Mayors, SBA Agreement Signed at CD and Housing Committee Meeting

By Eugene T. Lowe

During the 68th Conference of Mayors Winter Meeting, the Community Development and Housing Committee was briefed by several speakers on small business and housing. San Francisco Mayor Willie L. Brown, Jr., who serves as Chair of the standing committee, moderated the meeting.

The first speaker, Aida Alvarez, Administrator of the Small Business Administration (SBA), told the mayors that “we are living in a small-business economy. Last year, we guaranteed $16 billion in loans, which is more than has ever been guaranteed in the history of the SBA.”

Administrator Alvarez’s remarks preceded the signing of an agreement between the SBA and the Conference of Mayors “to work together in a collaborative effort to foster small business growth and the development through local outreach, including training and communications, and increased awareness of SBA programs and resources.”

Administrator Alvarez said of the agreement: “This... will result in the creation of a Small Business Task Force at the Conference of Mayors, which SBA will co-chair. The task force will develop creative ideas and look at the best practices of small business activities in your communities.”

Conference of Mayors Vice President Boise Mayor H. Brent Coles, who signed the agreement on behalf of USCM said: “Administrator Alvarez made a commitment to the Conference of Mayors at our leadership meeting in Denver in September. She said at that time that she wanted to develop a long-term, long-lasting, meaningful relationship with the mayors of this nation. This memorandum of understanding is a result of that commitment.”

Bill Apgar, HUD Assistant Secretary for Housing and the Commissioner of the Federal Housing Administration, briefed the mayors on the department’s plans for the coming year. He told the committee to expect a strong HUD budget for the next fiscal year, with increases proposed in housing vouchers and economic development programs. He said that the started job must be finished by President Clinton on the New Market initiatives, such as APIC, which was funded but not authorized. As for the housing, Commissioner Apgar said that HUD was pleased with the legislative response to the opt-out problem which helps “property owners not only stay in the Section 8 program, but avoid the temptation to pre-pay the HUD-insured mortgage and leave the program.”

Michael F. Shibley, Vice President for Regional and Legal Affairs of the National Association of Home Builders (NAHB), briefed the committee on the initiative, “Building Homes in America’s Cities”, which is a partnership between the Conference of Mayors, NAHB, and HUD. The goal of the partnership is to build one million homes in the inner cities throughout the country over the next 10 years. Mr. Shibley told the committee that the goal of the partnership is a “keystone” to NAHB’s approach to smart growth. He said that while 14 cities have been chosen as pilot cities, this does not preclude other cities from participating in the program. In fact, Mr. Shibley said, the partners are now developing materials to market the program to cities across the nation.

Dayton Mayor Michael Turner then described how his city is participating in the million home initiative. Starting in 1993, even before the creation of the “Building Homes” initiative, the city of Dayton in partnership with the local home builders association began a project that rehabilitated eight homes in an inner city neighborhood. With that program, the local homebuilders discovered that there was an opportunity to pursue housing construction in the city. The partnership between the city and the builders has expanded to include other neighborhoods. National Citibank has joined the partnership, and the city now offer tax abatements, acquires land for housing development, and has combined all city departments which relates to housing development in one department.

Barry Zigas, Senior Vice President and Executive Director of the National Housing Impact Division of Fannie Mae, gave the committee an update on his company’s trillion-dollar commitment, a new partnership between the Conference of Mayors, Fannie Mae and Access Capital, and a new initiative of Frank Raines, CEO of Fannie Mae, on what is called the Mortgage Consumer Bill of Rights. With regard to the trillion dollar commitment, Fannie Mae announced in 1994 that the company would “invest one trillion dollars in mortgage financing over the next seven years (at the end of the year 2000) to help 10 million target families achieve homeownership or to find a decent or affordable rental apartment.” Mr. Zigas said: “At the present time, we’re very much on track to meet that goal. We exceeded our 10-million goal last year, and we expect to reach the trillion -dollar investment goal ahead of schedule this year.”

Describing the partnership between Fannie Mae, Access Capital, and the Conference of Mayors, Mr. Zigas said the initiative is “designed to help mayors identify specific community re-investment challenges where private investment capital can be channeled into a community investment act mutual fund. Lenders receive credit under the Community Reinvestment Act, and therefore, fulfill their community obligation.”

As for the Consumer Bill of Rights, Mr. Zigas, presented five key rights to the committee: the right to access mortgage credit; the right tot he lowest-cost mortgage for which a consumer can qualify; the right to know the true cost of a mortgage; the right to be free of regulatory burdens; and, the right to know what’s behind a lender’s mortgage decision.

Kevin Bibbs, Director, Community Development Lending of Freddie Mac, told the committee that his company had identified 5 of the 14 pilot cities in the million home initiative. He said: “We’ve committed $100 million to those cities to build new homes in our urban communities. Those cities include: Sacramento, San Antonio, Cincinnati, Baltimore and Washington, D.C. “ Sharing some of Freddie Mac’s products with the committee, Mr. Bibbs said that cash for a down payment to purchase a home is “no longer the issue. The issue is credit.” Some of the products at Freddie Mac, Mr Bibbs said, such as the lease-purchase program  requires “no down payment from the home buyer.”  Mr. Bibbs said further: “the key (to getting more homeowners) is debt management counseling, as well as homebuyer education and low- down payment types of mortgages.”