Blue Ribbon Commission to Study Affordable Housing
MEETING MINUTES
Thursday, September 30th 1999
2:00 PM Legislative Office Building room 1D
Co-chairman Senator Eric Coleman called the meeting to order at 2:10.
The following commission members were present:
Joan Carty, Sen. Eric Coleman, Tim Coppage, Vincent Ditchkus, Michael Downes, Rep. Patrick Flaherty, Anne Foley, Diane Fox, Jeff Freiser, Elaine Hammers, Tim Hollister, Dennis Hrabchak, Robert Kantor, Steven Katz, Gary King, Rep. Janet Lockton, Alma Mayar, Brian Miller, Andrea Pereira, Raphael Podolsky, Diane Randall, Richard Redniss, Sen. Lee Scarpetti, Dick Schuster, Christopher Smith, Virginia Stefanko, Ronald Thomas, Gregory Ugalde, Juan Verdu
Tim Coppage of the Department of Economic and Community Development gave an overview of the DECD programs regarding affordable housing. A handout of his remarks was provided to commission members.
A number of questions were asked by the members of the Commission to Mr. Coppage.
Question by member (inaudible, microphone not used)
Rep. Lockton: Tim you mentioned that the scale that you used is 50% of the area median income, when you look at affordable housing.
Tim Coppage: That was the result of a survey, I don’t believe that was the scale we actually used.
Pat Downs: The Dept. produces an annual report “Tenant demographic report.” What we are required to do is to survey all of our developers and current owners of state financed housing, it is a self survey where we ask the managers/owners to respond to us in terms of who currently is living in those units in term of the income and who is on waiting lists. The response rate this year was better; we had over 50% response rate. What the responses indicated was that 92.71% of the residents in the units that were reported were families or individuals had as income less than 50% of the area median. If you go up to the 80% category that number increases to 98.29% so almost 100% of the residents in the are under 80% of the area median income.
Rep. Lockton: Is there any statute that says specifically that DECD has to be 50 or 80% under.
Pat Downs: Most of the standards or the limitations that set an income limit are set program, rather than a general statute that governs our programs. So for example under the affordable housing program the maximum income limit that we are looking to serve is 50% where as with the moderate rental program you will find that families are up to 80% we can go up to 100% in some developments in a limited equity co-op program which was another popular program so it’s not set in general for all of our activity, its usually set within a statute establishing a particular funding program.
Member question inaudible (mic not used)
Sen. Coleman: Let me just remind the member to use their microphones and state you name when you question or make a comment.
Jeff Freiser: I fear that the appearance when we look at the last decade to this decade by aggregating the entire decade there is some increased activity. But the reality is that authorizations and then following allocations and expenditures have really declined through the 90’s so I was wondering what your numbers reflect.
Tim Coppage: My recollection is that is not true. In the period between 81to 89 the authorizations where about 480 million. Between 1990 and 1999 the authorizations where 460 million. So we are actually up 4% in terms of dollars for housing.
Jeff Freiser: But what happened from year to year through the 90’s
Tim Coppage: Well through the years it goes like this, the other part of that is, I guess the legislators know this better than I, toward the end of the O’Neil administration we were bonding a fairly high rate. When Weiker came in one of his goals was to reduce the amount of state bonding, not for housing but for state bonding. When the Roland administration they went further and what you can see is that every state agency that depends on bond funds are impacted propotionaly to that general policy decision of the legislature and the executive branch.
Jane McAlevey: I’m wondering if you can talk the response to locally identified housing needs with regard to southwestern Connecticut for example, where both the number 50 and 80% of median don’t sink up very well with the needs of low income people. The 80% figure would put Stamford $93,400 median in the area of $74,800 is what you would need to make to qualify for 80%. Most of the area service workers earn something in the neighborhood of the high teens. That means that they are working 3 or 4 full time jobs just to afford the affordable housing the limited amount that exists in the area. The 50% of median figure give you about $46,700 in term of a salary that you would need to earn and again most of the people are working families, two dual jobholders don’t even meet the 50%. So when you say that you are responsive to locally identified housing needs I wonder if you could comment on how the median plays out in a place like southwestern Connecticut?
Tim Coppage: Well that’s and issue and I stated that affordable housing is an issue in the state. The reasons for it are many. The responses to it have to do with what we are doing in this committee and other committees. We need to respond in some way, I don’t have all the answers yet and we are looking with the ConPlan and our partners to develop some response to those issues, whish’s where we are today. If you look at the numbers there’s an issue.
Dennis Hrabchak: Does the Dept. keep any statistics that would give us as a commission a feel of the magnitude of the affordable housing needs state wide, that would include private as well as subsidized housing.
