Supporting the Most Promising Affordable Housing Initiatives

Housing advocacy groups are promoting a federal initiative that would require HUD to fulfill its obligations to owners arising out of housing assistance payment (HAP) contracts in fiscal year 2008 (FY08) on time and in full, says Denise Muha, executive director of the National Leased Housing Association (NLHA).

Another initiative, this one promoting public-private partnerships, is taking place at the state level. Groups leading this initiative are basing their efforts on reports by the Center for an Urban Future, a nonprofit housing advocacy group, that conclude that such partnerships are crucial to assure the future of affordable housing in urban areas.

We'll give you the details of these initiatives and tell you how you can help support them.

Owners' Federal Initiative

In May, a coalition of 16 housing advocacy groups sent a letter to the House Appropriations Subcommittee on Transportation, HUD, and Related Agencies, requesting a FY08 supplemental appropriation to ensure that there would be no shortfall in the availability of Section 8 funds, as was the case during the summer of FY07.

The letter arose out of a hearing held the month before by the Appropriations Subcommittee, which highlighted the HUD budget shortfall in FY07 that delayed payments to thousands of site owners. The hearing also examined the impact on owners of HUD's current practice of short-funding HAP contracts instead of assuring that 12 months of funding would be provided at renewal.

Federal Housing Authority Commissioner Brian Montgomery told owners that HAP late payment problems in FY07 were regrettable. He assured them that in FY08, HUD has enough money budgeted to fund all HAP contracts through November 2008, although this is less than the 12-month period sought by the housing advocates' initiative.

Advocacy groups, which included owners of affordable housing sites, expressed concern about the impact of short-funded contracts (and the problems arising out of HUD's failure to make timely payments over summer 2007) on owners' confidence. They also indicated the potential for an increase in the number of opt-outs from rental assistance programs.

The initiative promoted by owners' groups is increased stability in the Section 8 program. Owners are seeking a “catch-up” appropriation from Congress of $2.8 billion to permit the funding of HAP renewals for 12 months. The letter containing the initiative was signed by 16 housing advocacy groups and sent to the House Appropriations Committee. (For a list of signatories, see “Housing Advocacy Groups Promoting the Federal Initiative,” in this issue.)

To learn more about the federal initiative, contact Denise B. Muha, executive director of the National Leased Housing Association (NLHA) at (202) 785-8888, or Lisa Blackwell of the National Multi-Housing Council (NMHC) at (202) 974-2365. NLHA and NMHC are seeking support for the initiative, which can be accomplished by contacting congressional representatives, particularly those on the Appropriations Committee. A listing of House Appropriations Committee members can be found at http://www.house.gov.

Public-Private Partnerships—State Level

Meanwhile, on the state level, the importance of public-private partnerships in preserving affordable housing was stressed in a study released by the Center for an Urban Future. The report, titled “Affordable Housing Gaps in High Cost Urban Areas,” reveals that state and local governments have sought to preserve affordable housing that was at risk of being auctioned off as the result of foreclosure. (For a copy of the report, go to http://www.nycfuture.org; Reports and Publications are listed on the left side of the home page.)

New York City provides partnership model. In the 1970s and 1980s, New York City took ownership of more than 100,000 units that were in foreclosure, and 10,000 vacant lots, the report says. Since then, the city has worked with government agencies and low-income housing advocates to create partnerships for the purpose of preserving affordable housing.

Among those government agencies is the city's Department of Housing, Preservation and Development (HPD), which in 2007 rehabilitated 500 units of affordable housing owned by HUD that otherwise would have been lost to foreclosure.

According to HUD regulations, foreclosure of a site receiving federal housing assistance is mandated when its physical condition deteriorates and/or if it is no longer financially solvent. HUD has used foreclosure proceedings to take over sites from owners who have let them become insolvent or fall into disrepair to the point that they fail to pass inspection. When HUD sells a site, there is no guarantee that the new owner will maintain the units as affordable housing. On the contrary, the high rents obtainable in New York City mean that owners are likely to seek market rates immediately.

However, New York City Mayor Michael C. Bloomberg has made the preservation of affordable housing a priority, says Shaun Donovan, Commissioner of HPD. And Mayor Bloomberg has been making good on his promise to build or preserve 165,000 units of affordable housing over the next 10 years, which is the most ambitious municipal housing plan of any city in the nation, he adds.

Since 2007, HPD has worked with HUD and with the City Council to rehabilitate thousands of units that the city acquired through tax foreclosure. Those units remained affordable, meaning that residents paid no more than 30 percent of their income on rent, with the government paying the balance.

The efforts of the public-private partnership in New York City indicate a turnaround from previous policies. Additional reports from the Center for an Urban Future indicate that between 2003 and 2005, HUD was considering auctioning off 2,000 units of affordable housing. Since then, HPD, along with the City Council and various housing groups, rescued from foreclosure 17 buildings containing more than 2,100 units, turning them into housing for low-income residents.

Affordable housing preservation efforts were given a major boost in 2007 when the City Council added $14 million in funding to expand the program substantially throughout the city. For example, funds were allocated for a low-income housing project in Brooklyn called Gates-Patchen Apartments. The HUD-owned building was saved through a partnership with HPD, which allocated $3 million to carry out the residents' plan to rehabilitate it.

By establishing a resident-owned cooperative apartment building entity and carrying out the necessary renovations, the residents were able to preserve as affordable housing the units in which they had been living for years.

Further reading: For background information on the federal government's efforts to preserve affordable housing in New York City, see “In the News: HUD Preserves Affordable Housing on Staten Island,” in our sister publication Assisted Housing Management Insider, May 2008, p. 3.

Insider Source

Center for an Urban Future: 120 Wall St., 20th Fl., New York, NY 10005; (212) 479-3341; http://www.nycfuture.org.

Shaun Donovan: Office of the Commissioner, NYC Department of Housing, Preservation and Development, 100 Gold St., New York, NY 10038; http://www.nyc.gov/html/hpd/html/home/home.

Denise Muha: Executive Director, National Leased Housing Assn., 1900 L Street NW, Ste. 300, Washington, DC; (202) 785-8888; dmuha@hudnlha.org.

Sidebar

Housing Advocacy Groups Promoting the Federal Initiative

• Affordable Housing Tax Credit Coalition (AHTCC)

• American Association of Homes and Services for the Aging (AAHSA)

• Council for Affordable and Rural Housing (CARH)

• Housing Advisory Group (HAG)

• Institute for Responsible Housing Preservation (IRHP)

• Institute of Real Estate Management (IREM)

• Mortgage Bankers Association (MBA)

• National Affordable Housing Management Association (NAHMA)

• National Apartment Association (NAA)

• National Association of Affordable Housing Lenders (NAAHL)

• National Association of Home Builders (NAHB)

• National Association of State and Local Equity Funds (NASLEF)

• National Council of State Housing Agencies (NCSHA)

• National Housing Conference (NHC)

• National Leased Housing Association (NLHA)

• National Multi Housing Council (NMHC)