Group Title: Affordable housing issues
Title: Affordable housing issues ; vol. 16 no. 6
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 Material Information
Title: Affordable housing issues ; vol. 16 no. 6
Series Title: Affordable housing issues
Physical Description: Serial
Language: English
Creator: Shimberg Center for Affordable Housing
Publisher: Shimberg Center for Affordable Housing
Place of Publication: Gainesville, Fla.
Publication Date: October 2006
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Bibliographic ID: UF00087009
Volume ID: VID00041
Source Institution: University of Florida
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AFFO R D A B L E


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M.E. Rinker, Sr., School of Building Construction College of Design, Construction & Planning PO Box 115703,
University of Florida, Gainesville, FL 32611-5703 TEL: (352) 273-1192 SUNCOM: 622-7697 FAX: (352) 392-4364


Volume XVI, Number 6


October 2006


The February 2006 issue of the Shimberg Center's newsletter focused on the growing need
to preserve Florida's affordable rental housing stock. To summarize, government-subsidized
affordable rental housing is permanently being lost at a time when the need is soaring. Under the
terms of federal housing programs enacted in the 1960's through 1980's, many private property
owners have become eligible to opt-out of rental assistance contracts, prepay subsidized
mortgages, or end affordability of tax credit properties. This has spurred conversion of rental
units to market-rate housing or non-residential use, a shift that is influenced by market factors,
financial and physical property conditions, owner motivation, and availability of funding
resources. This issue continues the conversation about preservation by discussing the recent
work of the Affordable Housing Study Commission and outlining efforts at the state level to
improve data collection and encourage more preservation transactions.
On a national scale, preservation efforts have been haphazard, due in part to the lack of
understanding about the extent of the problem, including limited property-level data that would
provide insight into the risk of loss. Spearheaded by the Governor's Affordable Housing Study
Commission, Florida has taken a proactive approach to assessing its preservation challenges
and developing a preservation strategy.

h r.sev o I e more than 50 percent of total household income for
housing. Extremely low-income renter households
During its 2003-2004 study year, the Study
Cin h d are especially hard hit with more than 75 percent
Commission examined the housing needs of
e severely cost-burdened. Furthermore, elderly,
extremely low-income households families
r disabled and single-parent renter households are
who earn less than 30 percent of the area median
e disproportionately represented. This means that the
income. The Commission identified over 637,000
ome The commission ideniied oer most vulnerable households are facing a crisis of
extremely low-income households in Florida, unprecedented proportions.
unprecedented proportions.
many of which are severely cost-burdened, paying
WM


H 0 S N G








The Commission identified that contributing to this
crisis was the fact that many subsidized housing units
currently in use by extremely low-income households
had reached, or were about to reach, the end of their
life as subsidized housing. The Commission's 2004
final report states that some experts tag the loss in
Florida at more than 11,000 units over the past five
years, but that yet no one knows the exact numbers.
The Commission warned that solutions had to be
found to produce more units for extremely low-
income households, and that serious efforts must be
undertaken to preserve existing affordable housing
for extremely low-income families through rental
assistance or other means.





After initial consideration of the preservation issue
as part of its 2004 research agenda, the Study
Commission recognized that a comprehensive
multifamily state preservation policy should be
developed. Before the Commission could begin
to develop such a policy, it would be necessary to
educate itself about the aging and expiration status
of Florida's existing affordable multifamily housing
stock, the programs that funded this stock and the
barriers that limit preservation transactions. The
Study Commission found that Florida has over
259,000 affordable multifamily units financed by
myriad state and federal programs over the last
70 years. Almost 39,000 of these units are public
housing which will remain part of the affordable
housing stock; the preservation focus for these units
is maintaining or improving, where necessary, their
physical condition. The other 220,000 of these units
were built in exchange for a commitment by the
property owners to maintain the affordability of the
units at predetermined levels over set periods of time.
Depending on the program and year in which the
units were built, the affordability period ranges from
15 to 50 years.

The majority of units with affordability restrictions
must be maintained as affordable for at least another
25 years. However, current affordability requirements
for approximately 60,000 units will expire over the
next 15 years. Upon expiration of the affordability
requirement, a property owner may choose to convert
PU


to market rate housing or even non-residential use.
This is a serious concern, since many of the state's
lowest income residents rely on subsidized affordable
housing. An added concern is that additional rental
assistance will slowly disappear as HUD's budget is
cut. Rental assistance is provided to some 27,000 of
these units to make them even more affordable,

The age of Florida's affordable housing stock adds
another element to the preservation debate. The
Study Commission's 2005 final report states that
while over 40 percent of Florida's affordable housing
stock is 1-10 years old (95 percent of these newer
units have been financed through Florida Housing
Finance Corporation programs), almost one-third of
the stock 83,847 units is over 20 years old. Public
housing and units funded with early HUD programs,
such as Section 202 for elderly housing, make up the
highest proportion of the older stock. Even if these
units maintain affordability restrictions and rental
assistance into the future, they are aging and in need
of rehabilitation to keep them as decent housing

The Commission also outlined obstacles that may
complicate the implementation of preservation policy
if these are not addressed:
* Financial barriers: Onerous tax implications often
come into play upon sale of a property, limited
capital is available to maintain affordable devel-
opments, and, most importantly, public sector
programs are generally not well positioned or suf-
ficiently funded to encourage preservation;
* Information barriers: Comprehensive data is
limited about the status of Florida's assisted and
conventionally financed housing stock, and about
the regulatory and real estate market issues of a
particular development. Also, notice requirements
to announce the property owner's intent to end
affordability are very limited and do not improve
the chances that new owners will be found to
preserve the affordability of the units;
* Governmental and regulatory barriers: Tax
requirements, building code requirements and
affordable housing program requirements may
all impact the ability to carry out a preservation
transaction; and
* Capacity barriers: Across Florida's affordable
housing delivery system, stakeholders generally
lack the tools and experience to handle complex
preservation transactions.












