Sharing the Dream: A Place to Call Home

The General Board of Pension and Health Benefits of The United Methodist Church (General Board) has committed close to $1 billion to its Affordable Housing/Community Development Program. The video accompanying this study guide, Sharing the Dream: A Place to Call Home, illustrates the power of affordable housing to transform both individuals and communities.

This study guide will help you understand the issues surrounding affordable housing in the United States. It describes the United Methodist position on housing and explains in more detail how the General Board invests in affordable housing projects. Lastly, it gives some practical suggestions on how United Methodist congregations and individual United Methodists might assist in helping alleviate some of the housing problems in their communities.

All General Board investments are guided by the Social Principles of the Church. Affordable housing investments are as much a ministry as they are a financial investment. We are pleased to present this video and study guide to you.

We support the basic right of all persons to equal access to housing, education, employment, medical care,...(The Book of Discipline 2000, ¶162)

What is affordable housing?

Affordable housing is not easily defined. For many, affordable housing suggests a big city high-rise owned and operated by a public housing authority where rents are heavily subsidized by taxing authorities. This particular description resulted from nearly fifty years of federal housing programs that focused on public construction and public management of housing assets. Unfortunately, such programs have not always been able to provide for safe, secure, ethnically diverse and economically lively neighborhoods with opportunities for low- and moderate-income residents.

Since the creation of the Low Income Housing Tax Credit (LIHTC) program in 1986, the new reality is that many affordable housing units are privately developed, privately owned, and located in developments containing a substantial number of market-rate units. They are located in urban, suburban and rural areas and are frequently indistinguishable from the market-rate units that surround them. Since its inception, the LIHTC program has helped construct more than 800,000 units of affordable housing nationwide.

Ultimately, any housing unit's affordability is dependent on the occupant's ability to pay, the market forces affecting prices and the inflationary pressure on utilities and other housing-related expenses. Understandably, affordability varies from place to place and person to person. In general, affordable housing refers to housing units priced below local market rates or affordable to those individuals or families whose incomes fall below the local median income.

How many Americans are in need of affordable housing?

Because of the many factors affecting the affordability of housing, counting the number of Americans with housing needs is not easy. The statistics that have been compiled by both governmental agencies and independent housing advocacy groups vary depending on the definitions and assumptions used. For example, the Department of Housing and Urban Development (HUD) defines "worst-case" housing needs as unassisted renters with incomes below 50% of the local area median income who pay more than half of their income for housing or live in severely substandard housing. HUD estimates that 10.9 million Americans (including 3.6 million children, 1.4 million elderly and 1.3 million disabled adults) have "worst-case" housing needs.

The Center for Housing Policy, a research affiliate of the National Housing Conference, estimates that 13 million families have "critical" housing needs. A family has a critical housing need if it spends more than half of its total income on housing and/or lives in severely inadequate conditions.

An important measure used to approximate the number of people in need of affordable housing is the poverty rate. The Census Bureau measures poverty by using a set of income thresholds that vary by family size and composition. For the year 2000, the poverty threshold for a family of four was just over $17,000. Using the Census Bureau definition, more than 31 million Americans were below the poverty line in 2000.

How much should one spend on housing?

A widely accepted standard is that homeowners and renters should spend no more than approximately one-third of their household income on housing. Figures from the 2000 Census show that of the nearly 35 million rental housing units in the U.S., approximately 31% are occupied by renters who are paying 35% or more of their household income in rent.

What is the average cost of housing in the U.S.?

HUD calculates a Fair Market Rent (FMR) that determines the eligibility of rental housing units for federally subsidized housing programs. In 2000, the average FMR for a two-bedroom apartment for the 50 largest U.S. metropolitan areas was $701 per month, but there are stark differences from place to place. In Dallas, the FMR is $749, while in San Francisco, it is $1,362. Using the one-third of income standard for housing expenditure, a renter would have to earn nearly $27,000 to rent a two-bedroom apartment in Dallas, but nearly $50,000 to rent a similar apartment in San Francisco. Remember, more than 31 million Americans earned less than $17,000 in 2000, according to the U.S. Census Bureau.

Based on calculations by the Center for Housing Policy, a person employed as a janitor could rent a one-bedroom apartment in just six of 60 major metropolitan areas. A person employed as a retail salesperson could find such an apartment in only three of the 60 areas.

