More Federal Employees

EXECUTIVE DIRECTOR.— APPOINTMENT AND COMPENSATION.—The Council shall appoint an Executive Director, who shall be compensated at a rate not to exceed the rate of basic pay for level V of the Executive Schedule under section 5316 of title 5, United States Code. (NOTE: the best that I can determine, the salary range for the Executive Director will be from $120,000 - $180,000).

(ii) SENSE OF CONGRESS.—It is the sense of Congress that the Council should appoint an Executive Director not later than 90 days after the date of enactment of this Act. (NOTE: finding a high level Executive Director in 90 days seems too fast. Thus, the Executive Director has already been selected).

ADDITIONAL PERSONNEL.—With the approval of the Council, the Executive Director of the Council may appoint and fix the compensation of such additional personnel as the

Executive Director determines are necessary to carry out the duties of the Council.

COMPREHENSIVE PLANNING GRANT PROGRAM ESTABLISHED.

The Director shall establish a comprehensive planning grant program to make grants to eligible entities to carry out a project to—

(1) coordinate land use, housing, transportation, and infrastructure planning processes across jurisdictions and agencies;

(2) identify potential regional partnerships for developing and implementing a comprehensive regional plan;

(3) conduct or update housing, infrastructure, transportation, energy, and environmental assessments to determine regional needs and promote sustainable development;

(4) develop or update—

(A) a comprehensive regional plan; or

(B) goals and strategies to implement an existing comprehensive regional plan;

(5) implement local zoning and other code changes necessary to implement a comprehensive regional plan and promote sustainable development.

NOTE: using federal monies to change local zoning codes is the first step to further control how land is developed in the future.

OFFICE OF SUSTAINABLE HOUSING AND COMMUNITIES

The Livable Communities Act is legislation sponsored by Senator Dodd and others. The intent of this legislation is to have the federal government guide or influence how local communities are developed in the future. This seemingly innocent 63-page bill has far reaching ramifications in how land is developed in the future. To implement the legislation, government has to add people. Stated as follows:

There is established in the Department (HUD) an Office of Sustainable Housing and Communities, which shall—
(1) coordinate Federal policies and initiatives that foster livable communities, including
(A) encouraging sustainable development at the State, regional, and local levels;
(B) encouraging the development of comprehensive regional plans;
(C) fostering energy-efficient communities and housing;
(D) providing affordable, location-efficient housing choices for people of all ages, incomes, races, and ethnicities, particularly for low-, very low-, and extremely low-income families; and
(E) working with the Federal Transit Administration of the Department of Transportation to—
      (i) encourage transit-oriented development; and
      (ii) coordinate Federal housing, community development, and transportation policies;

(2) conduct research and advise the Secretary on the research agenda of the Department relating to sustainable development;

(3) provide administrative support for participation by the Secretary in the activities of the Council;

(4) implement and oversee the grant programs established under this Act by—
(A) developing grant applications for each grant program;
(B) promulgating regulations relating to each grant program;
(C) selecting recipients of grants under each grant program;
(D) creating performance measures for recipients of grants under each grant program;
(E) developing technical assistance and other guidance to assist recipients of grants and potential applicants for grants under each grant program;
(F) monitoring and evaluating the performance of recipients of grants under each grant program; and
(G) carrying out such other activities relating to the administration of the grant programs under this Act as the Secretary determines are necessary;

(5) provide guidance, information on best practices, and technical assistance to communities seeking to adopt sustainable development policies and practices;

(6) provide guidance and technical assistance to communities seeking to prepare applications for the comprehensive planning grant program under section 7;

(7) administer initiatives of the Department relating to the policies described in paragraph (1), as determined by the Secretary; and

(8) coordinate with and conduct outreach to other Federal agencies, including the Federal Transit Administration of the Department of Transportation and the Office of Smart Growth of the Environmental Protection Agency, on sustainability issues.

GRANTS proposed in the Livable Communities Act

Metropolitan statistical area with a population of not more than 200,000, may not exceed $750,000.

Metropolitan statistical area with a population of more than 200,000 and less than 500,000 may not exceed $1,500,000.

