March 30, 2010

On March 24, the House Financial Services Housing Subcommittee held a hearing on the Housing Preservation and Tenant Protection Act, H.R. 4868.  The bill was introduced March 17 by Committee Chairman Barney Frank (D-MA) to stem the loss of affordable rental housing units across the country.  The bill contains numerous provisions to help curtail the loss of federally- and state-financed affordable housing due to conversion to market-rate housing, deterioration, and foreclosure, and to prevent the displacement of low-income tenants.  The Committee released a summary of the bill in advance of the hearing.

The hearing’s witnesses included:
  • Carol Galante, Deputy Assistant Secretary (DAS) for Multifamily Housing, U.S. Department of Housing and Urban Development;
  • Tammye Treviño, Administrator, Rural Housing Service, U.S. Department of Agriculture;
  •  George Caruso, Executive Vice President, Edgewood Management Corporation, on behalf of the National Affordable Housing Management Association;
  • Toby Halliday, Vice President for Public Policy, National Housing Trust, on behalf of the National Preservation Working Group;
  • Ricky Leung, Treasurer, National Alliance of HUD Tenants, and President of the Cherry Street Tenants Association;
  • Michelle Norris, Senior Vice President, Acquisitions and Development, National Church Residences, on behalf of the American Association of Homes and Services for the Aging;
  • Raymond K. James, Partner, Coan and Lyons on behalf of the National Leased Housing Association; and
  •  William C. Shumaker, President of the Board, the Council for Affordable and Rural Housing, and Vice President of The Provident Companies.
 
At the hearing, Galante said HUD supports the principles of H.R. 4868.  She also said that, with some refinements, this legislation would provide HUD with additional tools to facilitate the preservation of affordable multifamily housing.  Galante stated that HUD applauds the bill’s focus on streamlining regulatory requirements.  She acknowledged that, in the past, HUD policies and practices often have obstructed preservation efforts rather than supported them, and she said HUD is moving forward on a number of regulatory changes included in the legislation.  For example, HUD is in the process of rewriting the Section 8 renewal guide to allow owners to secure new financing using “post-rehab” Section 8 rents, particularly for properties with Low Income Housing Tax Credits (Housing Credits), which would allow HUD subsidies to be leveraged with private debt and equity. 
 
Galante also described HUD’s Transforming Rental Assistance (TRA) initiative, which is intended to simplify HUD’s regulations, help address the capital repair backlog, provide mobility to subsidized families, move HUD’s rental housing programs into the housing market mainstream, and help preserve the nation’s assisted housing stock.
 
The hearing featured significant discussion about the bill’s provision establishing a first right of refusal HUD may assign to a state agency or qualified private buyer.  The first right of refusal would allow HUD, or an assignee, to purchase properties at fair market value and prevent affordable housing projects from being lost permanently to the private market.   Witnesses representing non-profit developers expressed support for this provision, while those speaking for tenants requested stronger measures such as the right of first purchase, which was included in earlier drafts of the legislation.  Witnesses representing private owners and managers stated their opposition to the first right of refusal, which they believe would drive potential purchasers and equity providers away from affordable properties.  Galante said HUD feels there are practical difficulties that would have to be overcome for the provision to work successfully.
 
At NCSHA’s request, H.R. 4868 includes a provision to eliminate the prohibition of Ginnie Mae securitization of HFA Risk-Sharing loans.  This amendment would facilitate the sale of bonds to fund HFA loans necessary for the development and preservation of affordable housing.  The bill also contains language proposed by NCSHA to offer the owners of state assisted or financed properties with maturing mortgages the option of accepting a project-based Section 8 Housing Assistance Payment (HAP) contract, to help preserve the affordable properties. 
 
A webcast of the hearing and copies of prepared testimony are available on the Committee’s website.  A markup on the bill has not been scheduled at this time. 
 
For more information, please contact Ellen Lurie Hoffman.