ANALYSIS OF IMPEDIMENTS TO FAIR HOUSING CHOICE

Transcription

1 ANALYSIS OF IMPEDIMENTS TO FAIR HOUSING CHOICE 2011 Thomas Jefferson HOME Consortium & Adopted by the Thomas Jefferson Planning District Commission on May 5, 2011 City of Charlottesville Adopted by the Charlottesville City Council on May 2, 2011

2 Contents Section I: Executive Summary... 3 Analysis and Methods... 3 Identified Impediments and Responses... 5 Section II: Introduction... 9 Purpose... 9 Process and Methods Organization Section III: Context for Fair Housing Background Data Demographic Data Economic Data Housing Data Citizen Participation Results from Input Sessions Section IV: Analysis of Impediments to Fair Housing Choice Evaluation of Current Fair Housing Legal Status Overview of Federal and State Fair Housing Law Fair Housing Complaint Review Home Mortgage Lending Review Public Sector Review Zoning, Land Use, and Building Codes Public-Sector Housing Policies Mobility, Access, and Public Transportation Public Schools Regional Disparities and Jurisdictional Boundaries Assessment of Fair Housing Activities Informational Programs for Fair Housing Public and Private Sector Enforcement of Fair Housing Section V: Identification of Impediments to Fair Housing Choice and Recommendations Impediments to Fair Housing Choice (2011) A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

3 SECTION I: EXECUTIVE SUMMARY 2 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

4 Section I: Executive Summary Analysis and Methods The purpose of this analysis is to identify, and make recommendations to eliminate, any impediments that currently exist in the Thomas Jefferson region (The City of Charlottesville, Albemarle County, Fluvanna County, Louisa County, Greene County, and Nelson County) to the fair housing choices made by all residents. The analysis is an important part of the HOME Consortium s and the City of Charlottesville s commitment to affirmatively further fair housing, and it will serve to guide activities relating to fair housing for the next several years. The analysis contains four major components that are used to inform the final selection of impediments: 1. Data on demographics, the economy and housing The Thomas Jefferson region is growing more racially diverse, with growth rates for Hispanics, Asians, and individuals claiming multiple races higher than the population as a whole. The region is generally becoming more spatially integrated, although the trend toward integration is less pronounced for families with children. The number of single-parent households remains high in urban and rural areas. In 2009, there were 20,093 people with a disability in the region, and a wide range of disability types are represented. An economic downturn has affected the ability of households to acquire and maintain housing. The unemployment rate has doubled since 2007, with Skilled Trades jobs in particular being lost each year, although it is still below the national average. Wages have not increased much for service-sector positions. Housing costs remain elevated relative to incomes for both rental and homeownership opportunities. A foreclosure crisis has hit Louisa and Fluvanna Counties, and certain neighborhoods of Charlottesville, and homelessness continues to rise each year. 2. Input sessions to hear concerns from the community Between October 2010 and March 2011, nine groups were asked questions about existing impediments to fair housing in the community. Each of these groups represents protected classes under the Fair Housing Act or has an expertise that overlaps with the analysis. The topics covered by these groups ranged widely in scope. Notes derived directly from the input gathered are included in the Context for Fair Housing section and used to inform the final identified impediments. 3. Analysis of public and private sector influence on fair housing An analysis of the public and private processes surrounding housing in the region helps determine whether there are systematic issues that impede fair housing choice in the Thomas Jefferson region. Outright discrimination remains an issue. Fair housing complaints in Virginia 3 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

5 are typically fielded by the Virginia Office of Fair Housing. Between 2005 and 2010, there were 13.2 complaints addressed per year, with about one-third being resolved in favor of the complainant. The financial markets for housing have changed dramatically in recent years. The primary problem between 2004 and 2007 was the prevalence of high-cost loans issued, particularly to minority homebuyers. Blacks and Hispanics were three times more likely to be issued a high or adjustable interest rate than a White applicant. Many of the predatory loans were issued for refinancing and home improvements, not a home purchase. High-cost loans are highly linked to foreclosures. After 2008, the conventional loan markets have tightened up and securing a loan for a new home has become much more difficult. Land use ordinances are enacted to preserve the health, safety, and welfare of citizens in a particular jurisdiction, although there are often trade-offs to consider in terms of housing availability and affordability. Studies at the national level have shown that some code requirements can increase the costs of providing new housing, and thus limit the options for affordability living. Local governments have undertaken many actions in recent years to facilitate the creation of affordable living options. Additionally, there are many public and non-profit institutions that have a role in providing housing, often utilizing a complex network of funding sources. Public housing providers have various methods for selecting tenants with objectivity. There are provisions in place to prevent displacement from occurring, especially as redevelopment occurs, and a range of providers have moved toward mixed-income and mixed-use projects. Transportation is fundamentally linked to fair housing, because transportation costs reflect the access to jobs and services of a home. A home that is located in close proximity to jobs and services is inherently less affordable. Therefore, the provision of transit and other low-cost transportation options can help to open up more housing opportunities to households. Likewise, public schools heavily influence the housing decisions of families. Public schools remain socioeconomically divided according to the area they serve. More economically and racially integrated schools will likely improve performance across the boards and make more homes throughout the region attractive to families with children. 4. Review of Fair Housing Activities between 2004 and 2010 Each of the impediments identified and objectives set in 2004 are revisited, and progress toward meeting goals is measured. This is means for assessing how well the various parties responsible for eliminating the impediment have performed in their role, and it helps determine which issues continue to need attention and which have been addressed sufficiently. Many of the goals set in 2004 continue through Although the affordability problem has shifted substantially since 2004, the severity of the issues has grown for many segments of the population. Accessibility of housing remains an issue, particularly for lower-income households. There have been improvements in developing mixed-income neighborhoods and the region has become more integrated, but families 4 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

6 remain divided by race and income. Community resistance to development with affordable housing and outright discrimination are ongoing concerns. The Piedmont Housing Alliance is a vehicle for fair housing awareness, enforcement, and consultation in our region. They have engaged in a number of activities over the previous five years to expand fair housing choice. Identified Impediments and Responses Based on the results of input sessions, data collection and analysis, and review of the 2004 identified impediments, the following are determined to be the greatest impediments to fair housing in the Thomas Jefferson region for the year Each are given an objective, a measureable result, and a party responsible for accomplishing the objective. The timeline for achieving progress toward each objective is five years, after which a future AI will evaluate the state of fair housing. This will continue until all impediments are eliminated Impediments and Plan of Action Impediment Description Objective Measurable Result Responsible Parties Rental Affordability Lack of rental units affordable to low income households; Increased competition for limited number of rental units Increase the # of affordable rental units; Align costs of rental options with the distribution of incomes in the area Smaller % of people with severe cost burdens; # of people receiving assistance; # of supported units HOME Consortium, local governments, non-profit organizations Regulatory Barriers and Community Resistance Land use codes and ordinances affect availability and affordability of location-efficient housing; groups may oppose density based on perceived or real neighborhood impacts Revise ordinances that create barriers to housing affordability; Eliminate stigma attached to affordable housing and density; encourage diverse housing stock without sacrificing quality of life Revisions to land use ordinances that allow greater flexibility to develop compact, mixed-use, and mixed-income housing with access to jobs and services Local governments 5 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

7 Impediment Description Objective Measurable Result Responsible Parties Discrimination in the Rental Market Either overt or covert discrimination against renters on the basis of race and ethnicity, family status, and disability Eliminate all discrimination in housing; Raise awareness of fair housing laws; Provide counseling and advocacy; test for discrimination # and resolution of complaints; # of people reached with fair housing activities; results from testing (if conducted) Piedmont Housing Alliance, other non-profit organizations, local governments High Debt-to- Income Ratios and Foreclosures Whether through loss of income or adjustment of loan, homeowners are struggling to retain their home; foreclosures will likely continue Prevent foreclosures from occurring; encourage loan work-outs; support banking legislation; provide financial counseling to prospective homebuyers # of foreclosures prevented through assistance; reduced homeowner cost burden Local housing counselors, Piedmont Housing Alliance, local governments, Legal Aid, other non-profit orgs Economic and Racial Disparities among Schools Concentration of lowincome and racial minority students into certain schools and districts may compromise school quality and exacerbate housing segregation among families Encourage neighborhood economic and racial integration for families with children, especially in the City of Charlottesville and urbanized Albemarle County Decreased racial index of dissimilarities among elementary school students; More equitable share of low-income students among schools Local governments, Local school boards, nonprofit organizations Lack of Housing Accessible to People with Disabilities Lack of housing appropriately designed for the range of disabilities that exist in the region; when available, accessible units can be expensive Increase the quantity and scope of accessible units; communicate visitability and accessibility needs to homeowners and landlords # of accessible units; # of group homes and support-services living options; # of people reached though outreach efforts Ind. Resource Center, Disability Services Board, Piedmont Housing Alliance, Livable for a Lifetime 6 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