In widely used figures prepared by the Joint Center for Housing Studies of Harvard University, the average price of a home in 2000 was $145,000 and the average monthly rent (including fuel and utilities) was $543. (These figures are based on statistics from the Census Bureau's American Housing Survey and data from the National Association of Realtors.)

How many affordable housing units are available across the U.S.?

Between 1997 and 1999, according to HUD, the number of housing units affordable to renters with extremely low incomes fell by 13%. (Renters in this category earn approximately only 30% of the median income in the area where they live.) Stated differently, for every 100 renting households in this category, there were only 40 units that were both affordable and available. The loss of affordable units could become even more severe in the coming years as millions of homes in federally subsidized housing programs come up for renewal.

How many homeless are there?

It is extremely difficult to gauge the extent of homelessness in America. The Census Bureau performed a count of the emergency and transitional shelter population in 2000 and estimated their numbers to be 170,000, but that figure reflects the situation at only one point in time. Other estimates are significantly higher. The United States Conference of Mayors estimates that at least 3.5 million Americans experience homelessness at some point during the course of a year. During 2001, requests for emergency shelter assistance increased an average of 13% in 27 cities.

The Urban Institute claims that on any given day in the U.S., 800,000 people are homeless.

To begin to alleviate poverty, we support such policies as: adequate income maintenance, quality education, decent housing, job training,...(The Book of Discipline 2000, ¶163E)

How does the General Board of Pension and Health Benefits' affordable housing investment program work?

The General Board made its first commitment to affordable housing in 1990 with an allocation of approximately $25 million. In 2002, General Board commitments to affordable housing now total nearly $1 billion! The above chart shows the growth in investments in affordable housing since 1990. It shows invested dollars as opposed to committed dollars. Committed dollars are the dollars the General Board is willing to invest while invested dollars reflect the actual dollar value of current holdings.

As with all General Board investments, Affordable Housing/Community Development investments are designed to earn a market rate of return commensurate with the risk to participants, while supporting underserved communities and the development of affordable housing units.

The General Board does not invest in affordable housing directly but relies on business partners called "intermediaries" to identify potential investment opportunities. These intermediaries are community development and housing organizations, real estate investment trusts, and for-profit organizations with a special knowledge of community development. Besides identifying potential investments, the intermediary performs the original underwriting and due diligence and normally holds the first-loss position on mortgage loans.

The entire portfolio performs similarly to a high investment grade AA-/A+ portfolio. In order to spread investment risk, the General Board seeks to co-invest with other institutions whenever possible.

The General Board's Affordable Housing/Community Development Program has consistently outperformed broad fixed income indices. Since inception, it has earned a rate of return of approximately 7.5%.

The General Board has invested in affordable housing projects in all 50 states and since 1990 has helped create or renovate more than 20,000 affordable housing units.

How does the General Board make its affordable housing investments?

Affordable Housing/Community Development investments include the following types:

• Public securities, guaranteed by Fannie Mae or Freddie Mac, backed by mortgages on affordable housing buildings,
• Mortgage loans on multi-family apartment buildings and senior housing facilities, and
• Loans to community development financial institutions secured by mortgages on single-family homes occupied by low-income families.

The General Board's Affordable Housing/Community Development Program limits its investments to those that meet the following criteria:

• Housing where 70% of the residents have incomes no higher than 80% of the area median income, or
• Housing that fills a special purpose need, such as single-room occupancy, transitional housing, abuse recovery or housing for the elderly, or
• Investments in underserved neighborhoods as part of a recognized effort to redevelop and revitalize communities through investments in retail, commercial and industrial facilities, education and job training programs, or child and elderly care facilities.

In an effort to broaden the scope and impact of the Affordable Housing/Community Development Program, the General Board is currently considering potential investment opportunities in the following areas:

• Investments in homeless shelters, charter schools, and community health care facilities,
• Mortgage loans on commercial properties, such as day-care centers and small businesses, in low-income areas, and
• Investments in Community Development Financial Institutions bringing wealth and asset building tools to low and moderate income areas.

Such investments would meet the risk and return criteria for all of the General Board's portfolio.

We hold governments responsible for...the guarantee of the rights to adequate food, clothing, shelter, education, and health care. (The Book of Discipline 2000, ¶164)

Does The United Methodist Church have a position on the issue of affordable housing?

