A new report from NLIHC and the Public and Affordable Housing Research Corporation (PAHRC), “Picture of Preservation 2021,” characterizes the nearly five million homes that constitute the federally assisted housing stock, analyzes preservation risks these homes face, and identifies policy priorities to support their preservation. The report finds that many federally assisted homes face expiring affordability restrictions and issues with physical quality. These homes could be lost from the affordable housing stock if deeply targeted financial resources are not expanded and preservation policies are not strengthened. NLIHC and PAHRC will present the report’s findings in a webinar on November 10 at 2 pm ET.
Using data from the National Housing Preservation Database (NHPD), the authors estimate nearly five million rental homes were supported by federal project-based assistance in 2020, which represents 10% of the U.S. rental housing stock. The Low-Income Housing Tax Credit (LIHTC) supports half of these homes, making it the largest federal program, followed by project-based Section 8 (28%), public housing (18%), and Section 515 Rural Rental Housing Loans (8%).
For-profit organizations owned half of federally assisted rental homes in 2020, while non-profits and public housing agencies (PHAs) owned 39%. The remaining 11% of federally assisted homes had unknown ownership types. For-profit ownership is considered a preservation risk factor because profit-minded owners sometimes seek to convert federally assisted housing to higher-cost, market-rate housing when permitted by expiring program requirements or other weak preservation protections in federal programs.
Affordability and income restrictions are set to expire for 312,446 (6%) federally assisted rental homes by the end of 2025. Most of these homes are supported by the LIHTC (44%) or project-based Section 8 (42%). Some of the homes with expiring affordability restrictions will be preserved. Based on the percentage of units lost in past years, however, 176,760 of the federally assisted homes with expiring affordability restrictions over the next five years could be lost if preservation efforts are not expanded. At least 129,819 federally assisted homes were preserved in recent years using federal resources.
An estimated 143,456 homes subsidized by LIHTC since 1990 were lost from the federally assisted housing stock before reaching 30 years of service and the end of their federally mandated affordability restrictions. Approximately 114,000 of these homes lost their affordability restrictions after 15 years of affordability, suggesting they may have exited through the Qualified Contract (QC) process. The QC process is a loophole in the LIHTC program allowing owners to exit program requirements early after 14 years.
Data on the physical condition of the federally assisted housing stock are mostly limited to programs that require HUD Real Estate Assessment Center (REAC) inspections. Twenty-three percent of public housing homes and 4% of homes assisted by project-based Section 8 failed their last REAC inspection, meaning they face significant issues with physical quality. Ten percent of homes assisted by public housing and 2% assisted by project-based Section 8 failed at least two of their past three inspections and likely face even higher depreciation risk. These properties likely require immediate reinvestment to cover outstanding maintenance deficiencies and provide safe and healthy living conditions for residents.
The report argues for more financial resources and stronger preservation protections to ensure the continued affordability and physical quality of the federally assisted housing stock. Historic investments in deeply targeted federal programs and strengthened preservation policies in the LIHTC program are especially needed. The “Build Back Better Act” provides such investments through the national Housing Trust Fund, Public Housing Capital Fund, and Housing Choices Vouchers, while closing the LIHTC QC loophole.
Read the report at: https://bit.ly/3DWSH3m
Register for the webinar at: https://bit.ly/3vxJN9G