LAHTF Needs Assessment 2012

7/30/2019 LAHTF Needs Assessment 2012

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An assessment o the need or aordable housing in Louisville, Kentucky, description o the intent andpurpose o the Louisville Aordable Housing Trust Fund, and establishment o the priorities o the

LAHTF based on identied community needs.

F O R T H E

L O U I S V I L L E M E T R O A F F O R D A B L E H O U S I N G T R U S T F U N D , I N C

2 0 1 2

An Assessment ofAffordable Housing

Needs in Louisville


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Letter from the Board President

The Louisville Metro Aordable Housing Trust Fund was ormed with great delibera-tion, ater careul study by several Mayoral Task Forces, Metro Council, more than90 endorsing organizations, and concerned citizens. As established by ordinance,the LAHTFs purpose is to receive and disburse monies through grants and loans toorganizations dedicated to addressing the aordable housing needs o low- and mod-erate-income people by promoting, preserving, and producing long-term aordablehousing. It invests ongoing dedicated public revenue in aordable housing, leverag-ing unds to achieve maximum beneit.

The LAHTF has close ties to Metro Government and ollows the best practices o other state and localhousing trust unds around the country it was established by Louisville Metro County Ordinance 40.41-45; a decision-making board representative o the community is appointed by the Mayor and conirmedby Metro Council; it targets unding to those with the most need; and a periodic Needs Assessment ispublished in accordance with the ordinance.

The Board o Directors began meeting in March 2010 to establish the structure and governance o theLAHTF, iling Articles o Incorporation, requesting IRS 501(c)(3) tax exempt status, establishing a Code oEthics, creating a Strategic Plan, seeking private unds to secure public matching unds committed in the2011-2012 Metro budget, and assessing the aordable housing need in Louisville and establishing priori-ties or selecting projects, resulting in this Needs Assessment.

Some o the indings rom this Needs Assessment are startling: about hal o all Louisville renters livein housing they cannot aord; 1 in 10 Jeerson County Public School children were homeless in the lastschool year; and 91,999 Louisville amilies struggle with unaordable housing the equivalent o illing upthe KFC YUM! Center to capacity more than our times.

The LAHTF still lacks the key component that deines all housing trust unds a source o dedicated ongo-ing public revenue. The Board o Directors o the Louisville Aordable Housing Trust Fund is commit-ted to working in partnership with Metro Council and Mayor Fischer to ensure an appropriate source odedicated public revenue is established, so the ull beneit o the LAHTF can be realized in the community.

Once this revenue source is established, the LAHTF is uniquely suited to address the aordable housingcrisis because it is a public investment in a community problem. Like all housing trust unds, it is designedto be both stable and lexible a critical combination that allows localities to provide thoughtul, ar-sighted solutions to evolving community concerns about aordable housing.

Kevin DunlapPresident, Board o Directors


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The purpose o this report is to assess the needor aordable housing in Louisville and establishthe priorities or the Louisville Aordable HousingTrust Fund and its projects.

91,999 Louisville amilies live in unaordable hous-ing -- the equivalent o illing the KFC YUM! Cen-ter to capacity more than our times. Withoutaordable housing, amilies are unstable. Theycannot thrive or plan or the uture. They may notbe able to meet basic needs. They are at risk ooreclosure, eviction, and homelessness. Studieshave documented the link between housing insta-bility, physical and mental health, and educational

attainment.

Although the cost o housing is lower than manyother metropolitan areas, Louisville has a persis-tent shortage o housing that is decent and aord-able to low- and moderate-income people. Thereis a deicit o at least 57,974 aordable housingunits in Louisville, according to the Louisville Met-ro Governments Five Year Strategic Plan.

Working amilies in Louisville increasingly cannotaord basic housing in Louisville. Some Louisville

amilies have incomes so low the market cannotproduce any housing they can truly aord. The ris-ing cost o utilities and transportation, aordablehousing segregation away rom areas o opportu-nity, and a lack o jobs with suicient wages con-tribute to the problem.

Many homeowners have lost their homes to ore-closure or are at risk o it, leaving neighborhoodswith vacant, uncared-or properties. Most ore-closures have been o moderately-priced homesintended to be aordable but were not truly

aordable to Louisville amilies. And increasinglystringent lending requirements will place home-ownership out o reach or even more Louisvilleamilies in the uture.

The Louisville Aordable Housing Trust Fund, es-tablished by Louisville Metro County Ordinance40.41-40.45, was created to help solve this com-munity problem by providing a reliable stream ounding or the creation and preservation o de-cent housing aordable to people at or below 80%o Area Median Income (AMI), with a set-aside orthose at or below 50% AMI. By leveraging exist-ing unds and working with nonproit and or-proithousing developers and service providers, theLAHTF can help the city achieve the vision o sae,decent, sustainable, aordable housing or Louis-ville.

Projects will be prioritized based on ability to le-verage unds and meet speciic needs identiiedin this assessment, including: making existinghomes aordable and sustainable; developing a-ordable rental housing or ELI and VLI amilies;creating additional high-quality workorce hous-ing near places o employment; increasing homeownership opportunities or LI and VLI amilies;preventing people rom losing existing, otherwise-aordable homes; and promoting housing choice.

The gap between what someone can aord to pay

or housing and what is available is widening. Fed-eral unding or aordable housing has decreasedwith the responsibility increasingly placed on localgovernments. Yet only 1.8% o Louisvilles budgetis invested in housing and amily services.

The LAHTF was capitalized with an initial invest-ment o $1 million. However, the city has not yetestablished a source o revenue or the Trust. Thecity must ulill its commitment to establish $10 mil-lion annually in dedicated ongoing public revenueor the LAHTF i housing is to be made aordable

or Louisville amilies.

Executive Summary


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ContentsLetter rom the Board President..........................................................2

Executive Summary...............................................................................3

Contents ................................................................................................4

Is There an Aordable Housing Problem in Louisville?......................5Louisville Needs to Add 57,974Aordable Housing Units ................................................................6

Who Needs Aordable Housing?........................................................7Many working people who serve our community cantaord housing in Louisville ..............................................................7

An income o $58,752 or a amily o our is requiredor Basic Economic Security in Louisville .........................................8

Jobs expected to be created in the next decade havewages too low or working amilies to aord housing .....................9

Full-time workers earning less than $13.35 anhour cant aord housing in Louisville ...........................................10

Families with the lowest income levels are indire need o aordable housing ...................................................10

Lack o aordable housing orces amilies into crisis: unaordablehousing, inadequate housing, and homelessness in Louisville........11

19% o all Louisville homeowners areburdened by their housing costs ...................................................11

Hal o all Louisville renters are burdened by thecost o housing, some o them severely burdened........................12

Low rental vacancy rates put pressure onlowest-income renters in Louisville ................................................12

The lack o aordable housing has led to recordlevels o amily homelessness in Louisville .....................................13

People in Severely Inadequate Housing ........................................13

Homeownership in Louisville is declining andincreasingly out o reach, despite the lower relative cost...............14

Low-income and frst-time home buyers are less able to

truly access homeownership and need more assistance ...............14Louisville homeowners remain at risk o losing their homesto oreclosure, and the problem is still increasing .........................15

The majority o homes in oreclosure (56.7%)cost $100,000 or less at the time o purchase ...............................16

Minority households, who have lower rates o homeownership already, are at increased risk o oreclosure..................17

Declining income, unavorable lending practices, and lacko home buyer education and counseling contributed tooreclosures ....................................................................................17

Louisvilles aging housing stock contributes to theaordable housing crisis.....................................................................18

The areas o concentration o older homes correlate withthe areas in which low-income people, and cheaper housing,are concentrated ............................................................................18

Utility costs play a major role in whether housing isaordable, especially or low-income amilies ...............................19

Certain populations have additional housing needs ........................20Housing is phenomenally unaordable or somedisabled and elderly households ...................................................20

Permanent supportive housing or people with chronicdisabillities & others .......................................................................21

Veterans .........................................................................................21

Where Should Aordable Housing Be Located? ..............................22Workorce housing is needed in Louisville.....................................22

Aordable housing should be throughout all three rings o thecity, and oer choice and opportunity to all Louisville amilies .....23

Aordable Housings Impact on the Community .............................25Who benefts rom aordable housing? .........................................25

Aordable housing has an economic beneft to the community ....25

Year one economic beneft o $1 million investment in aordable

housing ...........................................................................................26

Aordable housing helps amilies maintain stability, whichleads to improved attendance and academic achievementor school children ..........................................................................26

Costs to the Community o Unaordable Housing..........................27Vacant and abandoned properties are a symptomo Louisvilles aordable housing crisis ...........................................27

The prevalence o vacant and abandoned propertieshas a cost to the community ..........................................................27

The lack o aordable housing is associated with health risks .......28

LAHTF Solutions to the Aordable Housing Crisis...........................291. Make existing homes in Louisville aordable and sustainable..29