Within the last 10 years, The United Methodist Church has adopted three separate resolutions on housing issues.

Resolution 104, "Available and Affordable Housing" was adopted in 1992 and makes the following declaration:

A dwelling place becomes an inherent part of God's design for the creation in which human beings are an important part.

That same year, Resolution 105, "Homelessness in the United States" asserted

Homelessness is a scourge upon the nation's conscience.... The church views homelessness as a violation of human dignity and an affront to the biblical mandate to do justice.... Home as a promise to the homeless must be the ongoing commitment of the church.

And most recently, in 2000, Resolution 106, "Housing in the U.S.A." said

Love for neighbor demands that Christians care about how adequately their neighbors are sheltered.... The need for adequate housing at affordable costs is critical today.

Each of these resolutions calls upon general agencies, annual conferences and individual United Methodists to address the housing issues facing the United States and to work for equity, accessibility and affordability in housing markets.

What concrete suggestions are offered in these resolutions?

These resolutions suggest that individual churches should:

• encourage members to volunteer their services in community building and renovation projects,
• pool resources to help fund affordable housing projects,
• provide supportive assistance to all cooperative groups working to expand affordable housing opportunities,
• advocate for fair housing practices at all levels of government and for expansion of subsidized rental and public housing,
• oppose redlining,
• form non-profit housing corporations where possible, and
• dedicate a special Sunday for prayer and action on housing.

What are other Church groups doing to promote affordable housing?

Some churches and annual conferences around the country have developed impressive housing ministries. Examples include:

• The South Carolina Conference Board of Missions sponsors a summer service program engaged in renovation of housing.
• Glide Memorial UMC of San Francisco is a partner in the non-profit Glide Economic Development Corporation which is working on a $200 million mixed-use affordable housing project in San Francisco's Tenderloin Area.
• The Windsor Village UMC of Houston is working with partners to develop a 234-acre planned community with predominantly low to moderate-income housing. The development will include a wellness center and a retirement community.

Volunteer opportunities in both rural and urban settings are available through the General Board of Global Ministries' Mission Volunteers program. (See http://gbgm-umc.org/vim/index.htm for more information)

Monetary gifts may be directed to specific housing-related projects through the Church's Advance for Christ and His Church. Examples include the Appalachia Service Project, providing housing for economically deprived Appalachian families, and Warren Village of Denver, providing housing, child-care and other services for low-income single parents and families. More information on Advance Specials can be found at the General Board of Global Ministries Website (http://gbgm-umc.org/advance/).

For official United Methodist statements on housing and housing-related issues, visit the General Board of Church and Society's Website (http://www.umc-gbcs.org).

John Wesley's concern for social issues is well-known. Did he have anything to say about housing?

In 1773, Wesley visited Ireland, preaching throughout the countryside. His journal entry for June 15 reads as follows:

When I came to Belfast, I learned the real cause of the late insurrections in this neighbourhood. Lord Donegal, the proprietor of almost the whole country, came hither to give his tenants new leases. But when they came, they found two merchants of the town had taken their farms over their heads; so that multitudes of them, with their wives and children, were turned out to the wide world. It is no wonder that, as their lives were now bitter to them, they should fly out as they did. It is rather a wonder that they did not go much farther. And if they had, who would have been most in fault? Those who were without home, without money, without food for themselves and families? Or those who drove them to this extremity?

In a sermon entitled "Heaviness Through Manifold Temptations", Wesley identified some of the "temptations" that lead a believer to "heaviness" of soul. Such temptations include pain, disease and grief. Not surprisingly, Wesley also identifies poverty and homelessness as conditions that lead to heaviness.

'Having food and raiment' (indeed the latter word...implies lodging as well as apparel), we may, if the love of God is in our hearts, 'be therewith content.' But what shall they do who have none of these? who, as it were, 'embrace the rock for a shelter'? who have only the earth to lie upon and only the sky to cover them.... Who can tell what this means, unless he hath felt it himself? I am astonished it occasions no more than heaviness even in them that believe.

The United Methodist call for affordable housing is Wesleyan at its very core.

You can order a free copy of our affordable housing video, Sharing the Dream: A Place to Call Home, through our online Request Materials form.