Preserve And Prosper: 3 Affordable Housing Stories In The U.S.’ Growing Cities
The urban revival narrative sweeping America’s biggest cities comes with a caveat: the emigration of working class, low-income families.
The push for affordable housing, in neighborhoods offering equitable access to resources and amenities, has been contentious at best and muddled by a push to develop at market-rate and higher.
Excluding college-educated Millennials and young professionals, the U.S.’ low density suburbs grew 1.3% in 2016, according to FiveThirtyEight. Families are flocking to cheaper suburbs, unable to afford an urban lifestyle.
Preservation of affordable housing offers a more sustainable solution to maintaining mixed-income communities and preventing the migration away from urban life. Renovating existing units using infrastructure already in place is more environmentally responsible and better aligns with community planning proposals.
Policy vs. Preservation: Austin’s Affordable Housing Battle
Austin, the Texas college town that swelled to a population of more than 865,000 in 2014, still acts like a small city, and in the process has created a housing crisis. Limited planning for affordable housing and pushback from Texas policymakers trying to limit the number of low-income housing tax credits available for developers left a small and severely outdated inventory.
An independent housing market analysis conducted by BBC Research & Consulting in 2008 found that over 44,000 renters needing rents of less than $425/month had just 7,150 units available. Within the existing stock, 3,000 low-income renters occupy units in poor condition, with 5% alleging the dilapidation is so severe that the units are unlivable.
Local groups have taken on the challenge of encouraging the creation and improvement of affordable units. HousingWorks Austin is working on a “strike fund” that would preserve 20,000 units over the next 20 years, according to the Urban Land Institute. The goal is to add $20M to $30M in private investment to the fund, which would be managed by a community development institution and allow developers to quickly preserve properties in the housing market.
Chicago’s ‘Naturally Occurring’ Affordable Housing
The Austin neighborhood of Chicago is taking affordable housing preservation into areas that have historically lacked access to investment. For owners in low- to moderate-income markets, the inability to secure loans from traditional lenders has led to underuse, vacancy and the demolition of units.
Long-term vacancy was the issue with a mixed-use building at 4657 West Madison St., which sat unoccupied for 20 years, according to the Urban Land Institute. Community Investment Corp., a community development financial institutions fund that finances the acquisition and preservation of multifamily rental housing in the Chicago area, facilitated the purchase of the building by a local buyer in 2012. The renovated space includes 10 two-bedroom rental units and six commercial units.
The apartments are affordable because of the low market rents in the neighborhood, as opposed to enforced subsidies.
The acquisition and rehabilitation of 4657 West Madison cost $824,733, and the owner received $418,900 in financing from CIC. The Urban Land Institute found that acquisition, rehab and energy improvements cost $52K less than new construction.
In DC, The Future Of Affordable Housing Preservation Is Green
At the Monseñor Romero Apartments in the Mount Pleasant neighborhood of DC, a 67-unit building that is home to predominantly low- to moderate-income Latino families underwent fire restoration and green rehabilitation. The renovations allowed 60% of the original tenants to return to the building.
Adjacent to to the high-traffic, high-priced Columbia Heights neighborhood, residents can continue to enjoy access to amenities, public transportation and employment opportunities.
The green preservation strategy also saves tenants $1,800 annually in utilities, according to ULI.
Financing was made possible through the use of tax credits, grants and loans organized by DC's National Housing Trust and Enterprise Community Partners, which supported initiatives like energy efficiency and historic preservation. Green loans have become popular among all types of development projects as a way to not only save on eventual energy costs but also on the initial assessments required to modernize multifamily buildings.
Investment in affordable housing preservation is not only cost-efficient, but a way to maintain the diversity of America’s fastest-growing cities and encourage continued economic growth. Hunt Mortgage Group specializes in financing housing preservation, and strategically can find the best loans for developers looking to build and improve communities throughout the nation.
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