2. Develop aordable rental housing or ELI & VLI households ...29

3. Create more aordable workorce housing nearplaces o employment ...............................................................29

4. Increase homeownership opportunities or LI andVLI households ..........................................................................30

5. Prevent people rom losing existing,otherwise-aordable homes......................................................30

6. Promote housing choice ...........................................................31

Overview o the Louisville Aordable Housing Trust Fund .............32What Are Housing Trust Funds? .....................................................32

Legitimacy o the AHTF Model ......................................................32

Purpose o the LAHTF ....................................................................33Funding o the LAHTF ....................................................................34

Defnitions ...........................................................................................35Aordable.......................................................................................35

Fair Market Rent (FMR) ...................................................................35

Low, Very Low, and Extremely Low Income....................................35

Minority ..........................................................................................36

Poverty ...........................................................................................36

Severe Housing Problem ................................................................37

Recommended Reading .....................................................................37

Appendix A: Priority Housing Needs by Income and Population,Louisville Metro Department o Housing and Family Services Five YearStrategic Plan........................................................................................38

Appendix B: Louisville 2010 Homeless Census ..................................38

Appendix C: Housing Plus TransportationAordability Index or Louisville ...........................................................39

Endnotes..............................................................................................40

Reerences ...........................................................................................42

Acknowledgements............................................................................47

Board o Directors...............................................................................47


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Is There an Affordable HousingProblem in Louisville?Nearly a decade ago, the Brookings Institutions re-port Beyond Merger: A Competitive Vision for theRegional City of Louisville warned o disturbingtrends in Louisvilles housing aordability. Localtrends and policies such as concentrating eder-ally subsidized housing in certain neighborhoods,lower than average and declining racial ethnic mi-nority homeownership, the widening gap betweenwages and housing costs, and the eects o racialand economic segregation were named as seriousimpediments to Louisvilles uture.

Since then, these disturbing trends haveonly worsened:

Between1979 and2008, the averageUS in-come declined (except or the wealthiest 10%),while basic living expenses such as gasoline,groceries, and utilities have risen between 3.6%and 36% since June 2010 (Isidore, 2011). Asa result, amilies are paying a higher percent-age o their incomes or housing, leaving lessor ood, clothing, education, medical care, and

emergency savings.

The National Low IncomeHousing CoalitionsOut of Reach 2011 report stated, While the na-tion sets its sights on a gradual recovery rom theeconomic recession, the shortage o aordablehousing is an immediate crisis threatening theeconomic stability o American households.

The Kentucky Housing Corporation, whichadministers the Kentucky Aordable HousingTrust Fund, reports that critical housing needs

are increasing in Kentuckythe unmet demandcontinues to rise.

114,870people now live inpoverty inLouis-ville, an increase to 15.5% (U.S. Census Bureau,2011). Many o these amilies have so little in-come that the market cannot provide any hous-ing that is aordable to them.

37% of Louisvillesworkforce has amedian in-come below what is needed to aord rent andutilities or a two-bedroom apartment at marketrate in Louisville. That is 218,000 Louisville work-ers who need aordable housing (HPI, 2011).

Nearlyone-thirdofallLouisvillehouseholdslivein unaordable housing. Unaordable hous-ing puts amilies at risk o oreclosure, eviction,homelessness, overcrowded or substandardhousing, and continued economic instability, aswell as a number o health risks.

Although only 31% of Louisville householdsare renters, almost hal o them live in unaord-able homes.

9.6% of Jefferson County Public School stu-dents were homeless in the 2010-2011 schoolyear, indicating a 44% increase in homelessamilies in Louisville.

Homeownership is increasingly out of reach.Homeownership rates in Louisville have de-clined to the lowest rate in ve years, 63.4%

(MHC, 2011). And more stringent mortgagelending standards will require even more nan-cial resources and stability in the uture.

Louisvillehasseena17%increaseinordersofsale or home oreclosures in the past year, ontop o the 700% increase in the past 14 years,devastating neighborhoods with vacant, un-cared-or properties. Most o the oreclosureswere moderately-priced homes.

Thecostofutilitiesisanincreasingfactorinde-

termining whether housing is aordable, espe-cially or a large number o low-income house-holds in older, less energy-ecient homes,which are prevalent in Louisville.


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Thenumberofhouseholdsonthewaitinglistor subsidized housing has doubled in thepast two years to 24,394, even as a net losso 663 public housing units led to a 6.3% de-crease in subsidized aordable housing unitsin 2011 (HPI, 2012).

Income and aordable housing segregationhas continued; aordable housing that doesexist in Louisville is concentrated in just 7 o26 districts (Districts 1-6 and 15), not all threerings o the city (Louisville Metro Housing Au-thority, 2011).

The situation is not projected to improve on itsown. Jobs that will be created in Louisville in thenext decade have wages too low to allow a amilyto aord market-rate housing, much less save orthe uture and consider homeownership.

Yet while these problems have increased, ederal

unding, the primary mechanism or making hous-ing aordable, has decreased by 48% across sev-eral decades, and only 1.8% o the citys annualbudget is invested in housing and amily services.

This evidence makes the need or additional aord-able housing, and unding or such activities, clear.

The Louisville Metro Department o Housings Five Year

2010-2015 Strategic Plan identifed an unmet need o57,974 aordable housing units in Louisville.(34,057 or rental and 23,917 or homeownership)

Appendix Acontains a table rom the Five YearStrategic Plan speciying aordable housingneeds by income group and household type.

Terms such as Low Income, Very Low Income, and

Extremely Low Income, aordable, and severelycost-burdened, used throughout this report, aredened in thesection entitled Defnitions.46,593 Louisville households have especiallysevere housing problems and are within theincome levels the LAHTF is directed to serve(Louisville Metro Department o Housing, 2010).3

91,999 Louisville households (27%) live in un-aordable housing (2010 American CommunitySurvey data analysis by National Low IncomeHousing Coalition, 2011). This is the equivalent olling the KFC YUM! Center to capacity - more thatour times over (Louisville Arena Authority, 2012).

In Louisville, 47.5% o households in unaordablehousing are homeowners, and 52.5% are renters.The proportion o renters in unaordable housingis very high. Nearly 50% o Louisville renters livein unaordable housing, compared with 19% ohomeowners.

Is There An Aordable Housing Problem In Louisville?

25%

31%

44%


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Who Needs AffordableHousing?Many working people who serve our community cantaord housing in Louisville.

[In Louisville] there is a signifcant gap between what workers earn and thecost o sae, decent housing. This gap creates a local aordable housing crisisor working people and amilies.

Metropolitan Housing Coalition, 2005

Hard-working people should be able to aord ahome and still have enough money or groceriesand childcare. Yet working people who provideessential services to our community, such as car-ing or our children, ensuring public saety, andtaking care o our health, earn wages too low toaord housing in Louisville.

The median wage or much o Louisvilles coreworkorce makes an average-priced two-bed-

room apartment in Louisville unaordable andplaces homeownership out o reach, especially inneighborhoods near places o employment.

Despite the relatively low cost of housingin Louisville, there are whole categories owage earners or whom homeownership is en-tirely out o reach (Metropolitan Housing Co-alition, 2005). A reghter, police ocer, orlicensed practical nurse earning the averagewage or their proession in Louisville cannot

aord to purchase a median-priced home.

Andotherwageearners,likejanitors, teach-ers assistants, and child care workers, cannoteven aord basic rental housing in Louisville(MHC, 2005).

Nationally, there has been a 9.8% drop in incomerom the start o the current recession until June2011, the largest decrease in decades. U.S. me-dian household income declined more in the twoyears since the recession ocially ended thanit did during the recession itsel, and incomedropped more, in percentage terms, or somegroups already making less, a actor thatmayhave contributed to rising income inequality(Pear, 2011).

The U.S. Census Bureaus preliminary Supple-mental Poverty Measure ound one in threeAmericans is at or near poverty, 76% more thanthe previous measure, with large numbers o work-ing people pushed into poverty by low wagesand rising transportation, child care, and medicalexpenses (DeParle, Gebelo, & Tavernise, 2011).See also Appendix C, Housing + TransportationAordability Index, and the section on workorcehousing in this document.


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JEFFERSON COUNTY, KY

Monthly Expenses for: 2 Workers, 1 Preschooler,

1 Schoolchild

Housing ................................................. $535

Utilities ..................................................$148

Food ..................................................... $570Transportation ....................................... $1,019

Child Care ............................................. $1,062

Personal & Household Items .................$338

Health Care ........................................... $451

Emergency Savings ...............................$135

Retirement Savings ............................... $10

Taxes ..................................................... $950

Tax Credits ............................................ -$322

Monthly Total (per Worker) ................ $2,448

Annual Total (household) ...................$58,752

Hourly Wage (per Worker) ................. $13.91

Additional Asset Building Savings

Childrens Higher Education........ ........ .. $104

Homeownership .................................... $114

Note: Benets include unemployment insurance and employment-based healthinsurance and retirement plans.

