Innovative Policies
Innovative Policies: New Ideas for Advocates Laura Arce, CFED John Davis, Burlington Associates in Community Development Gene Severens, CFED Anne Li, CFED, Facilitator September 23, 2009
PRACTICE, MARKETS, POLICY
Policy Innovations Assets & Opportunity Scorecard Policy Innovation Briefs
Our Presenters Laura Arce, CFED John Davis, Burlington Associates in Community Gene Severens, CFED
Manufactured Housing: Affordable, Responsible Homeownership
Opportunity to Purchase Notice
Negotiate
Compete
Resident Ownership: Strong Policies Protections
Incentives
Penalties
Where do these policies exist?
Why manufactured housing? Affordable
Energy-efficient
Manufactured Housing Done Right
High-quality
Appreciates
Overcoming obstacles
For More Information www.cfed.org/go/mhtoolkit
Shared Equity Homeownership
Shared Equity Homeownership • Occupant’s interest. Occupants are owners, not renters. Rights, responsibilities, risks, and rewards of the “owner’s interest” (equity) are shared between the homeowner and a public or not-for-profit entity. • Legal mechanism. Each model has its own way of perpetuating the home’s occupancy and affordability . . . for many years. • Organizational structure. Each model has its own way of monitoring controls and “backstopping” security . . . stewardship.
Why Do Homeownership This Way? Promoting the public interest: 9Expand homeownership 9Prevent the loss of public subsidies 9Protect the condition of housing
Promoting the individual interest: 9Gain security, autonomy, and status by becoming a homeowner 9Acquire a home with a built-in safety net 9Build wealth
Why Do Homeowners Build Wealth (When Renters Do Not)? Forced savings:
9Return of downpayment 9Retirement of mortgage (amortization)
Voluntary savings: 9Capital improvements 9Stabilization of housing costs
Tax benefits Public subsidies Capital gains
Wealth
Affordability
Champlain Housing Trust $12,000 Average Household Gain in Wealth
5.4 years Average length of residency
67.4% Purchased marketrate homes after reselling
629 Homeowners; only 9 foreclosures
Obstacles Homeownership policy that ignores loss
of affordability in hot markets and loss of quality and security in cold markets. Investment policy that allows homeowners to pocket all public subsidies when reselling their homes.
Tax policy that assesses and taxes shared equity homes as if there were no restrictions on resale.
Opportunities Foreclosure crisis reminds policymakers that homeownership has risks as well as rewards.
Fiscal crisis persuades policymakers that states can no longer afford to allow public subsidies to be removed from assisted homes on resale.
Supportive state measures: 9Priority funding for “homes that last” 9Enabling legislation and equitable taxation
Combining strategies – asset building for the owner-occupants of shared equity homes.
What’s the policy innovation? DA New Entrepreneur Tax Credit targeted to start-up businesses. 1. Available to unincorporated businesses. 2. Targeted to low-income start-ups. 3. Easily accessed, broadly available. 4. Self-administering.
Why should we adopt this? D Because it’s a “win-win-win.” 1. a win for low-income start-ups which get a new tax credit to help with startup costs; come “above ground.” 2. a win for the depressed economy which needs these entrepreneurs’ contributions, and 3. a win for state government which receives new tax revenues!
National Self-Employed Customer Bases 10,000,000 10,000,000
9,000,000
8,000,000
7,000,000
6,000,000
4,413,120 5,000,000
4,000,000
3,001,000
3,000,000
2,000,000
1,000,000
170,000
313,963
0
Micro Programs (Aspen est)
VITA & AARP free tax sites (est)
For-profit tax prep (est)
Accessed EITC (actual, 2002)
Potential customer base (Aspen est)
What are the obstacles? 1. New strategy & unfamiliar tax laws 2. No organized constituency 3. Advocates aren’t familiar with strategy (asset & microenterprise coalitions)
D Hint: model on state EITC
Has it been adopted? DYes,sort of. . . 1. North Dakota 2. Nebraska 3. Other states 4. A new model
NETC: A model statute A possible new section to state statutues: (f) A refundable credit equal to $2000 (?)for taxpayers reporting self‐employment net profit income of at least $2000 for the first three (?) years of filing as self‐employed on federal Form 1040, Schedule C, and whose federal adjusted gross income does not exceed $75,000 (?) in any of the three years.
