Funding Tenant Organizing
Incentives for Owners to Renew
Funding Preservation Purchases

Funding Tenant Organizing

Organizations working with tenants in expiring use housing can get funding from federal and state sources, including HUD Outreach and Technical Assistance Grants (OTAGs). You can find a list of OTAGs at HUD's Web site.

Funds have also been available directly to tenant groups ($20,000 maximum, for resident capacity building) under the HUD Intermediary Technical Assistance Grant (ITAG) program. Also under the HUD ITAG program, nonprofit legal services and public agencies can receive Public Entity Grants ($20,000 maximum) to work on developments with expiring contracts in their service areas. As of August 2002 HUD had not yet made new ITAG funds available. For the current status check with the National Housing Law Project.

Regional nonprofit intermediaries can provide guidelines and an application:

• Northeast: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Washington, D.C., Vermont, West Virginia
  
  National Center for Tenant Ownership
  Harrison Institute for Public Law,
  Georgetown University Law Center
  111 S Street NW, #102
  Washington, DC 20001
  Contact: Roslyn Morris-Davis, (202) 662-9601
  rm89@law.georgetown.edu
• Southwest: Arizona, Arkansas, California, Louisiana, Nevada, New Mexico, Oklahoma, Texas
  Southeast: Alabama, Caribbean, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee, Virginia
  
  Low-Income Housing Fund
   330 Broadway, Suite 600
  Oakland, CA 94612
  Contact: Abby Rowe, (510) 893-3811 x315,
  arowe@lihf.org

• Northwest : Alaska, Colorado, Hawaii, Idaho, Illinois, Iowa, Kansas, Minnesota, Montana, Nebraska, North Dakota, Oregon, South Dakota, Utah, Washington, Wyoming
  Midwest : Indiana, Michigan, Ohio, Wisconsin
  
  Amador-Tuolomne Community Action Agency
   N. Hwy 49 #302
  Sonora, CA 95370
  Contact: Diane Bennett, (209) 533-1397 x225,
  dbennett@atcaa.org

Contact the National Alliance of HUD Tenants (NAHT) for more information: 353 Columbus Ave., Boston MA 02116, (617) 267-9564.

Incentives for Owners to Renew

For developments with expiring Section 8 contracts, Congress and HUD have provided a wide variety of preservation tools that give owners financial incentives to renew. Most of these tools are described in HUD's Section 8 Renewal Guide. Note however, that federal policies and funding are constantly changing. Check the Office of Multifamily Housing Assistance Restructuring or National Housing Law Project for current information on the following programs:

• Section 8 renewal contracts at specified rent levels, usually at market rents for most properties. Now these contracts can be for terms up to 20 years, subject to Congress' annual appropriations;
• the Mark to Market mortgage restructuring program for developments with HUD-insured mortgages and Section 8 rents that exceed market rents;
• the Mark Up to Market program, which requires HUD to offer to increase the Section 8 rents to market levels for properties meeting certain specific eligibility criteria, and permits HUD to offer even higher rents on others. HUD is also authorized to waive restrictions on the amount of profit owners with HUD-subsidized mortgages can pocket rather than put into the project or reserves in some fashion;
• the Mark Up to Budget program, which permits existing nonprofit owners to obtain rent increases up to market levels to support budget-based rent increases for rehabilitation and operating cost increases;
• HUD has authority to make grants or loans for rehabilitation of certain qualified properties (under Section 531 of the Multifamily Assisted Housing Reform and Affordability Act of 1997). As of August 2002, however, the money for this project has been entirely diverted to war efforts;
• authority to refinance a Section 236 property and preserve the Section 236 interest reduction payments (called "IRP decoupling"); and
• planning requirements and various funding resources for the rehabilitation of troubled properties facing foreclosure, disposition, or disqualification from Section 8 renewal;

Funding Preservation Purchases

Very little money is earmarked for preservation, so capital resources for purchases can be difficult to put together. Following are some of the most common sources.

• High-value federal Low-Income Housing Tax Credits, distributed by states; Below-market-interest loans from state bond funds or deferred loans. These usually come with lower value Tax Credits that provide additional equity.
• Locally controlled sources include funds provided under federal programs like HOME, CDBG, or project-based Section 8 vouchers, or locally generated funds such as redevelopment agency revenues. Competition for these funds may be intense.
• Some states have created specific funds targeted for preservation.
• State Housing Trust Funds permit preservation as an eligible use.
• Federal Mortgage Insurance might underwrite a loan on a property of this type.
• HUD's Intermediary Technical Assistance Grant (ITAG) program provides predevelopment grant funding for evaluating the feasibility of a nonprofit purchase ($70,000 maximum).

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