Access to Affordable Housing

In 2005, 74% of Oregon's very low income households spent more than 30% of their income on housing costs. Oregon's rate of homelessness is 50% higher than the national average. MMT staff and trustees have substantive experience funding housing-related projects, and MMT is unique in Oregon in using PRIs to support housing organizations. Meyer Memorial Trust has historically been one of the leading private funders of affordable housing efforts in Oregon. External advisers identified two critical needs MMT could help fulfill:

• Provide more nimble sources of capital for affordable housing preservation and development
• Strengthen the capacity of organizations in rural areas to expand the stock of affordable housing in their communities

A number of partners are contributing to the implementation of the Affordable Housing Initiative.

Key implementing partners include:

• Oregon Housing and Community Services
• Network for Oregon Affordable Housing
• Housing Development Center
• Oregon Opportunity Network
• CASA of Oregon
• Neighborhood Partnerships

Funding partners in the Oregon Housing Acquisition Fund include:

• State of Oregon
• John D. and Catherine T. MacArthur Foundation
• Collins Foundation
• Oregon Community Foundation
• Wells Fargo Bank
• Bank of America
• Key Bank
• JP Morgan Chase

Oregon Housing Acquistion Fund Steering Committee members:

• Elisa Aguillera, Executive Director, Community Alliance of Tenants
• Janet Byrd, Executive Director, Neighborhood Partnerships
• Cyndy Cook, Executive Director, Housing Works
• Rick Creager, Deputy Director, Oregon Housing and Community Services
• Tom Cusack, independent housing expert
• Monica Elgert, Director, Enterprise Community Partners
• John Epstein, Senior Vice President, Wells Fargo Bank
• Bob Gillespie, Housing Finance Director, Oregon Housing and Community Services
• Barbara Gibbs, Director, Policy & Strategy, Meyer Memorial Trust
• Maggie Jonsson, Housing Specialist Affordable Housing, Portland Housing Bureau
• Leon Laptook, Special Projects Manager, CASA of Oregon
• Ann Lininger, Clackamas County Commissioner
• Martha McLennon, Executive Director, Northwest Housing Alternatives
• Dave Summers, Housing Finance Section Manager, Oregon Housing and Community Services
• Bill Van Vliet, Executive Director, Network for Oregon Affordable Housing
• Tom Walsh, affordable housing builder

Affordable Housing Initiative Assessment: Review & Recommendations

May 2013

Meyer Memorial Trust asked Kristina Smock to assess the extent to which the first five years of the Affordable Housing Initiative achieved its projected goals and develop recommendations for the next five years of affordable housing investments. Her findings are summarized in a graphic overview and a comprehensive report. We're also providing an executive summary for your convenience.

