At the recent Governor's Housing Conference in Baltimore, the blue logo of a house with rays of light emanating from behind the roof was ubiquitous.
It's the emblem of one of the conference's main sponsors, Enterprise, and to the roughly 800 people in attendance Oct. 16, it was nearly as recognizable as the red-and-yellow square of Wells Fargo, another sponsor.
"They're not just a distant organization. … They bring home their national knowledge to us, and we impart what we're seeing," said Trudy McFall, president of the Maryland Affordable Housing Coalition, who moderated a panel about rental housing financing at the conference.
The Enterprise family of companies was launched in Maryland 30 years ago by Columbia's founder,
"We want to play a leading role, but we can only do that in partnership with others," said Terri Ludwig, Enterprise Community Partners Inc.'s president and CEO.
Enterprise recently published a report, "Community Development 2020," that lays out a vision for the way affordable housing should be approached in the coming years.
The report details five points Enterprise sees as critical to maintaining a viable affordable-housing system in the United States. Among those points is the idea that housing can only help people out of poverty if it is the right housing — residences that are connected to what Enterprise calls "communities of opportunity."
That means getting people into homes that allow access to transportation, health care, education and jobs, Ludwig said. Too often, she said, affordable housing is thought of without relation to other issues.
Enterprise and other housing groups must "actively partner with people in other sectors" and think of low-income renters' costs in the aggregate to break down these barriers, she said.
For instance, this week, the Washington-based Center for Housing Policy released a study that shows combined housing and transportation costs have gone up 44 percent in the nation's largest cities since 2000, while household incomes have grown only 25 percent.
Affordable-housing advocates need to think about data like that when making decisions, Ludwig said. Using such data to bolster the case for affordable housing is another item on Enterprise's 2020 agenda.
Enterprise's policy and research wing released a comprehensive look Oct. 18 at the nationwide mortgage settlement that concluded states have spent less than half of the $2.5 billion for housing-related expenses. The rest of the money, paid by banks that used fraudulent mortgage practices such as "robo-signing," has been diverted to states' general funds and other uses not related to housing, the money's intended target.
How to keep money flowing to affordable housing plays a large part in Enterprise's 2020 plan. Last year, Enterprise helped with the investment of more than $1 billion in community development, much of it from federal tax programs.
"The community-development field often relies upon government resources to conduct our work. ... However, politics and economic pressures at the federal, state and local levels mean federal dollars will continue to wane," according to the 2020 report.
Enterprise is most worried about the future of the low-income housing tax credit, which Congress created in the Tax Reform Act of 1986. Enterprise lobbied for the credit, which has since "leveraged $75 billion in private investment to produce more than 2.5 million affordable homes," according to the nonprofit's 2020 report.
Low-income housing tax credits are allocated by state housing finance agencies to developers of rental housing. Developers then sell the credits to investors in exchange for the money to invest in rental housing projects.
Part of Enterprise's mission is to connect developers with investors who will provide cash for an affordable-housing project. More equity means the developer's debt on the project is lower, so rental rates can be below the market rate.
For 10 years, investors — typically corporations seeking offset profits — receive a "dollar-for-dollar credit" against their federal tax liability, according to the U.S. Department of Housing and Urban Development. Rents in properties financed with the credit must remain affordable for at least 30 years.
"It is absolutely the glue that holds the affordable-housing community together," McFall said of the tax credit.
It creates the vast majority of the funding for affordable-housing projects, experts say.
In 2011, Enterprise arranged the sale of $717 million of low-income housing tax credits for developments, more than 10 times the funds created by the next-largest program used for affordable housing.
Four years ago, in order to sustain affordable-housing development through the recession, Congress instituted a 9 percent floor on the rate that is used to determine the portion of project costs that can be financed with low-income housing tax credits.
That floor is about to expire — a change affordable-housing advocates say could threaten the industry because the new rates, calculated by the government monthly and tied to interest rates, will drop below 9 percent.