Tim Coppage: That should come out of ConPlan that should be due by the end to this year.
Pat Downs: The Dept. does not conduct comprehensive need assessments
that cover the entire state. The last
time that was done was back in the 1980’s when there was a pilot program called
the Regional Compact and each of the regional planning areas were asked to do
housing needs assessment. The
information that we traditionally use and which we are required to use when we
respond to HUD in terms of planning document and the request for federal funds
is to use census information and we supplement that information with
information which is gathered not only by us through waiting lists and other
information which is provided to us by our customers but also other agencies
like CHFA of the DSS so we rely on that as well. I just want to point out in the last couple of weeks there have
been two documents that speak to the affordability and availability of
affordable housing nationally. One is a
report that was done by the National Low Income Housing Coalition which does
extrapolate numbers on Connecticut and the Connecticut market in terms of house
prices and rental prices and incomes.
There is a report, it is available on the web and also the Connecticut
Housing Coalition has done some analysis based on that information and Jeff
made available copies of the report. So
there is some information there that shows nationally that there are still some
issues around affordability as well as specific information about
Connecticut. So we will be looking at
this document as we put together our need assessment for the ConPlan Process.
The other document was a report that was recently produced by HUD which I
believe is called
“The Widening Gap – Refindings on Affordability in America” This pretty much is
saying the same thing as the Coalitions report, which is that the affordable
housing stock is shrinking that rents are rising that even as the stock is
decreasing it is decreasing even more for low and moderate income renters
because affordable stock does not always get used by those who need it at that
level. I can’t answer questions about
this report it may be useful to bring in a representative from HUD to speak
about this.
Tim Hollister: My take on your presentation is that DECD is doing a good job with the resources and the programs that it has. My question is what do you feel your not getting to us. Make the assumption that you had unlimited funds and staff what are the two or three thing that are the most pressing needs that you see out there that you would put those resources to?
Tim Coppage: Well-unlimited funds and staff are not something that we actually need. My concern is that different places have different needs, that is very complicated and the procedure seems to be somewhat cumbersome of how you get things done, you know how can we move a little bit quicker to meet some of the housing needs. We have 50 million dollars of housing needs in 2,700 units, how do we get those thing moving along so they come to fruition. What are we doing with our dollars, can we do it effectively is there flexibility can we precedent other costs. Bob Kantor put together a report with us that we helped fund that addresses some of the impediments to affordable housing and the increased costs.
Vincent Ditchkus: You mentioned that you have about 30 different housing programs out there. Also in your presentation you have a list of who your partners are. If you could tell us the differences in those programs, who they apply to or whom they are available to.
Tim Coppage: We can get that to you.
Elaine Hammers: I have a question because I got confused about something. Earlier Jane mentioned working in the areas where the 80% was a $70,000 number. When you are helping someone develop a project are you working to that 80% number of the area? I thought it was the 80% of the area or the state which ever was less?
Tim Coppage: I think you are confusing two things. One is the appeals process and then one is our programs. Our programs are sensitive by area. So if we say 80% in Stamford would be different than 80% in Willimantic. In terms of the appeals I will turn it over to someone who understands more about that.
Pat Downs: It is my understanding that the appeals work on either the lower of 80% of the state median or the area median.
Elaine Hammers: So that restriction is not on the programs that you might be helping to develop?
Pat Downs: That restriction I believe is placed on potential projects that maybe forth coming under the appeals procedure itself. So if a developer moves forward under the appeals procedure they have to document that they are serving the income groups based on the requirements of that particular statute.
Elaine Hammers: And when you provide the list that was just asked for about the different programs. Will you provided us with information about how someone goes about and does it or an example of some of them?
Pat Downs: Well we will try to provide as much information that we can get from the other agencies that have inventory of their own programs. I would feel more comfortable that they respond to their own programs.
Roger Vann: Can you tell us how you are going about doing the needs assessment that you say you have a deadline by the end of the year. What are you looking at in terms of this needs assessment?
Pat Downs: Primarily what we will be looking at is old census information because we are required to use some census information under the HUD regulations that cover the consolidated plan for housing and community development. We are able under the rules to supplement that with whatever other relevant information we may have. So we will be surveying the other partners around the table who are participating in this planning process that have information to bring about needs. We would also be looking at the information in those two reports, the one by the Coalition as well as the one by HUD. There is no state wide needs assessment project that is going to be happening.
Roger Vann: How does that differ in terms of the methodology from what you mentioned that went on during the 1980s in terms of these regional needs assessments?
