FHA Multifamily Loan Limit Adjustment Act of 2006
This is yet another example of the progress that we as members of the Committee on Financial Services have made on housing matters. In committee we have passed many housing bills that are waiting consideration by the House, and I am privileged to have supported this bill and other legislation because it begins to address the affordable housing crisis that we confront in America.
This bill is important to maintaining, as well as to increasing, the Nation's rental and affordable housing stock. FHA multifamily insurance products will remain available to assist projects for families with incomes from 80 percent to 150 percent of the median income. These are the people who really need our help. The bill will increase the loan limits for FHA-insured multifamily products in high-cost areas, where the FHA loan limits are no longer relevant in places like my district of Los Angeles, California. It is estimated to cost $146,240 per unit to build a 42-unit two-bedroom development in Los Angeles or approximately $6,142,069. In New York City and San Francisco, these projects are even more expensive, anywhere from $167,000 to $180,000 per unit.
This has had devastating effects on the construction of affordable housing projects in my district and elsewhere in the country, particularly as land and construction costs skyrocketed over the past few years.
In 2005 FHA insured a total of six multifamily projects in California. New York fared no better, as only eight projects were built in the same year. Of course, I am not surprised by this trend. But it must be reversed because of the large numbers of persons seeking affordable rental housing in this country, many of whom are working families with children, the elderly, and the disabled.
We all know that the affordable housing crisis has been exacerbated nationally since nearly 170,000 units of housing were lost last year in New Orleans alone as a result of the hurricanes that struck the gulf region. People of New Orleans and elsewhere in the gulf region are desperate for housing, which makes this legislation even more important. Very little, if any, multifamily rental housing has been constructed since the storms. Madam Speaker, I hope this bill reverses this situation.
H.R. 5503 will allow HUD to increase multifamily loan limits in expensive areas to 170 percent above the base limit, while giving the Secretary of HUD the discretion to increase the limit to 215 percent on a case-by-case basis. Because there are approximately 100 areas in the country that would be characterized as high-cost areas, this bill recognizes the reality of multifamily housing construction in this country. It just disappeared. Without these changes to the loan limits, it will remain impossible for developers, both for-profit and nonprofit, to develop any affordable housing units. The current loan limits can actually be attributed in part to the shortage of affordable housing units, particularly in high-cost areas of the country.
Now, as most of you know, there are no real alternatives in the private market to FHA mortgage insurance that assist families at 80 to 150 percent of the area median income. This is compounded by the fact that section 8 units are not available in these markets. The waiting lists for section 8 have not disappeared, and in Los Angeles there are more than 100,000 persons waiting for section 8 assistance. Other areas of the country, such as New York, Seattle and Philadelphia, are in the same predicament as Los Angeles.
Of course, this phenomenon is not limited to large urban areas. It is already affecting other areas of the country as populations grow and residents seek housing outside of the cities. Nearly 3.7 million people live in the City of Los Angeles, but 9.5 million live in the Los Angeles County area. From my vantage point, there is a real housing crisis across America.
On its face, this does not appear to be as important a measure as some other housing bills that this House has considered to date. But I contend that this is one of the most important housing bills that we will consider before the end of this session.
I, therefore, urge my colleagues to support this bill. It is a foolproof means of averting a national crisis in affordable housing.
Madam Speaker, I will insert in the RECORD a letter in support of H.R. 5503 sent to Members of the House by five housing and real estate associations.
Madam Speaker, in closing, and before I yield back my time, I would just like to say I do not know if I will have the opportunity to be on the floor with many of my colleagues from our committee before the close of the session.
But I first want to say how appreciative I am to the chairman of our committee, Mr. Oxley, for the leadership that he has provided, for his sense of fairness, and for his sense of what it takes to get both sides of the aisle working together. He has done a magnificent and tremendous job.
Madam Speaker, I also want to thank someone who is not here. It is unfortunate, because I have worked closely with Mr. Ney, and he has done a wonderful job in helping to move these housing bills to the point that we see them today.
I would like to thank all of the other members of the committee just in case we do not have an opportunity to be on the floor again on any more of those bills.