Affordable housing preservation has become of increasing concern. A recent study by Tennessee Housing Development Agency (THDA) researchers on aging affordable rental housing in Tennessee and the need for preservation has revealed some disconcerting results.
According to the study, the demand for affordable housing has increased while funding, availability and quality of existing facilities has decreased.
Statewide, THDA Research Coordinator Laura Swanson concluded that 70 percent of affordable housing properties across the state are more than 15 years old, with most deeply subsidized properties such as Section 8 and public housing built more than 30 years ago.
In Carter County, 82 percent of all affordable housing rental properties are considered to be aged, or built before 2000. In East Tennessee, nearly 70 percent of residents earning low income are living in properties built prior to 1980.
While the need for affordable housing is growing, Swanson said the need for renovation or recapitalization is increasingly demanding.
Both require funding, and Swanson’s report states that significant budget cuts pose a threat to low income renters. In fact, she reports the only program that has not faced serious cuts is the Low Income Housing Tax Credit (LIHTC), which she said makes it an even more important tool.
“Affordable housing developments with deep rental subsidies (public housing, Section 8) and rental properties with units set aside at lower rent levels but without direct rental subsidy (LIHTC), are a critical piece of Tennessee’s social safety net for low income families,” Swanson said in the report.
She said federal funding for new construction of rental housing with subsidized rent has become “essentially extinct.”
Additionally, funding for repairs has also decreased significantly, contributing to excessive demand for deferred maintenance. Swanson said this puts properties at risk of conversion to market level rents in order to make it possible for property owners to afford repairs and other expenses.
According to Housing and Urban Development (HUD) reports, preservation of properties costs between 30 and 50 percent less than constructing new affordable units, but for an individual property owner, contract renewal in the face of budget cuts can be daunting.
Many of their contracts with HUD or United States Department of Agriculture Rural Development (USDA RD) will soon reach maturity. The National Housing Trust predicts that over the next five years, 650,000 units covered by Section 8 will expire. That means property owners must choose whether to rent at market value to afford repairs or to renew contracts with HUD or USDA RD to continue providing affordable housing.
For them, the decision is not easy, as funding cuts have been severe, and the cost of deferred maintenance proliferating in the billions. In 2010, HUD public housing developments were projected to have $26 billion in deferred maintenance and repairs, and USDA RD multifamily properties’ rehabilitation needs totalled $3.2 billion.
Meanwhile, Swanson reports the effects of the recession and the increase in housing and rental prices exceeding income growth are contributing to an increase in numbers of individuals who rent. According to Harvard’s State of the Nation’s Housing report for 2014, there was not a single county in the nation where an individual earning the national federal wage ($15,080) could afford a one or two bedroom market rent apartment. She said some households with higher incomes rent housing that would be affordable for low income wage earners, further exacerbating the shortage of affordable rental housing.
The need to access other sources of funding in place of the reduced federal funding has become urgent for THDA.
“States and localities need to invest in or encourage preservation of the existing network of affordable housing because its’ preservation is critical to keep up with renter demand at lower income levels,” Swanson concluded.