Preservation Legislation Update

Yesterday the House Financial Services Committee chaired by Rep. Barney Frank held a hearing on his proposed affordable housing preservation legislation.  A revised draft was made available (Click here to download revised draft).  HUD secretary Shawn Donovan was the sole witness providing testimony. (Click here to download prepared text)  Chairman Frank held a similar hearing in June 2008 at which industry witnesses testified including Institute President Brian Poulin.

Secretary Donovan focused on three major themes:  (1) HUD needs to be a partner in the preservation process including adopting a “problem-solving ethos;” (2) HUD needs to better collect and analyze critical information; and (3) HUD needs to reject its “one size fits all” approach.  In his response to questions by Committee members, Donovan demonstrated his strong knowledge of multifamily and preservation issues as well as his strong desire to work with Chairman Frank to pass a meaningful preservation bill.  He specifically cited the 236 IRP decoupling program and mark-to-market as the only programs useful over the past decade to preserve housing.  He mentioned the importance of providing owners a post rehab rent increase commitment for closing and that certain policies such as limitations on distributions are no longer necessary.  

Chairman Frank stated that he has spoken with his colleagues in the Senate who also desire to get a bill to the President this year.

Industry Meetings

Deputy Assistant Secretary for Multifamily Carol Galante held three meetings the week of June 15th with representatives  of the for profit, nonprofit and tenant/community groups to discuss preservation issues.  The Institute was represented by Institute Counsel Monica Sussman and focused on (i) preservation in the broader context of revitalization; (ii) preservation and available resources; (iii) incentives versus mandates to encourage preservation and (iv) the universe of properties to preserve.  These meetings also play a role in HUD’s discussions with Chairman Frank as to what issues can be resolved administratively instead of through legislation, i.e. budget based rent increases to include new debt service, increased distributions.

Revised Draft of Preservation Legislation

The revised draft is similar to the version of a year ago but is substantially cleaned up.  It contains provisions strongly supported by the Institute including post rehab budget based rent increase, expansion of enhanced vouchers, conversion of RAP and Rent Supp contracts to project based Section 8 and a new window to transfer M2M debt to nonprofits, to name a few.  Unfortunately, it still includes a right of first refusal mandating any property with federal assistance including LIHTC properties be sold to primarily nonprofits – a provision that must be stricken.  This provision raises contract and property rights issues.  To his credit, Donovan spoke of a similar measure in New York City that the Courts ruled unconstitutional and had the effect of slowing the preservation of affordable housing.  The Institute is working with other groups including NLHA and Realtors to get this provision removed.

Stay tuned!

Institute for Responsible Housing Preservation
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