Rent Apartment Property: rent apartment california

>> good afternoon everyone, andwelcome to the quarterly update. and it's great to see all of youtoday, especially on a friday afternoon.we have a few technical difficulties with the externalfeed, so that's why we're slightly delayed.thank you for your patience, and thank you for joining us today.also to the folks that are viewing this on webcast, thankyou for joining us. we have a terrific line-uptoday, and starting with our chief market analyst, kevincain.

he'll give us an overview of howthe housing markets are doing in the first quarter.he'll also share with us some of the new things that we're doingin transforming the u.s. housing market conditions report from apaper-based product to an innovative web-based tool.we have a wonderful panel discussion lined up.as we've done in the past, we've tied an upcoming of evidencematters edition to our panel discussion for the quarterlies.of course, we're going to be talking about preservingaffordable housing.

this week's been an importantweek with harvard joint studies releasing their annual report onthe state of the nation's housing.you'll find findings consistent with what we've reported inpdnr's worst case housing needs report.i'll put in a plug. you can find the executivesummary on huduser.org. basically harvard's study foundthat there's a sharp rise in the number of renter householdspaying more than 50% of their income on housing.the report also states that

between 2007 and 2011 the numberof rental units affordable to the extremely low incomehouseholds fell to 6.8 million from 6.9 million, which doublesthe gap between the number of who need low income housing andthe supply of such housing. this makes it even moreimportant in terms of affordable housing preservation.the report also shows and projects some interestingtrends. it projects the majority ofpotential households becoming first-time homeowners arepredominantly minority, and that

has implications for wealthaccumulation and, of course, the rental supply.and then more members of the groups that have traditionallybeen homeowners are now becoming renters.so these trends show that preserving affordable housing iseven more critical now more than ever.we're pleased to have a panel of experts today, policy andresearch experts from the field join us, and we're delighted tohave margaret be our moderator. margaret is our acting directorand associate deputy secretary

for affordable housingpreservation here at hud. she oversees programs to recaptalize and preserve affordable rental housing and multi-familyproperties. she first joined hud in thesanï¿½francisco multi-family hub, and she servedï¿½-- she ensuredproduction and oversaw the development, refinance andsubstantial rehab of hundreds of multi-family homes with fhainsurance. she started her career as apresidential management fellow, and she cut her teeth on housingpolicy and local issues in the

northern california area.so it's my pleasure to welcome all of the panelists, but we'regoing to start off with kevin cain quarterly update.kevin, i'll invite you to the podium.>> good afternoon, everyone. thank you, jean.jean had mentioned the technical difficulties.i believe they were trying to figure out a way to reduce theglare coming on the screen, but unfortunately i don't thinkwe've figured that out yet. the folks on the webcast canprobably tell you that.

my task here this afternoon isto keep everybody energized and excited for the panel.i can find no better way i can think of to do that than to talkabout housing and economic statistics, so that's what i'mgoing to do for the next ten minutes here.before i begin, i'd like to thank or field economists whohelped me put together the maps you see in my presentation.those folks are david bank, ben hoak, wendy, ipp, t. michaelmiller and holly weaver and that team is led by randallgoodnight.

a note about the maps, brownindicates worse off conditions or declines and blue indicatesbetter conditions or increases. so before we start talking aboutthe housing markets, let's take a brief look at the nation'seconomy. this first figure shows theyear-over-year percentage charge in non-farm payrolls since 2003,and this is looking at both the 12-month and 3-month averagesthrough march of 2013. non-farm payrolls are a measureof the number of jobs in the economy.the 12-month average, shown in

blue, shows an annual change andis a more stable measure of economic performance.the three-month average change shown in red is a good indicatorfor where things are heading. during the 12 months endingmarch 2013, non-farm payrolls average nearly 134.3 millionjobs. this was up 1.6% or 2.2 millionjobs compared with a year ago. the three-month average was alsoup by 1.6% from a year ago. the rates for both of theseseries have been relatively stable since june of 2012, andyou can see that with the

flattening of the curves off onthe right side. for the eighth consecutivequarter every region in the country added jobs relative to ayear ago, so the entire country is shown in blue indicating jobgrowth. five regions grew at a rate thatwas faster than or equal to the national average with three ofthese regions growing by more than 2% shown in dark blue.growth was led by the rocky mountain region at 2.8% whereyear-over-year growth was up 0.5 percentage points compared withlast quarter.