The Basic Economic Security Tables (BEST) are tabulated by Wider Opportunitiesor Women (WOW) and the Center or Social Development (CSD) at WashingtonUniversity in St. Louis as part o the national BEST Initiative led by WOW.

An income o $58,752 or a amily o our is required or Basic EconomicSecurity in Louisville.

Basic economic security means the minimumamount o income and assets workers need tomeet the most basic household needs essentialto all workers health and saety. It includes verymodest housing costs, less than the Fair MarketRent, and ar less than the median homeowner-ship cost (Center or Social Development (CSD)at Washington University in St. Louis and WiderOpportunities or Women, 2010).

In Louisville, basic economic security or a amilyo our (two parents and two children) requires anincome o $58,752.

I the wage-earners in the amily do not haveemployer-provided health benets, like 46% oKentuckys private-sector workers, they must earn

$65,664 just to achieve basic economic security.

Who Needs Aordable Housing?


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Jobs expected to be created in the next decade in Louisville have wages too lowor working amilies to aord housing.

Most o the jobs that will become available in thenext ten years in Louisville do not provide enoughincome or amilies to aord housing and otherbasic expenses (Center or Social Development(CSD) at Washington University in St. Louis andWider Opportunities or Women, 2010).

Only13%ofjobsexpectedtobecreatedin Louisville by 2018 will provide basic eco-nomic security to a single parent raisingtwo children.5

Even with two people working full-time,forafamilywithtwochildrenonly76.1%ofjobsexpectedtobecreatedinLouisvilleby2018 will provide basic economic security.

The chart below shows the average wages o jobsthat are expected to experience the most growthbetween now and 2018, as compared with thelevel o income needed or basic economic secu-rity or amilies in Louisville.


RegisteredNurses

CustomerService

Representatives

NursingAides

&Orderlies

FoodPreparation

Workers

RetailSalespersons

Child CareWorkers

Janitors &Cleaners

Receptionists& Inormation

Clerks


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Full-time workers earning less than $13.35 an hour cant aord market rate housingin Louisville.

Families with the lowest income levels are in dire need o aordable housing.

A ull-time worker needs to earn $13.35 an hour,or $27,760 a year, to aord rent and utilities or atwo-bedroom market-rate apartment in Louisville(National Low Income Housing Coalition, 2011).

In act, nowhere in the United States can a am-ily with one ull-time worker earning the minimumwage aord the local air-market rent or a two-bedroom apartment including in Louisville.

Workers who earn the minimum wage, includingmore than 7% o Kentucky workers, earn ar lessthan the housing wage and have limited accessto decent and aordable housing (US Bureau oLabor Statistics, 2011).

People at many income levels need aordablehousing, but the need is especially acute or thoseat the lowest income levels. For these amilies,market-rate housing is phenomenally unaord-able, especially ater actoring in the cost o utili-ties. They must spend signicantly more o theirincomes on housing, leaving less or other basicnecessities like ood, medical care, child care, andheat, and are at constant risk o losing their housing.

See also the section on elderly and disabledhouseholds.

46,587householdsliveinpovertyandcannotaf-ord housing at the Fair Market Rate in Louisville.2

AbouthalfofExtremelyLowIncome(ELI)fami -lies spent nearly all their income on housing.1

84%ofrenterswhoearnlessthan$20,000ayear

the very lowest-income amilies and people live in housing they cannot aord (NLIHC, 2011).At this income level, the market is unable to pro-duce any housing they can aord.

The number of familieson thewaiting list forSection 8 or public housing has doubled in thepast two years to 24,394 amilies (MHC, 2011).



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Louisville Metro Department o Housing (2010) Five Year Strategic Plansanalysis o CHAS 2000 data reports 17,149 (67.5%) ELI, 10,353 (61.4%) VLI,and 4,131 (19% ) LI renter households live in unaordable housing (total o31,633). The data was based on 2000 CHAS data and diers rom NationalLow Income Housing Coalitions analysis o 2009 American Community Sur-vey data presented in their 2011 Congressional District 3 report.

Lack o aordable housing orces amilies into crisis: unaordablehousing, inadequate housing, and homelessness in Louisville.

Whenfamiliespaymorethan30%oftheirincometowards housing and utilities, their housing isunaordable. Families in unaordable housing

are at risk o losing their housing altogether, can-

not meet other basic household needs, and maylive in overcrowded or substandard conditions,leading to additional amily problems.


19% o all Louisville homeowners are burdened by their housing costs.

Renters are not the only ones in need aordablehousing. 43,772 Louisville homeowners (about19% o all homeowners) cannot aord their hous-ing and are at risk o losing their housing, are eco-nomically insecure, and may not be able to meettheir amilys basic needs.

Slightly less than hal (47.5%) o the householdsin Louisville living in unaordable housing arehomeowners.

Proportion o renters and homeowners in all income groups living inunaordable housing in Louisville.

Source: National Low Income Housing Coalition (2011) analysis o 2009 American Community Survey data or Kentuckys Congressional District 3 reports91,999 households live in unaordable housing in Louisville; 106,496 o total households are renters; 48,227 o those in unaordable housing are renters.The U.S. Census reports 219,545 homeowners housed in unaordable housing in Louisville. I the remaining households in unaordable housing are home-owners (91,999 - 48,227), 43,772 homeowners are in unaordable housing.

106,496

58,26948,227

219,545

175,773

43,772


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Low rental vacancy rates put pressure on lowest-income renters in Louisville.

As more people are strained by stagnant incomesand increasing costs, and some homeowners losetheir housing and are orced to become renters,competition or high-quality, low-cost rentalhousing is increasing.

According to the National Association o HomeBuilders, rental vacancy rates in Louisville aredeclining a good sign or apartment owners,but also a greater challenge to the lowest-incomerenters who do not have resources to compete.

Source: National Association of Home Builders, Housing and EconomicOutlook: Louisville, Kentucky Home Builders Association, May 24 2011.


Vacancy rates are improving | United States

Hal o all Louisville renters are burdened by the cost o housing, some o themseverely burdened.

48,227Louisvillerenters(49%ofrenters)livein housing they cannot aord (NLIHC, 2011).

Many have incomes so low the market cannot pro-duce any housing that will be aordable to them.

There are 106,496 renter households in Louisville,representing 31% o all households. The LouisvilleMetro Department o Housing & Family ServicesFive Year Strategic Plan identied a need or 34,057

more units o aordable rental housing in Louisville.Louisville renters have lower average incomesthan homeowners and there is a severe shortageo rental housing that is aordable to them. Be-cause o this shortage, nearly hal o all amilies whorent must select housing that they cannot aord.An increasing number o renters cannot aord atwo-bedroom unit at Fair Market Rent or Louisville(National Low Income Housing Coalition, 2011).

Renters in unaordable housing by income group are:

31,212renters(84%)earninglessthan$20,000a year, the lowest income group, are in una-ordable housing (NLIHC, 2011)

15,346 VLI & LI renters are in unaffordablehousing (39% o VLI/LI renters combined)

Alloftheseincomegroupsareeligibletobeserved by the LAHTF

See also sections in this document on ull-timeworkers earning less than $13.35and amilies with

lowest income levels have acute need.

Louisville Metro Department o Housing (2010) Five Year Strategic Plans analysis

o CHAS 2000 data reports 7,879 (66.5%) ELI, 6,557 (43.3%) VLI, and 8,499 (30.2%) LIhomeowner households live in unaordable housing (total o 22,935 households).The data was based on 2000 CHAS data and diers rom National Low IncomeHousing Coalitions analysis o 2009 American Community Survey data presentedin their 2011 Congressional District 3 report.


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Homelessness among Louisville families hasincreased 44% in ve years, including a 14%increase in 2011 (Coalition or the Homeless,2011).

The fastest-growing homeless population inLouisville is single mothers and young adults,who are the poorest in our community andmost impacted by ederal and state budgetcuts to assistance programs (Harris, 2011).

Every child deserves a sae place to call home.When children have the stability and security thatcomes with a place to call home, they do better inschool, are more likely to develop positive social

relationships, and are more likely to succeedlong-term.

Unortunately, 10,161 children in the JeersonCounty Public School system were homelessduring the 2010-2011 school year, more thantwice as many as in 2003-2004. Nearly 1 in 10JCPS schoolchildren were homeless last year.Homeless amilies were ound in every MetroCouncil district.

Families are becoming homeless due to soaringood, health care, transportation, and energyprices, and home oreclosures (US Conerenceo Mayors, 2009). Homeless people cite housingunaordability as a major actor in becominghomeless (Coalition or the Homeless, 2011).For more inormation on homeless populationsin Louisville, see Appendix B, the 2011 LouisvilleHomeless Census.

