Housing: lobbies and lobbying
Is affordable housing political? Are building lobbies just a rallying point for political lobbying?
At yesterday’s hearing on tightening regulation of the government sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, of all the issues that might draw debate — how tightly to regulate the companies’ balance sheets, whether to require pre-approval before they enter new business lines — the one generating most of the political noise was …
… Congressman Frank’s half-tithing proposal:
The proposed low-income housing fund has become a central stumbling block in the debate over legislation whose primary purpose is to establish stricter regulations for Fannie Mae and Freddie Mac following a series of accounting scandals.
A House committee has recommended that the companies put 5 percent of their profit into a low-income fund, but conservative lawmakers are trying to have the provision removed.
In the Senate, meanwhile, Banking Committee Chairman Richard C. Shelby (R-Ala.) has excluded the fund from his version of the bill, but that could cost the Democratic support needed to assure passage. The Senate bill is to be debated tomorrow in
Opponents of such a fund argue that cheap capital — soft debt or soft equity — available to fund cost-value gaps in affordable housing will be nothing more than a ’slush fund’ for political action:
Opponents of the proposed fund, however, are less concerned about the policy impact than about the political one.
“There will not be enough regulators on the planet to watch the dollars that are going to spread out to these hungry advocacy groups if we establish this fund,” said Tom Feeney (R-Fla.) in a congressional hearing.
“Please, sir, I want some more appropriations.”
Are the fund’s opponents interested in protecting the integrity of using the funds?
In reaction, House supporters of the low-income housing fund have agreed to restrictions on how the money can be used and proposed penalties for misuse.
Or, perhaps, past experience?
Moreover, they say, similar fears were raised about the FHLB fund when it was created in 1989 but did not come to pass.
Though ACORN Housing helped process Dabreau’s mortgage application and received the accolades, the money that helped buy her house came from the Federal Home Loan Bank of Atlanta — part of a program under which the 12 Federal Home Loan Banks (FHLBs) funnel 10 percent of their annual profit into a low-income housing fund.
Indeed, that experience shows (conceal your astonishment) that money allocated specifically for low-income housing actually goes into low-income housing:
Though a limited amount of money is available for the down-payment programs run by groups such as ACORN Housing, the FHLBs’ program is tightly regulated and much of it goes to bricks-and-mortar projects, according to a March study by the FHLBs’ regulator, the Federal Housing Finance Board. The bank examiners concluded that the FHLBs “have contributed substantially to affordable housing,” putting aside more than $2.1 billion over the past 14 years and creating more than 400,000 affordable housing units. In the District, the FHLB of Atlanta has helped finance more than 30 projects that serve families with annual incomes of $44,853 or less.
I’ve emphasized many times the need for the four kinds of money, and the value of soft capital. Without soft capital, one cannot create sustainable affordable housing.
While Democrats and advocates for low-income housing regard the program as a model for Fannie Mae and Freddie Mac, conservative lawmakers are fighting the idea, arguing that the funds from Fannie Mae and Freddie Mac would benefit groups they consider left-leaning, such as ACORN Housing.
“A lot of these funds are just going to end up in the hands of very politically active groups to come back and lobby us,” said Rep. Jeb Hensarling (R-Tex.) in a congressional hearing.
To give the paranoid their due, one often finds a relationship between a housing arm and a broader anti-homelessness or pro-low-income advocacy effort, or that the housing arm is a subsidiary of a larger political advocacy group whose positions often trend liberal and Democratic:
“We are very conscientious about this,” responded ACORN Housing’s national director of housing counseling, Bruce Dorpalen, who noted that unlike its sister organization, the Association of Community Organizations for Reform Now, the housing program is prohibited from lobbying.
Money is fungible. Organizational staff can migrate from one floor of a building to another. The distinctions must be observed punctiliously. Those of us who work in this field are well aware of the Byrd Amendment (named for our esteemed West Virginian) that prohibits use of Federal funds for legislative advocacy. And some of us (like me) have discovered how to conduct advocacy without being a lobbyist — simply do it for free.
Meanwhile, aside from the Federal Home Loan Bank example, there is the example today of the GSEs foundations, both of which are quite substantial:
In addition, the companies fund affordable housing through their foundations, which recently have together given up to $80 million a year in grants. Fannie Mae also makes debt and equity investments in low- and moderate-income housing through its American Communities Fund.
Unsurprisingly, those who deploy the capital and see its impact become its proselytes:
In the end, home loan bank officials and nonprofit housing groups said, policymakers cannot expect them — or Fannie Mae and Freddie Mac — to be affordable housing developers without being affordable housing advocates.
“We wouldn’t be as effective if we didn’t do outreach efforts,” said Lawrence H. Parks, senior vice president for external affairs for the FHLB of San Francisco. “We want to avoid a situation where we have a pot of money and no one to give it out to.”