8 Impediment Description Objective Measurable Result Responsible Parties Language and Cultural Barriers Language differences can be a means for housing discrimination; immigrants may lack knowledge of housing and financing options; cultural differences yield neighbor and landlord tension Reduce cultural and linguistic barriers to housing access; engage different groups in conversations about differences and similarities Housing information available in multiple languages; Homeownership rate for ethnic minorities International Rescue Commission, Creciendo Juntos non-profits, schools Homeownership Affordability Job losses, low wages, and tight credit markets limit homeownership options for a broad range of households Align home costs with the distribution of incomes in the area; Encourage smaller units with greater access to jobs and services. # of people receiving down payment assistance; # of supported units; average sq. ft. of new construction; average commute times HOME Consortium, local governments, non-profit organizations 7 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

9 SECTION II: INTRODUCTION 8 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

10 Section II: Introduction Purpose The purpose of this analysis is to identify, and make recommendations to eliminate, any impediments that currently exist in the Thomas Jefferson region (The City of Charlottesville, Albemarle County, Fluvanna County, Louisa County, Greene County, and Nelson County) to the fair housing choices made by all residents. The analysis is an important part of the HOME Consortium s and the City of Charlottesville s commitment to affirmatively further fair housing, and it serves as a companion document to the Consolidated Plan. According to the Fair Housing Planning guide issued by the U.S. Department of Housing and Urban Development (HUD), this purpose includes: A review of a city s or county s laws, regulations, and administrative policies, procedures, and practices; An assessment of how those laws, policies, and practices affect the location, availability, and accessibility of housing; and An assessment of public and private-sector conditions affecting fair housing choice. Impediments to fair housing choice are defined by HUD as: Any actions, omissions, or decisions taken because of race, color, religion, sex, disability, familial status or national origin that restrict housing choices or the availability of housing choices; or Any actions, omissions, or decisions that have this effect. In addition to the protected classes listed under the federal Fair Housing Act, the Commonwealth of Virginia Fair Housing Act includes elderliness, as defined as any person over the age of 55. Each of the classes included under federal and state fair housing law are not special interests, but rather characteristics of all people of which discrimination in the real estate or rental housing market is prohibited. This analysis not only evaluates actual or potential housing discrimination in the region, but also, more broadly, any actions or omissions that are counterproductive to fair housing choice. The U.S. Department of Housing and Urban Development (HUD) requires an Analysis of Impediments to Fair Housing Choice (AI) from all recipients of HOME and Community Development Block Grant (CDBG) funds. The member governments of the Thomas Jefferson region entered into an agreement to participate in the HOME Program as a Consortium, and therefore receive annual entitlement HOME funds available on an equal share basis to each participating government. The City of Charlottesville is the official grantee for the HOME Consortium and the Thomas Jefferson Planning District Commission is designated Program Manager for the Consortium. The City of Charlottesville is a CDBG entitlement community and receives annual CDBG funds to be used within the City. 9 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

11 Process and Methods This document has been prepared by staff from the Thomas Jefferson Planning District Commission, the Piedmont Housing Alliance, and the City of Charlottesville. All funding has been drawn from HOME Consortium administration funds, CDBG funds, and staff time from assisting organizations. The data presented in the analysis was collected over Fall 2010 and used as an objective basis to inform the identification of impediments over the following months. The data was obtained from a variety of sources: the U.S Census Bureau, U.S. Bureau of Labor Statistics, Virginia Employment Commission, The U.S. Department of Housing and Urban Development (complaint reports), Virginia Office of Fair Housing (complaint reports), RealtyTrac Inc., Weldon Cooper Center for Public Service, Charlottesville Area Association of Realtors, Blue Ridge Apartment Council, Virginia Department of Education, Charlottesville Area Transit, Thomas Jefferson Area Coalition for the Homeless, as well as local governments and agencies. Efforts have been made to include a broad cross-section of perspectives from the public throughout the course of the update. The initiation of the public participation process was announced on the TJPDC website, a variety of newsletters, and through a number of committees with an interest in housing issues, along with a means for submitting input for the analysis. A series of input sessions was held from Fall 2010 into Winter 2011 to directly solicit feedback from groups that represent protected classes or have unique expertise that could inform the analysis: 1. October 19: Rural Roundtable - an advisory committee of planning staff from rural localities: Albemarle, Fluvanna, Greene, Louisa, and Nelson counties. 2. November 16: The Partnership for Children - a committee of local service providers and other representatives advocating on behalf of families with children. 3. December 6: The Jefferson Area Transition Council - a partnership of students, families, agencies, schools, and other community partners who coordinate and improve the delivery of services for youth with disabilities, ages 14 through 22, as they transition from high school to adult life. 4. December 9: Creciendo Juntos (Growing Together) Roundtable - a network of government, community, faith-based, academic, and other groups and individuals serving Latinos. 5. December 9: International Rescue Committee (IRC) - a national non-profit that helps refugees settle in new countries. The organization has an office in downtown Charlottesville. 6. December 13: Disabilities Services Board (DSB) - a volunteer group of citizens, people with disabilities, and service providers advocating for the self-sufficiency of disabled people. 7. January 25: City of Charlottesville Planning Commission - and advisory board to the Charlottesville City Council on land use and development. 8. February 14: Public Housing Association of Residents - a group that serves the interests of public housing residents and Section 8 voucher holders in and around Charlottesville. 10 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

12 9. March 14: National Association for the Advancement of Colored People (NAACP) - the Albemarle Charlottesville Chapter of the national civil rights organization advocating for the rights of ethnic minorities. With input gathered from these sessions and data collected, Sections II IV of the Analysis of Impediments were drafted. This constituted the raw material from which the final identification of impediments and recommended actions could be derived. This draft was presented to the Housing Directors of the HOME Consortium on two occasions for review and suggestions. Finally this analysis was submitted for adoption by the Charlottesville City Council and the Thomas Jefferson Planning District Commission. The 2004 Analysis of Impediments to Fair Housing Choice Prior to the adoption of this analysis, the document governing fair housing activities for the City of Charlottesville and the HOME Consortium was the 2004 Analysis of Impediments to Fair Housing Choice. The Charlottesville City Council adopted the AI on March 15, 2004, and the Thomas Jefferson Planning District Commission on April 1, A summary of this plan was included in the 2008 Consolidated Plan, and progress has been measured each year according to the goals set in the 2004 AI. Although the identified impediments and recommendations contained in this updated plan are primarily based on an analysis of current data and public input, the previous AI serves as an historic reference point to gauge the community s ongoing challenge of providing fair housing to all residents. In the Assessment of Fair Housing Activities section of this analysis, the progress made toward each objective between 2004 and 2010 is evaluated. A measurable result for each objective was provided in the previous AI, and this benchmark is used to measure how well the Charlottesville community has met the objective. The review is used to inform the updated set of impediments. Organization The analysis includes three broad sections: 1. The Context for Analysis presents the background data collected and public input gathered that informs the ensuing analysis. Each of the protected classes are included in the data reviewed, along with economic and housing condition data that reveal the availability of housing opportunities to the range of residents in the community. Along with objective material, the section also includes the experience expressed by the public. 2. The Analysis of Impediments to Fair Housing Choice is the primary evaluation of the condition of fair housing choice in the region, including a review of fair housing complaints, lending practices, local land use ordinances and policies, and a variety of actions either taken or not taken by members of the community. 3. The Identification of Impediments to Fair Housing Choice and Recommendations are the final results of the analysis. Action items are supplied to counteract each impediment revealed. 11 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

13 SECTION III: CONTEXT FOR FAIR HOUSING 12 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

14 Section III: Context for Fair Housing This section presents the background data collected and public input gathered that informs the ensuing analysis. A demographic profile of our region is presented with an emphasis on classes protected under the Fair Housing Act: race, ethnicity, sex, family status, disability, and elderliness. An economic and housing profile presents data on the opportunities that exist for all residents in the region. Along with this quantitative background, the section also includes the qualitative input expressed by the public during a series of input sessions. Background Data Demographic Data The following demographic data cover the distribution of racial, ethnic, gender, age, disability, and several other characteristics relevant to fair housing protections across the population of the region. Special attention is given to the spatial concentrations of different demographic groups and the ways in which the region has been changing over the last decade. Racial and Ethnic Totals The racial majority in the Thomas Jefferson region has historically been and continues to be Non- Hispanic Whites, with African Americans constituting the most significant minority. This is also true for each jurisdiction within the region. Population in Region by Race (2010) County White % Black % Asian % Other* % Total Albemarle 79,738 81% 9,600 10% 4,625 5% 5,007 5% 98,970 Fluvanna 20,743 81% 3,938 15% 147 1% 863 3% 25,691 Greene 16,123 88% 1,167 6% 258 1% 855 5% 18,403 Louisa 25,996 78% 5,870 18% 160 1% 1,127 3% 33,153 Nelson 12,509 83% 1,967 13% 68 1% 476 3% 15,020 Charlottesville 30,031 69% 8,437 19% 2,771 6% 2,236 5% 43,475 Region 185,140 79% 30,979 13% 8,029 3% 10,564 5% 234,712 * includes American Indian and Alaskan Native, Native Hawaiian and Other Pacific Islander, and Two or More Races Source: U.S. Census Bureau Hispanic and Non-Hispanic Ethnicity (2010) County Non-Hispanic % Hispanic % Total Albemarle 93,553 95% 5,417 6% 98,970 Fluvanna 24,931 97% 760 3% 25, A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

