Affordable housing developers look to feds for financing fix
While the development of affordable housing always gets a spotlight, the preservation of those units is essential, too, as Connecticut is discovering.
The state is at risk of losing more than 5,000 affordable housing units in the next decade and 300 alone this year, CT Mirror reported. The expiration of affordability requirements linked to low-income housing tax credits is responsible for the approaching removals, though some are also likely to become uninhabitable.
The Low-Income Housing Tax Credit has been a boon for affordable housing development across the nation since it came online three decades ago. Under the program, at least 20 percent of units need to be affordable for at least 30 years to earn the tax break.
But that 30-year requirement is coming up in Connecticut and throughout much of the country. Nearly 159,000 units covered by the credits are set to expire nationwide in the next five years and the country is at risk of losing more than 327,000 affordable units during that period.
After the affordability requirement expires this year, there will be a small lull in 2024 of fewer than 100 units with expirations, according to data from the Connecticut Housing Finance Authority, giving the state some breathing room. The numbers rise steadily from there, hitting an apex of nearly 1,100 affordability expirations in 2028.
Many of the expiring units in the states are in big cities, such as New Haven, Stamford and Bridgeport.
“What happens to those low-income residents who are currently in those buildings?” Andrew Aurand, senior vice president of research at the National Low Income Housing Coalition, said to the publication. “There really are very few options, and they would have a very difficult time finding other housing.”
Landlords, meanwhile, would have an incentive to start bumping rents, considering how much rentals have exploded in the state in recent years, particularly during the pandemic.
The housing finance authority is able to work with owners to keep units affordable, adopting a preservation policy a couple of years ago. It can offer financial incentives for restoration in exchange for extended affordability requirements, as well as distribute points during application processes for developers promising 50-year affordability periods.
— Holden Walter-Warner
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