Pat Downs: The way that I understand what happened way back then was that there was I think that there was some funds which were actually provided to the regional planning agencies. In some cases they may have turned that over to their regional housing council. As part of the analysis I believe the regions were given some direction as to the nature of the factors that needed to be addressed in the needs assessment. However they were each under their own direction in terms of whether they were doing it themselves, whether they hired a consultant, what information they used to actually prepare their needs assessment and document their situation. So I don’t believe that it was completely consistent from region to region and I think that was part of the problem although I think there were certain general categories that everyone tried to gather some information to report on so there was some sense generally from region to region about what the needs where.
Sen. Coleman introduced Kevin Loveland from the Dept. of Social Services. Mr. Loveland reviewed various housing programs administered by DSS. A written copy of his remarks was distributed to the member of the Commission.
Rep. Lockton: What is the income eligibility for assistance under different programs under the state? So the housing under the DSS, in order to receive either federal of state aide for income assistance, what is the eligibility?
Kevin Loveland: For the state RAP it is 50% of the state median income is the income threshold. The same is true of the transitionally RAP. Section 8 is has a HUD threshold to enter the program but once you are in the program you can continue to receive benefits until your income allows you to no longer have a subsidy, the 30% of you income meets your retail obligation. HUD does publish standards for entry into the program.
Member asked question (inaudible, mic not used)
Rep. Patrick Flaherty: What activities does the Dept. undertake what the actual needs are for all these programs. Also do you have any information about waiting lists that would be an indication about what the needs might be for some of these programs? One of the charges of this Commission is to try to understand what are the needs of affordable housing in the state of Connecticut today. Also what the responses are in your presentation was very clear but did not give me a full picture of how big is the need that is out there that you are responding to with these various programs.
Kevin Loveland: These are programs that we have not actually studied the demand for affordable housing. We know from our waiting list each program has about 2000 families on the waiting list. The way that the waiting list operates really doesn’t measure the total level of demand. You would underestimate the total level of demand because what we do is when the waiting list numbers fall below a certain threshold we open the waiting list and stop taking applications so we know that the demand is much higher than the level of which the waiting list would show. The only other thing that gives you an idea of what the demand might be is the level use of housing subsidies in our temporary family assistance program where of the families in that program only about, all of whom you would expect would qualify for that program is about 50% of Federal poverty level is the payment standard for that program. Only about 30% of those families in that program are receiving any type of a housing subsidy in public housing. Obviously the demand is quite high, but we don’t undertake any efforts to study the demand for that housing.
Phil Tegeler: Question about the section 8 program and the RAP program which is an affordable voucher program that tenants take to private landlords. Have you done any assessments of what the geographic concentrations of those are and maybe any assessment to the barriers to your clients in using them?
Kevin Loveland: We are right now looking at the geographic distribution of that population. There is somewhat of a concentration in the inner cities, that low income people usually reside in the cities when they access our programs but that is something we are taking a look at as to what that distribution is. In our section 8 program we have over 400 vouchers and certificates in Hartford, 60 or so in West Hartford and East Hartford and smaller numbers in the surrounding outside communities so we could argue over why that is, whether it’s a lack of housing choice because of high rental costs and low fair market rent standards. Maybe it is by choice to remain in the communities that they have always lived. I think it can be said that most of our section 8 certificates and vouchers are in the more urban areas. The second part of your question?
Phil Tegeler: Have you done any assessment of the barriers in different communities regarding the use of the certificates.
Kevin Loveland: We are starting to look at that in term of what the rental levels are and the surrounding communities we have asked all of the housing authorities that administer section 8 programs such as ours to share with us their rent reasonableness studies and we are open to getting a handle on the differential is in terms of the typical rents in the communities outside of the urban areas. That is something we are looking into and as you know potentially making adjustments on our fair market rent standards to allow for those kind of differentials.
Richard Schuster: Have there been any studies done by the Dept. related to what the leveraging of Federal dollars may be too private sector dollars. It seems to me that the cost of providing the DSS services that you have outlined today there are a large number of private dollars that come into the pie in order for those services to be provided in Connecticut so we are looking at the true cost of service delivery we ought to be looking at it in terms of what also is on the table.
Kevin Loveland: I assume you are speaking to services such as the grant programs, as opposed to the rental subsidy programs. That is a good questions, as we are struggling with our level of funding for emergency shelters that is something we are starting to take a look at because it’s clear that we don’t pay for the full cost of these programs. Private fundraising and donations to support their programs as will as governmental sources. I know our commissioner is very much interested, whenever possible leveraging private resources to fund programs. I think coming up with a balance, we have been looking at emergency programs for instance, some have struggled recently some of the shelters have done a better job than others in terms of leveraging those type of resources an thus being able to maintain their fiscal viability. I think this is someplace we really need to be going but in terms of studies to the present time, no.