15 County Non-Hispanic % Hispanic % Total Greene 17,622 96% 781 4% 18,403 Louisa 32,391 98% 762 2% 33,153 Nelson 14,561 97% 459 3% 15,020 Charlottesville 41,252 95% 2,223 5% 43,475 Region 224,310 96% 10,402 4% 234,712 Source: U.S. Census Bureau Racial and Ethnic Change The region is diversifying as it grows in total population. Between 2000 and 2008, the Hispanic or Latino population in the region grew by 84%, compared to a 21% growth rate for Non- Hispanics. The rapid growth of the Hispanic population is underscored by a growing linguistic diversity as well. The number of households in the region speaking only Spanish in 2009 was 1,097, over triple what it was in The Asian population grew by 47% between 2000 and 2008, and the number of people claiming more than one race grew by 150%, the fastest of all demographic groups. The growth rate for linguistically-isolated households speaking other noneuropean languages has grown even faster, possibly as a result of home placements through the branch of the International Rescue Committee located in Charlottesville. Racial and Ethnic Spatial Distribution Racial and ethnic groups are segregated by geography to a certain degree throughout the region. The index of dissimilarity is a recognized measure of the degree to which racial groups are spatially separated from each other. The index is calculated by comparing the regional share of one demographic group in defined a smaller area with that of another demographic group. An index of 0% means that the two groups being measured are mixed evenly throughout the region, and a 100% means that there is no overlap whatsoever complete segregation. The following index has been derived for 2009 from races and ethnicities recorded for elementary school students throughout the region, set in the historic context of indices recorded by census tracts. 50% Measure of Racial and Ethnic Spatial Segregation of Region Black-White Hispanic-White 40% 30% 20% 10% 0% Source: Virginia Department of Education, U.S. Census Bureau 14 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

16 Percent Black or African American by Block Group in 2010 and Charlottesville 0% - 2% 3% - 5% 6% - 8% 9% - 15% 16% - 25% 26% - 50% 51% - 70% 71% - 95% 2000 Charlottesville Source: U.S. Census Bureau

17 Percent Hispanic or Latino by Block Group in 2010 and Charlottesville 1% 2% 3% 4% - 5% 6% - 7% 8% - 10% 11% - 15% 16% - 55% Greene 2000 Charlottesville Albemarle Charlottesville Louisa Fluvanna Nelson Source: U.S. Census Bureau

18 Placing the index of dissimilarity for the planning district in its historic and national context, it is clear that the region is relatively integrated and becoming more so between blacks and whites. The Thomas Jefferson region is in the top 20% of all metro areas in terms of integration between Blacks and Whites, and on this account it improved by 23% between the 1980 census and This decline in black-white segregation is consistent with metropolitan areas nationwide. The maps on the previous page display the distribution of Blacks and Hispanics throughout the region, and how the racial and ethnic composition of different areas has changed over the last decade. Many urban neighborhoods that had a high concentration of Blacks in 2000 had become more racially diverse by Three neighborhoods had in excess of 75% Black residents in 2000, but in 2010 these same neighborhoods average around 60% Black residents. This is a result of Whites and Hispanics moving into predominately Black urban neighborhoods. Throughout the region, there were 25 block groups with less than 2% Black population in 2000, but there were only 8 block groups with less than 2% Black population in This is a result of Blacks moving into predominantly White areas. Growth in the Hispanic or Latino population has occurred throughout the region in rural areas, suburbs, and urban areas at similar rates. In 2000, there were 63 block groups with less than 1% Hispanic population in the region, and in 2010 there were two. The block group containing the Southwood neighborhood, southwest of Charlottesville, had the highest concentration of Hispanics in 2000 at 18%. By 2010 the block group was 55% Hispanic. The urbanized area of the Route 29 North corridor in Albemarle County has also attracted numerous Hispanic households in the past ten years. Age and Gender Virginia Fair Housing law defines the protected class of elderliness as any person aged 55 and over. Although Virginia does not have a particularly high proportion of people over the age of 55 compared to other states in the country, the Thomas Jefferson region is an exception. Just over a quarter of the population falls within this category, which is 2% above the national average Population in Charlottesville Metro by Sex and Age (2009) Male Female Age Under 18 Age Age Age 65 and Over Source: U.S. Census Bureau 1 National index of dissimilarity figures are tallied from U.S. Census data by the American Communities Project, Brown University and the University of Albany. 17 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

19 There are more females than males in the region. While the number of children under the age of 18 is split evenly between sexes, adult females outnumber males in the region by an average of 14%. The difference may be accounted for by the fact that female life expectancy is longer and females are slightly more likely to have moved into the region within the last year than males. The University of Virginia enrolled 1,361 more full-time female students than male students for the academic year, partially explaining the prevalence for female in-migration. Family Status Roughly half of all households in the region include children under the age of 18, and four out of five of these are families by marriage. Among single-parent families with children, 85% are headed by a female householder. A child becomes more likely to be in a single-parent household as he or she grows. Only 11% of all children under the age of three belong to a single-mother family, compared to 23% of teenagers in single-mother households. Families with children make, on average, less than families without children, and typically have even less discretionary income considering the additional costs associated with raising children. According to the U.S. Department of Agriculture, annual child-rearing expenses for the average middle-income, two-parent family in 2009 ranged from $11,650 to $13,530. The number of larger, multigenerational families is growing nationwide and statewide, although current data is not available at the regional level. The Pew Foundation has attributed this trend to a combination of demographic and economic factors. The steady growth in delayed marriage (meaning adult children are staying with their parents) and international immigration have been driving the upswing since the 1980 s, yet recent job losses and housing foreclosures have prompted many families to move in together for financial reasons. 2 Multigenerational families may have special housing requirements. People with Disabilities and other Special Needs Fair Housing law defines protection on the basis of a disability more broadly than either the U.S. Census Bureau or the Americans with Disability Act (ADA). The special needs populations include the elderly, people with disabilities (mental, physical, developmental), people with alcohol and/or drug addiction or any other group that have special housing needs. In relation to housing, these special needs may include reasonable accommodations in existing policies and modifications to homes for the purposes of accessibility, assistive technology, supportive services such as live-in care, and adequate transportation access to the home. In 2009, there were 20,093 people with a disability, as defined by the U.S. Census Bureau, in the Charlottesville Metropolitan Statistical Area (this data is currently only available at the metropolitan area geography, which excludes Louisa County). Although there were more total women with a disability than men, men were slightly more likely to have a disability than women. Twelve percent of all men were disabled, while 9% of all women were labeled as such. The protected classes of race, disability, and elderliness overlap with each other. Blacks are more likely than whites to have a disability, and the incidence of disability increases rapidly as a person ages beyond Pew Social Trends Staff, The Return of the Multi-Generational Family Household, Pew Research Center, March A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

20 Disabilities by Type in the Charlottesville MSA (2009) Type Total % Type Total % Total Population 128, % Cognitive difficulty 4, % Any disability 9, % Ambulatory difficulty 5, % Hearing difficulty 1, % Self-care difficulty 1, % Vision difficulty 1, % Independent living difficulty 3, % Percent of Age Groups With a Disability in the Charlottsesville MSA (2009) 60% Hispanic White Non-Hispanic Black 50% 40% 30% 20% 10% 0% Under 18 Years Years 65 Years or Over Total Population Source: U.S. Census Bureau Economic Data The following economic data cover the distribution of employment and income in the region. Because both access to capital and potential for personal advancement are fundamentally linked to adequate housing, economic indicators play an important role in revealing any potential or existing inequality or discrimination among the residents of the region. Attention is paid to low-tomoderate income households and people with special needs in the region, those who may be more susceptible to the various barriers to housing opportunity. Employment The Thomas Jefferson Partnership for Economic Development places all workers in the region into one of four broad categories: Professional, White Collar Service, Skilled Trades, and Blue Collar Service. The Professional class includes information technology and finance jobs, as well as management positions across all sectors. White Collar Service includes health care, education, public administration and other service professions. The Skilled Trades class includes construction and manufacturing and related employment. Blue collar service includes retail, food service, and general administration. 19 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

21 Average Employment in Region Professional White Collar Service Skilled Trade Blue Collar Service Source: Virginia Employment Commission Average Annual Wage in Region $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $ Professional White Collar Service Skilled Trade Blue Collar Service Source: Virginia Employment Commission The employment base and wages in the region are relatively stable from year to year, but there are clear, long-term trends occurring between employment classes. All employment classes are growing with the exception of the skilled trades, which reached the peak of employment in 2000 and has been in decline for ten years. The wage growth of skilled trades jobs is still keeping pace with the white collar service sector, but there are fewer jobs to go around. Within the skilled trades class, most of the decline has been driven by a decline in manufacturing. Construction jobs had been climbing steadily until building activity was curtailed substantially in 2008 with the housing market downturn. In 2008, The Virginia Employment Commission had projected continued construction growth, but this will likely be delayed by the slow-down of building activity throughout the region into the foreseeable future. 20 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

