September 28, 2006

 
 

Preservation Outlook

 

In order to effectively save affordable housing, it is important to know which housing is at risk. A study recently released by HUD provides some guidance on this question by examining the characteristics of properties that have left the assisted housing stock. Multifamily Properties: Opting In, Opting Out and Remaining Affordable (click here to access the study) includes both quantitative and case study analyses to determine what factors contribute to an owner's decision to leave federal housing assistance programs.

What is the main determinant of an owner’s decision to opt out of the Section 8 program? Not surprisingly, the market matters most. An owner is more likely to leave the program if the property’s Section 8 rents are substantially less than market rate rents. Specifically, the study’s authors concluded that the lower a property’s rent level is in relation to Fair Market Rents, the higher the likelihood of opting out.

This finding reinforces the need to understand the local market conditions when assessing which affordable housing properties are at risk. Fortunately, HUD’s Section 8 database includes a rent-to-FMR ratio for each contract. At the National Housing Trust, we have included this measure in our HUD assisted housing data reports under the label “rent category” (click here to access our subsidized data website).

This research underscores that HUD must be a partner to property owners who have the choice to ‘go market.’ By interviewing owners who chose to opt out, the study’s authors found that difficult relations with HUD contributed to their decisions. Conversely, owners who chose to remain in the Section 8 program had good working relationships with HUD staff and were successful at securing rent increases.

The message is clear: if HUD acts as a partner, willing to provide owners market rents, owners will continue to provide affordable housing. If not, owners choose the unregulated private market and communities lose an essential source of affordable housing.

 

 
   Michael Bodaken
   NHT President

 

 

News from DC

 

House Passes Mark-to-Market Extension.  Last night, the House of Representatives adopted legislation that will preserve and improve thousands of HUD assisted and insured affordable apartments. The House passed H.R. 6115, “The Mark-to-Market Extension Act of 2006”, which extends and strengthens HUD’s Mark-to-Market (M2M) program.  The bill was introduced by Rep. Deborah Pryce (R-OH) and co-sponsored by Reps. Waters (D-MA), Gerlach (R-PA), Frank (D-MA), and Tiberi (R-OH). The Trust congratulates and thanks the sponsors of the bill.  Click here for more information on the bill.

Fiscal Year to End without a Completed HUD Appropriations Bill.  Congress filed a continuing resolution on Monday, September 25 that will fund HUD programs through November 17. The continuing resolution is necessary because Congress has failed to enact several appropriations bills before the end of the fiscal year.

LISC, SAHF Deliver Letter to HUD Stating Concerns about Guidelines to HUD Field Staff on the Assumption of Mark-to-Market (M2M) Debt.  The guidelines propose a new set of requirements that would govern sales of properties that have been through M2M restructuring. The main concern is that the guidelines will divert state and local resources away from acquisition and rehabilitation costs, instead directing them to HUD. The letter (click here) outlines proposed changes to improve the guidelines.

House and Senate Bills Would Authorize Funding for Project-Based Vouchers in Gulf Coast. Sen. Feingold (D-WI) and Rep. Al Green (D-TX) have introduced bills that would authorize funds for 13,500 new project-based vouchers. These vouchers would be used for rebuilding or repairing hurricane-damaged housing. The Senate bill is S. 3889 and the House bill is H. 6149.

 

Janet Byrd of The Neighborhood Partnership Fund Discusses Preserving Oregon's Affordable Housing and the Importance of Stakeholder Dialogue

As in many states around the country, housing in Oregon is increasingly out of reach for low and moderate income families. What factors are driving the affordable housing problems in Oregon?  How does safeguarding Oregon’s existing affordable housing fit into the strategy of addressing these problems?

Oregon’s population is growing. It is a prime spot for retirement and vacation homes. These trends are feeding a building boom in many parts of the state that is driving up home prices. The loss of assisted affordable homes will only make matters worse.

 The good news: our state housing agency and local governments understand the need for preservation. We’ve all joined together in persuading Senator Gordon Smith (R-OR) to help solve the problem. He has co-sponsored legislation that would spur preservation of these irreplaceable homes by relieving owners of exit tax burdens if they sell to non-profits committed to keeping the units affordable.

