Goal: Increase the Availability of Affordable Homes
Role: Preserve and Recycle Resources
Policy: Preserve Affordable Rental Homes


What is rental housing preservation?

Rental housing preservation policies seek to ensure the continued, long-term availability of quality affordable rental homes - an essential part of the housing stock for working families, older adults, people with a disability, and others. Preservation of existing rental housing has grown in importance as many former homeowners are now renters due to the foreclosure crisis. Many will remain in rental homes for quite some time as they repair their credit ratings.

Despite the growing need for quality affordable rental homes, across the country, hundreds of thousands of subsidized rentals, affordable to low- and moderate-income households, are at risk of being lost. Millions of unsubsidized rental homes that are affordable to moderate-income families are also at risk of becoming less affordable as rents rise and older properties are either upgraded to serve higher-income families or allowed to deteriorate. According to Harvard University's Joint Center for Housing Studies, in the past decade more than 1.2 million of these units were lost -- to escalating rents or condominium conversions in strong markets, to abandonment and demolition in weaker markets. [1]

There is no single policy that can ensure that affordable rental homes are preserved. Rather, multiple, coordinated and flexible policies are needed to identify properties at risk, provide the resources needed to facilitate the rehabilitation and/or purchase of target properties, and create the incentives needed to encourage owners to preserve and improve their properties.

Why is rental housing preservation important? Because the health, stability, and economic vitality of our communities depend on a mix of housing options. Nearly all of us are renters at some point in our lives -- whether as a young person, a family moving to a new job opportunity, or a retiree living on a fixed income. Rental homes play an important role in our economy, and are as critical to our nation's infrastructure as highways, transit systems, schools and industry. The preservation of affordable rental properties allows working families, older adults, and others to live in stable environments and within their financial means. By helping to ensure the continued availability of affordable rental homes, preservation policies help families spend a reasonable amount on rent and utilities, leaving them better positioned to afford basic health and food costs and to save funds: for weathering the unexpected -- loss of employment, medical issues, vehicle repairs, etc.; for expanding their economic opportunities -- savings for education, training, etc.; or for a major purchase -- such as the downpayment on a home. (Learn more about the importance of preserving and rehabilitating subsidized rental housing for older adults, in particular.) Preserving existing rental properties helps to conserve billions of public dollars already invested in the affordable rental housing supply. For over 40 years, federal tax policy and housing programs have encouraged private owners and investors to develop millions of rental homes. These homes play a critical role in housing working families. Due to the high costs of construction, the strong competition for land that drives up land prices, limited availability of new federal rental subsidies, and more stringent requirements on private capital, affordable rental homes that are lost are unlikely to be replaced through new construction. In most cases, it is also less expensive to preserve existing affordable rental homes than to build new ones. The loss of stable affordable rental homes can mean upheaval in a neighborhood, displacement of long-time residents, and a loss of the community's traditional character - particularly in communities where rents are rising. Well-maintained rental homes that are affordable to working families and others can contribute to

Solutions in Action

Photo credit: Jackson Smith, courtesy of NHT/Enterprise Hazel Hill Apartments in Fredericksburg, VA, a project-based Section 8 property built in 1971, had twice failed HUD inspections by 2004. As housing prices in the area soared, the owner faced foreclosure and the residents displacement. The National Housing Trust/Enterprise Preservation Corporation acquired Hazel Hill in 2004 and conducted the renovations needed to save the property. NHT/Enterprise further improved the community's quality of life by developing a resident services and community safety program. Visit the Gallery for more information on Hazel Hill.

neighborhood stability, combat the negative effects of gentrification, and create or
preserve diverse, mixed-income communities. The availability of affordable rental homes may also make it possible for homeowners that have undergone foreclosure to remain in their old neighborhoods as renters, helping to minimize disruptions at school and work.

When existing rental homes are well-located near jobs and/or public transit, their preservation can also improve the quality of life of residents and the surrounding community. Families living in such locations tend to depend less on personal vehicles than families in more remote locations, helping to reduce their transportation costs, energy usage, and commute time. The reduction in car usage also may help to ease congestion and traffic for others in the community.

Indeed, preservation is inherently "green" and environmentally responsible. The preservation of existing affordable housing produces less waste and uses less new materials and energy than new construction. Click here to learn more about the environmental benefits of rental housing preservation. From the Forum... "Preserving affordable rental housing near transit is becoming increasingly urgent. Changing demographic trends, traffic congestion, and high commuting costs are resulting in increasing demand to live near transit. As the market for housing near transit heats up, the threat exists for many affordable apartments to be converted to market rate housing. Are there specific strategies states and localities are adopting to preserve affordable housing near transit?" See what other people said and sign in to add your response The HousingPolicy.org Forum is a place to pose questions, exchange ideas, and learn from the experience and expertise of others. This section of the site features interactive forums organized around policy areas, including rental housing preservation.

When Crosspoint Human services redeveloped New Holland Apartments in Danville, IL, the company chose to pursue LEED certification. Read the case study

Where are rental housing preservation policies most applicable?

Rental housing preservation initiatives can be applied in both growing and softening markets. While most rental housing preservation efforts focus on ensuring the ongoing affordability of properties with expiring federal or state subsidies, some communities are deploying resources to preserve unsubsidized affordable rental properties. Each year, a portion of this unsubsidized but affordable inventory is lost due to inadequate maintenance. Other unsubsidized units are lost when owners make substantial upgrades that in turn price the homes out of reach for working families.

Not every property can or should be preserved. Some properties are simply too physically deteriorated or financially unstable to be preserved. But much of the existing rental housing stock can be preserved as a quality, affordable housing resource. Simply put, affordable rental homes play a critical role in the nation's housing stock. It is much more efficient to preserve this resource than to recreate it.

Window of Opportunity As part of its $150 million Window of Opportunity initiative, the John D. and Catherine T. MacArthur Foundation is investing in state and local programs that will preserve more than 70,000 affordable rental homes in 12 cities and states across the U.S. The programs supported by the initiative represent some of the most innovative efforts in the country, and they are profiled throughout this section of HousingPolicy.org. Click here to learn more about the Window of Opportunity initiative or skip to details about each of the state and local awardees, announced in February 2009. In March 2009, the National Housing Conference and the MacArthur Foundation partnered to host Partners in Innovation: A Dialogue on Federal, State and Local Rental Preservation Solutions. The symposium brought together the 12 state and local awardees as well as other leaders from across the nation, including US Department of Housing and Urban Development Secretary Shaun Donovan and US Department of Agriculture Secretary Tom Vilsack. Click here to download the agenda for the March symposium, view photos from the event, or access audio files of remarks by Secretaries Donovan and Vilsack.

Learn more about rental housing preservation Go back to learn about other policies that preserve and recycle resources for affordable homes

[1] Revisiting Rental Housing: Observations from a National Summit. [PDF] April 2007. Cambridge, MA: Joint Center for Housing Studies at Harvard University.

Note: The rental housing preservation section of HousingPolicy.org draws heavily on the experience and work product produced through the Window of Opportunity Initiative, sponsored by the John D. and Catherine T. MacArthur Foundation. The Center for Housing Policy particularly acknowledges our reliance on written materials prepared for this initiative by a Window of Opportunity policy working group that was facilitated by CFED. In addition, we gratefully acknowledge the input and feedback provided for this policy section by Michael Bodaken and Tracy Kaufman of the National Housing Trust, and Michael Torrens (CFED). Please note, however, that the views and opinions expressed on HousingPolicy.org are those of the Center for Housing Policy alone.

Goal: Increase the Availability of Affordable Homes
Role: Preserve and Recycle Resources
Policy: Preserve Affordable Rental Homes


How can rental housing preservation be used to increase the availability of homes?

The loss of affordable rental homes is a growing challenge in many communities across the country. Appreciating land values, expiring federal subsidies, and deterioration due to age and lack of maintenance are just some of the factors putting existing rental housing at risk. In many cases, the preservation and improvement of existing affordable rental housing is faster, easier, and cheaper than building new rental units from the ground up.

Depending on location and other circumstances, either or both of the following types of preservation may be involved for any given property. Information collection and analysis tools can help communities determine what properties are most at risk of loss and for what reason.

Listen to a podcast from August 2008 with Mike Pitchford, President and CEO of the Community Development and Preservation Corporation (CPDC).  CPDC specializes in the rehabilitation and preservation of affordable rental homes in the greater Washington, DC metropolitan region, and Pitchford talks about the importance -- and environmental benefits -- of preservation. Special guest Angie Skildum, Research and Policy Director at the Family Housing Fund in Minneapolis, MN, joins us to talk about the Interagency Stabilization Group, a collaborative initiative that brings together public and private sector funding partners to facilitate the preservation of affordable rental homes in the Twin Cities.

Use Preservation is the maintenance, sale, or transfer of a property that keeps rents affordable for the long-term, by maintaining or adding subsidies, refinancing existing debts, and introducing or modifying income eligibility and affordability restrictions. Physical Preservation is the maintenance and improvement of the physical condition and financial viability of a rental property so that it can provide a long-term source of decent, safe, and attractive housing that benefits families, neighborhoods, and communities. State and local governments have responded to the challenge of rental housing preservation by adopting a range of successful tools. (Click here for an overview of key preservation tools available at the federal level.) For example, most states prioritize the preservation of existing affordable homes in their Qualified Allocation Plans for Low-Income Housing Tax Credits, either by setting aside a portion of 9 percent credits for preservation or by awarding additional points for preservation-related projects. Some cities have also established incentives, such as abatements of property taxes, to encourage owners of rental properties to reinvest in their properties and maintain ongoing affordability. A number of cities have worked with lending institutions to help smaller property owners access affordable capital to modernize their properties and provide funds for larger rehabilitation projects that help maintain the supply of affordable rental homes.

Focusing on smaller owners? Much of the affordable rental stock -- both subsidized and unsubsidized -- is owned by individuals or small businesses that own relatively few rental properties. Local governments can partner with local financial institutions and others to provide owners of smaller rental properties with the skills and resources needed to manage their units profitably. The Community Preservation Corporation in New York City and the Community Investment Corporation in Chicago provide promising models for addressing this aspect of the preservation challenge. Click here to learn more about financing for small property owners.

Click on the links below to learn more about the policies needed to preserve affordable rental homes: Enhance funding for preservation efforts Stabilize and dedicate increased public funding to long-term preservation ownership, expand public-private financing sources for preservation transactions, and adopt innovative tax incentives to strengthen incentives for preservation. Create a policy environment that supports long-term preservation Streamline, coordinate, and align policies and administrative practices to increase the likelihood that affordable rental homes will be preserved and improved, develop more support for long-term preservation owners and make preservation transactions easier, faster and less costly. Improve information collection and policy coordination efforts Collect, standardize, and widely share information about the characteristics of existing affordable rental properties, their residents, and key factors that create a risk of loss, as well as innovative and successful preservation strategies. Protect displaced residents Help residents affected by displacement from affordable rental homes to understand their options, find other housing, and minimize disruption of schooling and social networks. Click here to review case studies of successful preservation projects, or click here to view other resources on preserving affordable rental homes.