22 Many working households most vulnerable to fair housing impediments occupy the blue collar service employment class, a group that includes over 30,000 people. This class has the lowest wages and has seen the slowest growth in wages over the last 20 years. While wages in the professional class grew by 53.4% between 2000 and 2009, blue collar service wages grew by 35.2%. Adjusting for inflation, the real wage growth for the blue collar service sector during this time was on average 11.8%. The income gap between these classes is growing. Business Ownership Few businesses are owned by minorities in the region, limiting the potential for capital accumulation and advancement among minority populations. Out of roughly 17,000 firms in the region counted in the 2002 Economic Census, 898 were owned by blacks and, of these, 132 had paid employees. This amounts to 5.3% of all firms, while blacks comprise 12.8% of the total population. When considering the share of all sales receipts going to black-owned businesses, the percentage is smaller yet. Black-owned businesses generate 0.4% of all revenue in the metropolitan area. Asians own 1.5% of all firms, and Hispanics own.08% of all firms. Ownership is defined as a 51% or greater share of investment in the business. Unemployment The unemployment rate captures the percentage of the population that is unemployed, has actively sought a job in the last four weeks, and is currently available for work. Unemployment Rates 8% 7% 6% 5% 4% 3% 2% 1% 0% Charlottesville MSA State of Virginia Source: US Bureau of Labor Statistics The rate of unemployment more than doubled in the Thomas Jefferson region between 2007 and 2009, and has plateaued into It still remains well below the national average and somewhat below the state average. There are long-standing racial differences in the unemployment rate in Charlottesville, as there is in most other communities in the United States. While the 2010 unemployment rate in Virginia for Whites was around 6.5%, 6.9% of all Hispanics and 11.2% of all Blacks were unemployed. 21 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

23 Employment and Disability Many individuals with disabilities in the region are members of the labor force, but they face special employment challenges that are not typical of the general populace. Employment Status of Working-Aged People with Disabilities (2009) In the Labor Force Not in the Labor Force With a hearing difficulty With a vision difficulty With a cognitive difficulty With an ambulatory difficulty With a self-care difficulty With an independent living difficulty 22 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e Source: U.S. Census Bureau A little over one third of all working-aged people with disabilities in the region were in the labor force in 2009, and 95% percent of those were actively working at the time. Average wages for people with disabilities are only a little over half the regional average for the total population. Disabled females in the region earn 19% more than disabled males, which is roughly the inverse of gender difference in wages among the non-disabled population. Spatial Distribution of Employment Most jobs in the region are located in Charlottesville, along the Route 29 corridor, or in the Pantops area of Albemarle County. The other counties in the region host 17% of the region s employment, where the major employment centers are schools. These are distributed more evenly in relation to residential density, and a small number of manufacturing centers. Albemarle County saw an average annual job growth of 2.9% over the last decade, with Louisa and Fluvanna showing 1.8% and 1.2% growth. Employment in Nelson County and Charlottesville has not grown significantly, and Greene County lost 2% of their jobs over the last decade. Some metropolitan areas in the United States have a discrepancy between the location of jobs, which tend to be concentrated in more affluent areas, and the homes of lower income residents. This spatial mismatch can create transportation barriers to employment for lower-income workers, who have to travel great distances and may lack transportation options. Employment centers in Charlottesville and the immediately adjoining corridors in Albemarle County are served by transit, although service varies in terms of scheduling and stop distances. This pattern does not seem to be the case in the Thomas Jefferson region. The location of employment opportunities generally matches the distribution of low to moderate income households throughout the region, as depicted in the map on the following page.

24 Employment Centers over Low to Moderate Income Density in Thomas Jefferson Planning District LMI Households per Square Mile Louisa Source: Nielsen Claritas, 2000 U.S. Census Greene Employers with over 50 Employees Charlottesville Albemarle Charlottesville Fluvanna Nelson

25 Household Income Overall, the median household income in the region dropped by roughly one thousand dollars per year between 2008 and 2009, making this the first year in recent history in which incomes in the region have decreased. Stagnating wages, decreased time spent working for those who are employed, and increased unemployment have all contributed to this drop. The distribution of all households by household income gives a picture of the broad range of income levels that exist in the region. The following chart displays the total number of households in the region that fall within twelve income brackets. Distribution of Households in Region by Household Income (2009) Less than $10 K $10 K to $20 K $20 K to $30 K $30 K to $40 K $40 K to $50 K $50 K to $60 K $60 K to $75 K $75 K to $100 K $100 K to $125 K $125 K to $150 K $150 K to $200 K or $200 K more Source: U.S. Census Bureau Housing Data The following housing data covers the housing supply, housing tenure, affordability and availability of both homes for purchase and rental units, housing conditions, supported housing, foreclosures, and homelessness in the region. An evaluation of this housing data, especially as it overlaps with the existing socioeconomic conditions in the region, provides the quantitative basis necessary to assess whether an appropriate balance exists between housing opportunities and the various needs for housing in the community. Housing Supply According to the U.S. Census, in 2010 there were a total of 105,453 housing units in the Thomas Jefferson region and eighty-seven percent of all units are currently occupied year round. Over two-thirds of units are single-family detached homes, and 65% include three or more bedrooms. 24 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

26 The building permits issued by localities in the region for new residential construction reveal changes in the supply of housing stock. Home Construction Building Permits issued in Region Single-Family Multi-Family * * Estimate for 2010 based Year-to-date up to November Source: Weldon Cooper Center for Public Service Multifamily construction peaked in 2002 and single-family construction peaked in 2005, with both housing types showing significant drops in the last few years. This suggests that the housing supply for both rentals and ownership is not expected to grow by a significant amount in the near future. Housing Tenure The proportion of homeowners to renters in the region generally mirrors the nation as a whole. There are notable differences in homeownership rates between races and income levels. Homeownership Rates by Household Characteristics (2009) TJPD Region Virginia United States Total 67% 69% 66% Hispanic 44% 49% 48% Black 51% 50% 45% Non-Hispanic White 71% 75% 73% Elderly Householder* 83% 82% 79% Family with Children 68% 67% 65% Low Income** 42% 45% 42% * Defined as Age 55 and over, per Virginia Fair Housing Act. ** Defined as earning $24,999or below annually Source: U.S. Census Bureau The overall homeownership rate in the region has been climbing steadily by about 0.5% per year since The gradual increase has been experienced across racial groups, and it has not been 25 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

27 slowed by the recent housing market downturn and economic recession. Although the national homeownership rate peaked in 2006, it continues to climb in the Thomas Jefferson region. Housing Costs and Availability The affordability and availability of homes in the region are fundamental components of equal opportunity to housing. Comparing the distribution of households by income in the previous section with the prices and rents of housing units in the region gives a picture of how well aligned the available housing options are with the means to afford them. The following chart matches the prices of homes sold in the region over the last three years, as recorded on the MLS database kept by the Charlottesville Area Association of Realtors (CAAR), with the minimum income category each unit is affordable to. Affordability is defined by HUD as spending no more than 30% of income on housing. For these calculations, a standard 30-year fixed-rate mortgage, a 5% interest rate, and with a 10% down payment is assumed Homes Sold Affordable to Each Income Category (2010) < $10 K $10 - $20 K $20 - $30 K $30 - $40 K $40 - $50 K $50 - $60 K $60 - $75 K $75 - $100 K $100 - $125 K $125 - $150 K $150 - $200 K > $200 K Minimum household Income Needed to Afford Source: CAAR MLS The data reveal that homeownership opportunities are slim for the 35% of all households in the region earning under $40,000 per year. Note that the set of homes in the chart includes all sales, including severely dilapidated properties unfit for occupation and properties with limited access to infrastructure. Since such properties are often priced at the lower end of the scale, this chart likely over-represents the number of true homeownership options available to those earning low to moderate incomes. Also, since it doesn t take into account the number of bedrooms, it does not fully represent the realistic options available larger families or households seeking housing. The following chart matches the advertised price of available rental properties collected on a single day in June 2010 with the minimum income category each would be affordable to. Because 26 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

28 rent paid to landlords typically do not include utilities, an average utility payment for the region has been incorporated into the affordability calculation to account for this housing cost. 250 Advertised Apartments Affordable to Each Income Category (2010) < $10 K $10 - $20 K $20 - $30 K $30 - $40 K $40 - $50 K $50 - $60 K $60 - $75 K $75 - $100 K $100 - $125 K $125 - $150 K $150 - $200 K > $200 K Minimum Household Income Needed to Afford This chart assesses how many rental units were available within financial reach of households in the region. Most rental units are priced for the $30,000 to $50,000 income per year households. For the 27% of all households in the region that earn less than this, there are very few affordable rental options available. Household size is an important factor in assessing housing opportunities in the community. A larger family has much different housing requirements than a single-person household, and an accurate accounting of housing affordability ought to take into account the variations that exist in the region. 250 Affordable Units to Rent by Size of Unit (2010) 3 Bedroom 2 Bedroom 1 Bedroom Studio Less than $10 K $10 K to $20 K $20 K to $30 K $30 K to $40 K $40 K to $50 K $50 K to $60 K $60 K to $75 K $75 K to $100 K $100 K to $125 K $125 K to $150 K $150 K to $200 K $200 K or more Source: BRAC listings on June A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

