Create a housing program modeled after the Challenge Fund
"The first year ... The question of affordable housing for first-time homebuyers and the rehabilitation of existing homes is a priority for a Buckhorn Administration. Together with our lending partners, our housing initiative will build a program modeled after the successful Challenge Fund. ... This program will ... include down payment assistance, reduction in origination fees, reduced interest rates, streamlined loan applications and assistance in preparing and packaging the loans."
A ‘scattershot’ approach to housing programs
Updated: Friday, March 29th, 2013 | By Richard Danielson
To voters who lived in Tampa in the late 1980s and early 1990s, Bob Buckhorn's campaign promise to create a program modeled on the Challenge Fund harkened back to a time when Tampa was a nationally recognized leader in creating affordable housing.
During then-Mayor Sandy Freedman's administration, in which Buckhorn served as Freedman's special assistant, the Mayor's Challenge Fund program helped thousands of Tampa residents buy and improve homes by using public money to guarantee private bank loans for people who otherwise could not have afforded conventional loans.
Buckhorn said his program would include down payment assistance, reduction in loan origination fees, reduced interest rates, streamlined loan applications and assistance in preparing and packaging the loans.
This was an ambitious — maybe even audacious — pledge for two reasons. First, the Challenge Fund had a lot of moving parts and required high levels of coordination and cooperation between City Hall, banks and nonprofit organizations. Also, the problems in the housing market today are much bigger, more widespread and more complex than they were 25 years ago.
To get an idea of how the Challenge Fund worked, consider one of its projects from the early 1990s. Back then, the city teamed up with First Union National Bank of Florida, the Tampa United Methodist Centers and the nonprofit Tampa-Hillsborough Action Plan to move, renovate and sell 70 houses from the path of the Veterans Expressway in northwestern Hillsborough County.
The buyers were all first-time homeowners and included at least 26 families who had lived in public housing.
Key to this, city officials said at the time, was a commitment to help with "very unusual financing” from First Union, a bank that no longer exists. (It merged with Wachovia in 2001, which itself was acquired by Wells Fargo in 2008.) First Union provided interim financing for the relocation and renovation of the houses, plus more than $2.1 million in mortgages.
The three-bedroom houses were moved to vacant lots the city had had acquired through condemnation, code enforcement proceedings or other methods. The Tampa-Hillsborough Action Plan handled renovations for 10 of the homes and concrete work for all 70.
The Challenge Fund provided the buyers with, on average, a $15,000 deferred second mortgage that became due when the homeowner sold the house. With that assistance, the new homeowners took out bank mortgages of $35,000, with principal, interest, tax and insurance payments of $347 per month.
To recreate something like the Challenge Fund, Buckhorn would need the right leadership at City Hall, money to help provide the financing and an organized network of private-sector and nonprofit partners.
At the mid-point of his four-year term, he had none of these in place.
First, personnel: City Hall hasn't had a housing director since Sharon West, then the manager of housing and community development, retired on Jan. 4, 2012. Buckhorn said he wasn't satisfied with the first round of applicants.
"I told them to start re-advertising nationwide about two weeks ago,” Buckhorn told PolitiFact Florida on Feb. 26, 2013.
Second, money: Buckhorn said one possible source of funds could be a national settlement between states and banks over mortgage foreclosure practices.
"It ought to come back here on the streets,” he said of the money. But a plan tentatively approved on March 20, 2013, by the Florida House Appropriations Committee earmarks none of the money for cities.
Of $200 million to be appropriated statewide, $45 million would provide down payment assistance to teachers who work in "D” and "F” schools, prosecutors and public defenders, veterans, active-duty military personnel and health care professionals who work in rural areas. Another $35 million would go to the nonprofit Habitat for Humanity to acquire and rehabilitate existing homes. The rest would go to rental assistance, clearing a statewide backlog of foreclosure cases, domestic violence shelters, college dormitories and legal aid for homeowners facing foreclosure.
Third: partnerships with private bankers, nonprofit organizations and other government agencies. Currently Buckhorn said the city tends to work with housing partners "in sporadic and scattershot ways,” but what made the Challenge Fund successful was its comprehensive approach, especially when it came to getting private lenders to sign on.