Metropolitan statistical area with a population of 500,000 or more may not exceed $5,000,000.

FEDERAL SHARE.—The Federal share of the cost of a project carried out using a grant under the grant program may not exceed 80 percent.

SELECTION.—In evaluating an application for a grant under the grant program, the Director shall consider the extent to which the application—

(1) furthers the creation of livable communities;
(2) demonstrates the technical capacity of the eligible entity to carry out the project;
(3) demonstrates the extent to which the consortium has developed partnerships throughout an entire micropolitan or metropolitan statistical area, including, as appropriate, partnerships with the entities described in subsection (d)(2)(D);
(4) demonstrates a commitment to—
(A) sustainable development;
(B) location-efficient and transit-oriented development;
(C) developing new capacity for public transportation and increasing ridership on public transportation;
(D) providing affordable, energy-efficient, and location-efficient housing choices for families of all ages, incomes, races, and ethnicities;
(E) creating and preserving long-term affordable, energy-efficient, and location-efficient housing for low-, very low-, and extremely low income families;
(F) revitalizing communities, neighborhoods and commercial centers supported by existing infrastructure;
(G) monitoring and improving environmental quality, including air and water quality, energy use, greenhouse gas emissions, and the redevelopment of brownfields; and
(H) coordinating the provision of transportation services to elderly, disabled, and low-income populations;

ELIGIBLE ACTIVITIES.—An eligible entity that receives a grant under this section shall carry out a project that includes 1 or more of the following activities. There are 27 activities to choose from including:

Implementing land use, zoning, and other code reforms to promote location efficiency and sustainable development.

SUSTAINABILITY CHALLENGE GRANTS.—

AUTHORIZATION.—There are authorized to be appropriated to the Secretary for the award of grants under this section, $100,000,000 for each of fiscal years 2010 through 2013, to remain available until expended.

SUSTAINABILITY CHALLENGE GRANT PROGRAM

Metropolitan area with a population of not more than 200,000, may not exceed $15,000,000.

Metropolitan statistical area with a population of more than 200,000 and less than 500,000 may not exceed $35,000,000

Metropolitan area with a population of 500,000 may not exceed $100,000,000.

FEDERAL SHARE.—The Federal share of the cost of a project under this section may not exceed 80 percent.

Preference given for “Location-Efficient” Housing

The Livable Communities Act 2009 also includes a definition of “location-efficient” and a new “location affordability index”. I am sure the index will be used to compare homes by location and ultimately be used by local government in their approval of new housing projects.

This all may seem innocent and a worthy goal to combine energy, transportation and housing costs together but it is a way to control growth, manage the use of land, and govern where people will live in the future.

LOCATION-EFFICIENT.—the term ‘‘location-efficient’’ characterizes development, housing, or neighborhoods that integrate land use, mixed-use housing and commercial development, employment, and transportation—

(A) to enhance mobility;
(B) to encourage transit-oriented development;
(C) to encourage infill development and the use of existing infrastructure; and
(D) to reduce growth in vehicle miles traveled and the transportation costs and energy requirements associated with ownership or rental of a home.


REPORT ON HOUSING LOCATION AFFORDABILITY INDEX.—
The Director shall conduct a study on—

(A) the development of a housing location affordability index that includes housing and transportation costs;

(B) ways in which the affordability index described in subparagraph (A) could be made available to the public to inform consumers of the combined costs of housing and transportation.

REPORT.—Not later than 1 year after the date of enactment of this Act, the Director shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report on the study.

Energy Efficient & Location Efficient Mortgages!!

The Livable Communities Act of 2009 will create two new lending practices based on energy efficiency of a home and also on its LOCATION!



The Director shall conduct a study on—

(A) The development of a housing location affordability index that includes housing and transportation costs; and

(B) Ways in which the affordability index described in subparagraph (A) could be made available to the public to inform consumers of the combined costs of housing and transportation.