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Goal: Increase the Availability of Affordable Homes
Role: Preserve and Recycle Resources
Policy: Preserve Affordable Rental Homes

Key Federal Programs

Since 1965, project-based federal rental assistance, administered through project-based Section 8 and a series of mortgage subsidy programs, has helped to make over one million privately-owned units affordable to low- and moderate-income families. Beginning in the late 1980s and mid-90s, the long-term affordability covenants included in the initial contracts between the federal government and the private owners began to expire, giving owners the opportunity to opt-out of the federal subsidy programs or to prepay their federally insured mortgages.

In many cases, the financial incentives to take these actions were strong, as owners could then raise rents to market rates or convert their buildings to other uses. In response to the potential loss of hundreds of thousands of affordable rental units, the U.S. Department of Housing and Urban Development (HUD) enacted several programs, including Mark-to-Market, Mark-up-to-Market, and Section 236 Decoupling, described below. These programs, while voluntary, are intended to offer adequate incentives and flexibility to encourage the continued participation of private owners in providing affordable rental homes.

The table below, reproduced with permission from the National Housing Trust, describes several federal programs that play an important role in preserving the existing stock of affordable homes. The National Housing Trust is a national nonprofit dedicated to safeguarding affordable housing through public policy initiatives, lending, and real estate development.

Other resources Click here to learn about other federal funding sources that fund affordable housing and community development initiatives more generally, many of which can be used flexibly to help preserve affordable rental homes. Click here to view a PowerPoint presentation on the federal policy context for affordable housing preservation, given by Michelle Winters of LISC at the 2009 Solutions for Working Families Learning Conference. Click here to view presentations on federal resources for preservation efforts from the breakout session, Regional Perspectives on the Federal Approach to Preserving Affordable Housing Near Transit, at the Partners in Innovation: Including Affordable and Workforce Housing within Transit-Oriented Development in Denver on September 28, 2010.

Preservation Tool	Applicable Properties	Description of Tool
Mark-to-Market Debt Restructuring	Project-based Section 8 properties with an FHA-insured or HUD-held mortgage and where Section 8 contract rents are above market rate.	The HUD-insured mortgage is bifurcated into two mortgages. The first is sized to an amount that is supportable at market-rate rents. The remaining unpaid principal balance is structured as a HUD-held note that is serviced with 75 percent of surplus cash. The restructuring allows owners to finance rehabilitation needs and cover operating expenses. Repair escrows are provided for immediate capital needs and increased deposits to reserve accounts are made to address long-term physical needs. In addition to cash flow, owners receive fees based on operating performance and a return on investments required by the program.
Mark-Up-to-Market	Project-based Section 8 properties owned by a for-profit or limited dividend entity with Section 8 contract rents that are below market rents, but in excess of 100 percent of HUD's published fair market rent.	Provides incentives for owners with below- market rents to remain in the Section 8 program. Owners are permitted to increase rents up to the lesser of market rate levels or 150 percent of HUD's published fair market rent. The increased cash flow resulting from the higher rents may be used to recapitalize the property and increase distributions to owners of limited-dividend projects.
Mark-Up-to-Market for a Non-Profit Transfer	Project-based Section 8 properties being transferred to a non-profit organization where Section 8 contract rents are below market rents.	Provides resources for non-profit, mission driven organizations to acquire and preserve Section 8 properties. Non-profit buyers are permitted to increase rents up to the lesser of "post-rehab" market rents or 150 percent of HUD's published fair market rent.
Mark-Up-to-Budget	Project-based Section 8 properties owned by non-profits where rents are below market.	Provides resources for non-profit owners to recapitalize a Section 8 property. Non-profit owners are permitted to increase below-market rents up to 150 percent of fair market rent (or higher if HUD permits) if project needs are justified. Higher rents allow non-profit owners to support additional debt for rehabilitation or to increase contributions to the replacement reserve for future repairs.
FHA Risk Sharing Loans	All types of properties eligible provided the loan results in affordable housing.	Mortgage insurance for mortgages of multifamily housing projects with loans that are underwritten by a Housing Finance Agency (HFA). HUD and HFAs share in the risk of the mortgage. HFAs may elect to share from 10 to 90 percent of the loss on a loan with HUD. The HFA reimburses HUD in the event of a claim pursuant to terms of the risk sharing agreement.
Section 236 IRP De-Coupling	Properties with mortgages subsidized through the Section 236 program.	Original 236 financing provides ongoing Interest Reduction Payments ("IRP") in amounts that reduce the effective interest rate on the mortgage to 1 percent. In a De-Coupling transaction, the 236 mortgage is pre-paid and the previously budgeted IRP's are retained. The anticipated flow of funds from the IRP can be leveraged to support debt in addition to what can be supported by the net operating income, providing additional funds for rehabilitation needs.
HOME and CDBG Grants	States and localities administer these programs and determine eligible properties.	These are federal block grant programs that provide state and localities a source of funding to meet their community development and affordable housing needs. Rehabilitation of subsidized rental housing in an eligible activity but competes with other types of uses.
Project-Based Vouchers	Rental units assisted under certain federal housing programs (e.g., rental rehabilitation, public housing) cannot be assisted with project-based voucher assistance.	Project-based vouchers are a component of a public housing agencies (PHAs) housing choice voucher program. A PHA can attach up to 20 percent of its voucher assistance to specific housing units if the owner agrees to rehabilitate the units. Rehabilitated units must require at least $1,000 of rehabilitation per unit to be subsidized, and all units must meet HUD housing quality standards.

Goal: Increase the Availability of Affordable Homes
Role: Preserve and Recycle Resources
Policy: Preserve Affordable Rental Homes

Enhance Funding for Preservation Efforts

When market rents or land prices increase, owners of affordable rental homes sometimes seek to upgrade their properties and rent or sell them to higher-income families. This is one way that affordable homes leave the affordable stock. On the other end of the spectrum, many affordable properties do not provide high enough rents to support maintenance and improvement of the property, and owners allow them to deteriorate. At some point, these properties cease to provide quality affordable housing opportunities. Rental housing preservation policies seek to preserve as many of these developments as possible as quality, affordable housing resources. Some owners can be induced to preserve their properties through tax incentives or through special financing that enables them to improve their property while keeping rents affordable. In other cases, the only way to preserve the property is through purchase by a non-profit or mission-driven for-profit corporation. Public funds or incentives are inevitably required to make these transactions possible. The funds are needed for the purchase of the properties and for physical improvements that ensure they will provide quality housing opportunities over the long-run. Because affordable housing developers often compete with private-market purchasers for the same property, and may not have much time to act, there is frequently a "need for speed" among preservation buyers. Flexible predevelopment, acquisition and interim financing can be critical tools for helping to address this problem and level the playing field for buyers seeking to preserve affordable homes. Many of the tools discussed elsewhere within HousingPolicy.org can be used to generate funding for preservation. For example, through its Citywide Affordable Housing Program, San Francisco uses tax increment financing for preservation. Fairfax County, Virginia has used a housing trust fund model, and Seattle supports preservation activities with funds appropriated from its general revenues, as do Minnesota and Montgomery County, MD.

Solutions in Action

Fannie Mae's Community Express® loan is a direct loan product that helps local public entities meet their housing needs by providing a flexible source of short-term financing. The loan is available via a streamlined application process, and may be repaid with funds from a variety of sources, including bond proceeds, Low Income Housing Tax Credit equity, and HOPE VI or CDBG grant funds. In the City of Los Angeles, the Housing Authority received a $30 million revolving line of credit through Community Express®. The funds have been used to purchase affordable multifamily properties that are at risk of loss due to expiring use requirements. As noted below, the ability to quickly obtain a flexible source of funding can play a crucial role in whether affordable rental homes are preserved. The loan will be repaid as the properties are refinanced through conventional sources. Click here [PPT] to view a PowerPoint presentation on the Community Express® program.

Some state housing finance agencies, such as Wisconsin, use their reserves or ongoing program revenue.

Photo courtesy of Hispanic Housing Corporation

Click on the links below to learn more about some of the strategies that states and localities have adopted to enhance funding for preservation efforts: Set-asides of tax-exempt bonds and 9 percent Low-Income Housing Tax Credits Set-asides within housing trust funds Flexible preservation funds Predevelopment, acquisition and interim financing Financing for small property owners Tax incentives for preservation

Or, click here to learn about key federal programs that support the preservation of affordable rental homes.

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You are currently reading: Enhance funding for preservation efforts Stabilize and dedicate increased public funding to long-term preservation ownership, expand public-private financing sources for preservation transactions, and adopt innovative tax incentives to strengthen incentives for preservation. Other pages in this section: Create a policy environment that supports long-term preservation Streamline, coordinate, and align policies and administrative practices to increase the likelihood that affordable rental homes will be preserved and improved, develop more support for long-term preservation owners and make preservation transactions easier, faster and less costly. Improve information collection and policy coordination efforts Collect, standardize, and widely share information about the characteristics of existing affordable rental properties, their residents, and key factors that create a risk of loss, as well as innovative and successful preservation strategies. Protect displaced residents Help residents affected by displacement from affordable rental homes to understand their options, find other housing, and minimize disruption of schooling and social networks. Click here to review case studies of successful preservation projects, or click here to view other resources on preserving affordable rental homes.

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Set-asides of tax-exempt bonds and 9 percent Low-Income Housing Tax Credits

Some 47 states prioritize the preservation of existing affordable homes in the Qualified Allocation Plans that determine how they will allocate Low-Income Housing Tax Credits. This is generally accomplished by reserving a portion of 9 percent tax credits for preservation or by awarding additional points for preservation-related projects under a larger competition. A smaller number of states have made a major push to use 4 percent Low-Income Housing Tax Credits for preservation by reserving multifamily bond cap (under the state's allocation of private activity bond cap) for preservation.

LIHTC Provisions in the American Recovery and Reinvestment Act of 2009 The American Recovery and Reinvestment Act of 2009 provides 2 mechanisms to help states and localities compensate for the recent plunge in the value of Low Income Housing Tax Credits. Through the Tax Credit Assistance Program (TCAP), ARRA sets aside $2.25 billion in grant funding that will be made available to State housing finance agencies based on FY 2008 HOME fund allocations. TCAP funds will be distributed on a competitive basis, in keeping with the priorities identified in states' Qualified Allocation Plans, and must be fully expended by February 2012. Through the 9 percent LIHTC "exchange" program, the US Department of the Treasury gives states the option to receive grants in lieu of tax credits. Specifically, states may opt to receive up to 85 percent of: (1) 10 times the state's unallocated 2008 LIHTC ceiling plus the amount of any unused credits returned to the agency in 2009; plus (2) 10 times forty percent of the state's unused 2009 LIHTC allocation. Click here to learn much more about both initiatives, or view a working draft [PDF] of State Responses to the TCAP and Exchange programs, compiled by the National Housing Trust.

While 4 percent credits sometimes need to be matched by local resources to complete the funding package for a particular property, they are important because they are a renewable resource. By expanding the use of multifamily bonds for the preservation of affordable homes that will serve families with incomes less than 60 percent of AMI, communities can leverage additional 4 percent low-income housing tax credits that can help cover the costs of preservation. Click here to leave this section and learn more about 4 percent Low-Income Housing Tax Credits. For more information on tax credits and preservation, view a policy brief prepared by Tracy Kaufman, Director of NHT's National Preservation Initiative, on Funding to Preserve Affordable Rental Housing: State and Local Solutions [PDF]. The brief, prepared for a 2007 MacArthur Foundation National Policy Forum on rental housing preservation, provides an overview of recent changes in state and local funding for preservation, including Low-Income Housing Tax Credit set-asides.

