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Long-Term Project Sustainability: The New Wave of Preservation NHC/MacArthur Foundation Partners in Innovation Conference May 17, 2010 Bill Rumpf, President Mercy Housing Northwest
Federally-assisted stock built during peak period of late 1960s to mid-1970s. Interventions aimed at preventing for-profit owner opt-outs, market-rate conversation Success = Long-term affordability restriction Preservation Classic
Production spurred by 1986 LIHTC and 1990 HOME Program In Washington State-largely nonprofit, 40-50 year affordability restrictions Units in operation 20 years+ by 2016: Seattle: 45% of 11,000 units Washington state: 40% of 37,000 units Preservation-Next Generation
Reserve shortfall in at least 1/3 of buildings Portland HDC Study Underwriting assumptions Reserve deposits of $250 to $300. Need=$700/yr Assumed 2-3% increase in rent, but actuals less Asset Management capacity has evolved later than development. What is the Challenge?
Asset/Property Management Affinity Group Operations Dashboard Capital Needs Assessment format exchange Lender refinance panels Bed Bugs 20-25 active participants Portfolio Preservation Planning Grants 6groups with 500 units+ each Operations, Finance and Physical Needs Seattle/WA State MacArthur Project
Multifamily Weatherization 800 units in 2009. ARRA helped Statewide Web-Based Reporting Single electronic report for local, HTF, tax credits Will enable real-time data analysis Recapitalization Guide Seattle/WA State MacArthur Project
Trade-off with resources that otherwise can be used for new units. Frog in Boiling Water Problem Housing capital sources are down Avoiding perverse incentive to be a low-reserve project. Public Policy/Political Challenge
Develop hybrid staff teams Break the 2nd-time Funding Taboo Set cap on resources for existing projects Competition. Best practice thresholds. Develop $25-30K solution w/o Tax Credit Portfolio Flexibility—post Y15 Recapitalization Strategy Ideas