The Affordability Toolbox

Last spring, the UT School of Law Community Development Clinic prepared a study for local nonprofit HousingWorks: "Preserving Austin's Multifamily Rental Housing: A Toolkit." The report, authored by clinic director Heather K. Way and students Aliaquanda Derrick and Mary Dear, describes six tools for keeping existing apartment rentals affordable, with examples of each measure from across the nation:

1) Public Funding:

(Either dedicated funds or one-time funds)

• New York City has more than $7.5 billion budgeted as part of a 10-year plan to preserve affordable-housing stock and hired a firm to "develop an ongoing risk assessment" of such residences.

• Fairfax County, Va., levies an additional penny tax per $100 on real estate, which is expected to generate $18 million toward the county's goal of preserving 2,000 affordable apartments by 2011.

• Chicago has an ongoing Rental Subsidy Program.

2) Private Finance Tools:

(Governments and nonprofits providing loans for apartment rehabs)

• Funding initiatives: Washington, D.C.'s Site Acqui­sition Funding Initiative leverages public funds with private investments, offering below-market-rate loans for development of affordable housing.

• Preservation loan programs also exist in New York, New Jersey, Chicago, Cleveland, Detroit, Massachusetts, and elsewhere.

3) Tax Tools:

• Tax increment financing: A TIF captures taxes generated by new or additional property value into a geographically designated fund, as with Austin's Homestead Preservation District on the Eastside; in Portland, Ore., 30% of all urban-renewal TIFs funding is held for affordable housing; in California, 20% of a TIF fund statewide is directed to low- and moderate-income housing.

• Housing tax credits and tax-abatement programs also have been instituted widely at the city and state level.

4) Zoning/Land-Use Ordinances:

• Condo conversion ordinances: The Community Development Clinic identifies three main components to such ordinances: Developers must cover tenant relocation fees, must offer tenants advance notice of conversion, plus a "right of first refusal" on buying the unit they currently occupy. Cities also can require a limit on the number of conversions yearly, approval by the city, or payment to an affordable-housing fund. Several cities and states (including Seattle, Boston, Los Angeles, San Francisco, and California and Nevada) have some form of a conversion ordinance.

• Affordable-housing-replacement ordinances or housing-impact studies also have been used to preserve affordable rentals.

5) Regulatory Tools:

• Similar to conversion ordinances, these include advance notice to the displaced, the right of first refusal, and relocation reimbursements.

• Boston requires a five-year notice to seniors and low-income renters that their apartments will be converted to condos; Chicago requires a 120-day conversion notice to all renters; Washington, D.C., has codified such measures in their Tenant Opportunity to Purchase Act.

6) Other Tools:

• New York, Los Angeles, Denver, Boston, and other cities have adopted comprehensive city strategies for preserving affordable rentals and apartments; these include offering outreach and assistance to owners and renters, setting a target number of units to preserve, tenant organizing, ongoing assessment of at-risk affordable properties, and stepped-up enforcement of the Fair Housing Act.