the five regions in light bluegrew at a rate slower than the national average with theslowest rate of growth in the mid-atlantic at 0.7%.let's take a closer look at the pacific region by metropolitanarea. year-over-year growth in thisregion was 2.1%, and that was led by a 6.9% increase in theconstruction subsector. this was related to increasedsingle-family home production in all four states.those areas in the darkest blue grew by more than 2%, and thatincludes the major metro areas

of phoenix, lasï¿½vegas,losï¿½angeles, sanï¿½francisco, and sanï¿½diego.the highest rate of growth occurred in santa cruz, whichwas up by 6.2%. the national unemployment ratewas 8.1% during the first quarter.this was down from 8.7% a year ago.the five regions in blue had a rate less than the nationalrate, and this was led by the great plains at 6.2%.the five regions in brown had a rate that was higher than thenational average led by the

pacific at 9.5%.on a state level, northï¿½dakota still has the lowest rate in thenation at 4%, and nevada and illinois both have the highestrates at 10%. what about the change in theunemployment rate from a year ago?on a national level the unemployment rate during thefirst quarter of 2013 was down 0.6 percentage points from lastyear. the four regions in dark bluedeclined at a rate that was greater than the nationaldecline.

the largest decline occurred inthe pacific at 1.4 percentage points, with the rate fallingfrom 10.9% to 9.5%. this was led by a 2.1 percentagepoint decline in nevada. the unemployment rate declinedor remained unchanged in every region of the country.now let me give a quick overview of current market conditions.sales market conditions continue to improve throughout much ofthe country, and they have become balanced in many regions.as a bit of background, balanced conditions exist when thequantity of housing supplied

equals the quantity demanded.soft markets occur when the quantity of housing supplyexceeds the quantity demanded and we have a housing surplus,and tight markets occur when demand meets supply and we havea housing shortage. all three home price indicessomehow home sale prices increased during the firstquarter of 2013 relative to a year ago with the largest gainswe've seen in years. existing home sales increased by8.1% during the 12 months ending march 2013 compared with a yearago.

inventories of new homes forsale were up 6% from a year ago and they were down 10% forexisting homes. based on the current rate ofhome sales, there's a 4.4-month supply of new homes, and that'scompared with a 4.9-month supply a year ago, and there's a 4.7month supply of existing home, which is down from a 2.6-month ayear ago. the sales vacancy rate was 2.1%for the quarter. rental market conditions arebalanced to tight throughout much of the country, and theycontinue to tighten in most

markets.an estimated 65% of new apartments that were completedin the fourth quarter of 2012 were absorbed within threemonths. this compares with a 55% rate ofabsorption a year ago. multi-family productionincreased by 17% in the first quarter relative to a year ago.now let's take a look at regional conditions around thecountry. these are assessments that areprovided by our field economists relative to last quarter.improvements in an area are

shaded in blue, and declines inconditions are shaded in brown. on the sale side, conditionscontinue to improve in much of the country, and they areconsidered balanced in half the regions with new england and therocky mountains both moving into the balanced category.conditions also improved in newï¿½york, new jersey, and in thenorthwest. conditions are only consideredsoft in the southeast, and they're slightly soft in themid-atlantic. on the rental side, marketconditions continue to tighten

