Preservation of Subsidized Housing

Background

Older Americans are particularly vulnerable to rising rental costs. Moreover, the current production of affordable housing is unable to keep pace with growing demand. Therefore, federal government programs such as project-based Section 8, Section 202 Supportive Housing for the Elderly, and Section 811 Housing for Persons with Disabilities are crucial funding sources for the production of new units of subsidized housing.

Many units of affordable housing are at risk for conversion to market rate or more expensive options. Rising property values, especially in areas with proximity to community amenities, give landlords incentive to opt out of the affordable housing market. As contracts expire, landlords often charge the highest market rents or sell their buildings. People with low incomes, however, still need affordable housing options in those same areas close to transit, shopping, and other community resources.

Section 8 and other rental-assistance contracts—renewals of rental-assistance contracts make up a growing share of HUD’s budget. Residents in housing funded under Section 8 rental-assistance contracts and other programs that support families with low incomes are at risk of losing their homes as contracts expire or subsidized mortgages are paid in full. Landlords are then not obligated to accept below-market rents, and households with low incomes lose affordable housing options. Forty-six percent of the families living in these Section 8 assisted units and buildings are headed by people age 62 and older. The Section 8 program’s viability is further limited by insufficient federal funding.

Choice Neighborhoods Initiative (CNI)—CNI, which is a successor to the HOPE VI program eliminated in 2012, is designed to create housing and livable communities in distressed neighborhoods. CNI requires a one-for-one replacement of units. Each community receiving a CNI grant must submit a comprehensive plan to detail how it will redesign its community according to the program’s primary goals:

  • Housing—creating mixed-income housing that replaces older and distressed assisted housing.
  • People—providing supportive services to residents and their families.
  • Neighborhood—developing strategies to encourage and promote public and private investment to provide community amenities and opportunities.

The community must collaborate with local partners to develop and support the plan.

Preservation of Subsidized Housing: Policy

Rehabilitation, acquisition, and early warning systems funds

In this policy: FederalLocalState

Local policymakers should consider ordinances to help preserve affordable rental housing.

Local policymakers should establish early-warning systems designed to track and identify housing developments with expiring mortgages, and rental-assistance contracts.

State and local policymakers should develop acquisition funds and/or transit-oriented development and tax credit programs to preserve affordable housing, particularly in areas near transit, services, or amenities.

Congress should authorize a capital grant and/or loan program to meet the rehabilitation needs of older rent-assisted housing projects and preserve the availability of prepayment-eligible units for low-income households.

Restructuring federally assisted housing

In this policy: Federal

Congress and the Department of Housing and Urban Development (HUD) should restructure the existing portfolio of federally assisted housing in ways that are least disruptive to tenants and that exhibit a long-term commitment to improving the portfolio’s quality and viability and maintaining long-term affordability.

Expiring mortgages and assistance contracts

In this policy: Federal

Congress should provide sufficient funding to fulfill and extend Section 8 project-based rental-assistance contracts, particularly those in areas near accessible, safe, and useful transit.

Congress should provide matching grants to encourage state and local governments to preserve their HUD-insured or HUD-assisted housing.

Congress should provide adequate funding to renew all expiring Housing Choice voucher rental-assistance contracts.

Congress should provide adequate funding for enhanced vouchers or other assistance to maintain housing affordability for existing low-income residents of properties with expiring affordability restrictions, including federally subsidized mortgages and rental-assistance contracts.

Congress should provide sufficient funding to fulfill and extend Section 8 project-based rental-assistance contracts, particularly those in areas near accessible, safe, and useful transit.

Calculating fair-market rents

In this policy: Federal

HUD should modify its formula for calculating fair-market rents in shared housing to encourage the use of vouchers in such housing by public authorities.

Improving the efficiency of HUD

In this policy: Federal

HUD should continue to upgrade its data management systems (including its data on resident characteristics) for its multifamily inventory, to ensure accurate estimates of funding that is needed to renew expiring contracts and provide early warning to keep projects out of default.

HUD should rectify problems in troubled Section 8 New Construction and Substantial Rehabilitation Program properties. Among other actions, the agency should conduct an impact analysis of troubled projects and of the use of recaptured funds to provide rental assistance to tenants.

HUD should consider partnerships with state housing finance agencies, nonprofit housing corporations, and tenant organizations to oversee troubled projects.