The Study Commission's 2006 final report draws
together multiple years of study and testimony to
offer a comprehensive statewide preservation policy.
Detailed recommendations were organized in five
parts and key recommendations are highlighted here:

Encourage private sector involvement in
preservation:
* Florida Housing Finance Corporation ("Florida
Housing") should create a Preservation Set-Aside
for 9% Housing Credits;
* Florida Housing should combine the acquisition
and rehabilitation costs of a preservation trans-
action into a single total development cost and
award a developer fee equivalent to that received
for new construction; and
* The Florida Legislature should appropriate $25
million for the creation of an affordable housing
preservation bridge-loan program, to be matched
by private lenders to create a program totaling a
minimum of $50 million.

Make existing state funding programs and processes
more preservation friendly:
* Florida Housing should allow HOME funds to be
combined with other state administered fund-
ing programs to make preservation transactions
financially feasible;
* Florida Housing should prioritize the preserva-
tion of properties with project-based rental as-
sistance in its preservation funding efforts. These
properties generally house extremely low-income
families, and once this federal subsidy expires,
the affordable units are permanently lost;
* The Florida Legislature should revise the SHIP
statute to increase the per unit loan or grant limit
on rental units, which triggers annual monitor-
ing and tenant income certification in the SHIP
program from $3,000 to $15,000; and
* The Commission strongly encourages local
governments to consider how unrestricted SHIP
program income can support preservation of
smaller affordable and conventionally financed
housing properties.


Knowledge is power:
* Florida Housing should prioritize comprehensive
data collection for the properties in its portfolio
and make this information available to the public
through the Florida Housing Data Clearinghouse;
and
* The Florida Legislature should adopt a notice
policy with a minimum notification period of 12
months, covering prepayments and opt-outs for
all affordable rental housing of five units or more
with permanent financing from the state. The
policy should pertain to developments funded
after the date of policy adoption.

Encourage nonprofit and public housing authority
participation in preservation:
* Florida Housing should broaden the field of
experienced and efficient developers by using
the Affordable Housing Catalyst Training and
Technical Assistance Program to provide a series
of preservation workshops for nonprofit develop-
ers, public housing authorities and local govern-
ments.

Converting Affordable Multifamily Housing into
Condominiums:
*Several developers have asked Florida Housing
to terminate the long term affordability require-
ments on units built with funds from the state's
affordable housing programs. Releasing these
units from the affordable rental housing inven-
tory represents an important and, in the opinion
of the Commission, unwelcome precedent. The
recommendation is therefore that Florida Hous-
ing should deny any requests for termination of a
Land Use Restriction Agreement or an Extended
Use Agreement for the purpose of converting af-
fordable rental units into condominiums.






In June 2006, the Shimberg Center for Affordable
Housing and Florida Housing Finance Corporation
received funding from the John D. and Catherine
T. MacArthur Foundation through its Window of
Opportunity: Preserving Affordable Rental Housing








initiative for a project to improve national data
collection and analysis related to the preservation of
subsidized rental housing.

The project seeks to develop a national consensus
on the design of a national preservation data
infrastructure that will allow data to be aggregated
at the state and national level for purposes of
prioritizing and tracking preservation efforts over
time. As part of this effort, the Shimberg Center
will identify the data on subsidized properties that
provide the most useful information for policy
decisions and program delivery. It will also develop
tools that use these data to help policymakers and
housing professionals identify properties most at risk
of loss from the inventory.


Funding for the project will also allow the Shimberg
Center to increase its capacity to collect and analyze
these data for subsidized properties in Florida
localities. It will provide the opportunity to expand
the existing assisted housing inventory that Shimberg
has developed for Florida. The assisted housing
inventory consists of a general database and a
preservation database, both with property-level data.
It is publicly available through the Florida Housing
Data Clearinghouse (http://www.flhousingdata.
shimberg.ufl.edu/). An expanded preservation
inventory that contains the most critical property-
level data will be of high value to policymakers in
making preservation decisions.

This newsletter is based on excerpts from the annual
reports of the Affordable Housing Study Commission,
available on the following website:
http://www.floridahousing.org/ahsc/AnnualReports/


Affordable Housing ISSUES is prepared bi-monthly by the Shimberg Center for Affordable Housing for the purpose
of discussing contemporary issues facing affordable housing providers. Reproduction of this newsletter is both permitted and
encouraged. Comments or questions regarding the content are welcome and should be addressed to Robert C. Stroh, Director.


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