Member asked question (inaudible mic not used)
Juan Verdu: Have there any studies as far as the needs for the program. Being familiar with the program, in the middle of the year we are very short with money. Any studies in that?
Kevin Loveland: No, we have not done any studies to determine what are the real needs are for affordable housing. I think it is one of these situations where the demand so clearly outstrips the resource is that it is almost a given. We have not done any type of need assessment in that area.
Roger Vann: When will you be finished with the geographical analysis.
Kevin Loveland: My goal is to have it done by the first on January.
Sen. Coleman: Introduced Gary King of the Connecticut Housing and Finance Authority (handouts were distributed to the members of his presentation at the October 14th meeting).
Rick Redniss: In terms of the expiring affordable housing projects, do we have any information geographically in terms of numbers of units of where they are. Can we get that to?
Gary King: Yes, it is difficult to get information from HUD, but I think over the last 2 years we have a good idea of where that is. The numbers are coming slower in Connecticut than in other states. I believe there 4 or 5 this year 10 to 12 next year so it is an issue which is not quite honest as other states such as Ohio might have as much as 150 developments expiring right now.
Steve Katz: In reference of the rental development. Do you give priority to developers who can present a plan, which is providing subsidized rental?
Gary King: Maybe, let me tell you how we review the projects. All of CHFA’s activities have to be consistent with the plans. For example Tim was talking about his staff is developing at this point in time and that is by state statute and that has to be consistent with the state policy plan which is the plan of conservation and Development, so they will outline certain priorities of certain housing which is first and which is second. So there is not specific priority at this point in time, example given to section 8 certificates per se. Developments that have the most affordability or have help the lowest income first for the most tend to get priority for financing over those that do not. There are issues, for example with feasibility, if you had section 8 certificates but they were only good for one year, your project might not get funded if it was not feasible for the long haul. This is all spelled out in a series of budget and policy plans that the Authority operates its programs under better consistency under state plans. Generally I think yes, the most affordable development is given preference over a lessor affordable housing project assuming everything else is equal. Financial feasibility is a very important fact in that.
Steve Katz: As you have mentioned your agency has helped out a number of first time homebuyers. I fail to recognize if you happen to have a member on the default for those first time homebuyers. How many of those first time homebuyers have actually defaulted in there first time home ownership?
Gary King: Well if varies with the economic times. CHFA makes loans that conventional banks do not make, so we are the lenders of last resort. You would expect our default rate to be higher. I think in the worst of economic times in the real estate recession I thing that about 2 to 3% out loans are actually going to foreclosure default. The delinquency rate in 1992 was 16% now it’s about 9%. There are efforts to help people to maintain there home but some social issues, such as divorce you just can’t help so it’s about 2 to 3 % right now.
Bob Kantor: In terms of bonding capacity you talk about some of the pressures and the Feds pulling back a little bit and CHFA having to take on more of the responsibility. So both on the first time ownership side and the rental side what is the bonding capacity prognosis that you have looking ahead 4 years out.
Gary King: The State at the present time receives authority to issue Federally taxes on bonds for a total amount annually of about 165 million dollars, prior to 86 that was really not capped. That is for all purposes such as student loans, economic development, and housing. The CHFA gets about 65 to 75 million dollars of that authority a year to issue new business. The good news is that because we have make so many loans in the past as those loans pay off we are able to recycle old bond authority into new mortgages, so most of our bonding authority comes from the recycling of old mortgages, not defaults but the people that just more up. So we are doing about 400 to 500 million dollars a year of first time homebuyers’ activity. We have also been very creative in figuring out how to convert short-term investments into long term mortgages. I would say that we could sustain for the foreseeable future 3,4,5, more years of first time homebuyer activity for two reasons. First we have so many loans that are recycling. Secondly, we are optimistic that Congress will be passing an increase in the tax-exempt bond authority, I believe in a 4 or 5 year period. So we are hoping that just about the time our ability to do the creative things maybe deteriorates the Federal Government will kick in and we will be able to sustain. Of course this is all driven by market demand we have just been fortunate in the fact the market demand today for first time home buyers is twice of what is what it was 10 years ago.
Member question inaudible (mic not used)
Roger Vann: Do you generate reports on a regular basis that have detailed demographics on who receives your loans and rejection rates and so fourth.
Gary King: The answer to the first part is yes, the answer to the second part is no. We have very detailed characteristics on all of your buyers. I am pleased to report that Connecticut’s homebuyer program is much more family oriented than other states. For example our average family is nearly 3 people and about 50% of our loans are in urban areas and about 25% are targeted areas in inner cities and I believe its about 25% our female heads of household and about 30% are minority. Those statistics are calculated in the bank reports, they get CRA credits through our loans. You can imagine what the reports would look like if ours were not kept.
