Affordable Housing

You asked for the Connecticut housing inventory for projects developed under several federal affordable housing programs and what owners must do when disposing of such projects (i. e. , ending the subsidy and thus affordability requirements through the sale of a project, loan repayment or subsidy non-renewal). You also asked (1) what incentives Connecticut housing agencies, including the Connecticut Housing Finance Authority (CHFA), currently have to encourage property owners to maintain the affordability of their housing units; (2) for other states’ federal housing preservation efforts (including if such programs were implemented through legislation); and (3) if there are federal and state definitions of housing and urban development.

We are waiting for the inventory lists from the federal department of Housing and Urban Development’s (HUD) field office in Hartford and the CHFA for the low-income housing tax credit program. We will update this report as soon as we receive the inventories for projects developed under the following programs about which you asked:

1. the Below Market Interest Rate Program, section 221(d)(3) of the National Housing Act (12 USC § 1715l(d)(3)(5));

2. Rental Assistance Payments Program Section 236 of the National Housing Act (12 USC §1715z-1);

3. Supportive Housing for the Elderly or Direct Loans for Housing for the Elderly or Handicapped, Section 202 of the Housing Act of 1959 (12 USC §1701q);

4. Rent Supplement Payment Program, Section 101 of the Housing and Urban Development Act of 1965 (12 USC §1701s);

5. Programs under Section 515 of the Housing Act of 1949 (42 USC § 1485); and

6. Low Income Housing Tax Credit (LIHTC) Program (26 USC § 42).

A property owner planning to dispose of a housing project (ending a subsidy that makes their housing units affordable) under the above programs must give notice to tenants and HUD, or provide an extended affordability period under the LIHTC program.

Connecticut housing agencies, including the CHFA and the Department of Economic and Community Development (DECD), do not offer incentives for landowners to keep their properties affordable once affordability requirements expire (e. g. , through re-payment or non-renewal of a federal subsidy).

We found six states with legislation that attempts to preserve federally subsidized housing as affordable when an owner plans not to renew a subsidy.

We could not find a specific federal or state definition of “housing and urban development. ” We do provide, however, some information that may be helpful in understanding the duties and responsibilities of HUD and DECD.

Federal law requires property owners who receive financial assistance under the six programs listed above to keep units affordable for a pre-determined amount of time (e. g. , 30 years). When an owner has fulfilled the initial obligation to keep units affordable (usually by paying back a loan or the required affordability time period expires), he may choose to renew the subsidy and retain the affordable units or not. If an owner chooses not to renew a subsidy under the first five programs, he must warn tenants, HUD, and the local government, according to the National Housing Law Project (NHLP). NHLP is a tax exempt, national housing and legal advocacy organization. Under the same circumstances, an owner participating in the LIHTC program would have to continue charging rent at an affordable rate for up to three years after the contract’s termination. However, he could evict tenants for good cause.

We have attached (attachment 2) a copy of OLR Report 2005-R-0652, which contains more information about federal and state housing.

We found one method by which states attempt to create an incentive for affordable housing. Six states, California, Illinois, Maryland, Maine, Rhode Island, and Texas, require property owners to offer a right of first refusal to the state housing authority, tenant organization, or local housing authority when an owner takes any action that would end a subsidy. As part of this process, the states have notification requirements in addition to any under federal law (e. g. , at least one year notice to the tenants and state). In these states, the authority or a tenant association group, for example, would purchase the property (having had enough notice to do so) and continue offering rent at affordable rates, according NHLP.

We have attached (attachment 1) a NHLP chart entitled, “Right of First Refusal in Preservation Properties - State and Local Initiatives,” for your reference. (The chart includes three cities, Denver, Colorado; Portland, Oregon; and San Francisco, California with ordinances to require first refusal rights. )

We could not find a specific federal or state definition of “housing and urban development. ” We have instead listed HUD’s mission statement and some of the duties and responsibilities of the state lead agency on housing matters, DECD.

HUD’s Mission is: “to increase homeownership, support community development, and increase access to affordable housing free from discrimination. ” To fulfill the mission, HUD’s website explains, it embraces high standards of ethics, management, and accountability and forges new partnerships (particularly with faith-based and community organizations) that leverage resources and improve its ability to be effective on the community level. The Department of Housing and Urban Development Act established the department in 1965.

In Connecticut, DECD is the lead agency for all matters relating to housing ( CGS § 8-37r). For the purpose of DECD, "housing project" means, in part, any work or undertaking to:

1. demolish, clear or remove buildings from any slum area, which work or undertaking may embrace the adaptation of such area to public purposes, including parks or other recreational or community purposes;

2. provide decent, safe and sanitary urban or rural dwellings, apartments or other living accommodations for families of low- or moderate-income, which may include buildings, land, equipment, facilities and other real or personal property for necessary, convenient or desirable appurtenances, streets, sewers, water service, parks, site preparation, gardening, administrative, community, recreational, commercial or welfare purposes and may include the acquisition and rehabilitation of existing dwelling units or structures to be used for moderate- or low-income rental units; or


January 18, 2005		2005-R-0040
AFFORDABLE HOUSING PRESERVATION

By: Joseph Holstead, Research Analyst