In 2010, the National Housing Conference hosted the Partners in Innovation preservation forums, a series of three regional forums focused on strengthening and supporting affordable rental housing preservation efforts through innovative partnerships, policy development, and legislative reform. The regional forums took place in Boston, MA; Portland, OR; and Denver, CO in 2010. View the following presentations on tax-exempt bonds from Partners in Innovation: Financing the Preservation of Rural and Urban Affordable Rental Housing in Portland on May 17, 2010. Raquel Gugliemetti, Northwest Real Estate Capital Corporation, presented during the breakout session, Rural Roundtable: Overcoming Challenges, Leveraging RD Resources, and Implementing Solutions Bill Brauner, Community Economic Development Assistance Corporation,  presented during the breakout session, Sustainability and Affordable Housing Preservation.

Solutions in Action

Michigan's "Plethora of Preservation Programs" received an award from the National Council of State Housing Agencies in 2002. Allocations in 2006 included: $75 million in tax-exempt bond capacity (plus 4 percent tax credits) to preserve developments subsidized under the Section 236 program $150 million in bond capacity to keep properties subsidized under the Section 8 program affordable for at least 35 years $100 million in bond capacity for the preservation of any Section 202, Rural Development Section 515, expiring 4 percent LIHTC or other rental development financed by the Michigan State Housing Development Agency Click here [PDF] to leave this site and learn more about Michigan's preservation programs. Through its Rehabilitation and Preservation (RAP) Program, the New York State Housing Finance Agency offers flexible, low-cost financing to the owners of rental properties that are made affordable through the state's Mitchell Lama program. With many of the older Mitchell Lama projects in need of major repair, RAP financing helps to free up resources for critical capital improvements and building renovations. In exchange, owners agree to keep their properties affordable for an additional 40-year period. Financing available through the RAP Program draws from many sources, including tax-exempt private activity bonds and federal Low Income Housing Tax Credits (LIHTCs). Click here to leave this site and learn more about RAP, or skip to a longer description of Mitchell Lama.

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Set-asides within housing trust funds

Housing trust funds are separate funds established by states or localities to provide a stable source of revenue reserved solely for affordable homes. Because they are created at the state or local level, they are extremely flexible and can be tailored to meet local needs. A growing number of states and localities are dedicating a portion of their housing trust fund revenues for rental housing preservation. Currently, some 38 state housing trust funds support preservation. New Jersey sets aside a portion of its trust fund for preservation. Other states that prioritize preservation in their state trust funds include Florida, Indiana, Vermont, Washington, and Washington DC.

Solutions in Action

In 2005, Fairfax County, Virginia, adopted "one penny for housing" from a local real estate tax levy for its affordable housing preservation fund. In 2006 and 2007, the fund received $18 - $22 million annually, which was used to leverage private financing, CDBG, and other resources such as developer contributions to preserve rental properties. In projects using the "Penny Fund," a minimum of 50 percent of the units had to be affordable to households earning 50 percent of the Area Median Income or below. In 2009, the County's Board of Supervisors voted to reallocate revenue from the Penny Fund to help fill a budget gap and restore emergency and human services programs. Fairfax County also has a preservation tax abatement incentive for owners of older (20-plus years) multifamily rental properties. Under this incentive, the tax increase on significant improvements will be abated for 10 years as long as the rental apartments remain affordable.

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Flexible preservation funds

There are a number of financing needs associated with the preservation of affordable rental homes. Some communities have found it helpful to create a flexible fund to cover the great variety of needs that arise with respect to different preservation transactions. In some cases, funding will be needed to cover the "gap" between what it costs to redevelop a property and what can be raised through tax credits and private financing. In other cases, there is a need to fund a backlog of accumulated capital needs, to provide predevelopment funds to facilitate investigation of a preservation opportunity, or to provide funding to help a non-profit or mission-driven for-profit act quickly to purchase an available property in need of preservation. Other needs include providing permanent financing for preserved properties and providing loans to property owners to help them refinance without raising rents to such a level that they are no longer affordable. By developing a flexible fund to meet the myriad of rental housing preservation needs, and building capacity among administrative staff and affordable housing developers, communities can greatly expand their preservation efforts.

Solutions in Action

The Wisconsin Housing and Economic Development Authority (WHEDA) Saving Our Stock program has set aside $30 million since 2004 to facilitate transfers of ownership to preserve affordable housing, fund operating deficits that arise from frozen rents and increasing expenses, address capital needs, and restructure and refinance current mortgages. WHEDA has also developed a special preservation loan product that provides discounted loans to preserve affordable properties. The Saving Our Stock program had preserved more than 2,000 units. Click here to leave this site and learn more about Saving Our Stock.

A number of state and local housing finance agencies have established special loan products for affordable properties with expiring use restrictions to encourage owners to keep those properties affordable. Some of these products provide funding to allow owners to repair their properties. Others allow owners to refinance their properties at a reduced rate. In both cases, the financing is often conditioned on a promise of ongoing affordability.

Solutions in Action

The New York City Housing Development Corporation established the Mitchell Lama Preservation program in order to preserve the affordability of rental homes funded through the State's Mitchell-Lama Housing Program. Mitchell-Lama was created by the New York State legislature in 1955 for the purpose of building affordable housing for middle-income residents. In exchange for low-interest mortgage loans and real property tax exemptions, the Mitchell-Lama Law required limitation on profits, income limits on tenants and supervision by the state's Division of Housing and Community Renewal. Because developments were eligible to withdraw from the Mitchell-Lama program after 20 years upon prepayment of the reduced-cost mortgage, New York City is now faced with the loss of thousands of critically needed affordable rental homes for working families. The Mitchell-Lama Preservation program seeks to preserve these homes through two products: The Repair Loan Program preserves Mitchell-Lama developments by offering a loan to owners in order to make needed capital improvements. An estimated 15 properties containing at least 7,500 apartments will receive this financing. The Mortgage Restructuring Program offers owners within the Housing Development Corporation's insured Mitchell-Lama portfolio the chance to restructure the first and second mortgages held on the properties. The mortgages are refinanced at a lower cost to the owner and for a longer period of time. Savings can be taken in the form of further reduction of payments or as funds to repair the property. Click here to leave this site and learn more about New York's Mitchell-Lama Preservation Program.

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Predevelopment, acquisition, and interim financing In many cases, it will be desirable to facilitate the transfer of ownership of an affordable property from the current owner to another owner who is more interested in preserving the property as affordable over the long-term. To cover the costs associated with investigating potential leads and conducting the due diligence necessary for determining whether a particular transaction can work, organizations interested in purchasing a property will need predevelopment financing. Other financing needs include financing for the acquisition of a property and interim financing to operate the property until it is recapitalized and permanent financing put into place. While some of these financing needs can be met by the private sector, in other cases, public financing or some combination of public and private financing is needed. This is especially true for smaller nonprofits that do not have as ready access to capital as larger organizations. Even larger nonprofits and for-profits may have difficulty accessing financing to purchase larger properties quickly as may be needed to compete with other purchasers. For all of these reasons, states and localities may wish to consider establishing predevelopment, acquisition, and interim financing programs to facilitate preservation transactions. Communities can also work to build partnerships with Community Development Financing Institutions, many of which are active in this area. Learn more about the role of CDFIs. Click here to leave this section and learn more about state and local programs to finance

National Church Residences was able to preserve the affordable rental homes at Battery Park Apartments in Asheville, NC by using an acquisition loan to purchase the property before it could be converted to market-rate condos. Read the case study

pre-development and acquisition costs or click here to view a policy brief prepared by Michael
Sloss of Enterprise Community Partners on Using Acquisition Funds to Preserve At-Risk Affordable Rental Housing [PDF]. The brief, prepared for a 2007 MacArthur Foundation National Policy Forum on rental housing preservation, provides examples of Enterprise's work with localities to develop acquisition funds to facilitate preservation of affordable rental homes.

Oregon's Housing Acquisition Fund Over the next 5 years, federal subsidy contracts will expire on 80 percent of Oregon's privately-owned rental housing. Nearly one-quarter of these units are located in Portland, where more than 2,700 families are waiting for rental assistance. With support from the John D. and Catherine T. MacArthur Foundation's Window of Opportunity initiative, the City of Portland and State of Oregon will work together to expand the Oregon Housing Acquisition Fund, a revolving loan fund created to finance the purchase of at-risk properties until permanent financing is available. Learn more about the Window of Opportunity initiative or click here to learn more Oregon's program.

Solutions in Action

A major element of the City of New York's preservation strategy is the city's Acquisition Fund. The Fund provides $200 million in affordable financing for the acquisition and preservation of affordable homes. The fund was capitalized with $8 million in city funds, combined with $32 million in loan guarantees from private philanthropic organizations, to leverage more than $190 million in private financing. The fund, which provides bridge financing for the acquisition of properties, aims to create and preserve up to 30,000 rental, homeownership, and supportive housing units over the next ten years. Click here to leave this site and learn more about New York's acquisition fund.

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Financing for small property owners

To preserve the affordability of unsubsidized rental homes, several cities have worked with nonprofit lending institutions to help smaller property owners access affordable capital to modernize their properties and maintain the supply of affordable rental homes.

Among other notable examples of nonprofit lending institutions with a specific focus on rental home
preservation are the following:

New York, NY. The Community Preservation Corporation (CPC) is a nonprofit organization, sponsored by more than 80 prominent banks and insurance companies, which provides loans to support the construction and rehabilitation of multifamily homes -- both for rent and for sale. CPC functions as a one-stop shop for owners and developers seeking to build or rehabilitate properties, providing both technical assistance and attractively priced financing. In its 34 years, CPC has financed more than 130,000 new or rehabilitated units, providing or facilitating some $7 billion in investment. CPC works closely with New York City's HPD and Housing Development Corporation (a local housing finance agency) to advance their shared goals of stronger communities and more affordable homes. Click here to leave this site and learn more about CPC. Chicago, IL. Community Investment Corporation (CIC) is a nonprofit mortgage lender, sponsored by more than 45 banks as well as Fannie Mae, the United Methodist Pension Fund and Peoples Energy. These investors have pledged in excess of $550 million through 2010 for CIC's revolving loan pool, which CIC uses to fund reasonably priced loans to support the rehabilitation of older multifamily and other homes. Since 1984, CIC has made 1,405 loans totaling $820 million for the rehabilitation of 39,000 units of quality affordable homes for about 110,000 Chicago area residents.

Ownership of the Section 515-assisted Clover Patch Apartments in St. Charles, MN was transferred, and the property was preserved as affordable, thanks to action by a local nonprofit developer, Three Rivers Community Action. Read the case study

• Some cities and states have adopted similar programs themselves, without partnering with an outside lending institution. The City of Los Angeles, for example, has used data from its award-winning rental inspection program to create a rehabilitation assistance program for the "mom and pop" owner-occupants of duplexes and four-plexes who lack funds for repairs. Many of these low-income landlords are seniors living on retirement benefits. By providing three-percent deferred loans as well as grants for lead paint removal and exterior improvements, the Mom & Pop Program also helps to preserve homeownership by serving owners who are vulnerable to high-cost refinancings. A related program provides three-percent, fully amortized rehabilitation loans to properties of up to 28 units occupied by low-income tenants.