Roger Vann: Can you tell if someone is getting a mortgage for a home in their present community or if they are moving to another community, for example.
Gary King: We don’t track whether one is moving from one town to another. We have looked at that on occasion. While we have looked it for example in the form of down payment assistance, as we do studies about what whether to expand downpay ment to other communities we are always trying to make sure we do not spend more money than we have. We have seen mobility; we have specific statistics on the homeownership program for people moving out of public housing. We do have statistics of what community they lived in and where they did moved to. So we do have some feel for that but we do not generally collect that on the whole program.
Roger Vann: Is that in a form that you can provide to us?
Gary King: Yes
Brian Miller: One of the segments of needs that I think we need to look at for the first time home buyer and talked about the affordability index of varies of various points in time comparing the overall with the first time. Now as I understand the affordability index it compares median income with median sales price and makes whatever adjustment is that correct?
Gary King: Yes, but it is not actually sales price it’s housing costs of the mortgage, that would include more than just the sales price. It is the whole cost of what it would cost to get the mortgage.
Brian Miller: When that is done then mortgage costs is based on the median valued house in a particular geographic area. Is that correct?
Gary King: Yes
Brian Miller: When the first time index are done the index are based on incomes of first time homebuyers as determined in what way and the second part of the question is the other side of the equation, the housing value. Is that still the mortgage costs based on the median housing value so there is no…?
Gary King: They have done a study for the typical type of house and what it costs for the first time homebuyer buys compared to the average income if you were median income as a first time homebuyer. I can’t give you the specific methodology but all those apples have been adjusted to apples and oranges to oranges.
Brian Miller: So it does recognize a different segmentation of the market.
Gary King: Yes, and this is a relatively new improvement in that type of analysis
Rep. Flaherty: If there are no further questions the next speaker is John Scott. Thank you for coming.
John Scott: I am a consultant in private practice. My experience in the housing areas is covers a long period of time. I have been doing this now for 26 years and in CT. that whole time. My firm is known as Scott, Kenny & Partners. We did some work for the state as far back as 1981. Our firm is known for the quality of its market research and what we provide primarily to the private sector is strategic planning for new developments. Our client base goes quiet beyond the private client although that has been our principal source of income over the years. We have a number of municipalities that we do work for, we have done work with housing authorities seeking to explore acquasition opportunities mostly in the market rate area and we have been involved in a number of nonprofits over the years. I personally served on the board of directors of Fairfield 2000 Homes for a period of 7 years. The Resources that we bring to this topic are quite extensive and as a result of the private sector paying us all these years to collect information for them. We not only cover CT. but most of New England large parts of New York and New Jersey. CT. is really our home and it is where we get most of our business. We have built some data bases that are pretty interesting, one of them in particular that we have been working with since 1973 is a database of planned residential communities in the state. I fail to count how many are in that database today but it’s in the thousands and it relates to the original pricing marketing history going back to that time so that almost everything that’s been developed in an organized developmental fashion in the market rate sector has been cataloged. We also have a very interesting database of sale transactions, in fact every single piece of property that changed hands in this state since 1989. The source of that information is a company called Warren Publishing in Boston but we have written some proprietary software that allows us to manipulate that data and we get pretty close to being accurate in that assessment. One of them is being able to identify new homes being sold in the market place as opposed to all of the transactions from a collection of gas stations to pizza parlors being sold. We also have started something this year that turned out to be a lot easier that I thought it would be and that is to collect information from towns on their planning activity. It’s not easy to get towns to cooperate. I was talking to DECD a couple of days ago how hard it is to simply get building permit data out of town. What we started to do this year largely due to the issue of supply is not building permits and if you remember anything of what I say today is that permit are a superficial and difficult to quantify method of describing how the supplies side of the industry, public or private, is responding to housing need. When you see a permit issued that doesn’t mean the unit was ever built, sold or occupied. Back in the 1970’s would get approval for a 500-unit project, which may take up all of the building permits, why because they never wanted an issue. Many times the bank would say that you had better pay for all those permits because we want to be sure that those development rights exist so nobody can take them away from you. So we would have all these permitted units and some of them would not be built until the late 80’s. I would respectfully suggest to all of you that CT. be headed toward a very large crisis in affordable housing. The reason that I say that is because I see every day what my clients are doing, we see through our research what is happening in the pipeline side of the business and we see what happening on the transactional side, where people are actually buying homes. Our database includes everything that is happening. I wish we had some kind of database for rental housing activity because when we go to do a rental market study and we have to pose as tenants and do all kinds of things to get any kind of information. As I said our business is supply and demand I would represent to you that