29 There were 15,768 households of four or more people in the region in 2009, about one-fifth of the total population. These families, on average, make less than the median income for the area. A majority of the 3-bedroom rental units, with enough space to suit the needs of these households, are priced for those making incomes of $40,000 or above. This leaves many families and other larger households in the region with an especially high housing cost burden. The mismatch revealed from a comparison between housing costs and household incomes is confirmed by census data for the reported percentage of household income actually spent on housing in the region (this does not include Louisa County). 56% 54% 52% 50% 48% 46% 44% 42% 40% Percent of Renting Households in each MSA Currently in Unaffordable Housing* Charlottesville Richmond Hampton Roads Lynchburg Washington DC Roanoke * Spending in excess of 30% of household income on housing costs Source: U.S. Census Bureau Many homeowners and renters in the region do, in fact, spend in excess of HUD s recommended 30% of income on housing costs. For renters, the Charlottesville MSA has the highest cost burden in the state, with a notable increase in cost-burdened households between 2008 and The Census definition of households includes students sharing a rental unit. Some of the disproportionate share of cost-burdened renters in the Charlottesville MSA may be attributed to University of Virginia students living off-grounds. A 2006 State of Housing report estimated that UVa students consume 6,064 rental units, 0r 53% of the rental stock in the City of Charlottesville. It is impossible to determine from the census data alone whether households in the region are voluntarily electing to stretch their budgets to purchase a nicer home or truly facing financial pressure just to find a safe and decent home. However, the combination of a lack of supply of affordable housing with a high incidence of households spending excessive amounts indicates that many households face the latter situation: they are forced into an unaffordable housing condition. Supported Housing There are a number of housing units throughout the region that are made available for below market rate to income-qualified owners or renters, providing affordable living options to 28 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

30 households that would otherwise be priced out of the market. Supported housing includes homes supported by public agencies and non-profit housing providers with federal, state, and local funding, as well as privately-owned units dedicated as affordable through deed restrictions. All HUD-funded traditional public housing units, 376 in total as of 2009, are located on seven multi-family sites and in five single-family or duplex homes around the City of Charlottesville. These are owned and operated by the Charlottesville Redevelopment and Housing Authority (CRHA). Residents pay a fixed percentage of household income to rent a unit. There are also 448 units of Low-Income Housing Tax Credit (LIHTC) properties in the City of Charlottesville, although the affordability requirements for almost all of these units are set to expire within 15 years. Additionally, there are several LIHTC properties in Albemarle County. Housing Choice Vouchers, otherwise known as Section 8 Vouchers, are issued to income-qualified households to supplement market rents to an affordable level. Unlike supply-side supported housing, the vouchers can be used to secure a qualified rental unit within the agencies service 29 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

31 area or transferred to any region in the country. In 2009, a total of around 1,270 vouchers were held by renters throughout the region, down from approximately 1,520 in Number of Active Housing Choice Vouchers in Region* Voucher Holder 2003/ Charlottesville Housing and Redevelopment Authority Albemarle County Fluvanna/Louisa Housing Foundation Nelson County Piedmont Housing Alliance (regional) Skyline CAP (Greene, Madison, Orange) Region 10 (regional) * Totals include Mainstream Housing Vouchers dedicated for people with disabilities Source: Voucher Holders, City of Charlottesville Other homes are owned privately but restricted by a deed to assure their affordability to future homebuyers. Many of these homes were purchased with down-payment assistance through one of several programs throughout the region. Other deed-restricted units were proffered by private developers or built by non-profit housing providers Habitat for Humanity or the Piedmont Housing Alliance. Housing Conditions Although housing conditions have improved dramatically over the last several decades, the number of substandard homes remaining, particularly in Nelson County, is not insignificant. The availability of complete plumbing is a commonly used measureable proxy for substandard housing. However, it does not necessarily capture the true incidence of housing-related hazards, such as poor indoor air quality, lead contamination, and various building code violations. Occupied Housing Units with Incomplete Plumbing and Overcrowding ( ) Albemarle Fluvanna Greene Louisa Nelson Cville Lack complete plumbing: Percent of Total 0.4% 0.3% 0.2% 1.0% 3.3% 0.4% Percent of Total in % 2.8% 4.7% 6.1% 9.4% 0.2% Overcrowded* Percent of Total 0.9% 1.1% 0.7% 1.2% 1.0% 2.0% Percent of Total in % 4.2% 3.4% 3.1% 3.5% 2.9% * Overcrowded defined at 1.01 persons or more per room Source: U.S. Census Bureau 30 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

32 Home Foreclosures The housing market in the United States is facing unprecedented levels of home foreclosures. The Center for Responsible Lending has estimated that 2.5 million foreclosures were completed between 2007 and 2009, and that by March of 2010 an additional 5.7 million borrowers were at imminent risk of foreclosure by virtue of being two or more payments behind on their mortgage. Several independent financial analysts have projected that between 10 and 13 million foreclosures will be completed throughout the United States before the crisis lessens by around The cause of the foreclosure crisis is widely attributed to the proliferation of risky subprime mortgages between 2000 and 2007, aided by the widespread resale and securitization of mortgages as investment vehicles. A decrease in home values coupled with an increase in unemployment helped to trigger and perpetuate the cycle of foreclosures that is expected to continue into the near future. The foreclosure data presented here has been derived from RealtyTrac, a private firm tracking real estate trends by month, and HUD s Neighborhood Stabilization Program, which Congress formed through the 2008 Economic Recovery Act as a way to target federal investments to areas with demonstrable needs. 0.30% 0.25% 0.20% 0.15% 0.10% 0.05% 0.00% 12-Month Average Foreclosure Rates in Region ( ) Source: RealtyTrac Oct 2009 Sept While levels of foreclosures have increased in the region as a whole during the current recession, the levels are below national and state averages. Virginia was relatively insulated from the housing bubble, and the Thomas Jefferson region in particular has shown more home value stability than other metro areas in the state. A common spatial distribution of foreclosures, as identified in metro areas around the country by University of Virginia professor Bill Lucy 4, is evident in the Thomas Jefferson region as well. Many of the hardest hit areas are the furthest from the urban core. Louisa and Fluvanna Counties have the highest foreclosure rates in the 3 Center for Responsible Lending, Foreclosures by Race and Ethnicity: The Demographics of Crisis 4 Bill Lucy, Foreclosing the Dream. APA, A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

33 Foreclosures Rates in the Thomas Jefferson Planning District Percent of all mortgages forclosed upon 0% - 0.5% 0.51% - 1.2% Greene 1.21% - 2% 2.01% - 3% 3.01% - 5% Charlottesville Albemarle Charlottesville Louisa Fluvanna Nelson High-cost Loan Rates in the Thomas Jefferson Planning District Percent of all mortgages defined as high-cost 0% - 5% 5.01% - 12% Greene 12.01% - 20% 20.01% - 25% 25.01% % Albemarle Charlottesville Louisa Charlottesville Fluvanna Nelson Source: HUD Neighborhood Stabiliation Program. June 2008.

34 Residential Home Vacancies as of Sept in Thomas Jefferson Planning District Percent of Residential Units Vacant for 90 Days or More Louisa 0% - 0.5% 0.6% - 1.5% 1.6% - 3% 3.1% - 6% 6.1% - 8.6% Source: U.S. Postal Service. 3rd Quarter 2010 Greene Charlottesville Albemarle Charlottesville Fluvanna Nelson

35 region by a significant margin. These two counties contain 25% of all housing units in the region, but have experienced 47% of all foreclosures over the last year. However, there have also been high foreclosures rates in certain sections of the City of Charlottesville. The Fifeville, Ridge Street, and 10 th and Page planning areas have some of the highest rates of foreclosure in the region. At the same time, the North Downtown and Greenbrier planning areas have some of the lowest levels of foreclosure. The contrast of foreclosures between census tracts in the urban home market is sharp. Foreclosure rates throughout the region have been correlated closely with the incidence of highcost loans, as shown in maps on the previous page (refer to the Home Mortgage Lending Review section for more discussion on loan pricing). Although foreclosures are not tracked at the local level by the racial or ethnic status of the borrower, the connection with high-cost loans, which are more prevalent among minorities, seems to indicate that minority homeowners have been disproportionately impacted by the foreclosure crisis in the region. While much of the first wave of foreclosures were due to high-risk loans, there is evidence that a second wave of foreclosures will be more closely aligned with unemployment and falling home values. 5 Both of these conditions are occurring in the region. Homelessness A homeless person is defined by HUD as an individual who lacks a fixed, regular, and adequate nighttime residence; or an individual who has a primary nighttime residence that is either temporary or not intended for human habitation. There are many reasons for homelessness, but certainly a lack of access to affordable housing opportunities is often considered among the most prevalent. The homeless population in the region has been surveyed each year since Regional Annual Homeless Count Counted on a single night in January Source: TJACH Between 2003 and 2010, the number of homeless people counted on a single night increased by 83% to a total of 274. Of all homeless counted, 28 were children. Although some have attributed this increase in homelessness to the availability of social services attracting people from other 5 RealtyTrac staff, Foreclosure Activity Increases 4 Percent in Third Quarter, Oct. 13, A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

