Preserving Project Based
Section 8 Apartments Inventory and Classification of Project Based Section 8 Complexes
Create an inventory of all the project
based section 8 properties in Miami Dade County
Include information on when the subsidy is set to expire and whether or
not the owner plans to renew (and other data).
Classification of Project Based Section 8 Complexes
Identify projects where the subsidy will expire between now and 2011
Identify projects in danger because they they have had trouble passing
HUD inspections with regard to their physical condition (low REAC
scores)
Identify other projects that may be good candidates for acquisition by a nonprofit
Profiles of Two Owner Types
Type #1: Owner wants to "opt out" and charge market rate rents -
purchase price for nonprofit will be high
Typically in more "desirable" neighborhood where the owner can charge
rent higher than what is available under Section 8
Such properties typically have a high fair market value - a huge amount
of subsidy would be needed to purchase and preserve affordability
Type #2: Owner does NOT want to "opt out" but is willing to sell to a nonprofit for a reasonable price
The property is in a "less desirable" neighborhood - owner doesn't want
to opt-out because rents paid by Section 8 are higher than the local
unsubsidized rents Section 8 contract may only have a few years left
but a nonprofit could get the term extended and the amount increased
Typically the building is 20-30 years old, in need of repairs and not
generating much net cash flow because the Section 8 rents have been set
low by HUD due to the poor condition
Key Variables for Acquisition by a Nonprofit
Finding a capable and willing nonprofit developer
Putting together a development team
Finding an owner willing to sell at a reasonable price
Ability to extend Section 8 contract with HUD
Availability of long term permanent financing
Ability to qualify for 4% "Low Income Housing Tax Credit" (or possibly, even, the 9% credit)�€
Availability of local subsidy (SHIP, HOME, etc.)
How to Preserve Project Based Section 8 Complexes - Devising strategies for acquisition and creative financing
Use bond financing coupled with 4% Housing Tax Credits supplemented with local subsidy.
Innovative
ways that nonprofits can partner with for-profits for the acquisition
and rehabilitation of existing Project Based Section 8 buildings
Transferring Project Based Section 8 subsidy to another building
Time line for actual preservation of such apartment complexes
Identify properties appropriate for acquisition
Devise strategies for acquisition and finance.
Form partnerships with HUD, local government housing agencies, and
experienced for-profits (and/or affordable housing consultants)