Finally, there's a fourth factor: Unlike the late 1980s or early 1990s, any housing program created now would not only be trying to rehabilitate existing houses or building new ones. It also would have to reckon, one way or another, with a huge glut of homes that either are in foreclosure or some form of mortgage distress, Buckhorn said.
"It's a much more complicated and difficult process than it was in ‘88 ‘89, ‘90,” he said.
All this notwithstanding, Buckhorn does point to a couple of positive developments in the city's approach to housing.
First, there's the Nehemiah Project, in which the city plans to demolish 51 abandoned homes in or near Sulphur Springs.
Also, the city helped identify six local nonprofit organizations that in February 2013 were awarded $800,000 in Wells Fargo grants to help Tampa neighborhoods recover from the housing crash and foreclosure crisis.
The work in Sulphur Springs and with Wells Fargo is part of what Buckhorn said he envisioned the city doing, but "it's frustrating” not to do more. The foreclosure crisis complicates things, but Buckhorn acknowledges that's no excuse.
"Candidly, part of it's been that I've had so much else on my agenda that I just haven't been able to get to it,” Buckhorn said. "It hasn't gotten my undivided attention. We're doing good stuff out there, but it's not comprehensive, it's not organized, it's fractured. It's just not up to what I expect.”
Buckhorn promised during his campaign that during his first year in office he would create a housing program modeled on the Challenge Fund. He missed that self-imposed deadline, but says he still wants to put together a more comprehensive effort. Considering the history of the Challenge Fund and the scope of the housing foreclosure crisis, he's got his work cut out for him. So for now, his progress on this campaign pledge remains Stalled.
Interviews with Tampa Mayor Bob Buckhorn, Feb. 26, 2013 and March 20, 2013
City of Tampa news release, "Wells Fargo grants $800,000 to six Tampa nonprofits to help stabilize local neighborhoods,” Feb. 11, 2013
Tampa Bay Times, "Tampa to demolish 51 vacant homes in Sulphur Springs," Jan. 29, 2013, accessed March 25, 2013
Florida House of Representatives, PCB APC 13-01 Redraft-B, "An act relating to funding from the national mortgage settlement,” accessed March 25, 2013
St. Petersburg Times, "Tampa mayor urges lawmakers to pass affordable housing bill ,” March 20, 1992, accessed March 24, 2013
St. Petersburg Times, "Family moves to preserved "dream house' ,” Sept. 22, 1993, accessed March 24, 2013
Web site, "First Union is now Wells Fargo,” accessed March 25, 2013
Challenge Fund still on the drawing board
Back when he was a candidate, Mayor Bob Buckhorn said creating a Challenge Fund housing program was on his list of priorities for the first year.
It's a program with which Buckhorn has experience. Under former mayor Sandy Freedman, for whom Buckhorn worked as a special assistant, the Challenge Fund helped poor and middle-class residents buy homes by combining federal grants and conventional bank loans to provide low-cost financing.
But the program hasn't exactly come back to life during in the Buckhorn administration. The city has been without a housing director since the beginning of 2012. The city's manager of housing and community development, Sharon West, retired on Jan. 4, 2012, according to city officials. A search is underway to fill the job.
That critical post needs to be filled before a Challenge Fund can get off the ground, Buckhorn said in an interview with PolitiFact Florida.
"Until we get new leadership, we would be hard-pressed to initiate any new programs, although I am committed to doing that, because I think it's important,” Buckhorn said.
Buckhorn's campaign promise was to start the program in his first year, and he hasn't done that. Still, if a successful program eventually starts later, this promise could merit a more positive rating. Buckhorn said he intends to do that.
But with no housing director yet in place, the promise doesn't seem to have gone very far. For now, we rate it Stalled.
Interview with Mayor Bob Buckhorn, Feb. 28, 2012
Tampa Bay Times, Bob Buckhorn unveils platform focused on business and neighborhoods, Jan. 24, 2011
Tampa Bay Times, The next level — Bob Buckhorn's goal for Tampa, and himself, Feb. 11, 2011
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