The voices of Urban Institute's researchers and staff
August 25, 2016

Preserving affordable housing: what works

As more low-income households struggle to find affordable homes, preserving existing affordable housing is critical. While new construction is part of the puzzle, the complex and costly process of development means these efforts have not kept up with demand. Preserving existing affordable housing is an important supplement to new developments, and it prevents displacement, is generally cheaper than building new housing, and conforms to existing land-use patterns.

Acquisition and rehabilitation of existing affordable housing is complicated. As with new construction, developers need to weave together federal, state, and local funding sources; employ state and municipal policy tools; and collaborate with stakeholders. The importance of local context means that most preservation deals look and function differently, but understanding how preservation efforts work in one place can nonetheless inform efforts in another.

To better understand how affordable housing preservation happens, we highlight in a new series of papers six cases from around the country where developers have successfully navigated complex policy and financing environments to preserve affordable housing. These case studies represent a range of contexts, from a historic mill complex in Hartford, Connecticut, to a manufactured home park in rural Oregon. The case studies illustrate pathways that successful preservation efforts have taken, and that could inform other efforts elsewhere. We highlight five:

  • Local and state resources available to complement federal funding sources
  • Local policies that give preservation efforts a chance to get off the ground
  • Developer capacity to put together complex deals
  • Collaborative relationships between buyers and sellers
  • Policy networks for sharing knowledge, techniques, and interventions across localities

Although federal subsidies remain critical for preserving affordable housing, preservation efforts often need additional resources. Local and state agencies provide short- and long-term financing, acquisition and predevelopment funds, and tax credits. In Minneapolis, preserving and renovating one of the largest affordable housing complexes in the city involved city, regional, state, and federal funds.

While funding availability is central, preservation efforts are also facilitated through local and state policy frameworks. For example, “opportunity to purchase” legislation, which requires owners to notify tenants of intent to sell and provide them (or an approved third party) an opportunity to purchase, played a role in three cases. In Washington, DC, residents could select a buyer who met their needs and had the authority to negotiate a sale from the previous owner.

Strong developer capacity is crucial for bigger projects with complex financing or multiple partners. Historic buildings, resident services, temporary relocation programs, and special needs of residents (such as elderly residents), can add to project complexity and cost. Elsewhere, dynamics in a given market may require a specialized intervention: in Chicago’s Austin neighborhood, where financing for development had been difficult to obtain, a community development financial institution provided credit access to the buyers of a multifamily rental building.

Collaboration between buyers and sellers helps, too. In two of our case studies, cities benefited from mission-oriented sellers motivated to work with buyers to retain affordable housing and other community features. In Cambridge, Massachusetts, and Hartford, Connecticut, sellers remained involved in the properties, funding resident services and other on-site activities.

Finally, preservation practice is strengthened through the transfer of policy knowledge, techniques, and interventions between localities, an effort supported through several policy networks, such as the National Preservation Working Group or Resident Owned Communities USA. These national initiatives, and local ones such as The Preservation Compact in Chicago, help practitioners share models, successes, and challenges locally and throughout the country.

Preserving affordable housing is an exercise in sustainability. Affordable housing is not a one-time construction project; it requires flexibility as neighborhoods and needs change. As the need for affordable housing grows, those working to expand and preserve our nation’s affordable housing stock need a wide range of tools and serious engagement from private and public actors. 

The Housing Assistance Matters Initiative is a project of the Urban Institute, made possible by support from HAI Group, to provide fact-based analysis about public and assisted housing. The Urban Institute is a nonprofit, nonpartisan research organization and retains independent and exclusive control over substance and quality of any Housing Assistance Matters Initiative products. The views expressed in this and other Housing Assistance Matters Initiative products are those of the authors and should not be attributed to the Urban Institute or HAI Group.

Maurice Barboza enters his apartment at the Hunting Towers on Friday, February 14, 2014, in Alexandria, VA.  Residents of the 525 apartments are worried about being priced out of their homes, where many have lived for decades, as a new owner updates the 60-year-old plumbing and windows there. Photo by Jahi Chikwendiu/The Washington Post via Getty Images

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