After 30 years, Rouse's Enterprise is adapting to financial challenges

Affordable housing nonprofit is working to set the agenda for other community development groups

October 26, 2012|By Steve Kilar, The Baltimore Sun

At the recent Governor's Housing Conference in Baltimore, the blue logo of a house with rays of light emanating from behind the roof was ubiquitous.

It's the emblem of one of the conference's main sponsors, Enterprise, and to the roughly 800 people in attendance Oct. 16, it was nearly as recognizable as the red-and-yellow square of Wells Fargo, another sponsor.

"They're not just a distant organization. … They bring home their national knowledge to us, and we impart what we're seeing," said Trudy McFall, president of the Maryland Affordable Housing Coalition, who moderated a panel about rental housing financing at the conference.

The Enterprise family of companies was launched in Maryland 30 years ago by Columbia's founder, James W. Rouse, and his wife, Patty, to combat poverty by streamlining the financing and development of affordable housing. Three decades later, Enterprise has become an agenda-setter for the affordable-housing community in a challenging time. Financing for affordable-housing construction is growing scarcer as federal and municipal budgets are squeezed.

"We want to play a leading role, but we can only do that in partnership with others," said Terri Ludwig, Enterprise Community Partners Inc.'s president and CEO.

Enterprise recently published a report, "Community Development 2020," that lays out a vision for the way affordable housing should be approached in the coming years.

The report details five points Enterprise sees as critical to maintaining a viable affordable-housing system in the United States. Among those points is the idea that housing can only help people out of poverty if it is the right housing — residences that are connected to what Enterprise calls "communities of opportunity."

That means getting people into homes that allow access to transportation, health care, education and jobs, Ludwig said. Too often, she said, affordable housing is thought of without relation to other issues.

Enterprise and other housing groups must "actively partner with people in other sectors" and think of low-income renters' costs in the aggregate to break down these barriers, she said.

For instance, this week, the Washington-based Center for Housing Policy released a study that shows combined housing and transportation costs have gone up 44 percent in the nation's largest cities since 2000, while household incomes have grown only 25 percent.

Affordable-housing advocates need to think about data like that when making decisions, Ludwig said. Using such data to bolster the case for affordable housing is another item on Enterprise's 2020 agenda.

Enterprise's policy and research wing released a comprehensive look Oct. 18 at the nationwide mortgage settlement that concluded states have spent less than half of the $2.5 billion for housing-related expenses. The rest of the money, paid by banks that used fraudulent mortgage practices such as "robo-signing," has been diverted to states' general funds and other uses not related to housing, the money's intended target.

How to keep money flowing to affordable housing plays a large part in Enterprise's 2020 plan. Last year, Enterprise helped with the investment of more than $1 billion in community development, much of it from federal tax programs.

"The community-development field often relies upon government resources to conduct our work. ... However, politics and economic pressures at the federal, state and local levels mean federal dollars will continue to wane," according to the 2020 report.

Enterprise is most worried about the future of the low-income housing tax credit, which Congress created in the Tax Reform Act of 1986. Enterprise lobbied for the credit, which has since "leveraged $75 billion in private investment to produce more than 2.5 million affordable homes," according to the nonprofit's 2020 report.

Low-income housing tax credits are allocated by state housing finance agencies to developers of rental housing. Developers then sell the credits to investors in exchange for the money to invest in rental housing projects.

Part of Enterprise's mission is to connect developers with investors who will provide cash for an affordable-housing project. More equity means the developer's debt on the project is lower, so rental rates can be below the market rate.

For 10 years, investors — typically corporations seeking offset profits — receive a "dollar-for-dollar credit" against their federal tax liability, according to the U.S. Department of Housing and Urban Development. Rents in properties financed with the credit must remain affordable for at least 30 years.

"It is absolutely the glue that holds the affordable-housing community together," McFall said of the tax credit.

It creates the vast majority of the funding for affordable-housing projects, experts say.

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