The lack o aordable housing has led to record levels o amily homelessnessin Louisville.

At least 32,477 Louisville households arein housing that HUD denes as severelyinadequate (NLIHC, 2011).

70% of Extremely Low Income (ELI) families($18,870 or less or a amily o our) have atleast one housing problem, such as severelyinadequate housing, overcrowded housing,or unaordable housing (Louisville Metro

Housing, 2010).As o 2009, 26,940 Louisville households areseverely cost-burdened by their housing, denedas paying more than hal o their income onhousing.

In addition, 5,537 Louisville households livein overcrowded and/or substandard housing.1,485 o these amilies live in homes that lackcomplete plumbing and a unctioning bathroom

and/or kitchen. 4,052 o these amilies livein overcrowded housing, dened by HUD asmore than one person per room (not bedroom)(Louisville Metro Housing, 2010).

Overcrowded housing has a signicantnegative impact on a amilys health, academicachievement, and overall stability, accordingto numerous studies by HUD and others, such

as the National Bureau o Economic Research.Overcrowded housing is linked to increasedsubstance abuse, domestic violence, stress-related preventable physical illness, mentalhealth problems like anxiety and depression,suicide attempts, risks o contracting contagiousdiseases, absenteeism, and lowered schoolperormance.

People in Severely Inadequate Housing


Source: MHC 2011 State o Metro Housing Report analysis o Jeerson CountyPublic Schools data.


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According to the National Association o HomeBuilders and the Home Builders Association oLouisville:

Increasingly stringent requirements forhomeloans, brought on by the national economicdownturn, mean that some people who wouldhave previously qualied or a home loan may

now not be able to do so.

First-time home buyers and lower-incomehouseholds, with ewer assets, less experiencewith nancial institutions, and lower creditscores, may not qualiy or home loans.

To access homeownership, more assistanceis needed. However, ederal unds or downpayment assistance and rst time homebuyer counseling have been sharply cut inthe U.S. Department o Housing and UrbanDevelopment budget. And as indicated bythe act that inadequate homeownershipcounseling was a actor contributing tooreclosures on Louisville homes, morepre-ownership counseling is needed to ensureamilies can retain their homes.

Low-income and frst-time home buyers are less able to truly accesshomeownership and need more assistance.


TheLouisvillehomeownershipratedecreasedto 63.4%, according to 2010 Census data. Thisis the lowest rate since the rate dropped in

2005, and continues to remain lower than thenational average o 66.9% (MHC, 2011).

Increasinglystringentlendingrequirementswilllock additional people out o the opportunityto purchase a home, while programs andederal unds to assist rst-time homebuyersare ar less available.

For many people, the opportunity to own onesown home is the epitome o the American dream.Homeownership is oten the biggest investment a

household makes, and especially or middle- andlow-income amilies, it is a key way or amilies toestablish economic stability, accumulate assets,and pass it on to uture generations.

Homeownership also benets the community byincreasing an individuals ability to contribute tosociety through employment, local purchasingand investment, and taxes.

Homeownership in Louisville is declining and increasinglyout o reach, despite the lower relative cost.


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Morethan9%8 o Kentucky homeowners are atrisk o losing their homes to oreclosure, higherthan the national average o 8.93% (Mortgage

Bankers Association, 2011). The number of mortgage foreclosures in

Louisville or which there were orders o salehas jumped 700% since 1996, with the largestincrease o 21% in the last year measured(2010), indicating the rise in oreclosures hasnot yet leveled o (MHC, 2008; MHC, 2011).

The homes in foreclosure are primarilythose with a below-average purchase price,traditionally advertised as Louisvilles so-called

aordable homes.

In an analysis of foreclosures in three focusneighborhoods in Louisville (Highview, Shively,and Caliornia), the majority o properties wereowner-occupied at the time o oreclosure.However, the oreclosure action led to adecrease in owner-occupied units (MHC, 2011).9

In 2010, there were 5,299 foreclosures led inLouisville, a 71.5% jump rom 2007 (MHC, 2011).

100 families faced foreclosure every week inJeerson County in 2010 (HPI, 2012).6

While the number o oreclosures in Louisville hasincreased dramatically, it is expected to increaseeven urther as a backlog o oreclosure lingsmove orward in the wake o the February 2012National Mortgage Settlement (MHC, 2011). Inaddition, as adjustable-rate mortgages begin toadjust upward, and the lagged impacts o huge

job losses spread to the broader prime market,the oreclosure crisis is predicted to intensiy (JointCenter or Housing Studies o Harvard University,2010; MHC, 2011).

Foreclosures can lead to vacant properties,homelessness, overcrowded and inadequatehousing, and additional pressure on rentalhousing. Foreclosures were ound at every pricerange and in every ZIP code and Metro Councildistrict.

Louisville homeowners remain at risk o losing their homes to oreclosure, andthe problem is still increasing.


Metropolitan Housing Coalition analysis of 2010 U.S. Census Bureau data as reported in the 2011 report Louisvilles Foreclosure Recovery: Understanding andResponding to the Impact of Foreclosure Sales.

7


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81.2% of the homes in foreclosure cost$150,000 or less.7

Thesharpincreaseinso-calledaffordablehomeoreclosures demonstrates the necessity orLouisville to continue to dene aordability as

a percent o income, in accordance with HUDand other national standards, and to understandthat a relatively low-priced home may still beunaordable to many.

The majority o homes in oreclosure (56.7%) cost $100,000 or less at the timeo purchase.

Data from Metropolitan Housing Coalitions 2008 report Louisvilles Foreclosure Crisis.


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Nationally, homeownership rates declined moreor Arican-American and Hispanic homeownersthan or white homeowners, according to the 2010Census. Homeownership declined 1.3% overall,

but only .8% or whites, while Arican-Americansexperienced a 4.2% decrease in homeownershipand Hispanics a 3.3% decrease (U.S. CensusBureau, 2010).

In addition, Arican-American and Hispanichomeowners are more likely to lose their hometo oreclosure than whites (Center or ResponsibleLending, 2010).

The ollowing map shows areas o concentrationo home oreclosures, which overlaps with areaso high numbers o minority, low-income, andsingle-mother households:

Minority households, who have lower rates o home ownership already, are atincreased risk o oreclosure.

Metropolitan Housing Coalition and MakingConnections Louisville reported that lack oeducation about the home buying process,especially or low-income and rst-time homebuyers, contributed to homeowners purchasinghomes that were actually unaordable to them.

The Legal Aid Society of Louisville, whichassists homeowners acing oreclosure, oundthat a shockingly large number o people didnot receive the loan or which they bargained atclosing.

Some received loans which wrongly did notinclude taxes and PMI within the mortgagepayments, a standard practice or most home

loans.

Loss of income; health problems andaccompanying medical expenses; andquestionable mortgage lending practices, suchas adjustable-rate mortgages with articially lowintroductory rates, lack o inclusion o propertytaxes and insurance in calculations o mortgagepayments, mortgage prepayment penalties, andinterest-only loans; were actors contributing tohome oreclosure in the MHC study.

Declining income, unavorable lending practices, and lack o home buyereducation and counseling contributed to oreclosures.

Foreclosure rates by census tract rom January 2007 to June 2008

Source: Louisville MetroGovernment Department

of Housing and FamilyServices (2010).



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Housing is aordable when the combined costo housing and utilities is no more than 30%o the households income. The more a amilyspends on utilities, the less it has available tospend on rent or mortgage costs. For a home tobe aordable in the long-term, the more energyecient it is, the better. However, according tothe U.S. Census Bureau American Fact Finderdata (1999) the majority o homes in Louisvilleare older and less energy ecient:

72% of Louisville homes (240,000 homes)were built beore insulation was a buildingcode requirement.

183,208Louisvillehomeswerebuiltbefore1970.

75,000 Louisville homes (22%) were builtbeore 1950, with the least energyecient standards.

The areas o concentration o older homes correlate with the areas in which low-income people, and cheaper housing, are concentrated.

Median age o housing stock | American community survey 2005-09 | Five year averages

Louisvilles aging housing stockcontributes to the affordable

housing crisis.

Renters, who do not have permission to makesignicant changes to the home to increase theirenergy eciency, and low-income people, whocannot aord to do so, disproportionately live in

these older, less ecient homes.

For example, the 40203 ZIP code is the 13thpoorest ZIP code in the U.S.

3,529 households in this ZIP code are at or below

the poverty level and living in homesbuilt beore 1950.

Source: Louisville MetroGovernment Departmentof Housing and FamilyServices (2011).


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As a result, utility costs play a major role inwhether housing is affordable, especially forlow-income families. Even though the cost outilities in Kentucky has remained lower thanthe national average, low-income households,especially those at the lowest end o the incomescale, are disproportionately impacted by any

increase in utility costs such as those we haveseen over the last decade.