(C) INCENTIVES FOR ENERGY-EFFICIENT MORTGAGES AND LOCATION-EFFICIENT MORTGAGES.—

“Energy-efficient mortgage’’ means a mortgage loan under which the income of the borrower, for purposes of qualification for such loan, is considered to be increased by not less than $1 for each $1 of savings projected to be realized by the borrower as a result of cost-effective energy-saving design, construction, or improvements (including use of renewable energy sources, such as solar, geothermal, biomass, and wind, super-insulation, energy saving windows, insulating glass and film, and radiant barrier) for the home for which the loan is made

‘‘Location-efficient mortgage’’ means a mortgage loan under which—

(i) the income of the borrower, for purposes of qualification for such loan, is considered to be increased by not less than $1 for each $1 of savings projected to be realized by the borrower because the location of the home for which the loan is made will result in decreased transportation costs for the household of the borrower; or

(ii) the sum of the principal, interest, taxes, and insurance due under the mortgage loan is decreased by not less than $1for each $1 of savings projected to be realized by the borrower because the location of the home for which the loan is made will result in decreased transportation costs for the household of the borrower.

IN GENERAL.—The Director shall conduct a study on incentives for encouraging lenders to make, and homebuyers and homeowners to participate in, energy-efficient mortgages and location-efficient mortgages, including—

(i) fee reductions;

(ii) fee waivers;

(iii) interest rate reductions; and

(iv) adjustment of mortgage qualifications.

In studying the incentives under subparagraph, the Secretary shall consider the potential for lower risk of default on energy-efficient mortgages and location-efficient mortgages in comparison to mortgages that are not energy-efficient or location-efficient.

How does that work for you?

‘‘Livable Communities Act of 2009’’ - MORE Definitions

LOCATION-EFFICIENT.—The term ‘‘location-efficient’’ characterizes development, housing, or neighborhoods that integrate land use, mixed-use housing and commercial development, employment, and transportation—

(A) to enhance mobility;
(B) to encourage transit-oriented development;
(C) to encourage infill development and the use of existing infrastructure; and
(D) to reduce growth in vehicle miles traveled and the transportation costs and energy requirements associated with ownership or rental of a home.

AFFORDABLE HOUSING.—The term ‘‘affordable housing’’ means housing, the cost of which does not exceed 30 percent of the income of a family.

COMPLETE STREET.—The term ‘‘complete street’’ means a street that enables all travelers, particularly public transit users, bicyclists, pedestrians (including individuals of all ages and individuals with disabilities), and motorists, to use the street safely and efficiently.

TRANSIT-ORIENTED DEVELOPMENT.—The term ‘‘transit-oriented development’’ means high density, walkable, mixed-use development (including commercial development, affordable housing, and market-rate housing) that is within walking distance of and accessible to one or more public transportation facilities.

Purpose of the "Livable Communities" Act - As per Congress

The 63 page legislation sponsored by Senator Dodd and others outlined the purpose of the act. The intent of this legislation is to have the federal government guide or influence how local communities are developed in the future.

This act provides the funding for land use planning which will alter the landscape of how land is used for development purposes in the very near future. The important statements are #7 and #9.

As an example, if this legislation was passed, would communities in the future be able to obtain a wastewater treatment plant discharge permit allocated for developments located beyond existing infrastructure?

1. Facilitate and improve the coordination of housing , community development, transportation, energy, and environmental policy
2. Coordinate federal policies and investments
3. Promote sustainable development
4. Encourage regional planning for livable communities
5. Adoption of sustainable development techniques including transit-oriented development
6. Provide a variety of safe, reliable transportation choices with emphasis on public transportation and complete streets to:
                              Reduce traffic congestion
                              Reduce greenhouse gas emissions
                              Reduce dependence on foreign oil

 7. Provide affordable, energy-efficient and location-efficient housing choices

 8. Make combined costs of housing and transportation more affordable to families
 9. Support, revitalize and encourage growth in existing communities to:
                             Maximize the cost effectiveness of existing infrastructure
                             Preserve undeveloped lands

 10. Promote economic development and competitiveness by:
                             By connecting housing and employment locations of workers
                             Reducing traffic congestion
                             Providing families with access to essential services

 11. Preserve the environment and natural resources
 12. Support public health and improve quality of life for residents and workers in communities by promoting:
                            Healthy, walkable neighborhoods
                            Access to green space
                           Mobility to pursue greater opportunities

“Congress FINDS” – WHY S.1619 Legislation

A section on findings is included in the legislation which is intended to support the necessity of the legislation: The legislation indicates a need for cooperation in LAND USE PLANNING and the development of housing and transportation. You be the judge. Does Congress make the case to spend $4,000,000,000?