developers are very savvy group when it comes to the depth of market. There is no place that the market is deeper than at the low priced end. There is more economic opportunity there conceptually than at the level of luxury homes. And the question is why there was a time that the tendency to over supply was at the lower end. Apartments were over built, low priced condos and track subdivisions were over built because people could get land inexpensively. There were also very fewer restrictions on getting permits and environmental things, a lot of good this not that they have to do but there was a lot of land and development rights in the pipeline and that was where the market tended to get over built, in the most affordable areas. I think that most of my clients would build a lot of affordable housing today if they could and the reason the can’t is really a supply and demand problem, they cannot get the development rights to build anything but the most luxuries housing in some communities. I wish I had more time to make this presentation because I think we have the data in our office to really put some hard figures on this. I spent quite a bit of time and realized that after printing out about 100 pages. A lot of people think that 1989 was the worst time well it really wasn’t on the supply side it really was 93 and 94 that was a time when the least amount of new home were being produced. For example in 1994 there was only 355 new homes built in Fairfield Country, new single-family homes. In 1998 there were 871…
(Some recording lost during turnover of new tape)
One of the things of principal concerns to the private market and nonprofits and some of the housing authorities we work for. There is a whole new barrier to getting things done today and it involve school populations but it has given a firebrand to everyone who wants to stop growth and stop affordable housing because it is a human cry that everyone can get behind, our schools are overcrowded and to build new schools is too expensive. What I see happening is until the demographics change it is going to be a real problem until about 2006 and then maybe it will ease up after that. A lot of towns close schools so this is considered a very good way to stop housing. The people that need affordable are not just young children, there are so many single people in the U.S. also couples and try to make due and there are also older people who are trying to scale down there lives somewhat. I know most of them probably don’t need affordable help because they have built up lots of equity in their houses. We are heading into a real crisis. New Haven and Hartford counties in particular have had their economies really decline in the last 10 years so if you live in those areas you don’t have the sense that housing affordability is a real issue. I think we are going to see it spread all over the state, the state is very healthy. You go into Rhode Island, which had one of the worst housing markets in the country. No one built there except for two companies and it is booming today and coming west and Southeastern CT. is going to start benefiting from that. So I look at it as a statewide issue. We are seeing it first in Fairfield country because that is where the higher densities and the lower residual capacities are. I wish I had more statistics for you and the data there. One last thing I really if somehow the State can put some teeth into DECD’s ability to get data from the towns. The Federal Government stopped collecting the distinction between single family home and multifamily homes and permit information 2 or 3 years ago. So now we just know residential permits we have no idea whether they are rental housing or multi-housing. I would really be nice because your job would job would be a lot easier if the people in state government could provide you with this information. It is all a matter of public record. It only takes someone a few hours to put it together, fill out a form and send it in. The information on transactions is already recorded we do know a lot about housing prices, we don’t know anything about supply.
Sen. Coleman: Thank you Mr. Scott. Are there any questions?
Rep. Lockton: I think that at one point you said that under 8-30g that houses had to be affordable in perpetuity. It’s not and we have just changed it 25 years and we just changed it to 30 years. That was a major problem and still is under existing law. Also I understand that you can get an idea of what the different communities have in affordable housing just by going through the census tracks. I believe Nancy Brown in the Greenwich has been through that and said it is not hard to get an idea of the stock of affordable housing this way.
John Scott: Whatever information there is, I mean all of us in the research use the census to give us a departure point and from there we update the data with permit information. We have never given any credence to any of the information that relates to affordability. Right now the data is 10 years of and it’s my understanding that the Dept. of Commerce collects this information from what people report as to what think their homes are worth or what they pay and I’m not sure we can count honest about that in both directions. I think the real answer is in the database that we get on transactions that is very accurate on what is happening.
Rep. Lockton: Could we also get it through reappraisals of our municipalities’ fair market value of a home. It seems to me that if we were really interested we could just go have a computer give the information on certain price range of homes in each municipality.
John Scott: Well the assessors keep track of the transactions themselves. When it comes time to assess the property they know the history of all of that. The problem with that is that everybody assess, the assess occur over a 10 year period and the don’t always happen at the same time.
Rep. Lockton: I think we are doing it know every 5 years and then every 2 years with statistical so it is much more current than that, so we may want to keep looking at that.
John Scott: But right now that we don’t have access to that level of details and that is going to happen that would be welcome but I would suggest to you almost readily, if I had my laptop here I could identify any property in the state and I could tell you what it last sold for and how many times it sold for over the last for years and who the buyers and sellers were. That is what we use for housing affordability when we go into communities.
