California Association of Local Housing Finance Agencies

		

November 7, 2001

Susan Molinari
Richard Ravitch
Co‑Chairs
Millennial Housing Commission
800 North Capitol St. N.W., Suite 680
Washington, D.C.  20002
 
Dear Co‑Chairs Molinari and Ravitch:
 
I am writing on behalf of the California Association of Local Housing Finance Agencies (Cal‑ALHFA) to urge the Millennial Housing Commission to support continued direct federal‑local government funding partnerships for existing programs, such as CDBG and HOME, as well as any new programs that might be proposed.  We would oppose any recommendation that would redirect such funds through State governments for the following reasons:
 
 *	Increased Bureaucracy ‑ While the States should facilitate the linkage of State resources to support local housing efforts (e.g. service funds), channeling federal resources through the States would create increased administrative burdens and costs for both the States and localities while encumbering the application process for funds.
 
*	Decreased Leveraging ‑ Local governments are in the best position to evaluate the timing and amount of appropriate resources to be applied to a project, as well as to contribute local resources on a timely basis.  The channeling of federal resources through the States would greatly complicate the integration and leveraging of these resources, as well as potentially create State‑imposed priorities.  Communities like the County of Los Angeles have been able to leverage approximately three dollars of non-federal funds for every HOME dollar spent.
 
*	Inefficient Program Administration ‑ While it may be beneficial for smaller States to administer housing funds to accomplish economies of scale, there are many Urban County Programs in California that are the size of the top 25 states in the Country.  Los Angeles County would be equivalent to the ninth largest state.  The most effective means of increasing efficiency and eliminating unnecessary bureaucracy is to create regulatory and compliance consistency among the principal federal funding sources (particularly when they are used together), including CDBG, HOME, tax credits, and tax‑exempt bond financing. 

Susan Molinari and Richard Ravitch
November 7, 2001
Page 2

 
	Additionally, regional efficiencies are maintained by retaining the current HOME and CDBG funding thresholds.  Under the HOME Program, 60% of the funds go to local "participating jurisdictions" and 40% goes to the states.  This formula has worked well and allows states to serve areas outside of local participating jurisdictions.
 
*	New Program Feasibility ‑ If it were advisable to direct federal housing funds toward an unmet need (e.g.‑ lower incomes, such as 30%, or to mix affordable with market units), it would be better to provide funds and incentives to local governments to advance these objectives in
combination with existing programs rather than to create a new State‑administered program.

Thanks you for you consideration of our comments; should you have any questions, please contact me at  (916) 444‑0288.
 
Sincerely,

Mary Ellen Shay
Executive Director