 

1. US population will grow 40% over the next 40 years to 439,000,000

 

2. The demographic group most likely to use public transportation is projected to increase the most from 2009 to 2025.

 

3. In the next 15-years, 1 in 5 people will be 65 years of age or older

 

4. From 1980 to 2000, the largest 99 SMSA’s consumed 16,000,000 acres of rural land

 

As stated in the legislation – about 1 acre for every new household

5. In 2007, TRAFFIC CONGESTION causes people:

• To waste 4,200,000,000 hours in traffic
• Purchase an extra 2,800,000,000 gallons of fuel
• This represents a congestion cost of $87,200,000,000
• The findings indicate that the congestion cost has increased 500% since 1982.

6. DOE forecasts that driving will increase 59% between 2005 and 2030
Far outpacing the projected 23% increase in population during this period

 

7. Census Bureau states that ONLY 54% of households have access to public transportation

8. In 2008, local ballot initiatives supported public transportation 79% of the time

9. Demographers ESTIMATE
30% of housing demand is for housing in dense, walkable, mixed-use communities and ONLY 2% of NEW housing is located in these areas

10. Average household spends 19% of its budget on transportation and very low-income households spend around 55%
Households with access to good public transportation spend only 9%

11. The need for Safe and Affordable Housing is Great
54% of renters spend more than 30% of their income on housing
29% of renters pay more than 50% of their income on housing
In 2007, there was a shortage of 2,800,000 units of affordable housing for extremely low-income renter households

12. People in compact developments (where housing, shopping, jobs and public transportation are in close proximity) drive 20% - 40% LESS than people who live in average development patterns

13. People taking transit instead of driving
Impact of transit on LAND USE taken into account
Carbon dioxide emissions can be reduced by 37,000,000 metric tons each year

14. Transportation accounts for 70% of the oil consumed
33% of the carbon emissions
Reducing the number of miles driven

 

Providing transportation alternatives through good planning and sustainable development IS A NECESSARY PART OF THE ENERGY INDEPENDENCE AND CLIMATE CHANGE STRATEGIES OF THE US

15. KEYS to revitalizing and maintaining town centers & preserve surrounding agricultural land in small and rural communities is to :
PREVENT commercial and residential development on the outskirts of town
PROMOTING integrated housing, economic, & transportation development in town centers

 

16. 1,600,000 rural households do not have access to cars

17. Residents in rural areas drive approximately 17% more than in urban areas

18. Ridership on small urban and rural public transportation systems increased 20% from 2002 to 2005

 

19. poorly planned development in rural areas can:

• fragment agricultural and forest lands
• pollute waterways with surface water
• cause unnecessary environmental impacts
• strain the capacity of rural roads
• sap economic vitality from existing “main street” commercial areas

20. FUNDNG for integrated housing, transportation, energy, environmental and economic development and other land use planning efforts at the local and regional levels is necessary to provide for sustainable development and smart growth.

  

We the taxpayers evidently have a government employee charged to track the above statistics which can’t be disputed by reasonable people.

  The key “finding” seems more like a statement –re-read #15. This is a first step toward the federal government through this legislation and incentives to prevent real estate development beyond existing infrastructure AT THE LOCAL LEVEL.

 

Sustainable Development as defined by Congress

Sustainable and sustainability have become overused words in our everyday political forum. If the politicians would only mean what they say, we could achieve sustainable communities in most every market. We have achieved successes in the past and will do so again in spite of the regulatory environment.

‘‘Livable Communities Act of 2009’’ defines SUSTAINABLE DEVELOPMENT.—The term ‘‘sustainable development’’ means a pattern of resource use designed to create livable communities by:

(A) providing a variety of safe and reliable transportation choices;

(B) providing affordable, energy-efficient, and location-efficient housing choices for people of all income levels, ages, races, and ethnicity;

(C) supporting, revitalizing, and encouraging the growth of communities and maximizing the cost effectiveness of existing infrastructure;

(D) promoting economic development and economic competitiveness;

(E) preserving the environment and natural resources;

(F) protecting agricultural land, rural land, and green spaces; and

(G) supporting public health and improving the quality of life for residents of and workers in a community.

