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Pick
Properties
Help Tenants Organize
In-depth Research
Make a Plan
There are several steps to a successful campaign to preserve expiring use housing:
focus
on. Developments that deserve attention first can either be those
at the greatest risk for conversion or those with the best prospects
for preservation.
The first step in picking focus properties is to find out which buildings in your target area are in the Section 8 or Section 236 programs, and when they will be eligible for conversion. This information is available from various places:
In addition, data on prepayments and opt-outs that have already occurred is available on the National Housing Trust's website at http://www.nhtinc.org/data.asp. This can be helpful for establishing trends.
Once you know which properties are eligible for conversion, sort the properties by several criteria in order to determine which ones are at the most risk:
are
not at risk of conversion to market-rate, due to the organization's
mission and often other restrictions accompanying the financing. For-profit
owners, however, usually have different objectives.
Advocates should pick properties where they think they can have the most effect. Along with the threat of conversion, consider potential for preservation and strategic location in terms of neighborhood stability.
Invariably, a housing development will be preserved only when the tenants who live there strongly support that objective. But many of the current residents may not have any information about either the threat to their homes or available options and strategies. Tenant education and organizing is therefore an essential ingredient for preventing conversion.
Organized tenants should be involved in researching their properties and developing the action plan. They will often have important information about the property or the owner to contribute to the analysis and will be well situated to gather more. Tenants will often need help, however, in evaluating their options, understanding the legal technicalities, and advocating for their rights. Regional tenant education and organizing project s funded with federal, state, and often private or local funds can help get this part of the job done. (See Financing section for more details.)
Once advocates have selected specific
properties, and begun to organize tenants and other affected parties,
research into those 
properties
should continue, adding to the information collected in the picking properties
stage.
The rules usually leave it to the owner to decide whether to preserve the property or convert it to market-rate. Therefore, information about the current ownership is key:
Get some of this information from
HUD data, but always double-check it with the local property records.
It is also often very useful to talk with the property manager, the local
HUD office asset managers, and the local government housing and planning
staff to see what they know or have heard. The local HUD office may also
have important historical or recent information about a given project's
status and contracts, 
including
any applicable restrictions; reports of physical inspections conducted
by HUD, lenders, or HUD's Real Estate Assessment Center (REAC); and any
pending actions against the owner for program violations.
Sometimes local public officials can obtain information about the ownership and its plans more easily than advocates. Of course, the tenants themselves may have found out important information on these questions.
It is especially important to determine if the owner has a good working relationship with HUD. Those owners that do not are typically looking for a divorce, regardless of the economic impact of the decision in the short term. It may, in fact, be HUD who has been seeking to end the relationship, usually due to perceived shortcomings in the owner's performance, such as poor management, failing to maintain the property, or misusing funds.
An owner may have already filed notices of prepayment or Section 8 opt-out with the tenants, with HUD, or with the state or local government. (Download Checklist of Notice Requirements.) Ask if any notices have been received by tenants of the property, local government (mayor, county executive or housing department), the local public housing authority, any state agency overseeing housing and community development, or HUD (particularly the housing branch of the local field office with jurisdiction over the property).
Talk regularly to tenants and neighbors to keep abreast of any changes in maintenance or management policies.
Owners facing conversion decisions want to know what rents can be obtained on the private market, so advocates should know too. Good data on the rent gap can not only help determine conversion risk, but can help identify which preservation strategies, if any, have potential. The greater the gap between HUD-approved rent levels and current market values, the stronger incentives the owner will need to renew.
Research and collect information on the average market rents by unit size being paid in the neighborhood. If a property in the area is going through Mark-to-Market (or if the project in question is in the Mark-to-Market process), a market survey will be part of the "Participating Administrative Entity's" recommendation, and should be accessible. There are also firms that sell market survey or appraisal information. If funds are available, consider contracting for an independent rent comparability study.
Even neighborhood data may not be precise enough, however. To gather data that is relevant to these specific units:
Information gathered in these ways can be much more helpful than the FMR in determining the "street value" of the units.