Affordable Housing Status Update December 2011

• To date, Oregon Housing and Community Services (OHCS) preserved 84 projects (3,349 units total) located in 51 Oregon cities and towns, securing subsidy contracts for 3,060 units.  OHCS’ dedication of resources to these Preservation projects helped developers acquire additional Rental Assistance from USDA Rural Development (RD) for 150 units that had no project-based assistance prior to being preserved. Since the beginning of the OHPP initiative, only 18 properties were lost to opt-outs (270 units).   
• Out of the 84 Preservation projects, OHCS helped recapitalize 75, with total project costs exceeding $360 million. OHCS estimates that every $1 million invested in preservation creates 8.3 jobs in the specific community and 8.6 jobs statewide.  Using these job creation estimates, the $360 million invested in the preservation of these 75 projects created 2,988 jobs in local communities and 3,096 jobs across the state.
• Federal project-based rent subsidies projected to flow into Oregon as a result of preserving the 84 properties exceeds $300 million over a 20-year period.
• According to the Oregon HUD Multifamily Program Center, HUD’s 2011 Management Action Plan established a goal of executing 75 long-term (20-year) Project-Based Rental Assistance contract renewals for the region (30% of all 2011 HAP contract renewals).  OHCS achieved 165% of the specific goal for Oregon (17 renewals) by executing 28 20-year contracts during the year.
• The City of Portland preserved Uptown Tower, another critical property located in a high-cost neighborhood.  The city is closing in on its goal of preserving all 12 of its project-based Section 8 projects by 2013.  To date, seven of the 12 at-risk properties have been preserved, with no contract opt-outs.
• Capitalization of the Oregon Housing Acquisition Fund (OHAF) stands at $35,626,420. NOAH closed two additional OHAF loans between December 2010 and November 2011, including the first acquisition of a conventional property for conversion to affordable rental housing.
• To date, NOAH closed 12 OHAF loans, with a total of 435 units preserved.  Nine of these projects closed on permanent financing and repaid their OHAF loans, making $14,480,500 available again to finance new acquisitions.
• Since 2008, NOAH funded or issued commitments for 13 Preservation term loans, preserving 474 federally subsidized units in seven Oregon communities.
• During 2011, OHPP approved six Green Pilot Program grant awards, representing 220 units. To date, 20 projects received awards totaling $272,500 (74% of the program funds) and 11 projects completed their grant-related work, receiving disbursements of $153,000.
• To date, four projects received awards for grant funds for post-construction evaluations of the installed green/energy upgrades, with two evaluation reports fully complete.  
• The 2011 OHPP Preservation Progress Report helped secure $5 million for preservation from the Oregon Legislature.
• After HUD’s Project Based Contract Administration (PBCA) selection process led to OHCS losing its contract to administer HUD project-based rental assistance in Oregon, OHPP staff kept Oregon’s congressional delegation informed about the status of OHCS’ protest.  The delegation eventually issued a joint letter supporting the protest and HUD ultimately decided to invalidate the results, reinstating OHCS as PBCA in Oregon while it finalizes a new process to award the contract long term.
• Responded to inquiries from Senator Merkley’s office regarding the impact and potential benefits to Oregon of an amendment to the HUD Appropriation bill, which ultimately passed, that facilitates preservation of Section 8 Moderate Rehab projects (one of three HUD “orphan programs”).  
• Continued to submit comments to HUD and RD, via letters and emails, regarding policy changes, including the PBCA protest and rent comparability studies on Option 4 Section 8 contract renewals.
• Encouraged owners of HUD Section 236 properties to prepay mortgages in order to acquire tenant protection vouchers for unassisted residents.
• Presented a proposal to Oregon Housing Authority Directors to project-base Housing Choice Vouchers when residents in their jurisdictions receive Enhanced Vouchers upon project-based Section 8 contract opt-outs or HUD mortgage prepayments, keeping project-based subsidy in the community.
• Proposed a policy change to allow the Oregon RD office to retain all existing Rental Assistance in the state.
• Acquired new OHCS and RD assisted housing datasets and additional HUD data fields for the PreserveOregonHousing database.  New datasets include projects with Low Income Housing Tax Credits and Oregon Affordable Housing Tax Credits awarded through OHCS.
• Published more regular posts to the PreserveOregonHousing news blog and began sending news blasts to subscriber list.

Status Update January 2011

Preservation of Affordable Rental Units.

The Oregon Housing Acquisition Fund (OHAF) is capitalized at $34,450,000. In August 2010, Network for Oregon Affordable Housing (NOAH) was awarded a $750,000 in CDFI funds for the OHAF and received a $50,000 grant for preservation activities. 

Seven affordable housing projects closed on permanent financing in 2011, repaying their OHAF loans and making $11,112,500 available for new acquisition loans.  Since 2008, NOAH has closed eleven OHAF loans for projects representing 416 affordable units versus a goal of 950 units.  The economic downturn and the lack of availability of permanent financing have slowed the preservation effort.  However, the flow of projects onto the depressed real estate market has also slowed and many owners are opting to renew their Section 8 contracts.  A total of 15 properties representing 249 units out of Oregon’s 6,926 subsidized units, have gone to market rates since 2007.