I have defined sustainable development in previous posts with a focus on environmental, social, and economic factors. Please take note that Congress defines a sustainable development the same as a livable community. Their definition of a sustainable community goes further by adding:

1. provide transportation alternative choices
2. provide energy efficient housing
3. provide location-efficient housing
4. maximize the use of existing infrastructure
5. protect certain land from development

“Livable Community” as Defined by Congress

I have highlighted several statements for further reference. The following is from the legislation under review by congress.

‘‘Livable Communities Act of 2009’’ In this act, the legislation defines:

LIVABLE COMMUNITY.—The term ‘‘livable community’’ means a metropolitan, urban, suburban, rural, or neighborhood community that—
(A) provides safe and reliable transportation choices;
(B) provides affordable, energy-efficient, and location-efficient housing choices for people of all ages, incomes, races, and ethnicities;
(C) supports, revitalizes, and encourages the growth of existing communities and maximizes the cost effectiveness of existing infrastructure;
(D) promotes economic development and economic competitiveness;
(E) preserves the environment and natural resources;
(F) protects agricultural land, rural land, and green spaces; and
(G) supports public health and improves the quality of life for residents of and workers in the community.

Many municipalities have similar definitions but without the following:
Energy-efficient and Location-efficient housing choices
Maximize the cost effectiveness of existing infrastructure
Protects agricultural land, rural land

As you read these statements, what comes to mind? I think “controlled growth” which translates into further restricting the use of land by owners.

Federal Legislation you haven’t Heard About

This week, I will be analyzing bill S.1619 which is currently working its way through Congress. If you are in the real estate industry, you will find this new legislation not only to be interesting but also troublesome. In any event, the federal government will continue to grow – if passed.

I admit that reading federal legislation is boring but every page of this 63 page bill is filled with ideas that in my opinion, will limit the use of land in the future. I will be devoting daily posts highlighting the specifics of this legislation for your use.

What I am having difficulty with is the time it takes to fully understand the approach of a 63-page bill. I can’t imagine trying to digest the health care and/or financial bills recently passed by Congress. As an example……..

WAIT until you read about INCENTIVES FOR ENERGY-EFFICIENT MORTGAGES and LOCATION-EFFICIENT MORTGAGES!!!!

111TH CONGRESS 1ST SESSION S. 1619
The legislation will establish:

The Office of Sustainable Housing and Communities
The Interagency Council on Sustainable Communities
A comprehensive planning grant program
A sustainability challenge grant program
And for other purposes.

The legislation includes funding and they are seeking the following appropriations:

AUTHORIZATION.—There are authorized to be appropriated to the Secretary for the award of grants under this section, to remain available until expended—

(A) $750,000,000 for fiscal year 2011;

(B) $1,250,000,000 for fiscal year 2012;

(C) $1,750,000,000 for fiscal year 2013.

(2) TECHNICAL ASSISTANCE.—Of amounts made available under this subsection, the Director may use for technical assistance under section 5(c)(3) an amount that does not exceed the lesser of
(A) 0.5 percent of the amounts made available under this subsection for a fiscal year; and (B) $2,000,000.

This Act may be cited as the ‘‘Livable Communities Act of 2009’’

I will be dissecting this legislation this week informing you of the ramifications this little known legislative effort will have on the housing industry. You will be interested to see the connection between energy, housing, mortgages, social justice, climate change and more…….

Supply - DOM - Price Trends

So Goes Housing - So Goes the Economy

2nd Half of 2010

Without a doubt, the market for entry level homes has stalled. Perhaps from moving buyers forward in their decisions due to the tax credit opportunity. Or perhaps there isn't a compelling factor for them to buy. If interest rates started to trend-up, this would energize the market. At the moment, the old idea that families wanted to be in their new home before school starts may not be a factor any longer. All new norms!

