Community Strategies to Preserve Affordable Housing
Rachelle Levitt, Director of PD&R's Research Utilization Division.
Each year, the United States loses more than a half-million affordable homes due to expiring affordability restrictions, improvements that allow owners to increase rents, or deteriorating physical conditions. The loss of affordable homes can contribute to a shortage of homes for low-income renters. Compounding this problem is the fact that most new apartments are designed as luxury units with rents that often are affordable only to high-income households. Preservation of affordable housing is key to a diversified and stable housing stock in cities across the nation. To address the shortage of apartments for low-income renters, several communities have prioritized preservation by including it as an objective in their affordable housing programs.
Washington, DC: Recognizing Preservation’s Importance
The population of Washington, DC (the District) has been steadily increasing, driving up the demand for housing. The loss of affordable units has the potential to exacerbate housing affordability issues. Between 2006 and 2010, the District lost at least 1,000 units of subsidized affordable housing, leading Mayor Muriel Bowser to create a DC Housing Preservation Strike Force (DC Strike Force) in 2015 composed of 18 stakeholders and housing experts. The following year, the DC Strike Force released a detailed report with several recommendations for preserving affordable housing in the District. Recognizing that the challenge of preservation might not be fully addressed if left to developers and tenants, the DC Strike Force concluded that the District government must be proactive and create and promote its own opportunities to preserve needed affordable housing. The DC Strike Force presented six recommendations for the District to implement immediately, including establishing a preservation unit as a central resource for the District’s preservation efforts and providing initial funding for a public-private preservation fund that would eventually leverage greater amounts of private capital.
The DC Strike Force also recommended that the District create a Small Properties Preservation and Affordability Program within the District’s Department of Housing and Community Development to expand resources to preserve properties with 5 to 50 units and publish draft regulations for the District Opportunity to Purchase Act, which allows the District to transfer properties at risk of becoming unaffordable to prequalified developers. In addition, the DC Strike Force suggested that the District provide financial incentives for preservation efforts associated with transactions under the Tenant Opportunity to Purchase Act and develop tenant-based vouchers or other rental assistance programs that allow low-income seniors to age in place. The District government has begun implementing some of the DC Strike Force’s recommendations. In her State of the District address on March 30, 2017, Mayor Bowser announced that the city would create a new $10 million public-private preservation fund.
Cook County, Illinois: Partnering To Preserve Housing
The Summer 2013 issue of Evidence Matters highlighted Cook County, Illinois’ approach to affordable housing preservation. After losing 138,000 units of affordable rental housing between 1990 and 2005, public- and private-sector leaders in Cook County came together to form the Preservation Compact (Compact). In 2007, Compact partners solicited input from more than 100 housing experts and community and civic leaders, and they identified key strategies to preserve and improve government-assisted and unassisted affordable rental housing in the county. These strategies, which together create a comprehensive approach to preserving affordable housing, include collecting and analyzing data on at-risk properties; facilitating collaboration among federal, state, and local agencies to preserve subsidized rental units; and reducing operating costs.
To help locate government-assisted properties at risk of being lost, Compact partners collaborated and shared information with the Interagency Council, composed of HUD, the city of Chicago, Cook County, and the Illinois Housing Development Authority. After identifying property taxes and utility costs as potential threats to the economic viability of affordable rental housing in the area, the Compact also mobilized support for reducing property taxes for multifamily properties. As a result, property tax assessments were restructured through a multiyear step-down so that multifamily rental properties would be assessed at the same rate as single-family properties. In addition, the Compact has tackled the unique rehabilitation challenges of two- to four-unit buildings. After a working group found that no products exist to finance groups of two- to four-unit buildings purchased by investors, the Compact’s coordinator, the Community Investment Corporation, created a new financing product for rehabilitating small rental buildings.
Learning From Existing Strategies
Preservation efforts are an important component of programs seeking to ensure an adequate supply of affordable housing for low-income households. These two community programs are examples of the extraordinary efforts necessary for preserving affordable housing, and several lessons can be taken from the strategies employed by both the District and Cook County. First, to ensure that strategies will be responsive to local needs, communities should solicit input from local stakeholders and experts in the field. Second, collecting and analyzing data is a vital step toward understanding the scope of preservation needs and locating at-risk properties. Finally, working with the private sector can help leverage private funding and magnify the impact of community efforts.