Initiative partner Oregon Housing and Community Services has preserved 64 projects representing 2,652 units in 43 cities and towns across Oregon, exceeding projections of 2,100 units preserved through 2010.  The Portland Housing Bureau has permanently preserved seven of Portland’s twelve at-risk Section 8 housing properties and plans to preserve the other five by 2013.  There have been no contract opt-outs.

NOAH continues to add new features to the PreserveOregonHousing.org website.  The website now includes at-risk properties by county, legislative, and congressional district, properties currently for sale, subsidy contracts expiring within the next 12 months, properties opting out within the next 12 months, and HUD and Rural Development properties eligible for the Weatherization Assistance Program. 

Initiative partners are actively participating in HUD rule making to try to streamline regulations and make them workable for affordable housing providers.

Building capacity in rural communities.

OHAP steering committee members are studying best practices and strategies to preserve the inventory of approximately 100 projects of 30 units or less that are essential to rural communities, but extremely difficult to finance. 

The Oregon Opportunity Network has been extremely active.  It has convened and provided technical assistance to six different affordable housing industry working groups – Resident Services, Multi-Family Development, Homeowner Development, Homeowner Education and Counseling, Fiscal Managers, and Property and Asset Management.  Sixty percent of members come from rural communities.  Trainings have included foreclosure mitigation, working with culturally specific populations, and bridging the minority homeownership gap.  The October 2010 Industry Support Peer Network Meeting attracted 205 participants, over half from outside of Portland.  Housing Authorities and Community Action Agencies are being invited to participate in OON work groups and convenings.  OON has successfully advocated for additional training funds from the State and is coordinating the Training consortium and is working with OHCS on the future of multi-family housing in rural Oregon.

The Housing Development Center made great progress on the Streamlining Compliance project, including sign-off on the Oregon Affordable Housing Compliance Workbook, which is estimated to save funders and property managers hundreds of thousands of dollars in staff time annually. Funders have agreed to a full roll-out involving every jointly-monitored project in the state in 2011.  HDC completed a needs assessment of rural CDC’s and is working closely with Oregon Opportunity Network, the Housing Alliance, and others to educate policy makers on issues faced by rural providers of affordable housing.  HDC’s repositioning work has resulted in the preservation, rehabilitation, and/or improved performance of eight properties representing 225 affordable housing units.  Four additional projects representing 254 units are in progress.

Finally, based on findings from the evaluation of Bridges to Housing, which provides stable housing and wrap-around services to formerly homeless families, the Meyer Memorial Trust joined the Portland Children’s Levy and the Bill and Melinda Gates Foundation in supporting the Regional Research Institute for Human Services at Portland State University to demonstrate the impact of on-site trauma-informed services to the families.

Status Update August 2010

Oregon Housing Acquisition Fund

• The Oregon Housing Acquisition Fund (OHAF) is currently capitalized at $32.7 million.
• Ten at-risk Section 8 properties with 381 units in Hermiston, Medford, Bend, Portland, Milwaukie and La Grande have been acquired with financing form the OHAF.  Loans to date total $16,371,000.
• Two properties with 118 units are in underwriting.  Loans would total $6,450,000.
• Eleven properties totaling 450 units in Hood River, Eugene, Portland, McMinnville, Klamath Falls, Prineville, Redmond, Willamina, Eagle Point and Tillamook are in the OHAP pipeline.
• NOAH (Network for Affordable Housing) is in discussion with the owner of a portfolio of Rural Development properties who has the opportunity to buy out the limited partners and preserve them as affordable.

PreserveOregonHousing.org Website and Database

• The website now includes HUD unit contract rents for Section 8 properties.  This formerly proprietary data has been released by HUD due to our efforts and the National Preservation Working Group.
• The database is helping Community Action agencies administering Weatherization Assistance Program (WAP) for tenants in multifamily buildings.  Lists of eligible properties can be found at PreserveOregonHousing.org.

 Inter-Agency Preservation Working Groups

Two inter-agency preservation working groups continued to meet regularly.  The working groups have so far produced an agreement to allow “residual receipts” to help finance preservation projects and approval of early renewal of Section 8 contracts, saving developers, local funders, and HUD hundreds of thousands of dollars in transaction and subsidy costs.

