Preserving
Project Based
Section 8 Apartments
Inventory and Classification of Project Based Section 8 Complexes
Classification of Project Based Section 8 Complexes
Profiles of Two Owner Types
Key Variables for Acquisition by a Nonprofit
How to Preserve Project Based Section 8 Complexes - Devising strategies for acquisition and creative financing
Time line for actual preservation of such apartment complexes
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)
