Comment Detail

Comment

June 12, 2018
Alfred Pollard, General Counsel
Federal Housing Finance Agency
Constitution Center
400 7th Street SW
Washington, D.C. 20219

Re: Proposed Rule for FHLB Affordable Housing Program
RIN 2590-AA83

Dear Mr. Pollard,
I write as former AHP advisory board member and served a term as Chair of the FHLB Boston. I write to express concerns with the proposed Rule for the AHP. In my day job I have worked as funders in almost all of the affordable housing development that has taken place in Vermont since the AHP program was established and have frequently partnered with the program. The VHCB is a multi-purpose public funder of affordable housing and community development in Vermont. We administer a state housing trust fund that has invested over $200 million in more than 12,600 homes across our state. Housing Vermont is a nonprofit tax credit syndicator and developer with a portfolio of over 5000 homes.
I ask that the Administrator reconsider the proposed Rule and offer the following comments:
1. I share the concern expressed by other regional and national groups that restructuring the minimum allocations required of banks will reduce the amount of funding available for rental housing in favor of homeownership. AHP can have the biggest impact in Vermont by filling the gap in funding available for affordable rental housing. The shortage of rental housing and the need for reinvestment is by every measure our number 1 need.
2. The new rule appears to try to impose a national framework on priorities for housing that should be determined regionally and locally. Our experience with the AHP, as administered by the Boston FHLB, is that is has provided the flexibility to serve a number of different needs within our diverse state. These needs include disinvested rural communities, special needs populations, and some very hot markets in which the supply of affordable housing is limited to such an extent that often Section 8 voucher holders cannot find available units. Flexibility in responding to those diverse and changing needs is critical and we believe the proposed Rule will, as drafted, decrease such flexibility.

3. The proposed Rule will likely add costs to the administration of the program for the Bank and applicants and duplicate efforts already underway to assure good use of public and private funds. Specifically, both the VHCB and our Vermont Housing Finance Agency are already underwriting the capability and quality of project sponsors, as well as reviewing the procurement process and requiring market studies. These are examples of issues that will add cost under the proposed Rule.

4. The proposed Rule would prioritize projects with a very high percentage of extremely low income residents or special needs populations. Our approach in Vermont, has been to create mixed income developments rather than isolating or concentrating special needs populations. Despite this approach we often lead the nation in the percentage of extremely low income residents living in our tax credit and HOME funded housing developments, Housing with a high percentage of units targeted to specific incomes or special needs does not serve rural communities well over time. In areas of lower of population, the needs are no less acute, but they are more diverse. Adding more restrictions to AHP will likely hinder rather than help it have the desired impact.

5. While there have certainly been times in the past that I have not agreed with the FHLB’s ranking of projects from Vermont, the process has always been clear, transparent and therefore defensible. We are concerned that there-ranking may fuel a perception that the competition for this important resource is somehow open to manipulation.
I applaud the goals of the program but do not believe these goals should serve as threshold requirements for success in the AHP competition. While I share your goal of serving those most in need, the proposed level of targeting to very low income and special needs populations will, we believe be problematic making it more difficult to layer AHP funding with the other state and federal sources, which require different targeting and are necessary to making projects work. In our fastest growing markets, such as the Upper Valley, our Capital, Montpelier or the Chittenden County region, our number one goal is to add to the housing supply so that voucher holders can find more affordable opportunities. Vermont’s Consolidated Plan, our statewide needs assessment and the adopted QAP should dictate Vermont’s priorities. Vermont is committed through a number of state policies to serving our most vulnerable citizens and we now require- that all sponsors of publically-supported housing target 15% of their entire portfolios for households that have experienced homelessness.
Vermont is also making a significant effort both through its own trust fund and the establishment last year of a $37 million bond for housing development. The goals of our program differ from those in your proposed rule. Under the proposed rule we expect Vermont applications to FHLB Boston will become less competitive even as they address Vermont and our local communities top priorities. The overall impact of the rule will likely limit the ability of the program to have the impact it seeks. Further, it should be noted that until the Federal Government returns as a partner in expanding rental assistance opportunities through both HUD and USDA, the ability to serve such a high percentage of individuals with special needs or below 50% of median may prove unrealistic especially as the rule will make mixed income developments (where internal cross subsidies are possible) less competitive.
We commend FHFA for its recent actions in support of the national Housing Trust Fund and work to update AHP. Our suggestions are offered in the context of our shared commitment to serving vulnerable households including in the most rural communities. Thank you for considering our comments.
Sincerely,

Gus Seelig
Executive Director