WMBB News 13 - The Panhandle's News LeaderHousing Finance Corp Criticized in Senate Committee

Housing Finance Corp Criticized in Senate Committee

The Florida Housing Finance Corp., which was privatized by the state in 1998, finds itself the target of a move to bring it back into state government with a couple of key senators concerned about where it has funded affordable housing projects and whether it is frugal enough.

Members of the Senate Transportation, Tourism and Economic Development Appropriations Subcommittee on Thursday peppered the executive director of the Housing organization, Stephen Auger, about how FHFC spends its operations budget and how it decides where it will finance projects.

Sen. Mike Bennett, R-Bradenton, questioned Auger about how it could be that the agency has an operating budget of $15 million when it has fewer than 150 employees –a ratio of more than $100,000 to each employee in terms of total operating costs.

"That's pretty stout," said Bennett. "At over $100,000 per employee, I think you can understand why we're looking at bringing this back in."

Sen. Don Gaetz badgered Auger on a different subject – how the agency chooses the locations where it will fund affordable housing projects. Gaetz essentially accused the agency of putting too much focus on the Orlando area, funding development there that isn't needed while ignoring other areas. Auger responded that may have once been the case, but that in recent years, the agency has seen a shift in the needs for affordable housing, and has stopped financing projects in the Orlando area.

Whatever the agency did to anger someone in the Legislature, it could have a bigger impact than just a morning of tough questioning for Auger.

Language in a proposed budget conforming bill that was drawn up by the committee's staff would return FHFC to being a state agency, rather than a public corporation, and remove its ability to guarantee loans. The plan would also move much of the corporation's budget into the state budget, giving lawmakers the ability to determine how it is spent. The committee didn't vote on the proposal because it's not in a bill yet, but it will become part of a budget conforming bill that will have to be voted on at a minimum on the floor of the Senate.

The plan doesn't directly attack funding for affordable housing projects – which comes mainly from documentary stamp tax revenues distributed to the State Housing Trust Fund. But the corporation's operational budget would presumably be targeted for cuts if it were put back in the state budget.

Auger told the panel that the agency was recently able to quickly put a large amount of stimulus money into projects because it is independent – had the money had to pass through the state budget, the agency would have had to wait for legislative approval. The agency has said in documents in the past that it also is able to get money flowing to private developers of affordable housing much faster than it did when it was part of the Department of Community Affairs, five days versus six weeks.

Agency officials also have noted that it is a financial corporation, managing large amounts of money. The agency has about $6 billion in assets, between rental units it owns and outstanding loans receivable. As such, it has lots of accountants and other professionals who provide controls that some other organizations don't need, which helps account for its ratio of operating cost to employees.

It's not clear where the complaints about overbuilding in central Florida are coming from – none of those who have complained about the issue have said publicly what its genesis was. In some cases in the past, local developers have voiced concerns about competing with affordable housing projects, but that issue wasn't raised Thursday.

Senate Budget Chairman JD Alexander said it was simply a concern about the financial controls at the agency, considering the amount of money in a loan guarantee fund it oversees.

"Some of their funding decisions may be in some level of jeopardy, that kind of speaks to some weakness in their decision-making and controls and leadership," Alexander said. But how far he'll push on the issue isn't clear.

"I'm going to be done here in about 28 days hopefully," said Alexander, R-Lake Wales. "I'm happy to raise the issue because I think it has to be raised to assure us that we're stewarding that well. I'm making a point. I'm not going to die for it."

As has been the case with a few other issues in the Senate this year and last, there were a few complaints about how issues seem to be more often popping up late in the process as "done deals" without full vetting by everyone who is interested in the issue.

Last year, that was the complaint of several senators about issues that arrived on the floor of the Senate during the final hours of the session in the form of budget conforming bills. This year, there have been a few complaints about how some measures have moved forward and how budgets have been crafted.

Sen. Jack Latvala, R-St. Petersburg, raised the process issue again on Thursday. He said he was seeing the proposal to "de-privatize" the FHFC for the first time.

"Changes to the housing finance agency should be in a substantive committee," Latvala said, so that senators could engage in the "normal back and forth with the folks who oppose this."

The chairwoman of the budget subcommittee, Sen. Lizbeth Benacquisto, R-Fort Myers, gave Auger time to talk to the committee, and Latvala later said he appreciated the chance for committee members to hear about the issue, saying he actually came to also be concerned about the alleged overbuilding in central Florida.

===

Information provided by the News Service of Florida