Are there other restrictions on the property that may inhibit conversion? Beside the Section 8 or Section 236 program, the property could be subject to old agreements made by the owner, restrictions based on other funding or subsidy sources, or local notice and zoning laws.
| Restriction Type | Comment |
| Federal Regulatory Agreements or Use Agreements | Accompanies the original financing or additional assistance provided after the property was developed (e.g., use agreements accompanying Flexible Subsidy funds or federal preservation plans, riders to promissory notes) |
| Other Federal Restrictions on Prepayment | Can be imposed on properties originally owned by a nonprofit or receiving Rent Supplement assistance |
Section 8 Contracts |
Some contain an obligation to renew or require agency consent to terminate |
| State or Local Regulatory Agreements | Accompany public financing such as bond financing, HOME or Community Development Block Grant (CDBG) money, or local redevelopment agency funds |
| State or Local Land Disposition Agreements | Executed as part of the transfer of the underlying land, usually in former urban renewal areas |
| Local Land-Use or Other Police Power Regulations | Zoning laws, variances and use permits, local rent or conversion control ordinances, and any other local ordinances that could impose substantive or procedural restrictions on conversion |
Many developments with HUD-subsidized
mortgages have another restriction on prepayment which effectively restricts
them to their current use until the expiration of the full mortgage term
(40 years), unless HUD approves a prepayment. These restrictions come
from other subsidy contracts such as Rent Supplement or Flexible Subsidy,
or because the property was originally owned by a nonprofit organization
that had agreed to a full mortgage term use restriction. HUD's approval
of prepayments on these 
properties
is governed by the National Housing Act , which requires notice
to tenants, an opportunity to comment, and a HUD finding that the property
is no longer needed as subsidized housing.
In the early 1990s, other restrictions arose when many owners and nonprofit or tenant purchasers made use of the Preservation Program, Title II ( the Emergency Low-Income Housing Preservation Act , or ELIHPA,1988) and Title VI ( the Low-Income Housing Preservation and Resident Homeownership Act , or LIHPRHA, 1990). Generally, under these programs, the federal government provided virtually all of the funds necessary for predevelopment expenses and transaction costs, capital grants for acquisition costs, or additional Section 8 operating subsidies needed to cover additional debt service for acquisition and rehabilitation. Developments preserved under ELIHPA or LIHPRHA became subject to additional use restrictions for the remaining term of the original mortgage (usually about 20 years) under ELIHPA, or for their remaining useful life under LIHPRHA.
Finding out if any of these restrictions
apply to your property will require a fair amount of looking. First, research
HUD's files. A list of relevant forms to request might include the 
mortgage,
note, regulatory agreement, and Section 8 HAP (Housing Assistance Payment)
contract and amendments. Some HUD offices will willingly provide the information
when asked; others may require a formal request under the federal Freedom
of Information Act. The latter may involve more time and expense; HUD
is often slow to respond, and sometimes claims it can't release some information
because it is a "trade secret" of owners or would violate tenants' right
to privacy. HUD also sometimes seeks to charge for providing information
because it takes a narrow view of what constitutes the "public interest,"
for which the fee would be waived.
After HUD, check all public records to see if there are any other restrictions affecting the property's use or value. Most of these other restrictions establish covenants running with the land and can be found through a title search in the recorder's office or in contracts that are part of federal, state, or local public agencies' transaction files for the property. They could be found at housing finance authorities, redevelopment agencies, city housing departments, tax credit allocation boards, bond allocation boards, or even housing authorities that finance multifamily housing
Keeping in mind in the information
they have gathered on the selected properties, advocates now need an action
plan. A preservation action plan should have three parts: 
a
preservation goal (renewal or purchase), a set of strategies (persuasion,
pressure, litigation), and a plan for protecting the tenants if the preservation
goal is not met. In some cases, preservation is not a feasible goal. For
these Buildings, tenant protection will be the whole plan.
There are two basic ways an expiring use property can be preserved: the owner can renew participation or the building can be purchased by someone committed to affordability.
Renewal by the current owner may be the least complicated route to preservation because it does not involve all of the planning and resources of a purchase. It only requires a decision by the owner. The drawback is that renewal may be just for a short period of time (as short as one to five years), putting the property at almost perpetual risk of conversion.
There are a number of federal programs that offer financial incentives to help make renewal worthwhile. These usually involve increasing rents or restructuring mortgages. State and local governments often have separate incentive programs of their own. See the Financing section for details.
This route involves more complications, but may be superior in providing long-term assurances of preservation. In considering its feasibility, consider issues such as the:
Some state or local laws now provide
nonprofits and other qualified organizations the 
right
to buy, or to make offers to buy, threatened properties when owners are
seeking to sell them for conversion to market rate. This is called "right
of first refusal." Some states have gone a step further by giving right
of first refusal to the state housing agency, housing nonprofits, or other
preservation purchasers whenever the owner gives notice of an
action that would terminate a project's subsidies, before it's for sale.
