Congressional Action Urged on Shortage of Housing

Responding to reports of a sharp decline in the construction of affordable rental housing in Los Angeles, San Francisco and San Jose, as well as other big cities nationwide, a coalition of housing advocates urged Congress on Tuesday to increase federal backing for multifamily housing development.

Data released by the Coalition for Affordable Rental Housing at a housing summit in Washington revealed that only one federally insured, affordable housing development was built in Los Angeles last year. None was built in San Francisco, New York City or Boston.

That one Federal Housing Authority-insured development in Los Angeles added only 237 affordable apartment units to a city in which about 1.3 million households last year spent more than 50% of their incomes on housing or lived in substandard housing, said the Mortgage Bankers Assn. of America and the National Housing Conference.

“The FHA used to be the No. 1 player in the multifamily rental market,” said Stephen Coyle, chief executive of the AFL-CIO Housing Investment Fund. “Now, FHA is not even on the playing field and we have a tremendous drop in rental housing.”

The housing coalition, which includes the National Assn. of Home Builders, the National Assn. of Realtors, the Mortgage Bankers Assn., the AFL-CIO Housing Investment Trust and the U.S. Conference of Mayors, urged Congress to raise by 25% the FHA loan limits for multifamily housing. Additional increases were requested for high-cost cities such as Los Angeles and San Francisco.

Under FHA multifamily programs, lenders obtain insurance on mortgages to construct or refinance apartment buildings, up to a maximum amount per unit that is set by Congress. Insurance limits have not been raised since 1992, even as building costs have doubled in many of the nation’s largest cities, creating a severe shortage of affordable rental housing.

In Los Angeles, the loan limit on one apartment unit now is $87,226. Under the proposal, the loan limit would reach $160,952 per unit. Without that boost, coalition members said, developers will not be motivated to build rental units.

The need for affordable housing is not limited to lower-income families, according to the coalition. Data from the Mortgage Bankers Assn. and the National Housing Conference show that 711,000 moderate-income families nationwide faced a critical need for rental housing in 1999, a 64% jump from 1997. Yet only about 127,000 multifamily units were constructed with FHA-insured loans during the last four years.

Jim Murphy, president-elect of the Mortgage Bankers Assn., said he is confident that Congress will respond to the coalition’s proposal, noting that a loan-limit boost would involve no cost to the government.

“The entire industry is recognizing the dire need for help with affordable housing,” Murphy said. “Now we have to translate this effort into housing production.”

Housing and Urban Development Secretary Mel Martinez said the hike in loan limits is just one of several proposals the Bush administration is considering to help ease the nation’s housing crunch. Another proposal is an increase in tax credits for those who build affordable housing.