Low-income people must spend 8% o theirincome on utilities, a higher percentage than the2% national average. Very low income peoplemust use 23% o their income to pay or utilities,leaving only 7% available or rent or mortgage(Citizens Energy Corporation, 2002).

The amount a amily can spend on housing aterpaying or utilities is so low or some incomegroups that the market simply cannot producehousing that will be available to these amilies.

Louisvilles aging housing stock contributes to the aordable housing crisis

10

Data from U.S. Department of Housing and Urban Development (2011). Utility billsburden the poor and can cause homelessness.


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Louisvilles aging housing stock contributes to the aordable housing crisis.

A decent place to call home oers seniors andpeople with disabilities an opportunity to live with

independence and dignity. Yet many householdsheaded by elderly and disabled people do nothave this opportunity, especially those whosesole income is Supplemental Security Income(SSI) payments.

Louisvilles Five Year Strategic Plan identied aneed or 13,952 additional units o aordablehousing or seniors (5,694 or renters and 8,258 orhomeowners). Appendix A contains the ull table oneeds by income group and population type.

People who rely on SSI as their sole source oincome are among our communitys poorestcitizens. SSI payments or an individual are $674monthly ($8,088 a year), which is 26% lower thanthe Federal Poverty Level.

Ater actoring in the cost o utilities, SSI-onlyhouseholds can aord to spend as little as $74or rent ($202 in combined rent and utility costs).

This housing cannot be produced by the market, andas a result seniors and people with disabilities may

spend as much as 94% o their income on housingand utilities combined, a price so unaordablesome would likely be orced to do without basicnecessities like ood and medical care.

In addition, housing discrimination and lacko accessibility is a major actor or disabledhouseholds. The largest number o air hearingcases in Louisville in 2009 involved personswith disabilities (MHC, 2010). Even i outrightdiscrimination is not a actor, many homes do not

incorporate Universal Design Standards or haveaccessibility or people with disabilities, makingthem unavailable to some disabled households.

Certain populations have additional housing needs.

Housing is phenomenally unaordable or some disabled and elderly households.

10


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Supportive housing combines aordable housingwith supportive services or individuals andamilies with an adult head o household withchronic disabilities (such as mental illness, HIV/AIDS, or chemical dependency), or youth who

have aged out o oster care without a permanentamily, and or some veterans, who have a severeneed and without services would otherwise likelybe unable to access and maintain stable housing.

Just like any other citizen, permanent simplymeans that the person determines how longshe or he lives there; she or he signs a leaseand pays rent. Support services can includecase management that ocuses on housingstabilization; coordinated care or mental health,substance abuse, or physical health; and

connection to education, employment, andmainstream benets. The goal is to help peopleachieve independence and remain stably housed,and at less cost to the community.

Permanent supportive housing is cost eectivebecause it is targeted to those who ace themost complex challenges, who would otherwisebe stuck in the revolving door o high-cost

crisis care and emergency housing and whouse costly public services such as incarcerationand emergency room care (Coalition or theHomeless, 2010).

A study by the Coalition or the Homeless oundit cost $88.8 million in 2004 and 2005 to providethese crisis services in Louisville, even thoughthe end result was that the individuals remainedhomeless and in crisis. The same study identiedthe average cost o providing PSH during thesetwo years as $11,592 per person, as comparedwith a larger cost o $12,493 or crisis-only servicesthat leave people still at risk or homeless.

The Coalition recommends that PSH be acomponent strategy in meeting Louisvilles

aordable housing needs, and that 400 additionalunits o this type o housing are needed orhomeless individuals (Coalition or the Homeless,2011). More PSH units are needed or people whohave chronic disabilities and are not homeless,but are low income, at risk o homelessness,and in need o services to maintain any housing,including low-cost, aordable housing.

Permanent Supportive Housing For People With Chronic Disabilities & Others

Our veterans should have access to sae, decent,aordable housing. Yet veterans ace thechallenges o high unemployment, housingunaordability, the need or disabled-accessiblehousing, and homelessness.

Recently returning veterans have higher rates ounemployment and disability.

The unemployment rate for veterans whohave served anytime since September 2001is 11.5%, higher than the national average.

Young male veterans in this category havea high unemployment rate, 21.9%, slightlyhigher than the 19.7% unemployment rate ornon-veterans in this age group (BLS, 2011).

One in four of these recently returningveterans are sel-reported as having adisability as a result o their military service,compared with 13% or all veterans.

When veterans return rom service, they may needboth aordable housing and services to help themmaintain housing. Todd Dedas o the Louisville

Veterans Administration states, Its a spiral:Typically when veterans return they dont end uphomeless immediately. The number o veteranswith mental health issues are increasing. As theyuse up their resources and amily support systems,they become homeless (T. Dedas, personalcommunication, December 5 2011).

Louisville currently has 200 units o supportivehousing or homeless veterans under theHUD-unded Veterans Aairs SupportiveHousing (VASH) program (T. Dedas, personalcommunication, December 5 2011). However,the Coalition or the Homeless identifed 820homeless veterans in its 2011 census, indicatingthere is a need or additional aordablehousing with services (Permanent SupportiveHousing) or veterans.

Veterans

Louisvilles aging housing stock contributes to the aordable housing crisis


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The cost o transportation or workingamilies pushes nearly 250,000 more peopleinto unaordable housing in Louisville,demonstrating the need or aordable housingclose to work sites and amenities (CNT, 2011).

When the cost o transportation is actored in,56.7%ofLouisvillefamiliesspend45%ormore

o their income on housing and transportationcosts combined, a more comprehensive viewo housing aordability (CNT, 2011).

A strong and thriving local economy relieson appropriate housing aordable to ourworkorce. Aordable rental housing, starterhomes, and larger amily homes should beaccessible to working amilies in neighborhoodsacross the region (MHC, 2005).

The location o housing, which dictates theamount o travel required or working amiliesto get to their jobs, has a signicant impact onwhether housing is truly aordable.

Although aordability o a house or apartmentis oten measured by calculating the percento household income devoted to housing andutility costs (the single biggest expense or mosthouseholds), transportation costs are the second-biggest expense or most amilies.

When combined, housing and transportationcosts claim 52 cents out o every dollar o theaverage households budget (HUD, 2012). Butbecause transportation costs are not easilydiscernible when amilies select housing, theymay not take into account the true cost selecthousing that is actually unaordable.

Transportation costs are an especially importantactor or working amilies. The average acrossall households is spending 27% o the amilys

income on housing and 20% on transportation.However, working amilies with incomes between$20,000 and $50,000 spend about 30% o theirincome on transportation (Center or HousingPolicy, 2006).

And when a amily has higher transportationcosts, they are more vulnerable to fuctuations ingas prices. In act, some studies nd that high

transportation costs are actually more o a riskactor leading to oreclosure than high overalldebt or high debt to income ratio (HUD, 2012).

The Center or Housing Policy declares, It isessential or regions to coordinate their housingand transportation policies to ensure they ullyrefect the needs o working amilies, includingboth where aordable housing units are built andtargeting public transportation improvements toareas with large numbers o moderate-incomeworking amilies with more expensive commutes

to work destinations (CHP, 2006).

Employers need to be able to count on havingstable, convenient housing or potentialemployees near the work sites. While peoplemay select housing or a variety o reasons, manyLouisville amilies are orced to live ar awayrom their work because the wage they earndoes not allow them to aord a home near theirworkplace, and because aordable housing is notreadily available at all price points throughoutLouisvilles neighborhoods. However, because

transportation costs increase the arther awayamilies are rom central locations where jobs andamenities are, amilies may not see the savingsthey expected. Factoring in transportationcosts, their housing may become unaordable,especially in metropolitan areas (HUD, 2012).

Indeed, there is a national trend towards includingthe cost o transportation when calculating truehousing aordability. The U.S. Departmento Housing and Urban Developments Oceo Sustainable Housing and Communities,

Where Should AffordableHousing Be Located?Workorce housing is needed in Louisville.


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in partnership with the Department oTransportation, has commissioned a ederalHousing and Transportation Initiative to bereleased in the all o 2012 (N. Beatley, personalcommunication, June 4 2012). The ederalHTI will be based on the existing Housing +Transportation Aordability Index by working in

partnership with that Indexs author, the Centeror Neighborhood Technology. The new HUDInitiative will contain a location aordability indexthat measures both housing and transportationcosts at the neighborhood level and begin toapply the Index to HUD-assisted communities(HUD, 2012).

The existing Housing + Transportation AordabilityIndex or Louisville demonstrates that 247,395

more Louisville people are in unaordablehousing than previous measures show, due tothe cost o transportation associated with theirhousing location:

Whentransportationcostsarefactoredintoliving expenses, 56.7% o Louisville amilieslive in unaordable housing.

This represents393,208peopleinLouisvillein unaordable housing (CNT, 2011).

For additional inormation on the Housing +Transportation Aordability Index or Louisville,see Appendix C.

