Governor Deval Patrick's Budget Recommendation - House 2 Fiscal Year 2009

Governor's Budget Recommendation FY 2009

Housing Initiatives

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Governor Patrick    FY09 House 2 Budget Recommendation:
    Issues in Brief

    Deval L. Patrick, Governor
    Timothy P. Murray, Lt. Governor



Providing affordable and accessible housing in the Commonwealth remains one of the biggest challenges to the State, its local and regional partners, private developers, and housing advocates. A safe and affordable place for workers to live is an essential component of a thriving economy, and the Patrick-Murray Administration has made it a priority to build on earlier efforts to expand affordable housing across the Commonwealth's communities to ensure all the state's regions can share in economic growth. The H.2 recommendation expands on the Governor's proposed capital investments to achieve these outcomes by increasing funding for the maintenance expenses of the State's local public housing stock. In addition to securing affordable housing, it is essential to provide support structures and emergency assistance for the most vulnerable residents in the state who are homeless or at-risk of becoming homeless. The State is embarking on a comprehensive system change in which the traditional emergency homeless shelter model would be slowly transformed into a new permanent housing model, providing homeless residents with critical assessments and targeted resources to improve homelessness outcomes. Finally, the Patrick administration continues its efforts to protect consumers, both from dramatic increases in the costs of energy and from predatory lending practices in the mortgage lending industry.

Local Housing Authorities Maintenance Funding

In November of 2007, the Governor proposed a $1.1 billion bond bill to support housing capital projects, including no less than $500 million to upgrade the State-owned public housing stock. The state owns more than 50,000 apartments and these funds will be used for the preservation and development of public housing for families, the elderly and those with special needs. However, in order to ensure that the State's local housing authority (LHA) partners can begin to address the substantial backlog in maintenance activities necessary to support these capital improvements, the H.2 recommendation provides an additional $13 million in funding (line item 7004-9005) in FY09 to fund subsidies to LHAs whose rental income does not meet the costs of operation. Furthermore, this investment will build on the Governor's FY08 investment, which aimed to address the long-standing under funding of LHAs maintenance costs at the expense of the condition of the State's public housing stock.

This chart shows the historical state public housing spending in $ millions from FY02 to FY09 whether by Capital or by Operating funds.

Commission to End Homelessness

Keeping in the tradition of Massachusetts to set and achieve immense goals, in the summer of 2007 a Special Commission to End Homelessness was convened to develop and propose recommendations for reinventing the homeless services system in the state and end homelessness within five years. Created by the Legislative Resolves 2 of 2006, and amended by the Resolves 1 of 2007, the Commission consisted of officials from within the Patrick administration, State Representatives and Senators, local elected officials, and community-based shelters and related organizations. In January the Commission recommended that the State undergo a comprehensive systems change, from one that relies heavily on emergency shelters to a permanent housing model, which focuses on maintaining or securing permanent housing to ensure positive housing outcomes. The Governor's H.2 recommendation would provide $8.25 million (line item 1599-1004) in FY09 to support the first phase of this transition, which would include a pilot program to develop the new service delivery model, while providing additional rental and emergency assistance for targeted homeless populations. This funding would be in addition to a $1.25 million investment by MassHousing to support this initiative. FY09 spending will be determined from the work of the Interagency Council of Homelessness and Housing, which is chaired by the Lieutenant Governor.

Low Income Home Energy Assistance Program (LIHEAP)

The LIHEAP or Fuel Assistance program is a key federal resource which supports those low income Massachusetts households which face mounting heating bills during the winter and often struggle to choose between paying the rent and heating their house or apartment. As the price of energy rises across the state, and the federal budget does not keep up with the cost of home heating, State funding to supplement the assistance provided under the federal program becomes that much more essential. The Governor's H.2 recommendation (Outside Section 5) provides $15 million in the State supplemental to LIHEAP, which is funded through the Governor's proposed Bay State Competitiveness Investment Fund (BSCIF) transfers. The BSCIF would be funded with the first $100 million in FY08 year-end surplus and would provide available resources for LIHEAP to be made available in the winter of 2008-09. The new Heating Assistance Trust Fund would capture $15 million in annual BSCIF transfers and any unspent funding in any given fiscal year would be carried forward and be made available in the next fiscal year.

Affordable Housing Trust Fund

The Governor's H.2 recommendation would provide $15 million in FY09 (Outside Section 5) to fund investments from the Massachusetts Affordable Housing Trust Fund (AHTF), which makes resources available for the creation or preservation of affordable housing throughout the state. This funding would be made available through a transfer from the BSCIF. AHTF program funds are provided for households whose incomes are not more than 110% of median income and are available for rental, home ownership and mixed-use projects as well as housing for the disabled and homeless, provided that they are only applied to affordable units. AHTF funds primarily support private housing projects include the acquisition, construction or preservation of affordable housing. MassHousing and the Department of Housing and Community Development (DHCD) jointly administer AHTF. These investments would supplement proposed capital outlays in FY09 by the State and MassHousing.

Mortgage Lending Oversight and Foreclosure Prevention

One of the greatest risks to the national and state economy is the dramatic upsurge in the rate of foreclosures experienced by Massachusetts homeowners and landlords across the state. While the efforts to gauge the full economic impact of this trend in Massachusetts are ongoing, the Governor and Legislature have worked to expand the regulatory oversight by the State of the mortgage lending industry. The FY09 H.2 recommendation would build upon legislation adopted by the Legislature signed by the Governor in 2007 that expands the regulatory role of the Division of Banks (DOB) to include the certification and licensing of mortgage loan operators, who play substantial roles in soliciting mortgage lending businesses. $5 million is provided for this purpose in FY09 (line-item 7006-0011), including $2 million in grants to no less than 10 regional organizations that will provided foreclosure prevention and counseling services to those communities hit hardest by the rise in foreclosures and predatory lending practices.

Housing Initiatives
Summary of New Investments
Local Housing Authorities Operating Subidy$13,000,000
Commission to End Homelessness$8,250,000
Affordable Housing Trust Fund$15,000,000
Governor's Proposal$51,250,000

Prepared by the Executive Office for Administration and Finance • Rooms 373 & 272 • State House
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