HUD Official: White House May Bring Back Affordable Housing Funding Initiatives
The White House is considering restoring an Obama-era initiative aimed at promoting affordable housing production, a U.S. Department of Housing and Urban Development executive said on a Bisnow webinar this week.
President Donald Trump is thinking about signing an executive order that would bring back the Federal Financing Bank multifamily risk-sharing initiative, lift the cap on the rental assistance demonstration and restore capital gain benefits for opportunity zones, HUD Regional Administrator for New York and New Jersey Lynne Patton said.
“The reason the administration gave for not renewing that program with the Department of Treasury was because it was primarily geared toward being formed during a time of economic downturn, so at the time we were in an economic boom,” she said of the administration’s decision to stop the program last year on a Bisnow webinar about inclusivity in affordable housing Wednesday. “Now we’re back in an economic downturn because of the pandemic.”
This comes amid an intensification of the affordable housing crisis nationwide: Local budget deficits, combined with lower-than-average rent collection rates and the potential for a decline in subsidies, will delay the production of affordable housing and could lower the number of units to come into the market for the next decade.
Patton was joined on the webinar by New York City affordable housing developer Jonathan Rose, BRP Cos. co-founder Meredith Marshall and Rosenberg & Estis attorney Daniel Bernstein.
Patton's statement came after Rose posed a question about bringing the program back amid a struggling economy that has left many affordable housing developers in need of additional resources.
"[The FFB risk-sharing initiative] is what would unleash affordable housing development in New York," Rose said.
Patton responded and said she was in active conversation with others in the administration to potentially bring the FFB program back amid the crisis.
The Trump administration announced it would scrap the program back in early 2018. The program officially ended at the end of 2019. It was started in 2015 as a way to move the affordable housing market as private funding became difficult to secure after the Great Recession, by providing government loans for these projects. Over 163,000 units were built as a result, according to the National Housing and Rehabilitation Association.
The White House didn't respond to a request for comment.
Rose also discussed the convergence of factors that have led to a major decrease in production and preservation in New York. A study published by the New York University Furman Center last week showed the overall number of affordable housing units in the city is on the decline, despite Mayor Bill de Blasio's persistent devotion to building new affordable housing.
This is evidence that there needs to be more emphasis on purchasing, restoring and maintaining existing affordable housing, Rose said.
“We need to move to dramatically increase the resources available,” Rose said.
With the $457M in cuts to the New York City Housing Development and Preservation in this year's city budget, many developers have found their projects stalled in the pipeline, awaiting funding set to come through or trying to get funding for new projects.
“The pipeline is stretching for years and years and years,” Rose said.
He pointed out that, even if a portion of New Yorkers move away from the city, there will always be a need for affordable housing.
"It is persistent because of the wage mismatch," he said. “There is not a single county in America where if you work full time and earn a minimum wage, you can afford to rent a two-bedrooom apartment.”
Hopefully, he said, amid a period of economic downturn, building these affordable housing projects will get easier for developers, not harder.
“When economies decline, construction costs decline and land prices decline, it should make it easier to build affordable housing,” he said.
The conversation came a day after HUD announced that the Federal Housing Administration’s moratorium on evictions and foreclosures, which covers more than 8 million people, would extend through the remainder of 2020.