Aordable housing should be throughout all three rings o the city, and oerchoice and opportunity to all Louisville amilies.

While Louisvilles recent population shits,including a migration o some people o coloraway rom the urban core, indicates a decreasein de-acto racial segregation in housing, incomesegregation and aordable housing segregationare still a reality (Price, 2011).

Nationally, the number o American amilies living in

either the poorest or most afuent neighborhoodsmore than doubled over the past 40 years, rom15% to 33%. 44% o American amilies now livein middle-income neighborhoods, down rom65% our decades ago.

The ndings refect ormerly middle-class workersbeing pushed into poverty while the wealthyreceived more income, and increased residentialsorting by income with the rich focking togetherin new exurbs and gentriying pockets wherelower- and middle-income amilies cannot aord

to live (Tavernise, 2011).

In Louisville, segregation and concentrationof subsidized housing in just a few districtswas ound to be concentrating distress andseparating low income residents rom areas oopportunity and the persistent segregationo black neighborhoods in the greater Louisvillearea has hindered the ability o Arican Americanhouseholds to build wealth (Louisville Metro

Government, 2006).

The 2010 Census showed Louisvilles suburbanedges are expanding, while urban areas are mostlyhollowing out, corresponding with a trend oArican-American residents moving to the suburbs(Green, 2011). The astest-growing areas are in thecitys third ring outside the Gene Snyder Freeway.

Even with these population shits, however,Arican-American residents remain concentratedin urban neighborhoods such as Newburg, Russell,and Shively (the rst ring).

At the same time, the State o MetropolitanHousing Report 2011 ound that nearlythree-ourths o all subsidized housing units inJeerson County are located in seven out o 26Metro Council districts (1-6 and 15), which areprimarily in the downtown and west o downtownareas (MHC, 2011).

On the other hand, districts 7 and 16 in Louisvilleseast end contain only .3% o the subsidizedhousing units in the city. This ollows the nationaltrend o the afuent being more segregated romother Americans than the poor are (Reardon &Bischo, 2011).

Where Should Aordable Housing Be Located?


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Where Should Aordable Housing Be Located?

Subsidized housing as a percentage o all housing units by council district in 2010 |Louisville Metro

Housing segregation by income createsdisparities in public amenities, leading to lessaccess to resources or low-income amilieswho are concentrated in poor neighborhoods,and worse outcomes or those amilies. Sincetheir housing is segregated away rom areas withthis need, wealthy amilies in areas with good

services and amenities are less likely to see theneed or increased investment in things like

parks, transportation, and community services.Yet research substantiates that the neighborhoodin which a amily lives strongly aects their social,economic, and physical outcomes. As a result ocurrent housing segregation, income inequalityand housing segregation perpetuates itsel andgrows over time, and low-income people have

even less chance or upward social and economicmobility (Reardon & Bischo, 2011).

The map below from MHCs State of Metropolitan Housing Report 2011 shows areas ofconcentration of subsidized housing in Louisville. In two districts, over half of the housing issubsidized. In 12 districts, less than 5% is subsidized.


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Businessesthatrequireastableworkforceandworkorce housing;

Low-income, very lowincome,andextremelylow income people who need aordablehousing;

Workingfamiliesthatneedaffordablehousingand basic economic security;

For-prot and non-prot organizations thatprovide aordable housing and housing-related services;

Peoplefacingforeclosureandneighborhoodsthat have been devastated as a result o theoreclosure crisis;

Thecommunityasawhole,duetotheeconomicimpact o the LAHTF and other reduced coststo the community o unaordable housing.

Affordable Housings ImpactOn The CommunityWho benefts rom aordable housing?

The construction and rehabilitation o housinggenerates economic activity. Projects create

jobs or workers in the construction industry andor those involved in manuacturing related to

housing those who make wood products orraming, fooring, and trim; concrete; equipmentor heating and cooling; and roong materials,or example. Projects also create new taxrevenue or localities, both in the initial year oconstruction and on an ongoing basis.

The National Association o Home Buildersproduces an analysis o the economic impact ohome construction and rehabilitation or single-and multi-amily homes, both in the initial year

o construction and subsequent years, stating,These are local impacts, representing incomeand jobs or residents and taxes (and othersources o revenue, including permit ees) orall local jurisdictions within the metro area. Theyare also one-year impacts that include both thedirect and indirect impact o the constructionactivity itsel, and the impact o local residentswho earn money rom the construction activityspending part o it within the local area.

Using this data, a local working group composedo the Home Builders Association o Louisville,Louisville Apartment Association, Habitat orHumanity o Metro Louisville, Fannie Maes

Kentucky Business Center, and others, in 2006estimated the economic impact in Louisville oa local AHTF. The report was included in themayoral task orce report and is also reerencedin the appendices o this report.

Every $1 million invested in aordable housingin Louisville creates as many as 84 units oaffordable housing, supports 112 jobs, andgenerates more than $6.4 million in localrevenue.

On an annual ongoing basis, the economicimpact o having these units o aordablehousingoccupiedincludes44jobssupportedand more than $3 million generated in localrevenue.

Aordable housing has an economic beneft to the community.


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Aordable Housings Impact On The Community

This level o economic impact has beendemonstrated by other AHTFs. A Minnesotaanalysis ound that investment in housing is animportant recovery measure, which will create

jobs, stimulate spending, and generate publicrevenues (Housing as a Lever or Economic

Recovery, Greater MN Housing Fund, Feb 2009).

In Ohio, an investment o $179 million in OhioHousing Trust Fund dollars was ound to havehad a $2.6 billion impact on the local economy,creating over $829 million in earnings or almost32,000 workers, rom 2006 to 2009 (Santer &Santer, March 2011).

Year One Economic Beneft o $1 million Investment in aordable housing:

Total local income generated or residents: $5,871,600Local business owner income generated: $1,366,680Local wages and salaries generated: $4,504,920

Total local tax revenue generated: $ 596,400

Local property tax generated: $ 131,000Totallocaljobssupported: 112

TOTAL1-yearimpact: $6,468,000and112jobssupported

Students who live in amilies that move andchange schools oten have higher rates o bothabsenteeism and academic problems (MHC,

2005). In addition, children in segregated poorneighborhoods have less access to quality childcare and preschool and other support networks(Tavernise, 2011).

Academic achievement is important. One o thesingle biggest predictors o uture economicsuccess is college completion. Those whocomplete college have signicantly higher

income levels throughout their lives, eventaking into account economic recessions andunemployment rates.

More than hal o children rom wealthy amiliesnish college, but ewer than 10% o low incomechildren nish college. Both numbers show anincrease, but the gap between rich and poor incollege completion has grown by more than 50%in the past two decades (Tavernise, 2011).

With Louisvilles new 55,000 Degrees program,the community is ocusing on the need or moreadults to complete college. While there are manyactors that cause the gap in college attainment,lack o quality early childhood developmentand lack o school stability associated withunaordable housing are certainly actors in long-term educational attainment.

Aordable housing helps amilies maintain stability, which leads to improvedattendance and academic achievement or school children.


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The dramatic increase in home oreclosures hasled directly to a similar increase in vacant andabandoned properties, which has been a signicantblight to certain Louisville neighborhoods and ledto problems like increases in crime and lowered

property values.Louisville Metro Government identied 5,400vacant structures and 1,023 vacant lots inLouisville as o June 2010 (P. Nicholson, personalcommunication, June 20 2011).

Foreclosures have occurred in every MetroCouncil district. However, vacant and abandonedproperties are especially concentrated in west endneighborhoods, such as Russell, Shawnee, andCaliornia, and a growing number in the southwest

corner o Jeerson county (M. McGwire, personalcommunication, December 5 2011).

Costs to the Community o Unaordable Housing

Vacant and abandoned properties are a symptom o Louisvilles aordablehousing crisis.

According toa studydonewithinPhiladelphiaby Temple University, Houses within 150 eet o

a vacant or abandoned property experienced anet loss o $7,627 in value (Temple University,2001).

AstudydoneinAustin,Texas,foundthatblockswith unsecured [vacant] buildings had 3.2 timesas many drug calls to police, 1.8 times as manythet calls, and twice the number o violent callsas blocks without vacant buildings (Spelman,1993).

Additionally, the presence of vacant andabandoned properties nearby increases the cost

o homeowners insurance, making aordablehousing less aordable (M. McGwire, personalcommunication, December 5 2011).

The prevalence o vacant and abandoned properties has a cost to the community.



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A 2011 study by the National Bureau o EconomicResearch documented the link between housinginstability and physical and mental healthproblems.

The study ound unstable housing has asignicant impact on mental health as well as ona wide range o preventable conditions that aresusceptible to stress.

For every 100 foreclosed properties in acommunity, emergency room visits and hospitaladmissions increased 7.2% or hypertension and8.1% or diabetes among people age 20 to 49.

