Michael Bodaken National Housing Trust Ohio Preservation Summit: 2010 Affordable Housing Preservation: An Historical Perspective Michael Bodaken, National Housing Trust 2010 Ohio Preservation Summit

National Housing Trust, Affordable Housing Preservation: An Historical Perspective 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? When a privately owned, subsidized rental property is preserved, the owner agrees to keep the property affordable. 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. Galen Terrace Apartments, 82 affordable apartments in Washington, DC preserved by NHT/Enterprise Galen Terrace beforeGalen Terrace after

National Housing Trust, Affordable Housing Preservation: An Historical Perspective Why Preserve? 3 out of every 10 households rent. It is stable housing, not tenure, that is key to providing quality of life benefits. Rehabilitating an existing affordable apartment can cost one-third less than building a new apartment Rehabilitating existing housing is easier and faster than building new housing. This means creating new, well paying jobs sooner. Stable rental housing is critical to diverse, healthy communities. Preserving affordable housing creates jobs quickly. Preserving affordable housing is cost effective.

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 Nations Housing 2010, JCHS

National Housing Trust, Affordable Housing Preservation: An Historical Perspective 1.2 million units of public housing 1.5 million units of privately- owned, federal property- based 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 400,000 units of USDA rural housing (Section 515) What do we want to preserve?

National Housing Trust, Affordable Housing Preservation: An Historical Perspective Why is this stock at risk? Strong market- Gentrification Weak market- Downward pressure on rents Market Risk Owners opt out or mortgages are prepaid or mature HUD takes enforcement action Policy Risk Owner may want out of the business Owner may lack capacity to maintain/ recapitalize housing Owner Capacity/ Interest

National Housing Trust, Affordable Housing Preservation: An Historical Perspective Major Preservation Milestones 1980s1990s2000s ELIHPA & LIHPRHA (1987 & 1990) Preservation incentives for HUD assisted housing Mark to Market ( 1997) Incentives for Section 8 recapitalization HOPE VI (1992) Public housing improvement grants ARRA (Stimulus) (2009) Full Section 8 funding; Green Retrofits of HUD housing Low Income Housing Tax Credits States increasingly dedicate LIHTCs to preservation Pres. Reform Leg. Introduced (2010) H.R. 4868; Array of preservation tools and incentives

National Housing Trust, Affordable Housing Preservation: An Historical Perspective Major Preservation Tools Preservation ToolApplicable PropertiesDescription of Tool Mark-to-Market Programs FHA-Insured/ Project- based Section 8 Market rents and debt restructuring to finance rehab/recapitalization Section 236 IRP De- Coupling 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 VouchersUnassisted affordable housing units Income stream can be leveraged to raise debt HOME/CDBG GrantsAll multifamily affordable housing Eligible activities include funding rehab needs

National Housing Trust, Affordable Housing Preservation: An Historical Perspective GREEN $ in Economic Stimulus Preserves affordable housing A GREEN investment in privately owned, federally assisted housing… creates or retains tens of thousands of jobs lowers energy costs of vulnerable low-income households and/or properties Energy Retrofits of HUD Assisted Housing: $250 M 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

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 Identify at risk affordable housing Assess resource needs Data Collection and Analysis Align program requirements to support preservation Breakdown agency silos Policy and Program Coordination Improve capacity of preservation-minded organizations Work with owners to understand their plans Outreach and Technical Assistance LIHTC and housing trust fund set asides Public-private funds for predevelopment, acquisition Dedicated Funding for Preservation Incentives for green preservation Integrate affordable housing preservation into TOD Commitment to Sustainability

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. Administered by each state. States given broad discretion for allocating tax credits. Affordable housing providers apply. Very competitive process. State housing agencies are increasingly dedicating resources to preservation

National Housing Trust, Affordable Housing Preservation: An Historical Perspective Michael Bodaken Address: th St, NW, Suite 400 Washington, DC Phone: (202) Web: National Housing Trust For more information: