Calling it a “heartbreaking” waste of money, apartment associations blasted the Federal Emergency Management Agency (FEMA) in February for spending almost $1 billion on 26,000 mobile homes that sat unused.
The National Multi Housing Council (NMHC) and the National Apartment Association (NAA), which operate a joint legislative effort, pleaded with FEMA to create a long-term housing voucher system that would place hurricane evacuees in available rental housing. “The $1 billion wasted on those unoccupied trailers that sit in the Gulf Coast mud would shelter 200,000 evacuee families in an apartment for six months,” said Jim Arbury, senior vice president for government affairs for NMHC and NAA.
The trailers were apparently ordered before FEMA realized that the organization’s own regulations prohibited their use in flood plains. It is just the latest action by FEMA that has drawn the ire of the apartment industry. The groups have criticized the agency’s use of short-term cash payments instead of rental vouchers, housing evacuees in hotels at up to three times the cost of apartments, and a lack of assistance for evacuees looking for longer-term apartment housing.
FEMA called mobile homes “an important part of a comprehensive housing strategy” and reported in late February that it was already reimbursing state and local governments for about 60,000 apartments leased to victims of the 2005 Gulf Coast hurricanes. It also announced plans to stop reimbursing the governments and instead transfer the evacuees into an individual rental assistance program, which will pay their rent on a month-to-month basis.
Letter to the editor
Welcome to our world! We’ve got a project that hit so many of the issues noted in the article from the AHF Live conference. (See Affordable Housing Finance, December 2005, page 6, and January 2006, page 20.)
Rosslyn Ridge is a 238-unit, 15-story high-rise redevelopment of an existing 22-unit project our nonprofit has owned for the past 12 years in the Rosslyn area of Arlington, Va. (just across the river from Washington, D.C). Due to the low land basis we did not have the deal-buster of having to finance the land (currently appraised at $22.6MM, or $100 per FAR [floor area ratio] foot), but scaling efficiencies and high construction costs have dictated a project that’s 40% affordable at 60% AMI, with the 60% market-rate being Class A with the commensurate bells and whistles, amenity-wise. Between the compliance issues that a 40@60% deal presents, and the fact that the market-rate piece is so high-end (affordable rents are around $1 per foot, market is $2.40 to 2.70 per foot), we’ve had a tough time finding investors.
This is a market which has seen no new Class A product in about two years, an inordinate amount of condo conversions, and the loss of 50% of “market-affordable” rental stock. Demand for both new Class A as well as affordable rental is huge, and we’ve had at least five syndicators tell us what a great deal this is, how much they’d love to do this but for the fact that investors won’t look favorably on a 40% deal, much less one with top-of-the-line market rents. Argh!
What blows us away is that the big players in this market also underwrite conventional deals. So why won’t they take the step of combining the underwriting of both the tax credit deal and the conventional deal together?
– Douglas E. Peterson, executive director, and Martha L. Paschal, director of real estate, Arlington Partnership for Affordable Housing Inc., Arlington, Va.