In almost all of these cases, however, owners do not have to accept offers;
they could keep the property or sell to someone else after a waiting period.
Every situation and every owner is unique, but good research will often point to a particular goal. The owner's desires are often key. If the owner and/or management company appear happy working with HUD, but say they just need more money, education about the various incentive programs available could lead to a renewal. If, however, they appear frustrated with the government, and say things about just wanting to get out from the under the property and get their investment back, then they may be open to a reasonable purchase offer.
There are also considerations on the advocates' and tenants' side. Access to resources can be an obstacle to a preservation purchase, especially if the rent gap is high and the property very costly, or if the property is in need of many repairs. The tenants' experiences with their current management can also be a factor: if they have been bad, then advocates might want to consider a purchase goal more strongly.
Advocates' two major strategies will be persuasion and pressure. There are many incentives out there for owners to renew, and they may not be aware of all of them. One role of advocates can be to help an owner see how renewal or sale can be a worthwhile approach. In most situations, however, it will take active organizing of the tenants and the community, combined with support from relevant government agencies, to achieve a preservation goal. In the case of a purchase it will also involve finding a purchaser, and helping that purchaser locate the funds for purchase. (See Financing section.)
One strategy available for properties
subject to additional restrictions is litigation.(See Other
Restrictions, above.) Because HUD may not carefully review an owner's
certification
of a project's eligibility to prepay, an owner may be allowed to convert
to market rate illegally unless advocates take to the courts.
Litigation can delay or prevent a conversion, or at least force an owner to comply with all notice requirements and tenant protections before proceeding. Possible plaintiffs include existing tenants, families on the project waiting list, others in the community in need of affordable housing, and low-income community or housing advocacy organizations. If there is a strong claim that will prevent conversion, litigation can be your primary strategy. Usually, however, it will be a tool to buy time or provide extra pressure.
Along with trying to enforce existing restrictions, here a few other types of potential preservation claims:
federal,
state, and local requirements to serve notices of a specific content
at a specified time upon certain parties during the process of conversion. These
requirements are rarely fulfilled completely. Tenants (and others) are
likely to have claims of violation of these requirements. (Download
Checklist of Notice Requirements).
This is may buy time until the owner complies.
For a list of recent cases that raised some of the above claims to challenge conversions, visit National Housing Law Project's Case List.
Some developments may not be preserved.
Organizers and advocates should be aware of this as they work toward preservation,
making sure that tenants are prepared for that 
possibility.
They should also continue to monitor converting buildings to make sure
tenants get timely and accurate information and benefits.
Required tenant protections, on both the owner and government side, are rarely carried out completely or on-time. There are two categories for advocates to pay attention to: notices and vouchers.
No one entity monitors owner compliance with federal, state, or local notice requirements. Federally required notices often fail to cover a full year, to contain the right information, or to be served on the right parties. State notices are often not provided at all, or fail to meet applicable legal requirements. (Download Checklist of Notice Requirements.)
Since 1999, tenants facing any "housing conversion action" can receive "enhanced" vouchers, whose value can be set at the reasonable market rental value of the unit. Tenants can use enhanced vouchers to stay in their homes or to move to another unit with a willing landlord. Federal law obliges owners to accept the vouchers in almost all cases. In 2000, Congress extended eligibility for this special protection to tenants whose homes were converted since October 1, 1994, and clarified the owners' duty to accept them.
Any tenant in residence at conversion who was previously assisted under a project-based Section 8 contract is eligible. Most low-income tenants residing in a development with a HUD-subsidized mortgage that is being pre-paid are eligible.
The responsible agencies, however-HUD's local Offices of Housing (responsible for multifamily opt-outs and prepayments), Public and Indian Housing (responsible for processing replacement enhanced voucher funding), and local PHAs (responsible for certifying tenants, inspections, and approving rent levels under the enhanced voucher program)-are usually not well coordinated, especially in locations where there have not been many conversions. PHA recertifications are often delayed or inappropriate or funding fails to arrive on time.
Tenants can have a hard time getting accurate information from the responsible agencies as well. Public officials will often "sell" the voucher program and downplay its deficiencies. National acceptance rates (recent HUD studies indicate) are plummeting down to 70%. Although voucher acceptance rates in tight markets are at times less than 20 percent, HUD tells people they have the freedom to move anywhere in the country with their voucher. There are reasons for such over-selling. Vouchers relieve a shrunken national HUD staff of administrative work, while local Housing Authorities get additional fees for administering the program. And HUD often has a close relationship with the owner who benefits from the opt-out/prepayment.
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