Green Pilot Grant Program

$53,000 in grants have been awarded to eight preservation projects to increase energy conservation measures and sustainable building practices.  Four of the eight approved projects are complete.  Two applications are in process.  Six properties are expected to apply by calendar year-end.

Tenant Education Services

The Community Alliance of Tenants (CAT) began providing tenant information/education services at several properties where owners are opting out of their subsidy contracts.  CAT has dispelled rumors about the opt-out process, informed tenants of their legal rights, and reduced the anxiety level for many residents.

Oregon Housing Acquisition Project Partners

• Oregon Housing and Community Services Department is on track to achieve its goal of preserving 1,598 units in the current biennium.
• $32 million out of Oregon’s $42 million in ARRA housing funds have been used to preserve 636 units.
• $11.3 million of lottery backed bond funding will be used by OHCS for 13 Rural Development and Section 8 properties representing an additional 518 units.
• OHCS and NOAH continue to encourage owners to renew expiring contracts and stay in the Section 8 program.  To date, 23 current owners (820 units) have renewed contracts for terms ranging from one to five years and two owners have renewed contracts for 20-year terms (180 units).
• The Portland Housing Bureau continues its efforts to preserve the City’s expiring-use Section 8 properties and have now permanently preserved five of 12 at-risk projects.
• Two additional Portland Preservation projects have secured financing through OHCS and the three of the five remaining projects are in negotiations with potential purchasers.  Chaucer Court, an 83 unit senior project located downtown is currently in underwriting for an OHAF acquisition loan.

 Selected Conferences, Events, and Presentations

• In May, OHAP hosted the National Housing Conference’s Partners in Innovation conference, one of three preservation-focused conferences sponsored by the MacArthur Foundation and the NHC this year. Participants represented over 20 states. 
• USDA Rural Housing Multifamily Housing Buyer and Seller’s Conference was held in May in Portland.  Several owners and potential purchasers approached NOAH during the conference regarding acquisition financing through the OHAF and developers seeking relief from an underwriting policy affecting a potential portfolio acquisition.  As a result, NOAH is now working with a developer to provide acquisition financing for a five-property RD portfolio.
• In June, Rob Prasch was invited to a gathering of academics, social scientists, developers and lenders at the Garrison Institute, Garrison, New York.  This gathering focused on achieving behavioral changes to reduce carbon footprints in buildings.
• Staff attended the annual gathering of MacArthur Foundation Window of Opportunity grantees in Chicago in June and participated on panels on the use of residual receipts for preservation projects and on affordable housing data systems.
• Rob Prasch was one of 40 housing professionals invited in July by the White House Domestic Policy Council to participate in discussions hosted by HUD, USDA Rural Development, Treasury Department and the White House on administrative changes the agencies could make to reduce redundancy and conflicts with the idea of streamlining subsidized housing programs and preservation.

Policy and Advocacy

Several administrative changes recommended by NOAH have been announced by HUD including:

• Approval for nonprofit sponsors to receive distributions of surplus cash to the same extent as for-profits
• Approval of Section 8 contract rents which exceed LIHTC rents
• Use of as-renovated rents on rent comparability studies.

HUD has also issued two project-specific approvals of the use of residual receipts for Oregon Preservation transactions and of the early renewal of New Regulation contracts on two Oregon projects.  The administration indicates it plans to implement several more recommendations in the next few months.

In March, the Preservation bill, H.R. 4868, the Housing Preservation and Tenant Protection Act of 2010, was introduced in the House.  Working through the National Preservation Working Group, NOAH contributed comments, suggested revisions to the bill, and responded to requests from Senator Merkley, Congressman Wu, and Congressman Blumenauer. Through its national contacts, NOAH was able to help facilitate a rule change to ensure that Idaho preservation projects seeking resources to recapitalize and renovate will no longer be excluded from consideration.