Price Trends

2nd QT 2010 GDP

The Bureau of Economic Analysis (BEA) released the GDP advanced estimate for the second quarter on July 30th. Later this month, this agency will adjust the GDP based on more accurate data. The GDP for the first quarter was increased.

2nd Qt GDP 2.4%

The BEA indicated that this GDP estimate was this high because:

1. There was an increase in residential investment

2. The investment in nonresidential structures increased

3. An increase in state and local government spending

4. Federal government spending was accelerated

Remember to look for trends as you digest this information.

Duration of Unemployment - Historical Perspective

Your Credit Score is Scored

35% is based on your credit history over the past 2-years
30% is based on the amount of the credit extended to you
15% is based on the length of your credit history
10% is based on the types of credit you have i.e. installment
10% is based on the number of inquiries into your credit history

Your credit score is now more important than in the past. Your credit score is used if you want to buy a home, buy a car or even rent an apartment. The lower the credit score the more problematic it is for you to obtain a reasonable interest rate or even qualify for a loan or lease an apartment. Start working on improving your credit score.

Interest Rates & Sales Price Correlation

Interest rates continue to be at historic lows but as the economy starts to rebound, the Federal Reserve will begin their tough decisions on raising rates to manage inflation. For first time home buyers, you should bookmark a website that will carry the Feds actions so you are aware of any adjustments. Certainly, the media will be in frenzy as interest rates trend up because that is a positive sign for the economy.

But, interest rate increases are not a great sign for those first time home buyers sitting on the fence. As interest rates trend up, first time home buyers will not be able to afford the same sales price of home. As interest rates rise and the economy rebounds, you should expect housing prices to also start to increase. The key is the rate in which these benchmarks change. Hopefully, the change will be gradual to give you time to buy!

Remember to look for trends. The following chart was prepared by my mortgage partner, Mr. Don O’Dell with Allen Tate Mortgage to illustrate housing affordability as it relates to interest rates.

Assumptions:
1. FHA minimum down payment of 3.5% requires decent to a good credit rating.
2. Conventional minimum down payment of 5% requires excellent credit.
3. Using an annual base salary of $50,000 and not excessive non-housing debt.
4. Remember homeowner association dues could affect the sales price amount.

FHA                                                                                           Conventional
Sales Price                            Interest Rate                                   Sales Price

$230,000                                   4%                                            $210,000

$210,000                                   5%                                            $194,000

$195,000                                   6%                                            $180,000

$180,000                                   7%                                            $166,000

$165,000                                   8%                                            $154,000

If you are renting in Charlotte, there are plenty of home buying programs available to even assist with down payments and closing costs. The bottom line, WHEN interest rates go up and it will happen, the house price afforded will go down. also, most likely, your monthly costs will increase. Get off the fence and think about the future!
Tomorrow, we will revisit credit ratings.

What Can a 15 Year Fixed Mortgage Rate Do For You?

Mortgage rates reached record lows that have not been seen since the 1950’s.

Is it time to refinance?

If you have a 30 year fixed rate in the high 6 percent range now is a great time to refinance into a 15 year fixed. Depending on your equity in the property and your credit score, you may find that you can refinance into a 15 year fixed with a payment that is not much more than what you are paying now.

The advantages to this are simple, paying a 15 year fixed rate mortgage builds your equity much more quickly and allows you to pay off your home much sooner…

For example, if you have a $200,000 mortgage at 6.75% your principal and interest (P & I) payment is $1,297. A 15 year fixed rate at 3.875% would give you a P & I payment of $1466, a difference of only $169 a month. What is important for homeowners to take note of is the difference in the paying down of the principal balance.

• After the first year, the 30 year fixed rate has paid down its balance by $2,316, while the 15 year fixed rate has paid it down by $7,486.

Those are powerful numbers, but what is even more compelling is what happens after 5 years:

• After 5 years the 30 year fixed rate has paid down its balance by $15,491, while the 15 year fixed rate has paid down by $67,458.

Today, rates are at an all time low but that does not mean they will stay this low forever.

Review your current mortgage rate and, if it makes sense to refinance into a 15 year fixed rate, consider talking to your Mortgage consultant about what options are available to you.

The following mortgage charts are from BankRate.com