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Tax incentives for preservation

In addition to innovative funding and financing tools, states and localities have adopted a number of tax incentives to encourage owners to preserve the affordability of quality rental homes. These incentives are intended to make it financially feasible for owners to recapitalize their properties to bring them up to code and current living standards without raising rents to such an extent that they cease to be affordable. In addition to the programs cited below, about 15 states have state-level variants on the federal low-income housing tax credit program. Click here to leave this site and access more information on state low-income housing tax credit programs.

Solutions in Action

The Class S program in Cook County, Illinois encourages owners of project-based Section 8 multifamily housing in high-cost markets to keep their units affordable by reducing the tax assessment by up to 33 percent. The Class 9 program offers a similar reduction to owners of unsubsidized properties who complete new construction or major rehabilitation of multifamily buildings and reserve 35 percent of the units as affordable. In 2001, Cook County extended the Class 9 program from just low-income census tracts to all areas of the county, an important strategy for encouraging mixed-income development. To reduce incentives for converting rentals to condos, in 2008 the county lowered the property tax assessment for apartment buildings from 26 percent to 20 percent (rates were reduced to 16 percent in 2009). View a PowerPoint presentation [PDF] from the 2009 Solutions for Working Families Learning Conference to learn more about both programs. The Illinois Affordable Housing Tax Credit (IAHTC) program allows individuals or organizations to give donations, in the form of cash, securities, personal property or real estate to participating non-profit housing developers and receive a credit against their income taxes. A number of donations may be made but the aggregated amount must be at least $10,000. Donations can be used for purchasing, rehabilitating, constructing, providing financing, technical assistance or general operating support for any approved affordable housing project. Donation tax credits can make the difference between the seller's asking price and what a new owner can afford in strong markets. In weak markets, credits can help an affordable housing developer handle exit taxes. Click here to leave this site and learn more about the IAHTC.

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[1] State and Local Housing Preservation Initiatives. [PDF] 2007. Washington, DC: National Housing Trust.

[2] State and Local Housing Preservation Initiatives. [PDF] 2007. Washington, DC: National Housing Trust.

Goal: Increase the Availability of Affordable Homes
Role: Preserve and Recycle Resources
Policy: Preserve Affordable Rental Homes

Create a Policy Environment that Supports Long-Term Preservation


Despite the wealth of state and local policy innovations and success, the volume of affordable rental homes preserved still falls well short of what's needed to keep our existing affordable housing, much less add to it. On one hand, preservation efforts have been stymied by a lack of information and a tangle of overlapping federal, state, and local policies and practice. On the other hand, growing market pressures and the absence of coordinated funding strategies that are quick and robust enough to compete with market-rate capital have made it harder to put together viable preservation deals. At a basic level, there are three fundamental problems that create the need for a systematic, comprehensive approach to rental housing preservation:

1. Incentives are misaligned. Current resources, incentives, and requirements tied to affordable rental properties do not adequately encourage or require owners to preserve long-term affordability or to sell to another owner committed to that objective.

2. Policies undermine "strong ownership". Current regulatory policies limit the ability of preservation owners to recapitalize, earn sufficient cash flow, and build a sustainable capital base from which to successfully improve, manage, and operate quality properties affordable to low- and moderate-income renters.

3. Current policies lack coherence. Regulations and programs are fragmented, cumbersome, often unpredictable and inconsistently applied. As a result, buyers committed to preservation ownership find it difficult and sometimes impossible to acquire properties that are at risk of loss from expiring subsidies, market-rate conversion, or severe deterioration.

There are many policies that states and localities can put into place to increase the likelihood that rental housing preservation efforts will succeed over the long run. For example, by giving residents of subsidized (or any) rental properties a right of first refusal to purchase a property that an owner puts up for sale, communities can empower residents to negotiate with owners and potentially facilitate the transfer to an entity willing to maintain the property over the long-term. To the extent it prompts owners to better maintain their properties, code enforcement can also be a tool for rental housing preservation. Still another important area is the set of policies that states and localities put into place with respect to nonprofit owners of affordable rental homes; policies that allow these entities to generate a meaningful cash flow can help them weather tough times and build capacity to investigate the next preservation transaction.

Photo credit: Robert Schoen, courtesy of MHIC

Click on the links below to learn more about how cities and states can create a policy environment that supports long-term preservation: Notice and right-of-first-refusal laws that allow residents to plan how they will address a conversion or change in ownership Policies that support long-term ownership and maintenance of affordable rental housing Code enforcement that ensures affordable rental homes are not lost as a result of poor maintenance Or, click here to learn about key federal programs that support the preservation of affordable rental homes.

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You are currently reading: Create a policy environment that supports long-term preservation Streamline, coordinate, and align policies and administrative practices to increase the likelihood that affordable rental homes will be preserved and improved, develop more support for long-term preservation owners and make preservation transactions easier, faster and less costly. Other pages in this section: Enhance funding for preservation efforts Stabilize and dedicate increased public funding to long-term preservation ownership, expand public-private financing sources for preservation transactions, and adopt innovative tax incentives to strengthen incentives for preservation. Improve information collection and policy coordination efforts Collect, standardize, and widely share information about the characteristics of existing affordable rental properties, their residents, and key factors that create a risk of loss, as well as innovative and successful preservation strategies. Protect displaced residents Help residents affected by displacement from affordable rental homes to understand their options, find other housing, and minimize disruption of schooling and social networks. Click here to review case studies of successful preservation projects, or click here to view other resources on preserving affordable rental homes.

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Notice and right-of-first-refusal laws

A number of states and localities have established policies that require owners of rental properties to give residents advance notice of any intention to sell the property or convert it to condominiums. The notice period gives residents a chance to plan how they will address the change in ownership. When combined with a right of first refusal allowing residents (or another qualifying entity) to match a legitimate offer to purchase the property, the notice provisions can set in motion a process that leads to the successful transfer of ownership either to the residents or to another entity willing to preserve the property as affordable over the long-term.

Right-of-first refusal laws vary in the length of time that they provide to tenants to make an offer to purchase, but typically range from 30 to 90 days. In some cases, existing residents can preserve the property as affordable by agreeing to waive their rights to purchase the property in exchange for a promise by the purchaser to keep some or all of the units affordable for a certain number of years. In other cases, the tenants either purchase the property themselves or transfer their rights to a non-profit or mission-driven for-profit company that agrees to maintain the property as affordable rental housing. For a right of first refusal to be successfully exercised, two factors need to be put into

Photo credit: Marvin Jones, courtesy of NHT/Enterprise

place very quickly. First, the tenants need to be connected with an entity that has experience purchasing and operating rental housing. For example, organized tenant groups in the District of Columbia and Montgomery County have turned their rights over to Community Preservation Development Corporation and to NHT/Enterprise Preservation Corporation. Second, funding is needed to make the transaction work. Government funding programs that can respond quickly and flexibly to requests from nonprofits and tenant groups seeking to purchase and rehabilitate at-risk housing can enhance the effectiveness of notification and purchase rights laws.

Click here to view a policy brief prepared by Jim Grow, Deputy Director and Senior Staff Attorney at the National Housing Law Project, on State and Local Regulatory Initiatives to Preserve At-Risk Affordable Housing [PDF]. The brief, prepared for a 2007 MacArthur Foundation National Policy Forum on rental housing preservation, provides an overview of recently-adopted regulations related to improved notice and rights of first refusal and other purchase opportunity laws, among other things.

Solutions in Action

Condo Conversions Chicago, Illinois -- Before converting a rental unit to condominiums, Chicago requires developers and property owners to give a 120-day notice to tenants. Expiring leases must be extended for the notice period. Tenants who are over 65 years old, blind, or unable to walk without assistance must be given a 180-day notice. Tenants have a right of first refusal to purchase their units. Boston, Massachusetts -- Before converting a rental unit to condominiums, Boston requires developers and property owners to give a five-year notice to seniors, disabled, and low-to-moderate income tenants. If the lease expires within the notice period, the lease must be extended to allow the tenant to stay for the entire notice period. Sale of Rental Units Washington, D.C. -- The Tenant Opportunity to Purchase Act (TOPA) provides that, before any rental housing unit in the city may be sold, the owner must give notice to each tenant and to the mayor. The tenants then have a right of first refusal to purchase the property. The tenants may assign this right to a third party. The tenants have at least 120 days to negotiate a sale. This time period can be extended for another 120 days if a lending institution provides written notice that the tenant association has applied for financing. Some Washington D.C. affordable housing developers have partnered with tenant groups to arrange complex purchase and rehab deals, often involving LIHTC financing. For example, Somerset Development and NHT/Enterprise Preservation Corporation worked with the tenants to acquire and rehabilitate Galen Terrace (pictured above), a federally subsidized 84-unit community in serious disrepair and threatened with sale. [1] The DC Housing Finance Agency provided $5.6 million in tax-exempt bonds and $4.65 million in tax credit equity toward the acquisition and renovation, while the Department of Housing and Community Development provided $3.25 million in CDBG funds. HUD renewed the complex's Section 8 contract for another 20 years. Click here to leave this site and read an analysis of the Tenant Opportunity to Purchase Act. Under the laws of Montgomery County, MD, the county and its public housing/housing finance agency -- the Housing Opportunity Commission (HOC) -- have the right to match contracts on rental facilities built before 1981 or on rental buildings being sold for conversion to condominiums. Certified tenant associations also have the right to match the contract on rentals built prior to 1981. The right can be waived if the purchaser commits to preserving the building as a rental property for five years at rents acceptable to the county. The county, either through HOC or a designated nonprofit housing developer, has exercised the right of first refusal at least six times. For example, to preserve some naturally occurring affordable units and hard-to-find three-bedroom units, the HOC bought an unsubsidized 1950s apartment building and is renovating it for moderate-income tenants. Click here to leave this site and learn more about the Housing Opportunity Commission. State Policies The State of California requires owners of HUD-subsidized housing and expiring Section 8 projects who intend to terminate the subsidy for any reason or prepay their mortgages to give a year's notice to tenants, the state housing authority, the local housing authority, and local governments. The notification program is paired with a right of first refusal that allows state-registered preservation buyers to match offers from other parties under certain circumstances. Other states with right-of-first-refusal and notification laws include Illinois, Maine, Maryland, Rhode Island, and Texas.

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Policies that support long-term ownership

In a world of limited funding for affordable housing, it makes sense to fund the strongest proposals. Taking their cue from federal policy, states and localities often create incentives to deliver projects with the lowest costs and the smallest margin of profitability (the more technical term is "cash flow"). In some cases this may be penny wise, but pound foolish.