Diane Fox: I have a question to see if you can project what a developer would do based on what you just said. Right now we have a limit of 30% of all housing development to fall under affordable. What do you think the threshold would be where the developer would be turned off my doing an affordable development. If the 30% would to be raised to 60% what is the threshold that the market can bear to keep developers to do in it and also make it deed restricted in perpetuity.
John Scott: Well the problem is the subsidy comes from the buyers of the other tenants of the other units so it really it really becomes almost a local market question and I think that most of my clients would be very reluctant to anything over the 30% of total number of units. Again it has a lot to do with what income standards they have to meet and if they have to meet a state standard in a Fairfield location where their land costs are $120,000 per unit to it becomes very problematic but it all really comes back to the market. The profit in investment returns are probably fairly constant in the sense of what is necessary to put a project together so the real issue becomes how much you are going to tax the future resident in that market rate unit.
Member asked question (inaudible mic not used)
Tim Hollister: One of the issues which has been active the affordable housing statute particularly in some of the recent court cases is how to measure need for affordable. Should it be done on a town, regional or state basis? Could you just give us you thought on what is the appropriate geographic measure of need.
John Scott: Well I think if we look at what we would consider to be natural market dynamics that would be a good place to start. When we look at market models and we have collected information over the years on the migration of people. This is very hard to collect because the information is put on documents that are otherwise confidential. If you can see the address on a lease where the person lives now while they are applying and you know where they are moving to you have a very good sense of the dynamics. I think that we found a 20-minute drive time from any single location is good indicator of what we would call the primary market but it varies. It is a difficult think to develop generic argument but it is definitely not just the town. In the 169 towns that we have I can’t imagine function all by itself on any kind of economic or housing level.
Vincent Ditchkus: I will agree with you on a few points. One is that the statute creates an adversarial climate between developers and the town and another one is that they also boost their number of what the will build under the affordable verses what they would build under anything else because they know the are going to be in for a fight in the long run. A couple of things, you mentioned that the rates on new homes went up by 18% in 98 and 97 was 7% and in 96 it 6%. Did that take into account that the interest rates on the federal level had dropped and that the homebuyer’s power had increased because rates for their homes had dropped also?
John Scott: I’m sure it does it takes into account everything including the money pouring out of wall street and every economic circumstance involving the purchase of a home including full employment basically but it is a factor which should send a signal or alarm in an economy where as we were told before the BLS index in going up 1 ½% and that is the average price. This just in Fairfield country I did not miss that point.
Vincent Ditchkus: Also you said that you track the existing home sales and the median price of what they do. If you could get the median home sales price for us. And just as one follow up you said that your clients will not go to Fairfield country. Are they targeting other areas?
John Scott: Homebuilders are in the business of building homes I think they would say show me some land and I will look at it. I think that people like to operate close to their base. Most of the firms that used to provide housing in Fairfield country most of them have retired. The number of people even more than 3 homes a year is very small so you wind up with these powerhouse companies who are left with the task of trying to housing on some scale and they are the ones that create the confrontational situation. The little guy is out building a $700,000 house in Wilton and he can live off that house for a year and it’s and as long as he can do that with little risk he going to do that.
Vincent Ditchkus: One quick follow up on the land costs that are very quick transactions.
John Scott: All that information is the database that we purchase every year. We can follow the trail of those transactions. Generally speaking in the scope of the development business there are people who take land risk and those who take manufacturing risk. The manufacturing risk is homebuilder the land risk is the one who puts up the money for the approval. Many times it is the present owner of the land who knows that if he gets the permits that it will be sold for a certain number. In a market where there is huge demand and very little supply you can see something trade four time and go from $30,000 to $300,000 in a matter of days. So I don’t think we have a lot of speculation. I think that it is just that land is very expensive now only because it’s permitted land, it’s not on an acreage basis.
Brian Miller: You quoted the statistics of Fairfield county but you also mentioned that we are really a state of individual housing markets. In the other two major urban areas of the state, could you go over a bit more why you think this housing crunch is going to hit Hartford and New Haven counties. Why do you think what happened in Fairfield county is going to happen in Hartford and New Haven counties.
John Scott: The answer is in the employment figures which we track closely as part of our work and this state is very healthy now but the worst for the longest time was Hartford county and it also had by vertue of lower land prices and a little more residual development land wise both Hartford and New Haven was where almost all of the over supply of housing was created. They were probably creating too much supply even if the economy had held in 1989. Now those jobs have been replaced and the market has stabilized with relatively little construction going on from a private market point of view and I think that that is all going to evaporate and without any mechanism to induce something to encourage affordable housing I think it is likely the same symptoms, not on the grand scale that we do in Fairfield. Why you ask because Fairfield county is very developed and in many ways much more urbanized. Many of the cities are exempt from the Act but my feeling is that the cities are really not holding up their end of the bargain.