The lower rates, which will apply to any housing complex that opens after 2013, will mean developers receive less equity from the tax credits and must search elsewhere for the cash required to finance affordable housing. And right now, there are few other sources to be found.
Smaller federal programs, like the HOME Investment Partnership and the Community Development Block Grant, will not be able to fill gaps created in project financing by a reduction in the low-income housing tax credit rate, advocates say.
Although the fixed-to-floating change doesn't go into effect for more than a year, it began taking its toll on affordable-housing projects months ago. Because building any housing development often takes more than two years, developers and investors had to assume the floating rate would apply to projects that could open after Dec. 31, 2013.
Enterprise is lobbying Congress to extend the fixed rate or make it permanent. Bipartisan legislation has been introduced in both the House and Senate to make the 9 percent fixed rate permanent, though the last major action on either bill was in late 2011.
"It is really just one of those legislative glitches that just needs to be fixed," said Charles Werhane, president and CEO of Enterprise Community Investment Inc., Enterprise's for-profit equity financing subsidiary. "It exposes the developers to risk and the investors to risk and the states to risk."
Enterprise is "a very powerful player" in Washington, in part because its nonprofit status may give it more credibility in the eyes of elected officials, said Beth Mullen, who is national director for the affordable-housing industry practice group at the accounting firm CohnReznick LLP and works on deals with Enterprise.
Enterprise's leaders and other affordable-housing advocates, though, don't want to focus too closely on this single tree in the forest of tax issues that influence their ability to sustain low- and middle-income housing. There are other housing-related tax issues that also need to be extended soon.
And, whoever wins the presidency, broader tax reform appears to be on the table, said Diane Yentel, Enterprise's director of public policy and government affairs. Community development organizations need to be on guard for changes that could reduce the ability to pay for affordable housing, she told an audience at the Governor's Housing Conference.
"There are so many unintended consequences" that can affect housing tax credits when politicians change the tax code, McFall agreed.
As a result of these threats, Enterprise is working to diversify its sources of funding, Ludwig said. The organization is expanding its use of "impact investing," which finds, without the assistance of tax credits, altruistic investors who want some return for their money, she said.
Its first offering of this type, the Enterprise Community Impact Note, was launched about two years ago. The note is available in terms of two to 10 years, currently offering rates of return from 1.5 percent to 3.5 percent with a $5,000 minimum investment. The funds go into the Enterprise Community Loan Fund, which lends money to affordable-housing projects.
The money Enterprise has raised from the note recently surpassed $10 million, Werhane said. Although that is a small fraction of the funding that can be created using tax credits, the note has attracted more than 65 contributors and helped establish a health center in Oakland, Calif., an education center in Seattle and built affordable homes across the country, Enterprise says.
Enterprise is planning more "impact investing" funds for individual investors, who are not motivated to invest by the same things that influence corporate investors, Ludwig said.
"They're motivated by the outcomes, both the social and the financial outcomes," she said. "It's a matter of necessity right now."
1973: Three women who attended developer James W. Rouse's church approached him to ask for assistance in converting two Washington apartment buildings into low-income housing. Rouse helped them secure financing to purchase and renovate the buildings. The nonprofit that came out of that transaction, Jubilee Housing, still operates.
1979: Rouse retires from the Rouse Co., where he made a name for himself with urban redevelopment projects such as
1982: Rouse and his wife, Patty, start the Enterprise Foundation. It is the precursor to Enterprise Community Partners Inc., which now employs more than 500 people across the U.S., including in Columbia, Washington and New York.
1985: Enterprise Homes Inc. is established as Enterprise's housing development arm.
1986: The low-income housing tax credit is passed by Congress. Enterprise lobbied for the credit's creation.
1995: Rouse is awarded the Presidential Medal of Freedom by President
1999: Enterprise lobbies Congress to preserve the Community Reinvestment Act, which encourages banks to "help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods," according to the
2005: The Enterprise Foundation is renamed Enterprise Community Partners Inc.
2012: Enterprise merges its mortgage financing division with Bellwether Real Estate Capital to expand its mortgage product line and geographic reach.