While it is clearly sensible for states and localities to use competition to drive down development costs, it is also important to recognize that long-term ownership and maintenance of affordable rental housing requires financially strong entities that can sustain themselves over the long-term. Squeezing all cash flow out of a transaction may bring down initial costs, but can also starve non-profits and mission-driven for-profits of the capital they need to weather difficult rental markets, to keep up with changing rules and regulations, to support the management of their overall portfolio, and to

pursue additional preservation transactions without the need for costly predevelopment financing. It also creates an incentive for entities to focus on new deals so they can earn additional developer fees, sometimes to the detriment of the properties they are currently managing. Good ownership requires money for asset management and should itself be incentivized and rewarded, for the long-term benefit of properties and residents. The following are some of the state and local policy reforms that participants in the Strength Matters group have identified that may impede cash flow for ongoing owners of affordable rental housing. Strength Matters is an initiative, funded by the John D. and Catherine T. MacArthur Foundation, to build the capacity of non-profits to successfully preserve affordable rental homes:

In 2010, the National Housing Conference hosted the Partners in Innovation preservation forums, a series of three regional forums focused on strengthening and supporting affordable rental housing preservation efforts through innovative partnerships, policy development, and legislative reform. The regional forums took place in Boston, MA; Portland, OR; and Denver, CO in 2010. View the following presentation on rural preservation legislation  from Partners in Innovation: Financing the Preservation of Rural and Urban Affordable Rental Housing in Portland on May 17, 2010.  Gideon Anders, National Housing Law Project,  presented during the breakout session, Rural Roundtable: Overcoming Challenges, Leveraging RD Resources, and Implementing Solutions.

• Have state housing finance agencies review their policies with regard to the availability, timing, and amount of distributed cash flow, and seek reforms that strengthen ownership.

• Eliminate soft-debt repayment policies that negatively impact a project's cash flow.

• Remove cost caps that undermine a developer's ability to achieve economies of scale in development, finance and operations.

• Eliminate award criteria in Qualified Application Plans that push applicants toward adopting unrealistic assumptions or "giving away" needed cash flow.

• Revise debt service coverage ratios that are too low to handle increases in expenses relative to revenue.

• Avoid expense assumptions and trending that are unrealistically low.

• Find a balance between replacement reserve deposit levels that are too low (putting a property, especially a family property, in a position that it is likely to be in trouble in the first 15 years) or too high (precluding any cash flow).

• Address the inconsistent treatment of the costs of service provision (e.g., included in operating costs, excluded from operating costs, funded from grants) despite service provision being mandated in scoring or identified by the owner to be a desirable component of the property.

For additional information on the Strength Matters initiative, contact NeighborWorks America, Stewards of Affordable Housing for the Future, and the Housing Partnership Network.

Washington/Seattle Guide for Affordable Housing Owners and Funders Despite Washington State's commitment to preservation and its long-standing dedication to providing affordable housing, more than 25,000 low-income households in Seattle pay 50 percent or more of their income toward rent. Through the John D. and Catherine T. MacArthur Foundation's Window of Opportunity initiative, Washington and Seattle will receive a $1 million grant to help nonprofit owners and affordable housing funders implement best practices in asset management to ensure the long-term stewardship of affordable rental homes. Learn more about the Window of Opportunity initiative or click here to learn more about Seattle and Washington State's program.

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Code Enforcement

Many high-quality affordable rental housing opportunities are being lost due to poor maintenance. Whether because of outright neglect or legitimate financial limitations on the ability of the owner to keep up the property, improperly maintained properties create ongoing problems for the building, its residents and the surrounding neighborhood. Without intervention, this situation can lead to poor housing conditions, foreclosure, abandonment, and, in the most severe cases, the need to demolish properties that have become abandoned and cost-prohibitive to restore. Well-executed code enforcement programs help to maintain the quality and the safety of existing units, thereby supporting preservation efforts. Code enforcement alone typically will not prevent the loss of units. This tool works best when coupled with other rehabilitation tools and funding streams, including programs to help small property owners secure financing for repairs. While the "stick" of code enforcement can be helpful in bringing difficult owners to the table, some communities have found it helpful to adopt a more facilitative attitude towards code enforcement. Taking the approach of an "educator" rather than a "policeman," inspectors work with building owners and developers to make redevelopment feasible, rather than just penalizing them for noncompliance.

Solutions in Action

Through its Systematic Code Enforcement Program (SCEP), the City of Los Angeles Housing Department inspects all rental properties with two or more units -- more than 760,000 buildings in total -- on a four-year cycle. In effect, the program requires owners to keep up their properties, preventing the deferred maintenance that can seriously undermine the condition of the housing stock. SCEP has identified 1.9 million violations which in turn spurred an estimated $1.7 billion in plumbing, heating, carpentry, and other repairs. In addition to the regular inspections, the Housing Department responds to complaints about building conditions by tenants, owners, or other public agencies. Property owners who fail to comply with correction orders can be placed in the Rent Escrow Account Program (REAP). Under this program, tenants pay their rents into a rent escrow account until all ordered building repairs are completed. Click here to leave this site and learn more about code enforcement in Los Angeles.

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[1] Grand Re-Opening: Galen Terrace Apartments Newly Rehabilitated, Resident Owned and Occupied. [PDF] Washington, DC: National Housing Trust.

Goal: Increase the Availability of Affordable Homes
Role: Preserve and Recycle Resources
Policy: Preserve Affordable Rental Homes

Key Resources


The following is a list of key resources on topics related to preserving affordable rental homes. This list includes reports, papers, and other materials gathered as part of Window of Opportunity, an initiative of the John D. and Catherine T. MacArthur Foundation. If you're aware of other resources that should be added, please contact us.

• Background
• Create a Policy Environment that Supports Long-Term Preservation
• Improve Information Collection and Policy Coordination Efforts
• Green Affordable Rental Housing Preservation
• From the Forum
  

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Background

Websites

The Housing Preservation Project is a nonprofit advocacy and legal organization working to preserve and expand the supply of affordable housing. Its website contains resources on preserving federally-subsidized housing, affordable market-rate housing, and manufactured housing.

The U.S. Department of Housing and Urban Development's Section 8 Contracts page contains resources on the Section 8 program, including a Contract Renewal guidebook.

The John D. and Catherine T. MacArthur Foundation is a private, independent grant making institution with a strong commitment to affordable housing. Among other work on affordable housing issues, the Foundation is investing $150 million in rental preservation efforts through its ground-breaking Window of Opportunity initiative. Through the end of 2007, developers funded through the initiative had helped to preserve over 45,000 units of affordable rentals nationwide.


Local Initiatives Support Corporation (LISC) Affordable Housing Preservation Initiative
This section of LISC's website provides information on its affordable housing preservation activities and links to other preservation resources. It also contains LISC's preservation-related publications, including the following:

The National Council of State Housing Agencies has a section on the organization website that collects news and information related to preservation.

The National Housing Trust (NHT) preserves and revitalizes affordable apartment homes to better the quality of life for the families and elderly who live there. The Trust is the only national nonprofit solely dedicated to housing preservation through real estate development, lending, and public policy initiatives.




Recap Real Estate Advisors provides financial services to owners of multifamily housing (specializing in affordable properties) and policymakers. Areas of focus include asset management, transactions, and advisory services.

Reports

America's Rental Housing: Homes for a Diverse Nation. 2006. Cambridge, MA: Joint Center for Housing Studies of Harvard University.
This report includes a chapter describing the need to preserve the nation's stock of affordable rental housing.

Policies and Programs to Preserve Affordable Housing: A Review of Incentives and Recommendations for Northern Virginia. [PDF] 2006. By Lisa Fowler. Arlington, VA: George Mason University School of Public Policy Center for Regional Analysis.
This report looks at tools used around the country to preserve affordable market-rate rental housing, providing several case studies, and explores their potential for application in Northern Virginia. Recommendations include developing a database of multifamily rental properties in Northern Virginia, engaging business leaders interested in retaining workers, instituting a condominium conversion tax, and developing programs to assist owners of affordable rental properties with operating costs.

Preservation of Affordable Multifamily Housing. [PDF] Spring 2008. Community Developments. Washington, DC: Office of the Comptroller of the Currency, US Department of the Treasury.
In Spring 2008, the OCC devoted its entire Community Affairs newsletter to the role of banks in the preservation of affordable rental homes. Articles address a wide range of topics, from discussion of specific policy tools to profiles of banks that are actively involved in investment in affordable rental properties.

A Preservation Strategy for Florida's Affordable Multifamily Housing. [PDF] 2006. By the Affordable Housing Study Commission. Tallahassee, FL: Author.
This report lays out the need for preservation initiatives in Florida, describes several policy tools and programs that can be used to achieve preservation goals, and outlines a comprehensive preservation strategy for the state.

Preserving Austin's Multifamily Rental Housing: A Toolkit. [PDF] 2007. Prepared by the University of Texas School of Law Community Development Clinic for HousingWorks Austin.
This report presents six tools available to local officials in Austin, Texas to promote the preservation of affordable rental homes. These include the use of public funding, such as housing trust funds and general obligation bonds, for preservation purposes, as well as regulatory reforms that offer greater protection to tenants. The authors also include examples of how the tools have been implemented in other places.

Events

Partners in Innovation Preservation Forums
In 2010, the National Housing Conference hosted the Partners in Innovation preservation forums, a series of three regional forums focused on strengthening and supporting affordable rental housing preservation efforts through innovative partnerships, policy development, and legislative reform. The regional forums took place in Boston, MA; Portland, OR; and Denver, CO in 2010.  Presentations and other resources for these events are online.

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Create a Policy Environment that Supports Long-Term Preservation [go to policy page]

Websites

The Housing Partnership Network operates as a peer network and business alliance of high-capacity, entrepreneurial development nonprofits. The 90+ members of the Housing Partnership Network are creating and preserving affordable housing in every region of the country. Click here to find a member organization in your state.

The preservation section of the National Housing Law Project's website contains laws, cases, and articles related to subsidized housing preservation (both HUD- and USDA-assisted). The site includes a chart of state and local right of first refusal policies.

Stewards of Affordable Housing for the Future (SAHF) is an association of national nonprofit organizations that acquire and preserve multifamily housing as affordable to low-income families, seniors, and disabled individuals. Members include Mercy Housing Inc., National Affordable Housing Trust, National Church Residences, Inc., NHT/Enterprise Preservation Corporation, Preservation of Affordable Housing, Inc., Retirement Housing Foundation, and Volunteers of America. SAHF's website features a library, information on peer networks, and case examples.

Reports

Project-Based Rental Assistance: HUD Should Update Its Policies and Procedures to Keep Pace with the Changing Housing Market. [PDF] 2007. Washington, DC: United States Government Accountability Office Report to Congressional Committees.
This report describes patterns among HUD-assisted properties that "opt out" of subsidy programs , identifies potential barriers to continued participation, and offers recommendations for modifications to help improve the effectiveness of federal preservation initiatives.

In April 2007 the National Preservation Working Group, a coalition of more than 20 member organizations, issued its own set of recommendations for federal action to facilitate preservation: Legislative Provisions to Support the Preservation of Affordable Housing [PDF].


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Improve Information Collection and Policy Coordination Efforts [go to policy page]

Websites

The California Housing Partnership Corporation (CHPC) is a private nonprofit organization that helps nonprofit and government housing agencies to acquire and preserve affordable housing in California. In addition to financial consulting services, CHPC provides training to housing organizations and maintains data on at-risk properties.

The Florida Housing Data Clearinghouse provides in-depth information on demographics, affordable housing needs, assisted housing inventory, and more. Databases are searchable by county. In particular, the preservation database allows users to search at-risk properties by location, funding source, and year the subsidy is set to expire.