Therewasalsoa12%increaseinanxiety-relatedER visits and hospital admissions, and an increase

in suicide attempts. Thesendingsheldtruenotjustforforeclosures,

but also or homeowners struggling to makemortgage payments on homes that were worthless than the cost o the mortgage, also known asunderwater.

Overcrowdedhousingcausedmorearguments,more alcohol consumption and substance abuse,more anxiety and depression, and even moresuicide attempts.

Neighborhoodviolentcrimerates,suchasthoseound in areas o concentration o poverty, arestrongly correlated with the birth weight oinants, an important health indicator (Reardon& Bischo, 2011).

Low-income families given the opportunity tomove out o concentrated poverty into mixed-income neighborhoods experienced largeimprovements in physical and mental health(Tavernise, 2011).

The lack o aordable housing is associated with health risks.

In summary, the lack o sufcient aordable housing throughout Louisvilles neighborhoods is severe,persistent, and aects the entire community.

On the other hand, investment in aordable housing bolsters the local economy and spurs economicactivity. The Louisville Aordable Housing Trust Fund is a key tool to help resolve the aordable housingcrisis and can serve as a catalyst or additional attention and investment in aordable housing.



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Based on the needs, problems, and opportunities identied in this Needs Assessment, there are clearareas or intervention by the Louisville Aordable Housing Trust Fund and others interested in investingin aordable housing. While a number o approaches are needed, The LAHTF will prioritize projectsthat incorporate the ollowing solutions.

LAHTF Solutions To TheAffordable Housing Crisis

1. Make existing homes in Louisville aordable and sustainable.

I existing trends continue regarding real wagedecreases and increases in the cost o utilities,transportation, and other basic living expenses,homes that are now aordable may quickly

become unaordable or many Louisville citizens.

Creating aordable housing that is aordableover many years is a primary goal o the LAHTF.Thereore, the LAHTF will prioritize projects thatincorporate energy eciency and sustainabilityin already existing multi-amily and single-amilyhomes, ensuring the projects remain aordableand livable, and demonstrating wise stewardshipo public unds. Projects could include:

Projects that rehabilitate rental housing tobe more energy ecient with signicantlylower utility costs, bringing rental units intoaordability or LI, and particularly VLI and ELI,

households

Owner-occupied homes that have not beenremodeled or energy eciency and areoccupied by low-income persons

Singlefamilyhomesinhighpriorityareasthatare being remodeled or maximum energyeciency beore sale to aordable housingconsumers

Projects that incorporate green buildingprinciples that reduce energy consumption andimprove livability

2. Develop aordable rental housing or ELI & VLI households.

Because the gap between what VLI and ELIhouseholds can aord and what is available cannotbe bridged through the existing market, theLAHTF will prioritize production o rental housingthat is aordable to ELI and VLI households bysubsidizing the cost o producing such housing.

This income level includes those at or below thepoverty level and disabled and elderly peoplewhose sole source o income is SSI. Projects willbe encouraged to incorporate Universal Designstandards so they will be available and accessibleto all households.

3. Create more aordable workorce housing near places o employment.

The LAHTF will prioritize aordable housingprojects in areas that can be considered workorcehousing, meaning they are close to places oemployment and will reduce transportationcosts or Louisville amilies, making homes trulyaordable. Both multi- and single-amily homesare needed.

Neighborhoods that largely lack aordablehousing, and are thereore segregated againstlow income people, will also be prioritized orLAHTF projects, to increase housing choice andeconomic opportunity throughout the community.


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While ederal unds exist to help somehomeowners avoid oreclosure, the programsare still underway and their overall success willdepend on a number o variables, includingimprovements to the job market that allowhomeowners to secure employment withsuciently high wages to maintain their housingater the ederal assistance ends. I the ederal

programs cannot adequately address theproblem, the community impact o vacant andabandoned properties, increased competitionor aordable rental housing, and increased

numbers o homeless and overcrowded housingconditions may result.

The LAHTF will consider programs that preventpeople losing housing to oreclosure, whereederal assistance is not already available, andwhen the housing will be truly aordable to theperson ater the intervention. Programs targeted

particularly to neighborhoods heavily impactedby the vacant and abandoned properties crisiswill be prioritized.

Foreclosure prevention

Supportive housingBecause some people with disabilities requireservices to remain stably housed, and ederalunds or such services have become lessavailable, the LAHTF will prioritize projects that

provide support services to low, very low, andextremely low income people to connect them toaordable housing and assist them in maintainingthe housing.

LAHTF Solutions To The Aordabel Housing Crisis

4. Increase homeownership opportunities or LI and VLI households.The LAHTF will prioritize projects that increaseopportunities or low income and very low incomeamilies to own a home that is aordable to themin the long term. Whether the project involvesnew construction or rehabilitation o existing

structures, considerations such as housinglocation, energy eciency, and universal designshould also be included.

Homeownership projects could include:

Potentialrst-timehomebuyerswhoneedmoresupport and education about homeownershipto ensure they do not secure housing that isactually unaordable to them or all prey tounscrupulous lending practices.

Families who need assistance with downpayments and closing costs.

Housingdeveloperswhorequireassistancetoreduce the cost o construction or rehabilitationo single amily homes to make them aordableor the long term.

Homeownerswhoneedlow-interest,no-interest,or orgivable partial loans, i homeownership isto be truly aordable.

5. Prevent people rom losing existing, otherwise-aordable homes.Families may live in aordable housing but losetheir housing or a variety o reasons. Somemay lose housing through oreclosure; others,because it becomes unaordable when thecosts o utilities and transportation are actoredin. Some may lose housing because they are orbecome disabled and their housing is not sae oraccessible to them or require support services to

remain housed.

Thereore, the LAHTF will prioritize projects thatprevent people rom losing existing, otherwise-aordable housing through such activities asoreclosure prevention, supportive housing, andaccessible rehabilitation.


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Accessible rehabilitation and Universal Design Standards

To assist elderly and disabled people in all lowincome groups in retaining otherwise-aordablehousing, the LAHTF will prioritize some projectsthat oer rehabilitation o existing structures tobe accessible to people with mobility challenges.

In addition, the LAHTF will also encourage theuse o Universal Design Standards in projects.Universal Design incorporates products as wellas building eatures and elements which, tothe greatest extent possible, can be used bypeople o all ages, sizes, and abilities.Universal

eatures are generally standard building productsor eatures that have been placed dierently,selected careully, or omitted to make themaccessible to disabled and non-disabled peoplealike (Center or Universal Design, 2006).

Elements can be incorporated during remodelingor new construction.

By including Universal Design elements in the listo priorities, the LAHTF allows the widest possibleavailability o newly created aordable housing.

Since a sucient amount o aordable housingis not widely available to those at or below 80%o Area Median Income in all three rings o thecity, but segregated into areas o poverty and

away rom areas o economic opportunity, theLAHTF will prioritize projects that assist in makingaordable housing more widely available in allneighborhoods throughout Louisville.

6. Promote housing choice.

LAHTF Solutions To The Aordabel Housing Crisis


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Housing trust unds provide a fexible way orgovernments to commit resources to providedecent aordable housing in their communities,and can be used to support innovative ways oaddressing a variety o housing needs. Theyinclude long-term aordability requirements,meaning projects that receive unding rom anAHTF are guaranteed to remain aordable ormany years to come.

Over 700 housing trust unds in the U.S. havebeen established in 46 states beginning in the1970s. This includes the Kentucky AordableHousing Trust Fund established in 1992, and now,the Louisville Aordable Housing Trust Fund.

Housing trust unds are unique because theybenet rom a dedicated source o publicrevenue, which is established through legislation.The revenue is committed to producing andpreserving housing that is aordable to lower-income households.

The unds are very ecient. Only two-tenths oone percent o the units unded through housingtrust unds did not get built. This is a record o

accomplishment that any government programwould envy. On average, each dollar spent bya housing trust und leverages seven dollars inadditional unding or housing. The KentuckyAHTF also averages leveraging each dollar seventimes over, according to the Kentucky HousingCorporation, which administers that und.

Overview of the LouisvilleAffordable Housing Trust Fund

What Are Housing Trust Funds?

Legitimacy o the AHTF ModelThe AHTF model has been implementedsuccessully across the country since the 1970s,with the majority being established in the 1980sand 1990s. The Kentucky Aordable HousingTrust Fund has created more than 8,273 unitso aordable housing in 119 Kentucky counties,distributing $65 million and leveraging anadditional $234 million or aordable housingsince 1994.

In Louisville, ater many years o study, a number

o entities, including government agencies andrepresentatives, have called or the creation o aLouisville Aordable Housing Trust Fund:

A Comprehensive Housing Strategy forLouisville Metro, published by Louisville MetroGovernment in 2006, called or the creationo a Louisville aordable housing trust und tohelp meet the citys objective o housing choiceand aordability in all three rings o the city.