For more information:
Self-Employment Tax Initiative (SETI) www.cfed.org/go/seti
Laura Arce, [email protected]; Gene Severens, [email protected] or [email protected]
Innovative Policies: New Ideas for Advocates
Q&A Laura Arce, CFED John Davis, Burlington Associates in Community Development Gene Severens, CFED Anne Li, CFED, Facilitator September 23, 2009
PRACTICE, MARKETS, POLICY
Policy Innovations Assets & Opportunity Scorecard Policy Innovation Briefs
Our Presenters Laura Arce, CFED John Davis, Burlington Associates in Community Gene Severens, CFED
Manufactured Housing: Affordable, Responsible Homeownership
Opportunity to Purchase Notice
Negotiate
Compete
Resident Ownership: Strong Policies Protections
Incentives
Penalties
Where do these policies exist?
Why manufactured housing? Affordable
Energy-efficient
Manufactured Housing Done Right
High-quality
Appreciates
Overcoming obstacles
For More Information www.cfed.org/go/mhtoolkit
Shared Equity Homeownership
Shared Equity Homeownership • Occupant’s interest. Occupants are owners, not renters. Rights, responsibilities, risks, and rewards of the “owner’s interest” (equity) are shared between the homeowner and a public or not-for-profit entity. • Legal mechanism. Each model has its own way of perpetuating the home’s occupancy and affordability . . . for many years. • Organizational structure. Each model has its own way of monitoring controls and “backstopping” security . . . stewardship.
Why Do Homeownership This Way? Promoting the public interest: 9Expand homeownership 9Prevent the loss of public subsidies 9Protect the condition of housing
Promoting the individual interest: 9Gain security, autonomy, and status by becoming a homeowner 9Acquire a home with a built-in safety net 9Build wealth
Why Do Homeowners Build Wealth (When Renters Do Not)? Forced savings:
9Return of downpayment 9Retirement of mortgage (amortization)
Voluntary savings: 9Capital improvements 9Stabilization of housing costs
Tax benefits Public subsidies Capital gains
Wealth
Affordability
Champlain Housing Trust $12,000 Average Household Gain in Wealth
5.4 years Average length of residency
67.4% Purchased marketrate homes after reselling
629 Homeowners; only 9 foreclosures
Obstacles Homeownership policy that ignores loss
of affordability in hot markets and loss of quality and security in cold markets. Investment policy that allows homeowners to pocket all public subsidies when reselling their homes.
Tax policy that assesses and taxes shared equity homes as if there were no restrictions on resale.
Opportunities Foreclosure crisis reminds policymakers that homeownership has risks as well as rewards.
Fiscal crisis persuades policymakers that states can no longer afford to allow public subsidies to be removed from assisted homes on resale.
Supportive state measures: 9Priority funding for “homes that last” 9Enabling legislation and equitable taxation
Combining strategies – asset building for the owner-occupants of shared equity homes.
What’s the policy innovation? DA New Entrepreneur Tax Credit targeted to start-up businesses. 1. Available to unincorporated businesses. 2. Targeted to low-income start-ups. 3. Easily accessed, broadly available. 4. Self-administering.
Why should we adopt this? D Because it’s a “win-win-win.” 1. a win for low-income start-ups which get a new tax credit to help with startup costs; come “above ground.” 2. a win for the depressed economy which needs these entrepreneurs’ contributions, and 3. a win for state government which receives new tax revenues!
National Self-Employed Customer Bases 10,000,000 10,000,000
9,000,000
8,000,000
7,000,000
6,000,000
4,413,120 5,000,000
4,000,000
3,001,000
3,000,000
2,000,000
1,000,000
170,000
313,963
0
Micro Programs (Aspen est)
VITA & AARP free tax sites (est)
For-profit tax prep (est)
Accessed EITC (actual, 2002)
Potential customer base (Aspen est)
What are the obstacles? 1. New strategy & unfamiliar tax laws 2. No organized constituency 3. Advocates aren’t familiar with strategy (asset & microenterprise coalitions)
D Hint: model on state EITC
Has it been adopted? DYes,sort of. . . 1. North Dakota 2. Nebraska 3. Other states 4. A new model
NETC: A model statute A possible new section to state statutues: (f) A refundable credit equal to $2000 (?)for taxpayers reporting self‐employment net profit income of at least $2000 for the first three (?) years of filing as self‐employed on federal Form 1040, Schedule C, and whose federal adjusted gross income does not exceed $75,000 (?) in any of the three years.
For more information:
Self-Employment Tax Initiative (SETI) www.cfed.org/go/seti
Laura Arce, [email protected]; Gene Severens, [email protected] or [email protected]
Innovative Policies: New Ideas for Advocates
Q&A Laura Arce, CFED John Davis, Burlington Associates in Community Development Gene Severens, CFED Anne Li, CFED, Facilitator September 23, 2009
