The Bronaugh Apartments is one of the oldest rental housing developments in Portland, Ore. It may also be one of the most important, providing vulnerable seniors and disabled individuals with a safe and affordable place to live.
Like many other older affordable housing properties across the nation, the 50-unit community was in danger of losing its affordability. The Bronaugh’s federal rental-assistance contract was due to expire in 2012, and the property was on the market as nonrestricted housing. That meant the residents were in danger of being displaced.
To thwart this looming threat, REACH Community Development, a local affordable housing organization, stepped in to buy the Bronaugh in 2013, performing emergency repairs and setting out on a sweeping, $14.5 million preservation effort.
“We wanted to continue providing housing for the Bronaugh’s residents, some of whom have lived there for many years,” says Lucy Corbett, housing development project manager. “Had the building been sold for redevelopment, it would have displaced the residents from their homes, further reducing affordable apartments in an area with high rents.”
Three years later, major renovations have been completed on the three-story building and its long-term affordability for residents has been ensured. A reopening of the Bronaugh was celebrated in mid-July.
The development is among the last of the at-risk Sec. 8 properties to be rescued under the Portland Housing Bureau’s ambitious 11X13 Preservation Campaign. In 2008, the agency identified 11 privately owned buildings, with more than 700 units, at risk of losing their affordability by 2013. It then partnered with developers, funders, and others to put plans in place to preserve the properties by that year.
“These 11 developments were prioritized for preservation because they represented extremely vulnerable housing with expiring rent subsidy contracts and Department of Housing and Urban Development (HUD)–insured mortgages,” says Barbara Shaw, housing portfolio finance coordinator at the Portland Housing Bureau. “Portland has a very aggressive real estate market. The developments were all privately owned, expiring-use properties, and they were vulnerable to market-rate conversion.”
The 11X13 initiative succeeded due to the strong collaboration between HUD, the city, and the state working with several nonprofits. In the case of Portland, the city gave the identified projects a priority route through the funding process.
For every dollar the city invested, the campaign leveraged more than $6 from other investors and lenders. Portland invested $22.3 million in Community Development Block Grants, Sec. 108–guaranteed loans, and local urban-renewal dollars. This leveraged over $136 million in other development funds and will leverage more than $120 million in federal rent assistance over the next 20 years. Renovations at one final project, the Hawthorne East, are scheduled to be completed by developer Northwest Housing Alternatives this month.
The effort comes at a crucial time. Affordable-use restrictions will expire on about 2 million federally assisted rental units over the coming decade. About 64% of these are low-income housing tax credit (LIHTC) units, both those reaching the end of their initial 15-year compliance period or their 30-year extended-use period, according to the National Low Income Housing Coalition (NLIHC). Properties reaching the 30-year mark are the bigger concern, and there are 358,575 of these units that will hit 30 by 2025 and don’t have other subsidies that would extend the affordable-use restrictions, reports the NLIHC.
The 11X13 campaign is one of several innovative efforts aimed at helping communities hold on to their affordable housing stock.
Housing leaders in the Minneapolis region have established a new fund to maintain 2,000 unsubsidized units, and in Washington, D.C., officials have launched a strike force to preserve its at-risk affordable housing.
Built in 1905, the Bronaugh is listed on the National Register of Historic Places. However, the development, initially three buildings that were tied together over time, had not been renovated since 1982 and was suffering from deferred maintenance.
REACH rehabbed the individual apartments, created a new community room, added a computer lab, and performed an important seismic retrofit of the building. The Bronaugh was one of approximately 1,700 unreinforced masonry buildings in Portland. Bringing the building up to code required significant work, including drilling 88 micropiles to an average depth of 35 feet to secure the building’s foundation.
Just as important as improving the physical condition of the building, REACH also made sure to protect the property’s long-term affordability. The team worked with HUD to obtain a new, 20-year, project-based Sec. 8 contract for all the units.
The project was an important one to save. Its downtown location close to services and on the MAX light-rail line makes it a desirable property, especially for residents who don’t have cars.
