Transcript Slide 1

Affordable Housing Preservation:
An Historical Perspective
Michael Bodaken
National Housing Trust
Michael Bodaken, National Housing Trust
2010 Ohio Preservation Summit
Ohio Preservation Summit: 2010
National Housing Trust
 Committed to safeguarding affordable housing.
 Only national nonprofit engaged in housing preservation
through real estate development, lending and public policy
initiatives.
 The National Housing Trust:
 Partners with investors to raise capital to buy and renovate affordable
apartments. Preserved 4,800 affordable apartments.
 Lends early money to developers to help them purchase and renovate
affordable apartments. Loans have helped preserve 5,000 apartments.
 Educates policymakers of the need to dedicate resources towards the
revitalization of existing affordable apartments.
National Housing Trust, Affordable Housing Preservation: An Historical Perspective
What is affordable
housing preservation?
Galen Terrace Apartments, 82 affordable apartments in
Washington, DC preserved by NHT/Enterprise
 When a privately owned,
subsidized rental property is
preserved, the owner agrees
to keep the property
affordable.
Galen Terrace before
Galen Terrace after
 This is usually combined with
raising new capital to repair
the property.
 Often the property is
transferred to a new owner
committed to the long-term
affordability of the property.
National Housing Trust, Affordable Housing Preservation: An Historical Perspective
Why Preserve?
Stable rental housing is
critical to diverse,
healthy communities.
3 out of every 10 households rent.
It is stable housing, not tenure,
that is key to providing quality of
life benefits.
Preserving affordable
housing is cost effective.
Rehabilitating an existing affordable
apartment can cost one-third less than
building a new apartment
Preserving affordable
housing creates jobs
quickly.
Rehabilitating existing housing is
easier and faster than building new
housing. This means creating new,
well paying jobs sooner.
National Housing Trust, Affordable Housing Preservation: An Historical Perspective
Preserving affordable housing is
inherently energy and resource efficient.
 Building Reuse. Produces less
waste and uses less new materials
and energy than new construction.
Infrastructure. Does not require
new utility or transportation
infrastructure.
Green space. Does not require
developing more land.
Household energy use. Integrate
green technology and methods into
rehabilitation.
Copyright National Trust for Historic Preservation
National Housing Trust, Affordable Housing Preservation: An Historical Perspective
We lose low-cost rentals at a far
higher rate than other housing
Source: State of the
Nation’s Housing 2010,
JCHS
National Housing Trust, Affordable Housing Preservation: An Historical Perspective
What do we want to preserve?
400,000 units of
USDA rural housing
(Section 515)
1.2 million units of
public housing
1.5 million units of privatelyowned, federal propertybased rental subsidies
2 million units with Low Income
Housing Tax Credits
2.2 million unsubsidized rental units affordable
to renters with incomes < 30% of AMI
National Housing Trust, Affordable Housing Preservation: An Historical Perspective
Why is this stock at risk?
Market
Risk
• Strong market- Gentrification
• Weak market- Downward pressure
on rents
Policy
Risk
• Owners “opt out” or mortgages are
prepaid or mature
• HUD takes enforcement action
Owner
Capacity/
Interest
• Owner may want out of the business
• Owner may lack capacity to maintain/
recapitalize housing
National Housing Trust, Affordable Housing Preservation: An Historical Perspective
Major Preservation Milestones
ELIHPA & LIHPRHA
Mark to Market
ARRA (Stimulus)
(1987 & 1990)
Preservation incentives
for HUD assisted
housing
(1997)
(2009)
1980s
HOPE VI
(1992)
Public housing
improvement
grants
Incentives for
Section 8
recapitalization
Full Section 8 funding;
Green Retrofits of
HUD housing
1990s
2000s
Low Income
Housing Tax
Credits
Pres. Reform Leg.
Introduced
States increasingly
dedicate LIHTCs
to preservation
H.R. 4868; Array of
preservation tools and
incentives
(2010)
National Housing Trust, Affordable Housing Preservation: An Historical Perspective
Major Preservation Tools
Preservation Tool
Applicable Properties
Description of Tool
Mark-to-Market
Programs
FHA-Insured/ Projectbased Section 8
Market rents and debt
restructuring to finance
rehab/recapitalization
Section 236 IRP DeCoupling
Section 236 subsidized
mortgages
Ongoing interest
reduction payments to
finance rehabilitation
LIHTCs/Tax Exempt
Bonds
All multifamily affordable
housing
Equity for property
rehabilitation
Project-based Vouchers
Unassisted affordable
housing units
Income stream can be
leveraged to raise debt
HOME/CDBG Grants
All multifamily affordable
housing
Eligible activities include
funding rehab needs
National Housing Trust, Affordable Housing Preservation: An Historical Perspective
GREEN $ in Economic Stimulus
 Energy Retrofits of HUD Assisted
Housing: $250 M
A GREEN investment in
privately owned,
federally assisted
housing…
 “Priority investments” in public housing,
including energy conservation: $1 B
 Weatherization Assistance Prog.: $5 B;
18 States Now Have M/Family
component.
 State Energy Program and Energy
Efficiency and Conservation Block
Grant Funds: $6 B
creates or
retains tens of
thousands of
jobs
Preserves
affordable
housing
lowers energy
costs of vulnerable
low-income
households and/or
properties
National Housing Trust, Affordable Housing Preservation: An Historical Perspective
National Issue:
Local Challenge
 While preservation is a national challenge, the wide variety of local
conditions requires a local, special response.
 Intervention requires a local understanding of the market, the
population being served and level of state and local support.
 Many states/cities/counties have resources dedicated to
development and/or preservation of affordable housing.
 Resources come in the form of soft loans, grants, allocation of tax
credits, or tax relief (e.g., real estate tax abatement).
National Housing Trust, Affordable Housing Preservation: An Historical Perspective
Components of Successful
Preservation Strategies
Data Collection and
Analysis
• Identify “at risk” affordable housing
• Assess resource needs
Policy and Program
Coordination
• Align program requirements to support preservation
• Breakdown agency silos
Outreach and
Technical Assistance
• Improve capacity of preservation-minded organizations
• Work with owners to understand their plans
Dedicated Funding
for Preservation
• LIHTC and housing trust fund set asides
• Public-private funds for predevelopment, acquisition
Commitment to
Sustainability
• Incentives for green preservation
• Integrate affordable housing preservation into TOD
National Housing Trust, Affordable Housing Preservation: An Historical Perspective
Effective Preservation Strategies:
Dedicate LIHTCs to Preservation
 Low Income Housing Tax Credits =
Largest source of resources for
affordable housing.
The number of affordable units preserved
annually with Low Income Housing Tax
Credits
64,000
 Administered by each state. States
given broad discretion for allocating
tax credits.
 Affordable housing providers apply.
Very competitive process.
20,000
 State housing agencies are
increasingly dedicating resources
to preservation
2000
2007
National Housing Trust, Affordable Housing Preservation: An Historical Perspective
For more information:
Michael Bodaken
National Housing Trust

E-mail:

Address: 1101 30th St, NW, Suite 400
Washington, DC 20007

Phone:
(202) 333-8931

Web:
www.nhtinc.org
[email protected]
National Housing Trust, Affordable Housing Preservation: An Historical Perspective