By Dave Gatton
February 17, 2003

Two California mayors representing the U.S. Conference of Mayors told the Mortgage Bankers Association of America meeting in San Diego on February 3, that while cities were becoming more innovative in their ability to develop affordable housing, a national housing program was needed to address the growing problem of housing America's working families.

U.S. Conference of Mayors Trustee Long Beach Mayor Beverly O'Neill and Advisory Board Member Fremont Mayor Gus Morrison described the need for affordable housing programs in their cities, and the use of housing development as part of their revitalization efforts.

O'Neill told the audience that private residential developers were in the process of building 3,000 middle to upper income units in downtown Long Beach. She said that these units would help to revitalize the downtown by greatly increasing its density and providing housing to attract young professionals interested in the urban lifestyle. But the mayor was quick to add that these developments would not address the city's serious need for affordable housing.

In response to that need, O'Neill called for creation of a variety of financing tools to help cities encourage housing development for working families who are priced out of both the rental and homeownership markets. Citing U.S Conference of Mayors President Boston Mayor Thomas M Menino's push for a national housing agenda, she encouraged the bankers to work with mayors on passing a national housing trust fund, a rental housing production program, expansion of low-income housing tax credits, and passage of President Bush's homeownership tax credit.

She described how her own city had used HOME, CDBG and tax credits do provide such housing, as well as her city's efforts to reorient its economy after military base closures that hit the city hard in the mid 1990s. Part of the city's current revitalization efforts include the development of a 260 acre parcel, owned by Boeing, which is being made available for mixed use development including residential, industrial and commercial activities.

Mayor Morrison, whose city of Fremont is the second largest in the Silicon Valley, told the bankers that lack of financial resources was the largest impediment to developing affordable housing. "I believe the housing problem is real, it is national, and it requires a national solution," he said. "We need to expand the tax credit program, allow greater use of mortgage revenue bonds, and encourage investment in multifamily affordable housing."

He described the challenges of developing affordable housing in areas where land costs ranged from $1 million to $1.5 million per acre. And he said that housing resources are tied up waiting for low income housing tax credit allocations and other federal housing grants because of over demand. "The project (a 60 unit affordable housing project for seniors) started with Fremont buying the land and we have had several million dollars tied up which so far has provided no housing for our investment," he said. The project will break ground in May.

Morrison criticized the lack of national attention on incentives to develop multifamily rental housing. "The emphasis seems to be to tear down massive public housing projects and replace them with ownership units," he said. "Unfortunately, people displaced by tearing down units are not the people who can always become homeowners right away. Where will these people go?" he challenged the audience.

John Cousron, Chair of the MBA and member of the Conference's Council for Investment in the New American City, said that the bankers were ready to work with the mayors in pushing for passage of a national housing production program, expansion and greater flexibility in the low-income housing tax credit and passage of President Bush's homeownership tax credit in the 108th Congress. "We have proven our effectiveness when we work together in concert with the nation's mayors," he said, "and we are ready to do the same in the upcoming congress."