lis 217 stemming the tide - LISC

introductionOver the past decade, at least 100,000 units ofprivately owned, federally subsidized housinghave vanished from the nation’s housing inventory.These losses have occurred not only instrong coastal markets like California andMassachusetts, but nearly everywhere—inalmost every state, in small towns, in ruralareas, and in big cities. In many parts of thecountry, a strong real estate market has placedthousands of additional affordable units at riskas owners consider converting to market ratehousing or non-housing use. In weaker markets,subsidized housing is threatened by disinvestment,default, and foreclosure.Community-based nonprofit developmentorganizations often lead the fight to preservesubsidized affordable housing. Most community-basednonprofits have a social mission thatincludes protecting existing low- and moderateincometenants from displacement. In manycommunities, federally subsidized projects arethe sole remaining source of economic diversity—theonly affordable housing left in the townor neighborhood for low-wage workers andmunicipal employees, single parents with children,elderly tenants, and minority households.As building costs rise and the federal governmentretreats from new housing production,existing units, once lost, will never be replaced.Housing preservation represents both a developmentopportunity and a significant challengefor community-based and other nonprofits.While a preservation transaction may offer thechance to move to scale quickly with a high visibilityproject that has significant neighborhoodimpact, as this handbook details, these dealscan be particularly intricate and involved.Community-based developers experienced onlywith small neighborhood revitalization projectswill require specialized expertise to ensure asuccessful transaction that is sustainable and agood investment. The key is to match missionand capacity, and intermediaries such as LISCcan assist with these issues when needed.Projects that are at special risk, those that arelocated in a nonprofit’s target area, or thosethat serve a nonprofit’s constituency group mayhave special appeal. This handbook is intendedas a guide to help community-based and othernonprofit development corporations createpreservation strategies for federally subsidizedhousing projects in their communities. Thishandbook focuses specifically on HUD-assistedmultifamily housing. However, much of thematerial in the chapters on strategies and propertyresearch will also be applicable to housingdeveloped under the U.S. Department ofAgriculture's Rural Development programs.1Chapter One traces the history of key federalhousing subsidy programs and provides anoverview of the subsidized housing preservationproblem. It addresses the two majorthreats to preservation: expiring use restrictions(or subsidized mortgage prepayments)and expiring subsidy contracts (Section 8housing).Chapter Two outlines the tools that are currentlyavailable to preservation advocatesunder federal laws and programs.Chapter Three explores preservation tools andstrategies developed by advocates and practitionersat the state and local level.Chapter Four explains how to research propertiesin order to build the foundation for apreservation strategy.iintroduction