Lack of investors may

keep away housing stimulus
By Scott Nicholson

Though federal stimulus money is being put into government-subsidized housing programs, little of the money is likely to come to the High Country.

Ned Fowler, director of Northwestern Regional Housing Authority, said the stimulus money is designed to complete projects from which private investors have shied away, giving priority to projects that will immediately create construction jobs.

The U.S. Department of Housing and Urban Development announced North Carolina will receive $52.1 million for the low-income housing tax-credit market.

“It’s one of two ways the stimulus money is trying to replace private equity,” Fowler said. “Fannie Mae and Freddie Mac had been purchasing 40 percent of the tax credit market, but they were hit by the credit crisis. The result is there are a bunch of projects that have been funded with credits but there are no investors.”

The Northwestern Regional Housing Authority oversees HUD projects and rental subsidies in a seven-county area, and currently only one project could be eligible for those funds. That one is in Wilkes County.

“We do not have a project that’s currently stalled in that process but we do have an application for a Wilkesboro senior project in the final round of approval for 2009 tax credits,” Fowler said. “The stimulus money is a possible safety valve for that.”

Though the stimulus funds are disbursed by the U.S. Department of Housing and Urban Development, they are managed through a state agency. The money will primarily geared toward stalled projects, Fowler said.

“The tax credit program is a housing program authorized and regulated by the Internal Revenue Service,”

Fowler said. “These are good investments for the investors who get involved in them, but not many of them are still in a position to invest.”

Another program, Tax Credit Exchange Program, is also getting federal funding through the recovery act.

“It’s very important across the state, but not so much across the region, though it will be in coming years as we look at sites for elderly housing,” Fowler said. “As far as workforce development sites, there are several developers trying to make that happen in Boone. The area is listed as ‘hard to develop, for high cost,’ which makes it difficult to classify as an affordable-housing project.”

The recession also aggravated what was already an existing challenge in Watauga County--land is expensive and is hard to develop.

“We’ve got a tremendous workforce housing shortage in both rental and home ownership, and it’s principally related to the fact that this is the third-most expensive market in the state,” Fowler said. “It’s really hard for builders and developers to make something affordable.”

According to HUD, the slowdown in construction has led to the freezing of investments in the low-income housing tax credit (LIHTC) market. The tax credits create an incentive for investors to provide capital to developers to build multi-family rental housing for moderate- and low-income families. Since the contraction of the credit market, and as traditional investors remain on the sidelines, the value of tax credits has plummeted. Consequently, as many as 1,000 projects, representing nearly 150,000 units of housing, are on hold across the country.

The stimulus package provides $2.25 billion for TCAP, a grant program to provide capital investments in stalled developments. HUD is awarding $52,152,687 in TCAP grant funds to the North Carolina Housing Finance Agency to complete construction of qualified housing projects that will ultimately provide affordable housing statewide. Since a major purpose of this program is job creation, the recovery act requires state housing credit agencies to give priority to projects that can begin immediately and be completed by February 16, 2012.

Fowler said other rental-assistance programs were still well-funded, with 270 households receiving Section Eight vouchers. The waiting list has doubled to 273 in the past year, with a typical wait of 12 to 18 months for an opening.

The agency’s housing counseling programs seeing a 300 percent increase in the past year. The agency offers mortgage delinquency and default counseling.

Fowler said default calls were not primarily with revolving-rate mortgages, but instead were from people who were having difficulty making payments because of job loss or a reduction in work hours.

“It’s the one service we provide that is not means tested. If someone has a housing problem, we don’t care what their income is,” Fowler said.

The Northwestern Regional Housing Authority offers free counseling for pre-rental, pre-mortgage, default and delinquency, foreclosure prevention, money management, and reverse mortgage situations.

To learn more about housing counseling, call the Northwestern Regional Housing Authority at (828) 264-6683.