Earlier this month, The Neighborhood Partnership Fund convened a number of stakeholders involved with preserving Oregon’s affordable housing, including representatives from the City of Portland, HUD, RHS, Oregon Housing and Community Services, nonprofits, Enterprise Community Partners etc. Why did you decide to convene these stakeholders? 

We are facing a big wave of possible prepayments and transfers over the next 4-5 years. Our challenge is to identify and maximize resources that can be dedicated to preserving these homes. Getting our partners lined up is essential to meeting this challenge.  We recently convened these stakeholders and brought in the National Housing Trust to help stimulate new thought and see new solutions.

What were the outcomes of these meetings?

We accomplished much, including:

  • agreeing on the need for better communication and coordination;

  • clarifying partners’ roles, including determining that Oregon Housing and Community Services, our state housing finance agency, would take the lead in preserving Oregon’s affordable housing;

  • raising the profile of preservation in the advocacy community and moving it towards the top of the policy agenda; and

  • generating support for Senator Smith’s exit tax legislation.

How do you plan on keeping these stakeholders talking to each other about preservation?

We hope to meet regularly- every two months or so- and to establish a centralized notification system that will alert mission oriented organizations when a property is at risk. We’re in agreement that this is essential, but are still finalizing the specifics.

Can you tell us more about what the Neighborhood Partnership Fund does?

NPF is a local intermediary organization that partners with Enterprise Community Partners, Oregon Housing and Community Services, the City of Portland, and a wide range of private funders to support non-profit housing developers statewide. We also serve as a conveyor and catalyst on statewide policy issues.  We convene the Housing Alliance, a coalition of advocates, local governments, housing authorities, community development corporations, environmentalists, service providers, business interests and all others dedicated to increasing the resources available to meet Oregon’s housing need which has a goal of $100 million of state resources for housing in 2007-2009.

 
NHT Calls on HUD to Create an "Early Warning System" to Help Save Affordable Housing

Information is essential to preserving affordable housing. Affordable housing developers must know which housing is at risk in order to act.  Unfortunately, there is no nationwide effort to inform preservation minded organizations when an owner of a federally assisted property gives notice to opt out of the Section 8 program or prepay a subsidized mortgage. The result:  lost preservation opportunities.

The National Housing Trust believes the federal government should provide information on opt out and prepayment requests to mission minded developers  so this housing stands a chance of being preserved. We call on HUD to establish a national database that would track these requests. The database would serve as an “Early Warning System”, informing preservation minded organizations when affordable housing is at risk of being converted to market rate.

Click here for an issue brief with more information.

 
What's New: NHT's Lending Capacity Increases with Two New Awards

Nine years ago, the National Housing Trust began providing loans through the National Housing Trust Community Development Fund in response to a major obstacle facing affordable housing preservation: the lack of predevelopment and bridge financing available to nonprofits. Since then, we have made more than $6 million in loans leveraging more than $371 million in financing to help save 4,400 affordable homes, including Interfaith Apartments in Boston, MA pictured here.

We are pleased to have recently received two new funding awards that will allow us to increase our lending capacity: a $250,000 investment provided by Trinity Health; and a $500,000 award provided by the U.S. Treasury’s CDFI Fund. This new capital will allow us to increase our efforts to help nonprofits purchase and renovate affordable homes.

For application and loan term information, click here or contact Keiva Dennis (202-333-8931 ext. 26).

We are grateful to our funders for their continued support.

 
Preservation in the News

A selection of news stories about affordable housing preservation that have recently appeared in the press...

A National Housing Innovator Leads City’s Effort for the Poor . The New York Times highlights the efforts of Shaun Donovan, the commissioner of the New York City Department of Housing Preservation and Development... click here for the article.

Affordable Housing Crunch Persists in Arlington, VA. Arlington County in Virginia has lost 52 percent of its affordable housing since 2000... click here for the article.

Affordable Housing in N.J. Nears its 'Sunset'. The Corzine administration is researching how best to preserve the state's federally assisted housing units... click here for the article.