AIA Ohio News
U.S. Housing Secretary Announces Insurance Rate Cuts to Spur Multifamily Housing Units
Julian Castro, U.S. Housing and Urban Development secretary, said he chose Columbus, Ohio to make a national announcement Thursday because of its exemplary development in the push for affordable housing.
Castro announced the Federal Housing Administration (FHA) is lowering insurance rates it charges on mortgages for multifamily rental housing properties, effective April 1, 2016. Speaking Thursday at the recently completed Poindexter Place senior housing development on Columbus' Near East Side, Castro said the rates are being lowered nationally to incentivize more affordable housing development, preserve existing housing units, and encourage energy-efficient homes.
"We chose Columbus because this is a fantastic community that's being developed, and it's a good example of all of the pieces of what we do coming together, with the Choice Neighborhood initiative, as well as multifamily development," Castro said Columbus received nearly $30 million to revitalize the Poindexter Village through HUD's Choice Neighborhood grant program in 2014.
"At its essence, what we're doing today is a case of 'less is more,'" Castro said. "Less borrowing costs mean more capital to rehabilitate affordable housing, more investment in energy-efficient upgrades that benefit more people and our environment, more construction and rehabilitation projects which will spark economic activity across the board in communities throughout the United States, and including here in Columbus.
"And as important as anything, it means that more Americans will have a safe, decent place to call home."
Castro said the multifamily rate reductions "will allow affordable rental projects to support approximately 4 percent more debt. We estimate that this will help rehabilitate nearly 40,000 units over the next three years. Developers can also use these dollars to build more housing or even to cut existing rent for families. They can also increase energy efficiency and cut greenhouse gas emissions."
The new insurance rates include three housing categories: "Broadly Affordable" housing, where at least 90 percent of units are under Section 8 or the Low Income Housing Tax Credit; mixed-income properties, including a partial percentage of affordable housing; and energy-efficient properties.
Julie DeGraaf Velasquez, senior vice president of McCormack Baron Salazar, the site developer of Poindexter Village, said Thursday the secretary's announcement "means that we'll be able to stretch our first mortgage financing even further, allowing us to serve more families at a time of limited resources and growing need for affordable and sustainable housing."
Castro also said that HUD has a "strong role" to play in President Barack Obama's Climate Action Plan.
"This is our way of both trying to spur more preservation of affordable units and create more, and then also incentivize the private sector to go green," he said.
HUD estimates almost 50 percent of renter households spent more than 30 percent of their income on housing in 2014, with more than a quarter of renters spending half their income on a place to live.
"No matter where I go, what I hear from folks is that they're having to spend more money on the rent, and that folks have a problem oftentimes finding something that is affordable," Castro said. "That means more people are spending a lot more of their budget on the rent than they ought to be; they're doubling up, they're not enjoying as good a quality of life as they could because the rents are so high."
He said the new rates are good policy and also helpful for FHA business, during a time the housing administration has a strong multifamily portfolio. He projected continued generation of positive returns to the federal government. The rate reduction will give all stakeholders more chances to work together and invest in development that welcomes families of all income levels, he said.
Also in attendance, Columbus Mayor Andrew Ginther said affordable housing is "critical" to stabilizing and improving quality of life in neighborhoods. He noted in his tenure, he will be primarily focused on the Near East Side and South Side of the capital city, as well as Linden and The Hilltop neighborhoods. He said the rate reductions will have a large impact on Columbus, and that Ohio should be a part of HUD's announced energy-efficient housing plans.
"We need to be assuming a leadership role in helping to make sure that safe, affordable housing isn't just necessarily having a roof over your head but [about] the sustainability involved with it, particularly as energy prices continue to go up," Ginther told Hannah.
Castro also made note of his time as mayor of San Antonio, TX.
"As a former mayor, I know that you need a city that works and is affordable for everybody to have a good quality of life, so it only makes sense to incentivize affordable housing development."