(interruption in tape)
Jane McAlevey: I am just curious because we have had such a difficult time getting information out of housing athorities. Have been tracking total units lost in certain areas of the state.
John Scott: Well we generally don’t need to use freedom of information we just show up. The had part for us is the real information that would be so valuable is properly protected under law. Specifically one of the problems we have is that DECD no longer gets information on demolitions now, so we have to collect it ourselves. And again the demolition which used to be quantified in terms of the type of dwelling we don’t even know and I’m not sure that it is even all residential so that is a real problem and I don’t see why the communities in this state which receive state funding couldn’t take ten minutes to fill out a form every month to supply this information.
Sen. Coleman: If there are no further questions, thank you Mr. Scott. The next item on our agenda is review of housing production under 8-30g.
Rep. Flaherty: I would like to thank the members of the commission for their patience. I got a very optimistic memo from staff who suggested we had 15 minutes for presentations and now it has been 2 ½ hours so I do thank you for you patience. In you packed there is a memo which was written back in 1997 in response to a study that had been done about housing production under 8-30g and the table is more up to date information done by our staff. One of our hopes out of this commission is to get a more comprehensive look as to exactly what activity has occurred under 8-30g during the time that it has been in effect so I do not expect the table you have before you is complete. I would think of it as a work in progress and I would hope that if you see some projects or developments that are missing from this list that you will notify the chairs and ranking members and not the staff and we can incorporate that into future versions of this document. What we had hoped to do today is to present some indication of what the needs are for housing in CT. and then look at the variety of responses the state has taken and put this list in context with many of the other activities that are taking place.
To discuss what issues you as members had raised at the last meeting and also what we see happening over the next few weeks. Specific questions were asked what is the Commissions’s charge, you have in you packet a copy of the statute which created this commission. Please contact either Sen. Coleman or me if you have any questions regarding what the charge of this commission is and what our scope or work should be. Secondly, a question was asked what is the definition of affordable housing. One is in the statue more real world sense to figure out what are the needs for affordable in the state, what is actually affordable in a common sense way of looking at it and what should our responses to the state be to that and match them up to what we are doing already. The third question that was raised was evaluation of the procedure. One of the things that we proposed to do soon. By the way based on your information you fill out on the contact we have identified Thursday afternoons as the most common time to meet. Two weeks from today we are hoping to arrange a case study where we will bring forward some people who have been involve in a particular appeals case and hopefully have representatives from both sides. What I would ask is that if you have a recommendation to one particular case of people who are willing to come before us I would ask that you put that in writing on the contact sheet.
There were a number of questions raised about the previous Blue Ribbon Commission certainly Gary King is available as a former member of that Commission. Also in your packet there are copies of the 13 principals and the 51 recommendations that were made by that Commission. Many of them were actually put into effect. In fact there were a lot of follow up to those recommendations made in 88 and 89 and I would commend those to your attention. Some of you suggested that we consider alternatives, in particular that we look at what is going on in New Jersey and Mass and we hope to have invited guests from those states to come before us in the future. Secondly, going back to the evaluation of the whole procedure, we are very interested in touring some of the housing that has been produced. A number of the people who have been involved in producing the housing have made suggestions of the housing they would like to show us. I would also suggest that if there are those of you that feel that there has been housing that has been created under the act that has been inappropriate that you suggest that we go look at it and see what the problems are.
I will end with I don’t think we got a strong handle on the question of need today that we need. I was hoping that we could open up the discussion more to discuss this more thoroughly. I would suggest as an alternative that those of you who have interest to identify yourself on the contact sheet and we will have a self selected subcommittee convene shortly to explore the question how we might better handle the need for affordable housing.
A number of people have distributed information to be distributed to the Commission and I have decided not to act as an editor and everything that was given to me is in front of you today and that would continue. I as that you get this ahead of time to us. Also we are working to set up our websight with our computer people.
We will meet two weeks from today at the same time.
Tim Hollister: One item that is specifically in the charge of the commission is an examination of the zoning enabling act and the extent to which we comply with that. Is that something that we should address in the future?
Sen. Coleman: What you are suggesting is perhaps worth exploring, if there are other members interested we could perhaps set up a subcomittee
Vincent Ditchkus: Just one request, if we could get where the goal of 8-30g , how that came about and how we came up with that number during the 1988 Commission.
(member unknown) Could the chair give me in writing what constitutes a conflict of interest I would appreciate that.
Sen. Coleman adjourned the meeting at 4:45 pm.