Saying the country had lost sight of the importance of rental homes in a balanced national housing policy, MacArthur Foundation leaders announced Thursday that it is investing $32.5 million to fund affordable housing preservation efforts in 12 states, cities, and counties.
“The end of the housing bubble, foreclosures, and economic decline underscore the importance of affordable rental housing,” said Jonathan F. Fanton, foundation president. “We now have an opportunity to restore rental housing to its proper place and to reshape the policy environment so that it both encourages rental housing preservation and makes it easier to do so.”
The initiative, which is expected to preserve more than 70,000 affordable rental homes, was praised by Shaun Donovan, secretary of the Department of Housing and Urban Development (HUD), during a conference call announcing the awards.
“It’s absolutely critical that in a time where so much focus has been on homeownership that we remember rental housing is an absolutely critical part of the housing solution for American families overall and particularly for low- and moderate-income families,” he said.
Donovan said he will make sure that HUD supports the efforts and not become an impediment to the innovations that are happening at the state and local levels.
He added that earlier in the day President Barack Obama unveiled a blueprint of his budget, with a $1 billion commitment to the National Housing Trust Fund, which will help to create new affordable rental housing and to preserve existing housing. He also said significant resources aimed at rental housing preservation were included in the American Recovery and Reinvestment Act signed last week. A key provision was $2 billion to ensure that Sec. 8 contracts can be renewed for a full year.
Fanton put the issue in perspective by saying that 2 million affordable rental homes were lost—sold, demolished, or priced out of reached—during the last 10 years. That loss was only partially offset by the 1 million new units of affordable housing that were built.
He added that preserving an affordable rental home costs on average about half as much as building a new one.
Sister Lillian Murphy, CEO of Mercy Housing, a national affordable housing developer, estimates the overall gap between the supply and demand for affordable housing for low- and very low-income people to be about 12 million units nationwide.
“Preservation is absolutely critical so we don’t lose more of the affordable stock, particularly now when there’s more and more pressure because of the foreclosure situation,” she said.
Fanton described the states and local jurisdictions receiving the grants as “innovators.”
In Denver, a $250,000 grant and a $2 million program-related investment will help establish a new loan fund for transit-oriented development that preserves affordable rental housing near existing and planned transit stations.
The area is undergoing a major expansion of its light-rail transit system that will create about 120 miles of new track, said Mayor John Hickenlooper. “It became clear when we looked at this that a lot of the stations and the development activity around the proposed stations were going to put at risk the affordable housing stock that was there, and there was some open space for the creation of new affordable housing,” he said. “It was going to be pushed aside by the economic demand for higher-value housing and higher-margin housing.”
The other 11 preservation efforts are in Florida, Iowa, Maryland, Massachusetts, Minnesota, Ohio, Oregon and Portland, Pennsylvania, Vermont, Washington and Seattle, and Los Angeles.
In Los Angeles, nearly one-third of the subsidized housing stock, or 22,000 units, is at risk of losing its affordability in the next 10 years. A $1 million grant will support the city’s capacity to track and monitor affordable units that are at risk of losing their affordability and will also support efforts to preserve single-room occupancy units in Skid Row and downtown, which house some of the city’s most vulnerable residents.
The Ohio Preservation Compact was awarded $5 million from the MacArthur Foundation, which will help housing leaders develop a database of federally subsidized properties to evaluate preservation needs and opportunities. In addition, a loan fund will be established to provide low-cost financing. The compact is a consortium of the Ohio Housing Finance Agency, the Coalition of Homelessness and Housing in Ohio, and the Ohio Capital Corporation for Housing.
Ohio is facing a potential loss of subsidized rental housing that will affect nearly 43,000 families. Over the next 10 years, the new investment will help ensure the preservation of more than 30 percent of the housing that is at risk, according to Ohio leaders.
The open competition drew 80 applicants.
The funding of the 12 projects is part of MacArthur’s Window of Opportunity initiative, a $150 million, 10-year effort to preserve affordable rental homes across the country.
For more information, visit www.macfound.org.