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chapter threeState and Local Preservation Tools and StrategiesSince the termination of the LIHPRHA and ELIH-PA programs, responsibility for preserving HUDassistedhousing has increasingly devolved tothe state and local level. Today's federal preservationtools—including Enhanced Vouchers,Mark-Up-to-Market/Budget, IRP Decoupling,and Mark-to-Market incentives—are not adequatelydesigned or funded to preserve all ofthe units that remain at-risk. Not surprisingly,mortgage prepayments and opt-outs continueto erode the assisted housing stock.In recent years, however, a variety of innovativepreservation tools and strategies have emergedat the state and local level to supplement, andextend the reach of, existing federal programs.This chapter will review the laws, programs, andpolicies that have been developed by preservationadvocates, practitioners, and governmentofficials to preserve subsidized housing in theircommunities. Both regulatory and incentiveapproaches ("carrots and sticks") will beaddressed. Case studies will illustrate how differentcommunities have combined these toolsto develop successful preservation strategies. 301. REGULATORY ANDINCENTIVE APPROACHESRegulatory/Enforcement ToolsCrafting effective state or local regulatoryapproaches to preservation can be difficult.Efforts to restrict property rights must be carefullydesigned to avoid legal challenge. In theabsence of funding or other incentives, permanentpreservation can rarely be accomplishedby state or local regulation alone. Nevertheless,a variety of regulatory and enforcement toolshave been utilized to bring owners to the negotiatingtable or otherwise facilitate preservationoutcomes.Rent and Eviction ControlsSome localities have existing rent control laws(San Francisco, Los Angeles, New York City) orproposed initiatives (Massachusetts) that canhelp to preserve at-risk properties. These lawstypically extend coverage to federally-assistedhousing when the HUD subsidy expires throughmortgage prepayment or opt-out. Eviction controlsusually provide that tenancies in controlledproperties can be terminated only forgood cause.Where the regulatory scheme keeps rents belowmarket, incentives for conversion may be significantlyreduced. In San Francisco, for example,advocates attribute the virtual absence of prepaymentsand opt-outs to the city’s strong rentcontrol system. A weaker or more transitory regulatoryscheme may have less of an impact. Atthe same time, rent controls that depress propertyvalues below the level required to cover theseller's exit taxes 31 may discourage ownershiptransfers, including sales to nonprofit purchasers.For this reason, some preservationadvocates have sought to exempt propertiessold to nonprofits from rent control coverage.Existing Use RestrictionsSome properties may have use restrictionsimposed by a state or local agency that dateback to their original development. Theserestrictions often limit a property’s use beyondthe expiration of federal regulatory agreements.Local restrictions commonly arise from urbanrenewal plans, land disposition agreements,zoning or parking relief, tax relief, or publicfinancing.Often these covenants are buried in long-forgottenlegal documents, and identifying, excavating,and interpreting them in a way that ismeaningful to current circumstances can be aformidable challenge. But the rewards can besignificant: in Massachusetts, enforcement ofexisting restrictions by state and local agencieshas resulted in significant preservation benefits(see below).Notice RequirementsA number of states (California, Minnesota,Maryland) and cities (Portland, Oregon; SanFrancisco, California; Denver, Colorado) havelaws that supplement existing federal notice22chapter three: State and Local Preservation Tools and Strategies