National Low Income Housing Coalition Preservation Catalog Project
This section of the National Low Income Housing Coalition's website contains its research on the feasibility of developing a national preservation catalog of federally subsidized rental properties and the tools needed to do so. The site also includes information on the Coalition's state-level preservation catalog projects for Washington DC, Florida, North Carolina, and Washington State.

Reports

Multifamily Properties: Opting In, Opting Out and Remaining Affordable. [PDF] 2006. Prepared by Econometrica (Bethesda, MD) and Abt Associates, Inc. (Cambridge, MA) for the U.S. Department of Housing and Urban Development Office of Policy Development and Research.
This research report describes the characteristics of HUD-subsidized rental properties that have left the affordable housing stock due to opt-outs or foreclosure/deterioration, as compared with those whose owners have continued to participate in assistance programs. This information can be used by states and localities to guide efforts to compile a preservation catalog.


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Green Affordable Rental Housing Preservation

Green Resources Relevant to Preservation of Affordable Multifamily Properties. [PDF] Updated Summer 2007. Washington, DC: National Housing Trust.
This chart provides a state-by-state look at the different incentives offered to encourage energy-efficient rehabilitation and preservation.

Preserving Opportunities: Saving Affordable Homes Near Transit. [PDF] 2008. National Housing Trust (Washington, DC) and Reconnecting America (Oakland, CA).
This briefing paper explains the importance of preserving existing affordable homes located in close proximity to public transit, and details threats to the continued availability of these homes as their use contracts expire. The paper also includes a series of maps comparing the location of federally-assisted affordable homes with transit service in selected metropolitan areas.


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From the Forum The following resources are drawn from posts to the Rental Housing Preservation Discussion Group on the HousingPolicy.org Forum, an interactive section of this site that allows members to ask questions, offer advice, and share their experience. Any document attached to a Forum post will be added to this list. If you have a resource that should be included, simply reply to a related thread on the Forum - or create a new thread - and attach the file to your post. Click here for instructions on how to add an attachment to your reply. Affordable Housing Preservation: Building a National Data Infrastructure [PDF] -- By Anne Ray of the Shimberg Center for Affordable Housing, describes research conducted by the Center into the current state of preservation-related data collection efforts throughout the country. Posted in: States-Localities/At-Risk Housing/Data Collection Available Federal Subsidized Housing Datasets summary table [PDF] -- Developed by the National Housing Trust, provides details on and links to HUD data on the project-based federally assisted housing stock. Posted in: States-Localities/At-Risk Housing/Data Collection Better Coordination of Transportation and Housing Programs to Promote Affordable Housing Near Transit [PDF] -- Prepared by the Federal Transit Administration and the U.S. Departments of Transportation and Housing & Urban Development (HUD), September 2008 report outlines strategies developed to continue and expand coordination of federal mixed-income and affordable housing and transit initiatives. Posted in: Preserving Affordable Housing Near Transit A Brief Review of State and Local Preservation Purchase Laws [PDF] -- Article from the Nov.-Dec. 2006 issue of the National Housing Law Project's Housing Law Bulletin, describes various elements of these laws in states and localities throughout the US. Posted in: Statewide Right of First Refusal Comments on the Weatherization Assistance Program for Low-Income Persons [PDF] -- Memo prepared by Enterprise Community Partners and submitted to the U.S. Department of Energy. Posted in: Weatherization notice for assisted housing Commercial Real Estate at the Precipice [PDF] -- Prepared by Richard Parkus of Deutsche Bank. This report suggests that overleveraged large multifamily properties will constitute the next wave of the foreclosure crisis. Posted in:  Predatory Equity in MF Buildings Getting Started on Predatory Equity Research in Your City [PDF] -- By Tom Waters, Community Service Society. This report is an advocate's guide to research on predatory equity practices. Posted in:  Predatory Equity in MF Buildings Guidance on Green Retrofit Program for Multifamily Housing [PDF] -- Guidance prepared by the US Department of HUD on HUD green retrofit program, issued May 13, 2009. Posted in:  Stimulus resources for affordable housing preservation/Weatherization Assistance Program Memorandum of Understanding Between Department of Energy and Department of Housing and Urban Development [PDF] -- This proposed interagency agreement would streamline the income verification process for residents of HUD Qualified housing when demonstrating eligibility for the Weatherization Assistance Program. Posted in: Stimulus resources for affordable housing preservation/Weatherization Assistance Program Multifamily Properties: Opting In, Opting Out and Remaining Affordable [PDF] -- Prepared by Econometrica, Inc. and Abt Associates, Inc. for HUD's Office of Policy Development and Research, describes the characteristics of HUD-subsidized properties that may be more likely to leave the assisted stock. Posted in: States-Localities/At-Risk Housing/Data Collection Preservation Catalog for the District of Columbia [PDF] -- Prepared by the National Low Income Housing Coalition and upated in May 2009, this document catalogs subsidized rental housing stock and limited-equity cooperatives in Washington DC. Posted in: States-Localities/At-Risk Housing/Data Collection Subsidized Housing Data -- Interactive map prepared by the National Housing Trust, provides access to state-by-state subsidized housing data reports. Posted in: States-Localities/At-Risk Housing/Data Collection A Success Story: Preserving Multi-Family Housing as More Sustainable and Energy Efficient Homes [PDF] -- Case study prepared by Enterprise Community Partners that highlights an acquisition and rehab project in Brooklyn, NY. Posted in: Stimulus resources for affordable housing preservation/Weatherization Assistance Program Taking Stock: The Role of "Preservation Inventories" in Preserving Affordable Rental Housing [PDF] -- Describes efforts of five jurisdictions to collect data to facilitate identification of "at-risk" subsidized rental homes. Posted in: States-Localities/At-Risk Housing/Data Collection Transit-Oriented Affordable Housing -- Included in HUD's Regulatory Barriers Clearinghouse monthly Breakthroughs newsletter, describes efforts to develop affordable housing near public transit facilities. Posted in: Preserving Affordable Housing Near Transit

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Go to the Preserve Affordable Rental Homes main page.

Goal: Increase the Availability of Affordable Homes
Role: Preserve and Recycle Resources
Policy: Preserve Affordable Rental Homes

Improve Information Collection and Policy Coordination Efforts

Rental housing preservation can be a complex endeavor. A strong data collection effort to identify properties at risk of loss and key issues that need to be addressed can aid good decision making and allocation of resources, while helping communities prioritize their outreach and development efforts. Preservation efforts can also be strengthened through better coordination among the various players: local, state, and federal officials, as well as nonprofit and for-profit developers, owners, potential buyers, advocacy groups, lenders, community groups, and other stakeholders. Finally, communities can use outreach and technical assistance strategies to reach more owners and residents. Experience has shown that not all affordable rental properties are equally at risk. As illustrated in a diagram prepared by the National Housing Trust and reproduced below, the existing stock of federally assisted rental housing can be divided into three categories: Properties at risk from deterioration/abandonment Properties at risk from conversion to market rate Relatively stable properties at no immediate risk of conversion or deterioration

From the Forum "Collecting and analyzing data on subsidized affordable housing is important for identifying properties that might be at risk of being lost from the affordable housing stock. How are state and local groups using data to identify at risk housing and conduct outreach to interested buyers? What types of data are proving important for identifying at risk housing?" See what other people said and add your response The HousingPolicy.org Forum is a place to pose questions, exchange ideas, and learn from the experience and expertise of others. This section of the site features interactive forums organized around policy areas, including rental housing preservation.

A strong information collection and analysis program can help you determine which properties are at risk of loss and for what reason, helping you target and tailor your preservation efforts.

Photo courtesy of MHIC

Click on the links below to learn more about strategies that states and localities have adopted to strengthen information collection and policy coordination efforts: Data collection and analysis Policy and program coordination Outreach and technical assistance

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You are currently reading: Improve information collection and policy coordination efforts Collect, standardize, and widely share information about the characteristics of existing affordable rental properties, their residents, and key factors that create a risk of loss, as well as innovative and successful preservation strategies. Other pages in this section: Enhance funding for preservation efforts Stabilize and dedicate increased public funding to long-term preservation ownership, expand public-private financing sources for preservation transactions, and adopt innovative tax incentives to strengthen incentives for preservation. Create a policy environment that supports long-term preservation Streamline, coordinate, and align policies and administrative practices to increase the likelihood that affordable rental homes will be preserved and improved, develop more support for long-term preservation owners and make preservation transactions easier, faster and less costly. Protect displaced residents Help residents affected by displacement from affordable rental homes to understand their options, find other housing, and minimize disruption of schooling and social networks. Click here to review case studies of successful preservation projects, or click here to view other resources on preserving affordable rental homes.

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Data collection and analysis

A number of cities and states have developed databases of their subsidized rental housing stock that help them identify and conduct outreach to properties that are most at risk of being lost due to expiring affordability restrictions, increases in market rents, physical deterioration or other factors. The state of New Jersey, for example, has developed the New Jersey Data Warehouse to enable the identification of properties with affordability restrictions set to expire within the next five years. The Preservation Division of the state's Housing and Mortgage Finance Agency uses this "priority list" to contact owners of high-risk properties and arrange refinancing agreements or transfers of ownership to keep the properties in the assisted housing portfolio. Statewide in California, all localities are required to prepare a 10-year analysis of at-risk subsidized properties. The analysis must include the locality's preservation goals and provide a five-year action plan that identifies available financing and subsidies. In Chicago, the Rehab Network, a local nonprofit, tracks subsidized multifamily properties at risk of terminating their affordability contracts through a statewide database of the properties, which includes information on when their affordability term expires. The nonprofit also assists

Solutions in Action

The Housing Preservation Project (HPP) is a public interest advocacy and legal organization headquartered in St. Paul, Minnesota. HPP created the first database of manufactured home park units in Minnesota, and was instrumental in the passage of state legislation that requires owners to notify the state housing finance agency when parks are scheduled to be closed. These accomplishments allow advocates to better track and respond to park closures. Learn more about the Housing Preservation Project

in lining up purchasers for the properties.

In Florida, the Florida Housing Data Clearinghouse combines Federal and State housing data to produce a comprehensive picture of the subsidized housing stock, aiding state and local decision making. In particular, the Clearinghouse features an Assisted Housing Inventory that contains property-level data about assisted rental housing.

In New York City, practitioners can access the Subsidized Housing Information Project (SHIP) database, which provides access to information on some 235,000 privately-owned, subsidized rentals.  Created and administered by the NYU Furman Center for Real Estate and Urban Policy, the database -- which is easily accessed and explored through the Center's Data Search Tool -- includes data from 50 different public and private sources that can be easily filtered and viewed on a map.

A number of studies have been conducted to determine which factors best predict the loss of subsidized rental housing properties. Click here [PDF] for a summary of these factors prepared by the National Housing Trust as a guide to "early warning systems" that can help identify properties at risk of loss. The National Housing Trust also maintains inventories of properties participating in several of the largest federal subsidy programs. These inventories can provide states and localities with a good head start on their own databases of at-risk properties.

For more detail on how states and localities are using data collection to guide their preservation strategies, click here [PDF] to read a research brief prepared for the John D. and Catherine T. MacArthur Foundation by Rebecca Cohen and Barbara Lipman of the Center for Housing Policy.