As a result, in 2006 then-Mayor Abramsonappointed an Aordable Housing TrustFund Task Force to study the issue andmake recommendations. The Task Forcerepresented a broad spectrum o constituenciesincluding home builders, bankers, realtors,apartment owners, state and local governmentrepresentatives, housing and homelessnessexperts, and community groups. OnDecember 4, 2006, the members o the TaskForce unanimously called or the establishmento a Louisville Aordable Housing Trust Fundwith $10 million annually in dedicated ongoingpublic revenue to help meet the need oraordable housing, and published a reporto their research and recommendations, AnAssessment and Recommendations for theCreation and Funding of an Affordable HousingTrust Fund.


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At nearly the same time, the LouisvilleDepartment o Housing and Family ServicesFive Year Plan also called or the establishmento a local AHTF.

The Louisville Metro Councils Health andHuman Needs Committee conducted several

months o hearings in the summer and allo 2007 on the issue o a local AHTF andrecommended the establishment o a LouisvilleAHTF.

The LouisvilleMetroCouncilagreedwith therecommendations o the Health and HumanNeeds Committee, and on March 18, 2008,passed an ordinance establishing the LouisvilleAordable Housing Trust Fund.

The Mayors AHTF Task Force reconvened

in 2009 at the request o Metro CouncilsGovernment Accountability and OversightCommittee to study how the LAHTF couldbest move orward, given the lack o activityby the citys Housing Department. The AHTFTask Force again recommended a local AHTF,but newly recommended a separate non-prot

organization be established to administer theTrust. The Council re-established its commitmentto the LAHTF, accepted the recommendationso the Task Force, and passed an amendmentto the LAHTF ordinance.

Community groups have long called for

the establishment o the Louisville AHTF.Metropolitan Housing Coalition (MHC) hascalled or a Louisville AHTF in its annual Stateo Metro Housing report every year since 2004.MHC, Citizens o Louisville Organized andUnited Together (CLOUT), and the Coalitionor the Homeless rst studied the issue andbrought housing trust unds to the attention othe public. These same groups later createda movement called Open the Door whichgathered more than one hundred local business

and organizational endorsements or theestablishment and ull unding o a LouisvilleAHTF. The same group successully achieveddedicated public revenue or the KentuckyAHTF beore re-ocusing their attention onLouisville.

Purpose o the LAHTF

The Louisville Aordable Housing Trust Fundwas established by Louisville Metro Councilordinance in 2007 and was urther amended in2009 to address the need or increased aordablehomeownership and rental housing in Louisvillein response to a community-wide movement inLouisville to establish a local AHTF.

The Trust directs its resources to aordablehousing developers and service providers thathelp people access and maintain aordablehousing. However, the beneciaries o the Trustare, in act, the working amilies and low-incomehouseholds who need aordable housing inLouisville.

The LAHTF is intended to be a catalyst, helpinggenerate participation by other lenders, investors,and partners, urther leveraging the impact oeach LAHTF dollar.

The ordinance states the LAHTFs purposeis to receive monies and disburse moniesto organizations dedicated to addressingthe aordable housing needs o individualsand amilies o low- and moderate-incomehouseholds by promoting, preserving, andproducing long-term aordable housing andproviding housing-related services to low- andmoderate-income households.

The LAHTF gives grants and/or loans to nonprotand or-prot aordable housing developersand service providers or a wide variety oaordable housing-related activities including:homeownership and rental housing acquisition,new construction, rehabilitation, emergencyrepair, down payment assistance, and temporaryrental assistance; technical assistance andtraining or developers and low-income housingconsumers; support services designed to keeplow-income at-risk people stably housed; and

Overview o the Louisville Aordable Housing Trust Fund


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programs impacting sae, stable, aordablehousing such as oreclosure intervention andhousing-related asset-building. The LAHTF isgoverned by a 13-member Board o Directorsthat is representative o the community.

AllprojectsthatreceiveLAHTFfundingfroma

public source must serve households that are atorbelow80%ofAreaMedianIncome (in 2011,80% o AMI was $31,702 or an individual). Theseare considered low-income households.

Hal o the unds are reserved or those at orbelow 50% of AMI; in other words, very lowincome and extremely low income households (in2011, 50% o AMI was $19,814 or an individual).

Public unding is intended to be the main undingmechanism or the LAHTF. However, it may also

accept private gits, and these unds may servehouseholds at or below 110% AMI ($43,590 oran individual in 2011).

See also Area Median Income table in theDefnitions section o this document.

Funding o the LAHTF

Overview o the Louisville Aordable Housing Trust Fund

Metro Council established by ordinance a goal o$10 million annually in dedicated ongoing public

revenue or the LAHTF. These sources o revenueare what dene an AHTF.

The LAHTF was awarded $1 million in 2006in windall tax revenue by then-Mayor JerryAbramson, intended to capitalize the und untildedicated ongoing public revenue could beestablished by urther ordinance. In 2011, MayorGreg Fischer allocated an additional $100,000 inmatching unds or the LAHTF or Fiscal Year2011-2012.

The city has not yet established dedicatedongoing public revenue or the Louisville

Aordable Housing Trust Fund.

Establishing dedicated ongoing public revenueis the LAHTFs top priority. Without thisrevenue source, the LAHTF cannot succeed,and Louisville will not be able to meet theneed or aordable housing.


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Affordable

As dened by HUD, housing is aordable when a amily pays no more than 30% o its gross income orhousing and utilities combined.

Fair Market Rent (FMR)

Fair Market Rent is determined by HUD annually, and represents the local cost o a modest rentalunit. Specically, the FMR is the 40th percentile o gross rents or typical, non-substandard rentalunits occupied by recent movers in a local housing market (HUD, 2011). The calculation excludesrental units built in the last two years to avoid rental units at the high end o the market and excludessubsidized housing, which is not priced at the market rate. Gross rent means the cost o rent plusutilities paid by the renter.

In order to aord rent and utilities or a two-bedroom apartment in Jeerson County at the Fair MarketRent o $694, a household must earn $27,760 annually. Assuming a ull-time job, this level o income

translates into a Housing Wage o $13.35 or Louisville.

The FMR has increased by 38% in Louisville rom 2000 to 2011 (National Low Income Housing Coalition, 2011).

Low, Very Low, and Extremely Low IncomeMedian Income is the middle point o the local income distribution, where hal o the amilies have moreincome, and hal have less. It is calculated annually by the ederal government or states, counties, andother localities, and or dierent amily sizes.

HUD denes 80% o AMI as people or amilies who are low income (LI), 50% o AMI as very low income(VLI), and 30% o AMI as extremely low income (ELI).

In 2011, AMI or a amily o our in Louisville was $62,900. Thereore:

ThehighestincomelevelthatcanbeservedbytheLAHTF,thoseat80%ofAMI,is$50,320foraamily o our.

50%ofAMIis$31,450forafamilyoffour,andhalfoftheLAHTFfundsmustservethoseatorbelowthis income level.

The LAHTF, as established by Louisville Metro County Ordinance 40.41-40.45, is designed to serveamilies earning 80% o Area Median Income (AMI) or less. Hal o the unds must serve those at thelower end o the income scale, meaning at or below 50% o AMI.

An estimated 392,812 are in these income groups and are potentially eligible or LAHTF-unded projects(U.S. Census Bureau, 2010).

The table below lists the income levels or LI, VLI, and ELI households or Louisville in 2011. It alsocontains data about the estimated number o people in each income group, based on the 2010 U.S.Census report. For inormation on how much rent or mortgage a household or individual can aord atthis income level, see the table in this document on utilities and housing costs.

Denitions


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Minority

In this report, minority household reers to households headed by a member o a racial or ethnicminority group. In Louisville, this reers primarily to Arican-American or Hispanic households.

The U.S. Census Bureau denes Black or Arican-American as a person having origins in any o theBlack racial groups o Arica. It includes people who indicate their race as Black, Arican Am., or Negroor provide written entries such as Arican American, Aro American, Kenyan, Nigerian, or Haitian.

The U.S. Census Bureau denes Hispanic as those who indicated that their origin was Mexican, PuertoRican, Cuban, Central or South American, or some other Hispanic origin. It should be noted that personso Hispanic origin may be o any race.

Poverty

In 2012 the Federal Poverty Level is $23,050 or a amily o our, or $11,170 or a single person. This isabout $1,921 or $931 monthly, respectively. The Federal Poverty Level is only slightly higher than thelowest income tier o extremely low income.

In 2011, 114,870 Louisville people (15.5%) were living at or below the Federal Poverty Level. This rateo poverty is higher than the national average, which itsel is higher than usual.

The U.S. Department o Health and Human Services annually announces the poverty guidelines.Calculations are revised each year to refect infation using the Consumer Price Index.

The ormula used or calculating poverty

LAHTF Needs Assessment 2012

Documents

Transcript of LAHTF Needs Assessment 2012