NOAH is working with OHAP steering committee members to develop a strategy for facilitating preservation of small and rural projects.  An analysis of the subsidized inventory revealed approximately 100 projects of 30 units or less throughout the state.

Status Update May 2010

Funding Match Available for Rural Properties

Housing Development Center is preserving 12-15 properties in rural Oregon and match funding from HDC's MMT Affordable Housing Iniative Fund is available for Oregon's rural nonprofit housing owners. Contact Housing Development Center for more information.

Preservation Activities and Oregon Housing Acquisition Fund (OHAF)

Overall OHAF capitalization stands at $32.7 million, the same as in January 2010.  NOAH has applied for $6 million in new funds for permanent financing that would increase the effectiveness of the OHAF by providing a source for the borrower’s required equity, predevelopment and closing costs.  Currently, projects in Portland (83 units), Beaverton (48 units), La Grande (46 units) and Stayton (48 units) are in underwriting.  Another six projects in Hood River, McMinnville, Salem, Klamath Falls, and Prineville–representing a total of 243 units–are in preliminary discussion.

American Recovery and  Reinvestment Act (ARRA) Outcomes

ARRA funds in Oregon have been used to preserve 2,213 units of federally subsidized housing, create 818 units of new affordable housing, weatherize 4,635 units, and to subsidize 500 new homes for low-income buyers.  Last month Oregon Housing and Community Services (OHCS) presented a report to the Oregon House Committee on Business and Labor providing the estimated benefits from $115.3 million in State and Federal ARRA housing investments in terms of job creation (3,947), federal rental subsidy dollars retained ($115 million) and estimated economic benefits ($985 million).  Extension of the ARRA funds would allow many projects in the OHCS-funded pipeline to move forward.  Rural projects in particular would benefit should Congress extend the ARRA tax credit exchange program for FY 2010.

Opt-Outs

Section 8 contract opt-outs are running close to projections.  Since 2006, 14 OHCS bond financed Section 8 projects have opted-out (234 units total) and we anticipate six projects will opt-out this year (200 units total). Since 2003, five HUD Section 8 projects opted-out (62 units total–these partially subsidized properties are in addition to the OHCS bond projects). Between March 2010 and Dec 2014, 50 OHCS Section 8 projects and 3,151 units will expire.  We hope the majority of these will be transferred or owners will be convinced to sign new 20-year contracts.

Oregon Housing and Community Services Funding Pipeline

OHCS has 45 projects in its pipeline for subsidies.  Most of these could close within the next two years if debt and equity were available.  The projects represent 1,851 units and include OHCS Section 8, HUD and RD subsidized properties.

Data Collection and Website Improvements

During a January meeting of the National Preservation Working Group in Washington, D.C.,  HUD officials committed to making much more data on federally subsidized multi-family housing available within the next few months.

OHCS and NOAH staff are monitoring the availability of Federal weatherization funds for multi-family housing and are encouraging CAP agencies to upgrade federally assisted multi-family properties.  OHCS and NOAH are also working with Oregon Department of Energy to find a way to utilize weatherization funds for replacement windows.

National Housing Conference, Portland, May 17-18

OHAP was invited to host one of three regional Preservation Forums sponsored by the National Housing Conference and the MacArthur Foundation.  The two-day event focused on financing preservation projects and preservation of manufactured home parks.  Meyer Memorial Trust was a sponsor.  Doug Stamm participated on a panel on the role of philanthropy in policy development and social programs. Presenters included top HUD and USDA officials, local elected officials, industry experts and representatives from two national and three Oregon foundations.

Streamlining Compliance

MMT grantee Housing Development Center held a well-attended luncheon kick-off on March 31 for the pilot phase of Streamlining Compliance.  The statewide effort includes federal, state, local agencies and nonprofit and private owners of affordable housing.  It aims to significantly reduce the number of duplicative compliance forms, audits and inspections to which affordable housing properties are subjected by their numerous funders.  The effort is projected to save over $2 million per year.