36 areas, most of the people surveyed originate from one of the counties in the region. Sixty-nine percent reported being from within the planning district, a proportion that exceeds that of the population as a whole. A homeless person in Charlottesville is more likely to have grown up in the community than a non-homeless person. Citizen Participation Results from Input Sessions According to HUD s Fair Housing Planning Guide, the identification of housing problems and the development of solutions are the task of the full community: All affected people in the community must be at the table and participate in making those decisions. Although the guide does not define specific public participation requirements, the accuracy and depth of this analysis depends on hearing from the broad range of voices in the greater Thomas Jefferson region. As a practical means for acquiring different perspectives throughout the region, input from various citizen and public servant committees has been solicited. Each committee was briefed on the essential purpose of fair housing and asked to provide input based on their own expertise and perspective. Rural Roundtable The Rural Roundtable is a quarterly gathering of planning staff from Fluvanna County, Louisa County, Greene County, Nelson County, and Albemarle County. The purpose of the meeting is to discuss current transportation and land use activities underway in the rural localities of the region, in order to encourage regional coordination and the sharing of best practices. Karen Reifenberger of Piedmont Housing Alliance and Howard Evergreen of Fluvanna/Louisa Housing Foundation addressed the group on their October 19, 2010 meeting. Comments received include: Although each county in the region has legal provisions to allow for temporary ramps to extend beyond set-back requirements, in some jurisdictions this requires an appeals process that can take a number of weeks. This can be a struggle for families with pressing accessibility needs. New legislation from the Virginia General Assembly supersedes local zoning codes and allows temporary living units intended for the elderly on residential parcels with a medical prescription. These accessory dwelling units provide an affordable housing option, but there should be a plan in place for when they are no longer needed. State law requires that residential areas not restrict group homes, but their placement can be very controversial with local residents. Zoning limits to unrelated occupants should be waived for group homes as a reasonable accommodation. Partnership for Children The Partnership for Children is a monthly committee of various service providers in the community related to families and children. Health Care services, the school system, social services, public housing, and charitable organizations are all represented within this group. Karen Reifenberger and Selena Cozart of Piedmont Housing Alliance and Daniel Nairn of the Thomas Jefferson Planning 35 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

37 District Commission met with the Partnership for their November 16 th, 2010 meeting to discuss impediments to fair housing that families with children in the area may face. Comments received include: Some landlords impose rules that make families feel like they could not let their children out of the house for fear of being evicted. This can be a housing impediment to families with children. Social service providers hear from clients that they do not feel safe letting their children go out and play. This can be an issue of perceived crime or general lack of security in the neighborhood. Some landlords allow housing conditions to degrade to a level where the health and safety of children, in particular, may be compromised. Mold can be a serious health issue for children. One service provider just found an apartment unit with grass growing through the ground floor. The condition of a home in general is an issue that impacts children disproportionately. Overcrowding of families with children is a problem. On the one hand, fair housing law generally does not allow a landlord to discriminate against families based on the number of children, as long as there are no more than two people per bedroom. The decision for allocating bedrooms should be left up to the parents. On the other hand, some committee members felt that older children of the opposite sex should not be sharing a bedroom. There is a concern that some families are being discriminated against based on language barriers, especially when citizenship documentation is in question. In many cases, not being able to establish a credit rating is the source of the problem, although there are ways to do this without having a FICO score. Jefferson Area Transition Council The Jefferson Area Transition Council (JATC) is a partnership of students, families, agencies, schools, and other community partners who coordinate and improve the delivery of services for youth with disabilities, ages 14 through 22, as they transition from high school to adult life. Daniel Nairn of the Thomas Jefferson Planning District Commission met with the Council for their December 7, 2010 meeting. Comments received include: The lack of the affordable housing options is the primary obstacle. Post-high school students often earn the minimum wage, and few apartments are available within their range of affordability. The up-front costs of security deposits can be difficult for those who have not been able save, and young people can be turned down for housing because of a lack of credit history. Interest was expressed in small starter apartments for those just beginning to live on their own, which are not currently widely available in the region. There is a need for a supervisory housing option, with residents of an apartment complex sharing common space and a staff supervisor. Many young people with disabilities are not ready yet for full independence, and can be taken advantage of by roommates and 36 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

38 others. Such an arrangement would be theoretically possible to fund as a medicarewaivered service, but the waiting list is currently extremely long. There is a lack of access to information. Life skills involving obtaining and upkeep of housing are not often taught. Additionally, the system for public housing assistance is often difficult to navigate for anybody, and especially so for people with cognitive disabilities. Language barriers and cultural differences can deter people from finding housing. Safety was raised as a major concern. The only affordable units are often concentrated in high-crime areas, where disabled youths can be taken advantage of and influenced negatively. Some end up in jail, at considerable public expense. Another safety issue is the streets themselves. Since most of their clients do not drive, they are the most vulnerable road users. Those who do receive assistance or funding from a public or non-profit agency are sometimes discriminated against on this basis. There are cases where landlords will refuse to rent to an applicant based on their source of income or support system, for unwarranted fear they will be less stable tenants. Creciendo Juntos Roundtable Creciendo Juntos is a network of government, community, faith based, academic, and other groups and individuals serving Latinos in the City of Charlottesville and Albemarle County. Twice a year, they gather together in a roundtable to share services they provide and opportunities throughout the community for the Spanish-speaking population. Daniel Nairn from the Thomas Jefferson Planning District Commission joined their December, roundtable to solicit input on fair housing choice. Comments received include: Those who have recently arrived in the country often do not have the credit history or personal identification that landlords and financial institutions typically want to see. One property management company had begun an advertising campaign to seek Spanishspeaking tenants, but they ended the campaign early because many of the applicants could not supply a social security number. Failure to supply this information is a legal means for denying rent under the Fair Housing Act, but there are alternative means for verifying identity that may be easier for tenants. Roughly one-third of Latino households in Virginia are outside of the mainstream financial system, according to a report from the Taylor Murphy Center in the Darden Business School. Their research has indicated that housing values are more stable in predominantly Latino neighborhoods where there is a community credit union specifically catering to Latinos. The report attributes this stability to a decrease in robbery rates that are associated with storing cash in private homes. There is no such credit union in the Thomas Jefferson region, and tests conducted for the study indicate that Spanish-speakers face barriers to opening a bank account and accessing basic financial services in banks serving the region. There is a language barrier to securing homeownership. One participant in the roundtable claimed to be the only Spanish-speaking mortgage broker in the region. She pointed to the high proportion of risky loans that were issued in the Hispanic community 37 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

39 over the last several years. Without access to reliable information to make sound financial decisions, many Hispanic households have entered into mortgages that are not likely to be sustainable as home values decrease. There are at least a few cases in which utilizing informal economic exchanges for housing have left Latinos legally vulnerable. Mobile home parks in Albemarle County have a high proportion of Hispanic residents, and properties have been purchased without titles. Especially as redevelopment efforts occur, it will be important to determine ownership to avoid displacement. International Rescue Committee The International Rescue Committee helps refugees forced to flee war or disaster resettle in new countries. They maintain an office in downtown Charlottesville, and assist many refugees with relocating to the Charlottesville area. Karen Reifenberger of the Piedmont Housing Alliance met with the International Rescue Committee staff on December 9, 2010 to discuss fair housing choice. Comments received include: Many clients who arrive from other countries as refugees are denied housing because they do not speak English or due to stereotypes attached to certain countries. Some landlords will rent certain properties to refugees, but other properties in different neighborhoods are not available to them. It s not necessarily the case that higher rents are being charged, but the decisions seemed to be based on the neighborhood. Many of the clients who arrive from other countries have disabilities as well, meaning they also face many of the impediments generally experienced by disabled individuals. Most clients relocating to the Charlottesville area are from Iraq, Bhutan, and Burma. They were impressed that PHA had fair housing materials available in Arabic, Dari and Burmese. They suggested Nepali as the next translation. Jefferson Area Disability Services Board The Jefferson Area Disability Services Board (JADSB) is a volunteer group of citizens, people with disabilities, and service providers. The purpose of the group is to stimulate public awareness, foster coalitions of committed and educated advocates, and enhance local government interest in disability issues. Daniel Nairn from the Thomas Jefferson Planning District Commission joined the group to discuss Fair Housing for their December 13, 2010 meeting. Comments received include: Sometimes there can be a conflict between the desire for Charlottesville to become a green community and the needs of disabled people, especially if the goals are to make living spaces smaller and grow vertically. There should be a positive connection between sustainability and inclusiveness of people with all abilities. Builders are not voluntarily designing buildings for accessibility. There is a misperception that accessible features increase costs dramatically, and many builders are not educated about what would make their project more accessible. Some building codes meant to provide accessibility lead to inefficient outcomes, like sidewalks that lead to nothing, while the actual experience of accessing the building is no easier. 38 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