Financing for the Bronaugh Apartments includes $8.7 million in low-income housing tax credit equity and $1.5 million in historic tax credit equity from Bank of America Merrill Lynch; $2 million from a Network for Oregon Affordable Housing permanent loan with state housing credits; $1.7 million from a Portland Housing Bureau loan; $280,000 in Oregon Housing and Community Services grants; and a $270,000 sponsor contribution.
“Public awareness matters,” says Dan Valliere, REACH CEO, describing one of the key lessons learned. “The public awareness around the need to preserve affordable housing in the central city provided incentive and motivation for all of the partners to assume some risk and to be creative.”
Twin Cities preservation fund
The Minneapolis–St. Paul area is taking a stand to stem the loss of affordable housing. In an initiative that’s the first of its kind in the region, officials have launched a fund that seeks to preserve 2,000 unsubsidized affordable rental homes in the Twin Cities.
The Naturally Occurring Affordable Housing (NOAH) Impact Fund hopes to begin acquiring properties by the end of the year. It recently took a big step forward when Hennepin County (the seat of which is Minneapolis) agreed to invest $3 million in the fund, which seeks to raise $50 million in two phases.
“It’s cheaper to preserve affordable housing than it is to create it,” says county commissioner Jan Callison. “For our clients who are using county services, housing is fundamental. Unless they have stable housing, it’s very hard to work on some of the other issues they may bring, whether that’s chemical dependency or unemployment or a need for other services. We know that we need to have our people stably housed if they’re going to improve the conditions of their lives. It just makes more sense to preserve the housing that’s already in existence.”
Like many other communities, Hennepin County is seeing its affordable housing stock disappear as buildings are converted to market-rate housing. Officials estimate that the county has lost at least 1,300 affordable homes so far this year.
Overall, the county has approximately 82,000 units of unsubsidized multi- family rental housing, with rents affordable to households with incomes at or below 60% of the area median income, which is $51,480 for a family of four.
Created by the Greater Minnesota Housing Fund (GMHF), the NOAH Impact Fund will target at-risk naturally occurring affordable housing composed of Class B and C rental apartments typically built between the 1950s and 1980s.
“The goal will be to keep the properties affordable for 15 to 20 years to preserve the affordability and avoid the displacement of tenants in a hot market,” says Warren Hanson, GMHF president and CEO.
The first phase of the program seeks to preserve 1,000 units with $25 million from the fund. If that is successful, officials would do a similar second phase.
The county’s funds join $1 million from The McKnight Foundation and $2.25 million from GMHF.
The NOAH fund will work with high-performing, nonprofit affordable housing developers and socially motivated, for-profit owner–operators. These organizations will be required to put up 10% of the equity, and the fund will put up 90% of the equity. That will make up roughly 30% of the overall financing needed for the properties, according to Hanson. The other 70% will then come from conventional lenders.
The fund will operate in a seven-county area of the Twin Cities.
Under a pilot, GMHF acquired a 72-unit property in New Brighton last year. Renters at Fountain Terrace were facing rent increases of more than $200 a month until the fund, in partnership with Real Estate Equities, a for-profit owner, acquired the property, for $6.8 million.
D.C. establishes strike force
Washington, D.C., lost at least 1,000 units of subsidized housing between 2006 and 2014. It’s at risk of losing many more in the years ahead as subsidies expire on an additional 13,700 units by 2020, according to housing officials.
To protect the affordable housing stock, Mayor Muriel Bowser established the D.C. Housing Preservation Strike Force. The 18-member team unveiled several draft recommendations in June, including:
- Establishing a preservation unit located within a District government agency that is tasked with being the central resource to preserve assisted affordable housing;
- Providing seed funding to a public–private preservation fund; and
- Developing a small-properties preservation and affordability program in the Department of Housing and Community Development to help properties with five to 50 units with renovation and repair funds.
- Although the regional approaches are different, each community seeks the same outcome: Preserve affordable housing before it’s lost.