Through its Window of Opportunity Initiative, the John D. and Catherine T. MacArthur Foundation will support data collection initiatives in Iowa, Minnesota and Ohio: Iowa - With much of its affordable housing stock more than 25 years old, Iowa faces the challenge of an oversupply of affordable housing in some areas where populations are declining, and an undersupply in areas with growing populations. Support from the MacArthur Foundation will be used to develop a comprehensive database of all subsidized properties, which will allow the state to allocate scarce resources strategically and recruit developers to preserve affordable rental properties in rural parts of the state. Minnesota - Over the next 10 years, 52,000 units of subsidized housing are at risk of being lost as subsidy contracts expire, properties physically deteriorate, and financial pressures increase. Minnesota will use support from the MacArthur Foundation to enhance its system for detecting properties at risk of losing their affordability in order to direct assistance and new funding towards preserving those rental homes. Ohio - High rates of unemployment and foreclosures have resulted in a steady increase in demand for affordable rental housing throughout the state. Ohio will direct funding from the MacArthur Foundation towards development of a new clearinghouse of information on federally-subsidized properties and coordination of assistance for tenants and affordable housing developers, including an acquisition loan fund. Learn more about the Window of Opportunity initiative or about programs in Iowa, Minnesota, and Ohio.

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Policy and program coordination

As reflected in the lengthy list of policy options included in this section on rental housing preservation, there are many different policies that need to be put into place and many different actors whose cooperation needs to be arranged to ensure a successful rental housing preservation strategy. Through processes that facilitate cooperation and coordination, states and localities can develop more effective and coordinated preservation strategies and improve accountability through the ongoing tracking of progress. The National Low Income Housing Coalition has prepared a series of reports on "potential tools in the affordable housing preservation toolbox," which draw connections between other policy documents, such as the HUD-mandated Consolidated Plan, and preservation goals. Incorporating a preservation agenda into these documents allows communities to strengthen their efforts and ensure that preservation initiatives align with other policy priorities.

In several localities, interagency councils have been formed to coordinate the activity of organizations engaged in preservation-related work and streamline funding applications and other processes for developers involved in preservation projects.

Notable examples include:

The Cook County Interagency Coordinating Council is a part of the Preservation Compact (see Solutions in Action at right), a comprehensive affordable rental housing preservation initiative led by the John D. and Catherine T. MacArthur Foundation and the Urban Land Institute. The Council was created to improve communication and cooperation across agencies and levels of government involved in preservation-related activities. Key partners include the Chicago Department of Housing, Cook County Government, Illinois Housing Development Authority, and U.S. Department of Housing and Urban Development. The Council also receives staff support from the Real Estate Center at DePaul University. Members of the Council meet monthly to share ideas and to develop coordinated property preservation strategies and collaborative responses to issues of shared concern. A primary goal has been to create agreed-upon criteria for identifying high-risk properties and neighborhoods to monitor on an ongoing basis. Using information from the affordable rental housing Data Clearinghouse, which is maintained by the Real Estate Center, members have been able to identify 400 HUD-assisted properties in Cook County, of which 100 have been prioritized by the Council for additional evaluation. The Council is also working to link sellers of subsidized properties with interested buyers who will preserve the properties and maintain their affordability.

Solutions in Action

The Preservation Compact is a coalition of public, private and nonprofit leaders dedicated to preserving the affordable rental housing stock in the Chicago region. In 2007, under the guidance of the Urban Land Institute and with funding from the John D. and Catherine T. MacArthur Foundation, they created a Rental housing Action Plan to preserve 75,000 units of affordable rental housing in Cook County by 2020. The plan includes a number of innovative elements including an interagency council (see description at left) and a rental housing data clearinghouse. The interagency council will work to better coordinate government programs and improve information flow. The rental housing data clearinghouse will collect and maintain information on both subsidized and unsubsidized stock and serve as an early warning system for properties at risk of leaving the affordable market. Learn more about the Preservation Compact or read the plan, or click here to view a PowerPoint presentation on the Preservation Compact presented by Paul Shadle of DLA Piper at the 2009 Solutions for Working Families Learning Conference.

• The Housing Development Consortium (HDC) is a not-for-profit trade association that brings together public development authorities, nonprofit housing developers, government agencies, and other members of the housing industry to promote the development and preservation of affordable housing in King County, Washington. "Affinity groups," organized for members by HDC, give organizations facing similar issues the opportunity to collaborate and develop shared solutions and proposals. The group also organizes stakeholder meetings, works to promote affordable housing legislation, and conducts outreach to improve community perceptions of affordable homes.

• Members of the Interagency Stabilization Group (ISG) in Minnesota's Twin Cities include representatives from the metropolitan area government and private sector affordable housing funders. The group was first convened in 1993 by the Family Housing Fund to coordinate funding and other efforts related to the preservation of affordable homes. 

Through its Window of Opportunity Initiative, the John D. and Catherine T. MacArthur Foundation will support interagency policy coordination initiatives in Los Angeles, California; Maryland; and Massachusetts: Los Angeles, California - Nearly one-third of the subsidized housing stock in Los Angeles is at risk of losing its affordability in the next decade, including Single Room Occupancy (SRO) units that typically serve households most at risk of homelessness. The City of Los Angeles will use support from the MacArthur Foundation to align its various governmental agencies and their capital resources to implement a comprehensive preservation strategy, including building the capacity of developers with expertise in operating SROs. Maryland - Military base closures and the related relocation of 25,000 households will increase pressure on rents in 8 counties in Maryland. In response, the State will use funds from the MacArthur Foundation to create a Compact among state and local housing leaders to align efforts and identify preservation opportunities. Massachusetts - With the fifth most expensive rental market in the country and more than half of renters spending a disproportionate share of their income on housing, Massachusetts cannot afford to lose the 41,000 subsidized rental units whose affordability requirements expire in the coming decade. With support from the MacArthur Foundation, Massachusetts will form an interagency working group to coordinate state, federal, and local housing activities to identify and preserve these properties. Learn more about the Window of Opportunity initiative or about programs in Los Angeles, Maryland, and Massachusetts.

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Outreach and technical assistance

Both owners and tenants of multifamily properties need education about their options for preservation. They also may need technical assistance to take advantage of refinancing options, rights of first refusal, and other preservation tools. In Washington, D.C., for example, a broad group of technical assistance providers assist tenants and nonprofit organizations acquiring properties for preservation.

The Chicago Rehab Network, Community Economic Development Assistance Corporation (CEDAC) in Massachusetts, and the California Housing Partnership Corporation are just a few of the organizations providing capacity-building and technical assistance to sellers, buyers, residents, and officials participating in affordable rental housing preservations. Activities range from providing advocacy and policy development support to offering training workshops. Click on the following links to leave this site and learn more about the outreach and technical assistance work of: the Chicago Rehab Network, CEDAC, and the California Housing Partnership Corporation. Window of Opportunity With support from the John D. and Catherine T. MacArthur Foundation's Window of Opportunity initiative, the State of Florida will provide technical assistance and other support to mission-driven organizations to preserve properties for extremely low-income households and people with special needs. Learn more about the Window of Opportunity initiative or click here to leave this site and learn more about Florida's program.

Photo credit: John Booz, courtesy of Valerie Denney Communications

Outreach and education can be an important part of the solution even in communities that do not have specific local policies to preserve affordable rental homes. One way for communities to encourage preservation is simply to educate owners of federally assisted or insured housing about the latest incentives available from the federal, state, and local governments to facilitate the preservation of affordable homes. Federal incentives include Mark-to-Market - a program for project-based Section 8 properties with above-market rents that provides for restructuring at market rents, which may include an infusion of new capital for renovations; Mark-Up-to-Market - a program to allow project-based Section 8 properties with below-market rents to raise their rents to market; and budget-based rent adjustments, which allow rent increases tied to certain increased expenses. (Click here to learn more about key federal programs that help to preserve affordable rental homes.) Some states and localities, like Los Angeles, California and the state of New Jersey, have appointed a preservation coordinator or office to facilitate this work.


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Goal: Increase the Availability of Affordable Homes
Role: Preserve and Recycle Resources
Policy: Preserve Affordable Rental Homes

Housing Preservation Project Case Study

Although by any standard it's a small organization located well outside the beltway, the Housing Preservation Project (HPP), headquartered in Minnesota, continues to demonstrate that a legal advocacy approach to affordable rental housing preservation works. Initially formed in 1998 with backing from a local intermediary philanthropic funder, HPP was launched to combat the threatened loss of privately owned federally subsidized rental housing in Minnesota. The scope and influence of this public interest advocacy and legal organization quickly expanded nationally and

Photo courtesy of MB Properties

includes preservation of subsidized and unsubsidized rental housing, including site built and manufactured housing.

HPP's primary mission is to prevent the loss of affordable rental housing by conversion to market rate, demolition, foreclosure, and other causes. HPP also works to foster expanded affordable housing opportunities. This work involves a variety of innovative strategies, including:

• Providing technical assistance to local attorneys and tenant advocacy organizations, owners, housing funders, and policy makers
• Negotiating with property owners
• Pursuing litigation to uphold both local and national laws, enforce fair housing and affordable housing planning requirements, and to challenge NIMBYism by local groups opposing affordable housing
• Seeking local and national policy changes through legislative advocacy
• Educating the public about affordable housing issues
• Continuous monitoring of the current supply of at-risk affordable housing
• Working with tenant advocacy organizations to organize and empower tenants

HPP attorneys work with tenant and advocacy organizations, public and private housing funders, owners, developers, and policy makers in their efforts to protect and expand affordable housing. Its attorneys have provided technical assistance to attorneys and advocates in 20 states, including the District of Columbia.

To date, HPP's work has resulted in the direct preservation of more than 6,000 federally subsidized units in Minnesota and nationally. Equally important, however, are the direct and indirect policy changes resulting from HPP's work that have resulted in concrete benefits for thousands of low income households across the country. HPP believes its preservation accomplishments are due to primarily to its modus operandi - that it never works alone, but always in collaboration with a variety of stakeholders, including low income residents, advocacy organizations and the philanthropic community.

HPP's work has played a significant role in creating an environment in Minnesota that discourages the market rate conversion of units. Aggressive intervention and litigation strategies created public attention for the issue, encouraged owners to pursue negotiated resolutions, and led to creation of $10 million (annual) state preservation funding. (Learn more about ways to enhance funding for preservation of affordable rental homes.)

Since 1998, HPP has achieved landmark victories in a series of cases, leading to changes in federal legislation and HUD policies that have resulted in increased protections for tenants nationwide. Further examples of what HPP advocacy has accomplished include:

• Persuaded state office of RHS to require owners of Section 515 housing developments to comply with state prepayment notice laws, drastically slowing the process of prepayments and providing opportunities for preservation. (Learn more about federal programs that play an important role in the preservation of subsidized rental units.)
  

• Led a successful effort to change the Minnesota state law on condo conversions to eliminate a sunset provision that affected local ordinances. This amendment will ensure any changes made at the local level will positively impact the way conversions are handled in the city for the future.

• Helped pass the Minnesota Manufactured Housing Park Closure Notice bill (S.F. 2887 and H.F. 3449) which adds a requirement that notice of manufactured park closures be sent to the MHFA and the Department of Health. By centralizing this data, advocates will be better able to track and respond to park closures. The bill was signed into law on May 10, 2006.
  