40 Disabled people can feel excluded from neighborhood social groups when they cannot get inside other people s homes for parties or visits. There is a lack of availability of accessible units, and there is no easy means for locating them. Many accessible units are very expensive to rent or purchase, or are geared specifically toward elderly residents. There is limited guidance for people who wish to add an accessory dwelling unit to their home. There needs to be a way to get through red tape and funding difficulties involved in making the modification. Sidewalks in the city are often not passable for a person in a wheelchair. There is also a lack of designated parking spaces. Landlords and banks deny disabled people housing because of a lack of employment history during their time of disability, even if they can prove they are currently reliable tenants. Charlottesville Planning Commission The Charlottesville Planning Commission is appointed by City Council to develop and recommend a Comprehensive Plan for future growth and development, as well as provide ongoing land use guidance. Melissa Thackston from the City of Charlottesville and Daniel Nairn from the Thomas Jefferson Planning District Commission met with the Planning Commission during their January 25, 2011 work session. Comments received include: A 2008 Affordable Housing Zoning Text Amendment was intended to increase the percentage of affordable housing in new developments, but it has, in some cases, had the opposite effect. The ordinance requires a minimum of 5% affordable units for a density bonus, when there is evidence that developers would have been willing to proffer more units without the ordinance in place. There are concerns that units designated as affordable in new developments are insufficient. Some are studio apartments that do not meet the needs of larger families. There are cases where no deed restriction is used, and the affordability ends with the first purchase. It is too easy for the Planning Commission to tout a commitment to affordability without real long-term impacts. When the definition of housing affordability is set sharply at one income level (i.e. 60% Area Median Income), everyone aims for households directly below the line. There is little gradation in the people served. Affordability is impossible without density and allowing different land uses in close proximity. Many city zoning ordinances that have the intended or unintended effect of reducing density, by implication, limit affordability. This includes parking requirements, frontage requirements, historic overlays, street widths, and a proposed critical slopes ordinance. Students drive up rental housing costs. Their parents can afford to pay high rates, and they want to live close to grounds. Furthermore, housing programs with income-restrictions can be utilized by students, who have low incomes but high future earning potential. 39 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

41 The needs of the disabled community are not fully represented in the site plan review process. There is no formal procedure for considering accessibility in plans. There ought to be more developers and non-profits producing affordable housing projects to spur more competition in the region. The city has made substantial improvements in recent years. Parking regulations have been relaxed, densities have been increased, and the city has been actively engaged with federal-entitlement housing programs in a thoughtful way. A 2003 rezoning, in particular, led to a large amount of multifamily development that has opened up the rental market and driven rents downward. Public Housing Association of Residents The Public Housing Association of Residents (PHAR) represents the interests of residents of public housing and Housing Choice Voucher holders in the Charlottesville area. Karen Reifenberger from the Piedmont Housing Alliance met with the PHAR board of directors during their February 14, 2011 meeting. Comments received include: Housing associations/management companies target people based on race for rules violations or lease violations. Housing providers can advertise "No Section 8. Landlords should not be able to discriminate against housing vouchers. There is a concern that CRHA is steering International Rescue Committee clients to two properties: Michie Dr. and S. 1st Street. There is a suggestion that PHA get out into the community to educate public housing residents. Suggestions included coming to a Resident Services Committee meeting and a joint staff/resident meeting. After an update on the Dialogue on Race, there was an expression of concern about the separation between the CRHA Madison Avenue residents and other neighbors in the area. Albemarle-Charlottesville National Association for the Advancement of Colored People The National Association for the Advancement of Colored People (NAACP) exists to ensure the political, educational, social, and economic equality of rights of all persons and to eliminate racial hatred and racial discrimination. Karen Reifenberger from the Piedmont Housing Alliance met with the Albemarle-Charlottesville NAACP during their March 14, 2011 meeting. Comments received include: The state of the economy has an important effect on the affordability of housing. There are many segregated communities in our region, and there remains a lack of diversity. There is a strong connection between schools and the communities they serve. When residential areas are segregated, then the educational environment is also segregated Public housing can resemble a prison complex controlled by police and management. 40 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

42 SECTION IV: ANALYSIS OF IMPEDIMENTS TO FAIR HOUSING CHOICE 41 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

43 Section IV: Analysis of Impediments to Fair Housing Choice This section is the primary evaluation of the condition of fair housing choice in the region, including a review of fair housing complaints, lending practices, local land use ordinances and policies, and a variety of actions either taken or not taken by members of the community. Evaluation of Current Fair Housing Legal Status Overview of Federal and State Fair Housing Law The Thomas Jefferson region is covered not only by the Federal Fair Housing Act, but also by the Virginia Fair Housing Law. Together, these laws protect us from discrimination based on race, color, religion, national origin, sex (gender), family status (presence of children in the family), disability (physical and mental), and elderliness (55 and older). HUD has determined that Virginia s Fair Housing Law is substantially similar to the federal law. As a result, complaints of housing discrimination filed with HUD are generally transferred to the Virginia Fair Housing Office. There are several actions that can be deemed discriminatory under the Virginia Fair Housing Act, including: 1. Refusing to sell or rent 2. Altering the terms, conditions, or privileges of sale or rent. 3. Advertising and publishing discriminatory material 4. Misrepresenting availability 5. Denying access to real estate services or membership 6. A restrictive covenant on a housing unit 7. Steering to particular properties 8. Coercion, intimidation, threats or interference in buying or renting housing. Localities in Virginia are enabled by the General Assembly to adopt their own fair housing laws in addition to state and federal requirements, although there are certain limitations. For example, Fairfax County includes prohibitions against discrimination on the basis of age and marital status. The jurisdictions in Virginia that currently have local fair housing laws are Fairfax County, Arlington County, Prince William County, Loudon County, City of Alexandria, City of Falls Church, City of Danville, City of Roanoke, and the City of Virginia Beach. Fair Housing Complaint Review Most cases of housing discrimination are determined through a compliant-based system managed by HUD and the Virginia Fair Housing Office (VFHO). An evaluation of the types of complaints received over the last several years reveals the kinds of discrimination that may be more likely in the Thomas Jefferson region, as well as the means by which it has typically been expressed. 42 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

44 Between 2005 and 2010, 66 individual fair housing complaints were filed with either HUD or the VFHO in the Commonwealth of Virginia. Of those complaints, the three most prevalent fair housing issues were: discriminatory terms, conditions, or privileges, relating to housing rental (29); discriminatory refusal to rent (28); and discriminatory advertising, statements, and notices (17). Of the seven classes protected by federal fair housing law, the three most likely to be identified in a complaint were race (34), familial status (20), and disability (19), respectively. Please note that a single complaint can include more than one violation or protected class. The results of these cases are as follows: 33% (23 cases) concluded with a ruling in favor of the complainant. This could be a charge issued, violation found, discrimination found, or conciliation reached; 30% (24 cases) concluded with a ruling of no finding (no cause, no violation, or no jurisdiction to file a complaint); 18% (12 cases) received no ruling. They are either closed, complainant failed to cooperated, or complaint withdrawn by complainant. Finally, 13% (9 cases) remain open through HUD reactivation or no ruling issued to date. There is widespread agreement that the number of complaints filed under the Fair Housing Act represents only a small portion of all actual occurrences of housing discrimination in any given community. Based on a random audit of Fair Housing compliance conducted by HUD in metropolitan areas nationwide in 2000, an estimated 19% of all Hispanics and 17% of all Blacks experienced some form of discrimination in the rental market. In the market for homebuying, the rates were even higher. HUD estimated that 25.7% of all Hispanics and 21.6% of all blacks were discriminated against in real estate inquiries. Therefore, the total number of violations or complaints should not be interpreted as a comprehensive evaluation of illegal fair housing activities in the region. Home Mortgage Lending Review Fair lending practices among financial institutions have long been a major component of fair housing policy. Access to reasonable credit is considered essential for entry into homeownership in the United States, and disproportionate access can lead to disparities in wealth accumulation and quality of life among residents. Discriminatory lending practices first entered the national spotlight in the 1960 s when it became apparent that banks were rejecting home loans in certain urban neighborhoods on the basis of the homes locations alone. This practice, known as redlining, contributed to the economic decline of inner-city neighborhoods during this period, leading the federal government to place restrictions on the criteria banks may use to decide whom to lend to. Over the last decade, the focus of fair lending has shifted from access to any credit at all to the costs of the credit being offered. Redlining had historically excluded low-income and minority neighborhoods from credit altogether, but the primary problem has shifted to the proliferation of high-cost, risky loans in these same neighborhoods. As early as 1998, federal data showed that households in predominantly African American neighborhoods throughout the United States were five times more likely to accept a subprime loan than households in white neighborhoods. 6 By 6 Goldstein, Subprime Lending, Mortgage Foreclosures and Race: How far have we come and how far have we to go? The Reinvestment Fund, A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

