (60-120% AMI)
Cleveland
         Cleveland Foreclosure Response Pilot

 Partners:
    Neighborhood Progress, Cleveland Housing Network, City of
     Cleveland, 6 CDCs

 Development costs total $21 million including:
    Demolition resources: $1.2 million in CDBG
    REO Redevelopment: $1.5 million in CDBG soft seconds
     ($10,000 per homeowner)
    $4.5 million in gap funding from OHFA

 Enterprise’s Role:
    Technical assistance in the creation of this pilot program
    $1 million in pre-development and acquisition financing
    $200,000 grant from program reserves
              Remaining Challenges


 Production capacity – need to ramp up quickly

 $3.92 billion – great start, not nearly enough

 Timely access to discounted REOs in bulk

 Untangling REOs from complicated financing
  pools
   New Innovation: Community Stabilization Trust


 National Community Stabilization Trust (NCST)
   Coordinates the purchase and disposition of REO
    properties from lenders, loan servicers, investors

 Lead partner organizations:
     Enterprise
     The Housing Partnership Network
     The Local Initiatives Support Corporation
     NeighborWorks America
  New Innovation: Community Stabilization Trust


 Goal of NCST:
   Effectively link financial institutions with local housing
    providers
   Support local programs to stem decline in
    communities


 NCST Key Activities:
     Transfer of foreclosed properties to localities
     Provide financing to support local efforts
     Organize and facilitate local collaborations
     Advocate for programs, policies and resources
         National Community Stabilization Trust

 Growing participation in NCST property acquisition
  programs from leading national financial institutions and
  federal agencies:
      Wells Fargo
      JPMorgan Chase
      Citigroup
      Freddie Mac
      Fannie Mae
      Bank of America/Countrywide
      GMAC
      HUD/FHA
      FDIC
              For Further Information




Ali Solis
Vice President, Public Policy and Industry
  Relations
asolis@enterprisecommunity.org
202.842.9190
Thank You!