House Financial Services Committee Chairman Barney Frank (D-Mass.), a longtime advocate of preservation as a key element in the nation's affordable housing strategy, has drafted a comprehensive bill to save the urban and rural low-income housing inventory.
The preservation effort also has the backing of the Obama administration, although it hasn't endorsed the specific legislation. Department of Housing and Urban Development (HUD) Secretary Shaun Donovan told the committee that the department “supports the fundamental principles” of the Frank draft.
Donovan emphasized tailoring preservation efforts to the requirements of specific projects. “One concept that we are very interested in pursuing is linking the preservation of the existing affordable housing developments with broader initiatives that benefit communities,” he said at a committee hearing.
Frank's draft bill would provide federal assistance to extend affordability requirements for assisted-housing projects with expiring-use restrictions. The aid could include loans or grants to present owners to rehabilitate their properties for continued low-income use, assistance to nonprofits to purchase properties, and project-based Sec. 8 assistance for unassisted units in low-income housing projects. Tenants facing the loss of assistance because of the maturity of a subsidized housing mortgage and termination of use restrictions would be eligible for enhanced vouchers.
A controversial element of the draft bill would provide a mandatory first right of purchase before subsidized projects can be converted to market rate.
An owner planning such a conversion would have to provide a 24-month written notice to HUD or the U.S. Department of Agriculture, the tenants, and the state and local governments. Qualified preservation purchasers, defi ned as nonprofit or for-profit entities willing to maintain affordability for at least 30 years, would have 12 months to provide a notice of intent to purchase the project and would have to make a bona fide offer before the end of the 24-month notice period to purchase the property for fair market value.
TARP funds eyed for trust fund
With contributions from Fannie Mae and Freddie Mac suspended because of their financial woes, supporters of the national affordable housing trust fund are looking for other sources of money.
The Obama administration pledged $1 billion for the trust fund in its fiscal 2010 budget, but it didn't specify where the funds would come from. Some legislators are eyeing the Troubled Asset Relief Program (TARP) created last year to shore up the financial system.
Frank, Housing Subcommittee Chair Maxine Waters (D-Calif.), and committee members Dennis Cardoza (D-Calif.) and Nydia Velazquez (D-N.Y.) have introduced a bill (H.R. 3068) that would get the $1 billion for the trust fund from dividends paid to the Treasury Department by financial institutions that have received TARP assistance.
The bill also would shift $1.5 billion in TARP dividends to the Neighborhood Stabilization Program for the redevelopment of abandoned and foreclosed homes by state and local governments.
Barry G. Jacobs is editor of Housing and Development Reporter, the nation's premier source for in-depth, factual coverage of all aspects of affordable housing and community development. The two-part publication includes informed reports and insightful analyses in “HDR Current Developments,” and an up-to-date compilation of essential documents in the “HDR Reference Files.” For more information, call (800) 723-8077.