45 2006, roughly 54% of African Americans and 47% of Latinos received subprime loans compared to approximately 17% of whites. 7 Although lending institutions have tightened their loan application qualifications considerably in the last two years, the implications of high-cost loans secured during the peak of subprime activity are still being expressed through foreclosures and otherwise heavy housing cost burdens on households throughout the country and our region. There are two common means for measuring access to home finance at the local level: data submitted each year under the Home Mortgage Disclosure Act (HMDA), and ratings given to financial institutions by federal regulatory agencies for compliance with the Community Reinvestment Act (CRA). Home Mortgage Disclosure Act (HMDA) Analysis The Loan Application Register (LAR) disclosed each year under the HMDA is the most comprehensive tool available for monitoring home loans. Lending institutions are generally required to submit information on all home loan applications they receive, including the race/ethnicity of the applicant and co-applicant, the applicant s annual income, the applicant s gender, the outcome of the application, and a range of other data points. The HMDA was passed in 1975, in response to the widespread failure among banks to provide the same credit services to inner-city neighborhoods that were provided to suburbs. Banks had to disclose the total volume of all lending by census tracks, and regulators, as well as the private watchdog groups, could monitor the fairness of their geographical distribution. The scope of HDMA has grown over the years. It was expanded in 1989 to include personal information about the individual applying for the loan and the action taken by the bank. In 2004, the scope of HMDA was further widened to include data on interest rates of the loans being issued. This additional requirement measures whether discrimination occurs in the pricing of the loan as well as in rates of origination, addressing the growing concerns about predatory lending. There are limitations to using HMDA to determine fair housing compliance. Smaller institutions, issuing roughly 20% of all mortgages, are not subject to disclosure requirements, and forms such as the race of the applicant are left blank in about one out of ten applications. Omissions in data are likely systematic and thus may be undercounting rates of disparity, especially by race. Furthermore, the inclusion of interest rates in the data does not fully capture incidence of predatory lending. Interest rates are one factor among many that constitute high-cost loans. Various fees for processing, terms of the loans, and marketing of subprime loans are important cost factors that are not considered in this definition of high-cost loan. While the HMDA data is the most accurate available, there are many limitations that are still being addressed by the U.S. Congress with ongoing improvements to data collection. Using HMDA data, it is possible to generate a profile for lending activity in the Charlottesville Metropolitan Statistical Area (MSA). The MSA includes the City of Charlottesville, Albemarle County, Nelson County, Greene County, and Fluvanna County. Note that Louisa County, a member of the Thomas Jefferson Planning District, is omitted from this data. 7 National Fair Housing Alliance, Fair Housing Trends Report A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

46 Total Number of Home Purchase Loans Originated in Charlottseville MSA Hispanic Applicant Black Applicant White (Non-hispanic) Applicant Source: FFIEC HMDA, TJPDC The total number of all home purchase loans issued in the Charlottesville MSA fell to 1,666 in 2009 from an historic high of 4,139 in 2005, with major drops in activity experienced in both 2007 and This clearly indicates a sharp downturn in the housing market for all segments of the population. Whites in the region are significantly more likely to apply for and to be approved for mortgages than other racial or ethnic groups. In 2009, 0.99% of all whites in the region secured a mortgage, while 0.32% of Blacks and 0.31% of Hispanics secured a mortgage. Additionally, 6,180 Asians lived in the MSA in 2009, making them the fourth most populous demographic group. A total of 54 mortgages, or 0.90% of the Asian population, were issued to Asians in Rates of Approval by Household Income and Race ( ) 70% 65% 60% 55% 50% 45% White Applicant Black Applicant 40% 0-50% AMI 51-80% AMI % AMI > 120% AMI Source: FFIEC HMDA, TJPDC 45 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

47 Between 2007 and 2009, a mortgage application from a White homebuyer in the region was 10.46% more likely to be approved than an application from a Black homebuyer of the same income level. The disparities in approval rates between races are roughly the same for applicants at each income level. Because lenders use a variety of price determinates, such as credit and employment history, that are not included in HMDA data, there is no way to discern unlawful discrimination conclusively based on race alone. However, the differences in acceptance rates do illuminate a racial gap in access to credit that exists in the region. Rates of Approval by Household Income and Census Tract ( ) Low Income Census Tracts High Income Census Tracts 70% 65% 60% 55% 50% 45% 40% 0-50% AMI 51-80% AMI % AMI > 120% AMI Household Income Source: FFIEC HMDA, TJPDC Throughout the United States, in 2009, an applicant in a high-income census tract was 16.9% more likely to be accepted than an applicant in a low-income tract. Mortgages are more likely to be approved for households with higher income levels, and they are approved at approximately the same rate throughout the Charlottesville metro area. However, low-income households living in wealthy census tracts, defined as the top quintile of the median income distribution, have a harder time securing a mortgage than households of the same income level living in census tracts in the bottom quintile. This points to a barrier of housing affordability in the high-income areas of the region for those making below the median income. There is no statistically significant difference in approval rates between applications submitted by males alone and females alone, but applications submitted jointly are 3.22% more likely to be approved than applications submitted by one applicant. 46 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

48 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Debt-to-income ratio Employment history Reasons Provided for Loan Denial ( ) White (Non-hispanic) Applicant Black Applicant Hispanic Applicant Credit history Collateral Insufficient cash Unverifiable information Credit application incomplete Other Source: FFIEC HMDA, TJPDC Lending institutions must provide a reason for all loan applications that are denied. Among applications submitted by minorities, credit history is the single most cited reason for denying an application. Although a bill has been proposed in the U.S. Congress to require reporting of credit scores for all mortgage applications, it is currently not possible to control for this and other underwriting variables in the regional lending market. For all loans, interest rates must be disclosed if they exceed the Treasury Bill rate by 3% or, alternatively, if they qualify as a high-cost loan under the Home Owner Equity Protection Act (HOEPA). This analysis will define high-cost loan by the reported interest rate spread. However, this picture is incomplete because many adjustable rate loans do not trigger the HMDA threshold for high-costs. 25% Percent of Home Purchase Loans Defined as High-Cost White (Non-hispanic) Applicant Black Applicant Hispanic Applicant 20% 15% 10% 5% 0% Source: FFIEC HMDA, TJPDC 47 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

49 Between 2004, the first year pricing information was collected, and 2009, the incidence of highcost loans among minority applicants in the Charlottesville MSA changed dramatically. During the peak years of homebuyer activity, Blacks and Hispanics were nearly four times more likely to receive high-cost loans than Whites. According to the National Community Reinvestment Coalition, this racial disparity in high cost loans was the widest of any congressional district in the nation. 8 However, as housing market activity dropped the number of high-cost loans issued to minorities dwindled to virtually zero. Only six high-cost loans were issued to minorities in 2008 and 2009 combined. Although there have been far fewer loan applications submitted in the last two years, minority applications actually became more likely to be approved in 2009 than before even as the interest rates improved considerably. Among Whites, the rate of high-cost loans has averaged 2.7% over the last six years with little fluctuation. Percent of Home Purchase Loans that are Federally Backed White (Non-hispanic) Applicant Black Applicant Hispanic Applicant 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Source: FFIEC HMDA, TJPDC The drop in high-cost loans between 2007 and 2009, which were almost exclusively issued in conventional loan markets, has coincided with an increase in federally-backed loans. A wide majority of the federally-backed loans are backed by the Federal Housing Administration (FHA), although the Farm Services Administration/Rural Housing Service (FSA/RHS), and Veterans Administration (VA) also provide this insurance. All racial groups in the region have increasingly opted for federally-backed loans in the last two years, but racial minorities have done so to a much greater degree. The trend toward federally-backed mortgages is likely the result of a few factors. Private lending institutions have responded to the financial crises in recent years by constricting their lending activity. As banks have tightened their requirements, FHA loans are likely to be relatively less strict with credit ratings and require less of a down-payment than conventional loans. 8 National Community Reinvestment Coalition, Lending Disparities by Congressional Districts A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e

50 Additionally, FHA mortgage limits are significantly above the average home price in the region. As of 2010, FHA will back loans of up to $437,000 for a single-family home in the Charlottesville MSA. As home prices in the region have dropped over the last few years, more homes fit within the mortgage limits than before. This may have helped broaden their appeal. Although federally-backed loans being issued in the region do not meet the HMDA definition for a high-cost loan, there are typically additional costs associated with these loans. Most notably, as of October 2010, FHA requires an annual mortgage insurance premium of 1.55% of the loan amount, in addition to an upfront premium. In exchange for less stringent lending requirements, federally-back loans usually come at a higher price that is not recorded in the interest rate spread. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Loan Purpose for High-Cost Loans in Charlottesville MSA ( ) Home Improvement or Refinance Home Purchase 0-50% AMI Household 51-80% AMI Household % AMI Household > 120% AMI Household Source: FFIEC HMDA, TJPDC Contrary to public perception of households borrowing recklessly to purchase large new homes, a majority of high-cost loans in the region over the last three years were refinance loans, secured by an existing owned dwelling. The prevalence for high-cost refinance loans is especially pronounced among lower-income households. For households earning below 50% of the median income, almost 9 out of 10 high-cost loans were home equity loans. Housing researchers have used this finding as evidence for predatory lending. While home purchase loans are likely to be initiated by the buyer, refinancing loans are more likely to be initiated through marketing by the lender. Community Reinvestment Act (CRA) Analysis The Community Reinvestment Act was enacted by U.S. Congress in 1977 to require lending institutions above a certain size to serve the investment needs of the communities from which they draw deposits. Based on a set of investment criteria, federal regulators, as well as community groups, have been given the standing to challenge banks who do not meet the standards. Although the decade after the law s passage did not reveal a considerable change in lending practices, many studies have shown that banks operating under CRA guidelines have, in fact, increasingly provided more investment to minority and low-income neighborhoods than banks not 49 A n a l y s i s o f I m p e d i m e n t s t o F a i r H o u s i n g C h o i c e