Innovative Changes

In February, MMT grantee Innovative Housing Inc. launched Innovative Changes, a community development financial institution that helps low- and moderate-income families manage short-term financial needs with small loans and financial education.  Innovative Changes aims to help families break the cycle of high-interest payday and tax-refund loans.  Innovative Housing hopes the project will eventually generate revenue to fund the agency’s other activities.

Status Update January 2010

Goal 1

The Oregon Housing Preservation Fund stands at $30.7 million with another $2 million committed in early 2010. The John D. and Katherine T. MacArthur Foundation has contributed a $4 million to the fund. In addition to MMT, Oregon foundation funders include the Collins Foundation and the Oregon Community Foundation. Other partners include the State of Oregon, Wells Fargo Bank, Bank of America, Key Bank and JP Morgan Chase. To date, the fund has provided interim acquisition financing totalling $13,430,500 for eight properties. These projects have preserved 287 units of subsidized housing with good geographic distribution throughout Oregon, 16% of the 1,800-unit, five-year goal. Three of the loans totaling $2,636,500 have been repaid with permanent financing and the projects have transitioned into the construction phase of rehabilitation. Another three projects representing 179 units are in the underwriting stage; the total loan amount for these projects would be $7,675,000. In addition, as of November 2009, Oregon Housing and Community Services (OHCS) had completed 15 deals representing 636 units and had an additional eight projects of 356 units in process. If and when all the deals in underwriting are completed, the initiative will have achieved a total of 1,458 units preserved, or 25% of its five-year, 5,840-unit goal. In 2010-11, contracts on 3,000 units will expire, of which NOAH is targeting 800 for preservation with OHAP funds.

The Preserve Oregon Housing website provides potential buyers with ready access to all at-risk preservation properties in Oregon by owner, name, county, and zip code and provides subsidy type, unit mix, current manager, and contact information. The database also offers a list of potential purchasers by county. NOAH is working to promote the website to potential preservation buyers and sellers.

NOAH is actively working with State and Federal agencies to improve policies and rules affecting affordable housing. The State of Oregon has devoted $16.3 million in lottery-backed bond funds to the program. HUD and OHCS have agreed to allow the use of residual receipts for the acquisition and renovation of preservation projects, unlocking some $9 million in 13 Oregon properties for preservation.

The flagging economy has depressed real estate prices, causing more owners to renew Federal affordability contracts instead of putting their properties on the market. In addition, an infusion of ARRA stimulus money to the State has temporarily dampened demand for the Oregon Housing Acquisition Fund. NOAH expects demand to increase within the next few months when the stimulus funds are completely deployed. Meanwhile, it is working on the concept of a "Purchase and Hold Entity" which could move quickly to acquire properties to assemble for more efficient transactions.

Goal 2

The CDCs have put their working capital grants to good use. Some have turned over their $75,000 grants at least once, while others are using the funds to support staff salaries. The Housing Development Center's website features its work on streamlining compliance project. HDC estimates the project could save owners as much as $2 million a year in compliance costs state-wide.

Goal 3

This portion of the initiative builds on the Bridges to Housing project serving mainly low income, high needs single mothers and their children. The project attempts to codify a menu of services that can help these families stabilize and prove that provision of such services is cost effective and should be included "above the line" in project financing. Grants to the seven organizations participating in this phase of the initiative were made in February 2009, so the projects (other than those associated with Bridges to Housing) are not yet one year old.

The resident services project partners are working well together and data is being collected. The interim evaluation reports show that about 75% of Bridges to Housing clients are stable after one year, with 25% needing higher level mental health services than can usually be provided by case management staff of most agencies. Initial training of case managers in dealing with clients affected by trauma has proved beneficial and Portland State Univeristy has applied for a significant national grant to further this work.

This initiative also contributed to two notable developments that increase Oregon's affordable housing resources: MacArthur Foundation's $4 million to the Oregon Housing Acquisition Fund and the 2009 Oregon Legislature's passage of a bill increasing document recording fees on real estate transactions to generate $15 million per biennium for affordable housing.