Over a quarter century ago, affordable housing advocates, housing providers, and public officials began to fully recognize a potential affordable housing crisis. In the early 1990s, federal contracts with private owners of affordable apartments faced expiration in huge numbers, threatening the housing of about 1.5 million, of which 1.2 million were subsidized through HUD’s project-based Section 8 rental assistance program. In essence, as most readers know, property owners agreed to maintain the properties as affordable in exchange for various incentives, such as below-market interest rates or rent subsidies. Once these contracts were up, the owners had no legal obligation to retain the affordability.
Owners would, in the case of the Section 8 program, opt out of contract renewal. In the case of the smaller programs, owners could prepay their HUD-insured mortgages, recognizing that higher rents would allow them to refinance, if necessary, with fewer restrictions. The worry among advocates was, of course, that in expensive rental markets, owners would raise rents to such levels that would essentially force low- and moderate-income residents out of those neighborhoods. In 1998, for example, the National Housing Trust, long the leader in the push for affordable housing preservation, reported in Shelterforce that after prepayment, rents, on average, increased by 45 percent, a jump unaffordable to the typical resident.
In a way that today seems almost as real as a unicorn, or more aptly a rainbow and a pot of gold after a massive thunderstorm, Congress acted.
It passed Low-Income Housing Preservation and Resident Homeownership Act of 1990 (LIHPRHA), which offered incentives as well as limitations on repayments of federally subsidized mortgages, and built on earlier Congressionally approved preservation efforts. Recognizing the value of resident-ownership and local control, LIHPRHA even funded property purchases by nonprofits and tenant associations. (Congress defunded that part some time ago.) Seven years later, Congress responded anew to the crisis with the Multifamily Assisted Housing Reform and Affordability Act of 1997 (MAHRA), which aimed to restructure loans in order to allow rents to remain affordable and to reduce federal risk.
In the subsequent years, however, critics argued HUD did not adequately use its authority to preserve these units, putting as many as one million units at risk of losing their affordability. Various plans came out of HUD and Congress, and even others grew from the financial crisis of 2008. The biggest (and albeit simplest) takeaway is that the federal government efforts were quite successful, as according to two studies, in 2006 and earlier this year about two-thirds of the rental units were preserved in some manner. (Yes, many were saved because the federal offer remained the best deal for a property in a sluggish market, but many, many units would have been lost, and tens, if not hundreds, of thousands of families displaced.)
So, as an unreformed old-school housing advocate, I propose—as it avoids default on the national debt—that after choosing a new Speaker of the House acceptable to all 435 members and preventing a government shutdown, Congress approve legislation that at once preserves existing federally assisted stock, creates new programs for those too poor to afford even LIHTC units and fully funds public housing authorities.
Well, not quite.
My thoughts, as are those of many of us these days, are both much less dramatic and much more plausible, given the current political environment.
One of the reasons why advocacy to preserve housing has been so effective is that the data exist. We know, since we are talking about federal assistance, how many units and properties face contract expirations in the next few years. This is a big piece of what the National Housing Trust does. We also know that states and localities also track the availability of as well as the threat to affordable rental housing in their consolidated plans and elsewhere. Once a community knows that, for example, 100 units of affordable housing is about to be lost, they can work to preserve, purchase, or at least plan, to mitigate the impact of the loss of it on residents. LIHPRHA once helped, though housing providers still have tax credits, housing vouchers and other tools that can help.
If only this concept (or at least the mindset) could be applied to the largest source of unsubsidized affordable housing in the nation, which is manufactured housing. About 40 percent of these homes are located in about 45,000 manufactured housing communities across the nation. Over 95 percent are investor-owned, meaning that, depending on state law, families face the threat of eviction as owners raise rents, sell to new owners or dispose of the communities for reuse. In California, for example, 400 communities have been lost in the last 20 years. Far too often, even with good relocation law, families are uprooted and schooling disrupted. And in the big picture, affordable housing resources are lost and never replaced.
The primary strategy to support preservation of manufactured housing communities has been through the development of cooperatives, such as those organized by ROC USA, or purchased by nonprofits or public housing authorities. Some public and private investors have entered this space, and provide vital resources.
Yet, it’s impossible to preserve affordable housing if you don’t know that it exists, let alone that it is at risk. That’s why HUD needs to compel states and localities that receive federal housing and community development funds to count and assess manufactured homes and communities as they do other housing resources. Not only would this help planners accurately catalog housing options, but potentially identify qualified recipients of housing funds. It would also help homeowners, nonprofits and local officials learn about communities that may be at risk for closure or sale, and start the process to preserve not just affordable housing, but affordable homeownership.
We know that the era of a robust federal role in affordable housing is over, at least in the near term. This has made the affordable housing crisis not only worse, but has left us with fewer tools to address it. We need to know what’s in the preservation toolbox. If we are serious, ignoring manufactured housing preservation is no longer acceptable.
(Photo credit: Darrell, via flickr, CC BY-NC-ND 2.0)