• Created the first database of manufactured home park units in Minnesota, detailing the location, number of units and resident demographic information. This database is updated regularly and is used with a sophisticated mapping program that has proven to be an effective policy advocacy tool. (Learn more about data collection and analysis that helps preserve affordable rentals.)

• In response to threatened HPP litigation, HUD recently modified its national policy on how to treat enhanced voucher-holders who have become over-housed, eliminating the requirement that such tenants (often elderly surviving spouses) be required to move or pay large rent increases.

Click here to leave this site and visit the Housing Preservation Project's web site.

Goal: Increase the Availability of Affordable Homes
Role: Preserve and Recycle Resources
Policy: Preserve Affordable Rental Homes

Protect Displaced Residents
Session data

One of the key benefits of affordable rental housing -- particularly subsidized housing -- is the stability that it provides families. When families have a stable place to live, and pay an affordable share of their income for rent, they may be better positioned to succeed in other aspects of their lives, including job search and retention, maintenance of treatment regimes necessary for their health, and at school.

When affordable rental homes are lost, this stability may be jeopardized, as families are forced to move to other developments -- in some cases, in unfamiliar neighborhoods. "Tenant protection" vouchers enable families living in project-based Section 8 housing, and certain other federally subsidized developments, to stay in the development

at an affordable rent even after rent restrictions expire, assuming the building remains as a rental development. The vouchers also enable families to move to another location if the development will not stay as a rental or if they wish to exercise their right to move. To make an informed decision about whether to stay, and if not, where to go, many families would benefit from relocation counseling that helps them locate other housing and understand the relative amenities offered by different neighborhoods (especially, vis-a-vis schools and access to transit). Families that move also may need assistance with moving costs, security deposits, and more generally, settling in to their neighborhoods. States and localities can help by providing funding and oversight to the local housing authority with jurisdiction over the development leaving the subsidized inventory to ensure that the relocation counseling and other services are robust, timely, and effective.

Photo courtesy of MB Properties

Families living in some forms of subsidized rental housing receive an ordinary Section 8 housing voucher, rather than a tenant-protection voucher. The chief difference is that ordinary vouchers generally do not give families enough buying power to stay in the same development; so these families will often have to move. For families in market-rate rentals, or in state- or locally-subsidized developments, there is no federal policy that

New Protections for Renters in Foreclosed Buildings In May 2009, a law was passed to provide greater protection to tenants in rental properties undergoing foreclosure. Visit the HousingPolicy.org Forum to learn more about the Protecting Tenants at Foreclosure Act, which extends renter protections by requiring a 90-day notice period prior to eviction.

provides these families with a housing voucher or with
assistance with relocation (except in the rare instance when the move if forced by public action, triggering the Uniform Relocation Act). States and localities can help by funding relocation counseling and assistance, and by providing these families with priority for admission to the housing voucher or public housing programs.

In 2010, the National Housing Conference hosted the Partners in Innovation preservation forums, a series of three regional forums focused on strengthening and supporting affordable rental housing preservation efforts through innovative partnerships, policy development, and legislative reform. The regional forums took place in Boston, MA; Portland, OR; and Denver, CO in 2010. View presentations on protecting displaced residents from the following panel at the Partners in Innovation: Including Affordable and Workforce Housing within Transit-Oriented Development in Denver on September 28, 2010. Managing Transit Impacts in Low-Income Neighborhoods

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You are currently reading: Protect displaced residents Help residents affected by displacement from affordable rental homes to understand their options, find other housing, and minimize disruption of schooling and social networks. Other pages in this section: Enhance funding for preservation efforts Stabilize and dedicate increased public funding to long-term preservation ownership, expand public-private financing sources for preservation transactions, and adopt innovative tax incentives to strengthen incentives for preservation. Create a policy environment that supports long-term preservation Streamline, coordinate, and align policies and administrative practices to increase the likelihood that affordable rental homes will be preserved and improved, develop more support for long-term preservation owners and make preservation transactions easier, faster and less costly. Improve information collection and policy coordination efforts Collect, standardize, and widely share information about the characteristics of existing affordable rental properties, their residents, and key factors that create a risk of loss, as well as innovative and successful preservation strategies. Click here to review case studies of successful preservation projects, or click here to view other resources on preserving affordable rental homes.

Goal: Increase the Availability of Affordable Homes
Role: Preserve and Recycle Resources
Policy: Preserve Affordable Rental Homes

Window of Opportunity: Media

<< Go back to Window of Opportunity main page


On November 7, 2007, MacArthur Foundation President Jonathan Fanton announced expanded funding for the Window of Opportunity initiative, saying: "The wave of foreclosures and mortgage problems facing low-income homeowners and working families has added to the widespread need and demand for quality, affordable rental homes. Left unchecked, market and regulatory pressures will continue to shrink the existing stock of affordable rental homes by tens of thousands of units each year. Preserving and improving the existing stock is critical because it increases the return on our past public investments, strengthens our communities, and is faster and cheaper than building new homes."

Click here to read the full MacArthur Foundation press release. For more coverage of
pressures eroding the affordable rental stock and efforts to preserve it, please view the media resources below, which are organized into three areas:

• Print
• Video
• Audio

Or, just scroll down to read more. Click here to go to the preservation Key Resources page, which contains research reports and articles on the preservation of affordable homes, or click here to view the Window of Opportunity Gallery.

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Print

Foreclosure Crisis Impacts Chicago's Rental Housing Market [PDF]
Woodstock Institute
May 2008
For many Chicago households, affordable housing is rental housing. In 2007, over 35 percent of the foreclosures filed in the City of Chicago affected buildings with rental units. These foreclosures put increased strain on the rental market by displacing current renters from foreclosed properties and taking foreclosed multi-family properties out of the supply of rental units.

America's Rental Housing: the Key to a National Balanced Strategy [PDF]
Joint Center for Housing Studies of Harvard University
April 2008
The damage from today's mortgage foreclosure crisis reaches deep into the rental market. With affordability already a problem, the current housing debacle not only adds to the number of households competing for low-cost rentals and threatens current renters with eviction, but also increases the costs of financing rental housing construction and preservation.

Preservation of Affordable Multifamily Housing [PDF]
Comptroller of the Currency, Community Developments Newsletter
Spring 2008
A significant share of privately owned affordable multifamily housing is available to lower income families through federal subsidy programs. These programs began in the early 1960s and continue today. These programs have supported the development of more than three million housing units.

Rentals Out of Reach [PDF]
CQ Weekly
October 15, 2007
Author: Clea Benson
This article examines the loss of affordable rental housing nationwide and its impact on working Americans.

Oregon affordable housing advocates scaling back expectations [PDF]
The WorldLink.com
November 29, 2007
Author: Julia Silverman, Associated Press Writer
This article gives an update on the status of affordable housing spending in Oregon.

Links to reports on preserving assisted rental housing: the national data infrastructure

The American Dream of Affordable Rental Housing [PDF]
On Common Ground, Creating Housing Opportunity
Winter 2008
Author: Steve Wright
While the need for affordable rental housing has never been greater, the uphill battle to preserve existing affordable housing has never been steeper.


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Video

Immigrant Workers Make a Stand Against Gentrification
Source: OneDC Video (YouTube link)
August 8, 2007
Tenants living in the Shaw neighborhood of Washington, DC purchase their own building and form a housing coop as an alternative to displacement by condos.


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Audio


Chicago Residents Sue to Save Section 8 Housing
Cheryl Corley, NPR
August 8, 2005
Millions of low-income Americans look to the federal government for help in finding affordable housing, but units under one subsidy program are fast disappearing. Some subsidized housing residents in Chicago are fighting to keep their homes in the program by taking the U.S. Department of Housing and Urban Development to court.

Renters Learn How to Protect Housing
Natalie Moore, Chicago Public Radio
October 26, 2007
Some activists on the South Side want to train apartment renters how to defend their affordable housing. A first step, they say, is for people to band together in tenant councils. A workshop on how to do that is on the agenda tomorrow at a housing conference sponsored by the Kenwood Oakland Community Organization, or KOCO. The group says that the South Side's dwindling stock of affordable housing is what's driving the effort. Chicago Public Radio's Natalie Moore has the story.


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Rental Housing Preservation and "Green" Housing*

Through preservation initiatives, communities can simultaneously accomplish the dual goals of preserving existing affordable rental homes and promoting energy efficiency and conservation of scarce natural resources. Preservation achieves its "green" status in several ways: 1. Strategic location in transit-friendly communities -According to the National Housing Trust, 250,000 subsidized rental units can be found within one-half mile of public transit, not to mention thousands more unassisted units. These homes provide ready access to affordable transportation and the option to forgo car ownership, or at least reduce reliance on a personal vehicle, allowing residents to dramatically reduce both their energy consumption and the combined cost of housing and transportation. Affordable housing near transit is also crucial for many older adults who cannot or choose not to drive. Easy access to reliable public transportation enables these households to retain their mobility and travel independently to visit with family and friends and access services.

From the Forum "The American Recovery and Reinvestment Act included significant funding for the State Energy Program and Energy Efficiency and Conservation Block Grant program. Does anyone know of states/localities proposing to use a portion of these funds to support energy retrofits of affordable multifamily housing?" See what other people said and sign in to add your response The HousingPolicy.org Forum is a place to pose questions, exchange ideas, and learn from the experience and expertise of others. This section of the site features interactive forums organized around policy areas, including rental housing preservation.

Window of Opportunity Through the Window of Opportunity initiative, the John D. and Catherine T. MacArthur Foundation will support "green" investments in preservation in Denver, Colorado; Pennsylvania; and Vermont: 1. Denver, Colorado - The Denver metropolitan area is undergoing the largest expansion in the nation of its public transit system. With support from the MacArthur Foundation, the City and County of Denver will establish a new loan fund for transit-oriented development that preserves affordable rental housing near existing and planned regional public transit stations. Click here to learn more. 2. Pennsylvania- Assistance from the MacArthur Foundation will enable Pennsylvania to conduct comprehensive energy audits to determine the most appropriate and cost-effective energy efficiency improvements in rental homes. The resulting rehab efforts are expected to help mitigate the effects of a projected 40 to 60 percent increase in utility expenses resulting from deregulation of the state's electricity industry. Click here to learn more. 3. Vermont- As the price of heating oil increases, the costs to operate affordable rental housing in Vermont are also escalating. The MacArthur Foundation will support several initiatives to lessen the rental burden on lower-income households, including improvements that encourage energy conservation and the use of Medicare and Medicaid to assist in housing for older households. Click here to learn more. Learn more about the Window of Opportunity initiative.

In 2010, the National Housing Conference hosted the Partners in Innovation preservation forums, a series of three regional forums focused on strengthening and supporting affordable rental housing preservation efforts through innovative partnerships, policy development, and legislative reform. The regional forums took place in Boston, MA; Portland, OR; and Denver, CO in 2010. Access presentations on green rental housing preservation from following breakout session at the Partners in Innovation: Including Affordable and Workforce Housing within Transit-Oriented Development in Denver on September 28, 2010. The Developers Perspective: Green Affordable Housing

* This page draws from the National Housing Trust's Preserving Affordable Housing is Green Fact Sheet. Click here to leave this site and learn more about why preservation is green.