around the country and areconsidered tight in new england, newï¿½york, new jersey, wherethings were previously mixed, and in the northwest.they are a mixture of balanced to tight in many other regions.in the midwest, previously tight conditions improved slightly tobalanced to tight, while in the southwest balanced conditionshave become a mix of balanced to tight.let's take a look at those price indices.for the fourth consecutive quarter, all three indices showprice increases relative to a

year ago and the rate of growthcontinues to go up. the case shiller index shown inblue was up 10.2%. the fhfa index, which is shownin red, was up 6.7%, and the core logic index shown in blackwas up 9.8%. in comparison to put this incontext, in the first quarter of 2012, two of these three indiceswere still declining. this next map shows the changein the core logic index by region from the first quarter of2012 to the first quarter of 2013.this is not seasonally adjusted

data, and it does includedistressed sales. nationally, the increase was9.8% with prices up in every single region.the west coast shown in dark blue was up by double-digitswith a gain of 16.9% in the pacific region followed by 10.6%in the northwest. the rocky mountains, southeast,and southwest regions increased between 5% and 10% shown in themedium shades of blue. the rest of the nation increasedby less than 5%. on a state level, there wereeight states that had

double-digit price increases ledby nevada, which was up by 20%. arizona was up by 18%.prices were down in only three states led by a 4% decline indelaware. according to the census bureau,the median price of a new home in the first quarter of 2013 was$251,000. this was up 5% from a year ago.according to the national association of realtors, themedian price for an existing home was $176,000.this was up 11% from a year ago. this next map shows the pricechanges in the southeast region

at the metropolitan level duringthe first quarter. prices were up in everymetropolitan area in florida including three areas that wereup by more than 10% shown in dark blue.this resulted in an 8% increase for the state altogether.in alabama prices were down nearly 2% with declines innearly every metro area in the state, and you can see that mostof those metro areas then are in brown.the foreclosure situation continues to improve.this next map here shows the

percent of home loans 90 or moredelinquent, in foreclosure or reo in 2013.reo is real estate owned which means the lender owns theproperty. it was down 7.8% from a yearago. the four regions in brown have arate that's higher than of the national average, while theother six regions are below the national average.the rate declined in seven regions with the most dramaticchange in the pacific region, which was down by 2.4 percentagepoints.

newï¿½york, new jersey, and newengland were both up by less than 1 percentage point.the rate remained unchanged in the mid-atlantic.arizona, nevada, california, and florida led the declines in thenation, and those were all down by more than 2 percentagepoints. new jersey, on the other hand,was up by 1.2 percentage points. so let's take a closer look atregion 2. those areas in the two shades ofbrown have a rate that's higher than the national average.10 metropolitan areas in the

region have a rate that's morethan 10%. those are shown in dark brown.the percentage of distressed loans increased in everymetropolitan area in region 2 during the past year with thelargest increase of 2.6 percentage points in vineland,new jersey. let's take a look at sales now.existing home sales increased by 8.1% during the 12 months endingmarch 2013 compared with a year ago.sales increased in every region with double-digit increases innew england, the midwest, the

rocky mountains, and thenorthwest. the regions in dark blueincreased at a rate that was faster than the nationalaverage, white the light blue grew slower than the nationalaverage. just to note something not onthe map, new home sales were up 20% in the first quarter of 2013relative to a year ago. that's according to data fromthe census bureau. looking closer here at thenewï¿½york/new jersey region, which has the smallest increase.that area was up by 2.9%.

sales were up in 13 metropolitanareas shown in the two shades of blue, and they were down in theother seven areas shown in brown.camden led growth, and that was up by 11%, with rochester andocean city also increasing by more than the national average.declines ranged from 1% in utica to 19% in buffalo.single-family home building, as measured by building permitsissued, increased by 27% across the country during the firstquarter relative to a year ago. single-family home buildingincreased in every region of the

country with gains ranging from11% in new england to almost 47% in the pacific.so that explains that increase that we had in the constructionsubsector. the number of multi-family unitspermitted was up by 17% in the first quarter of 2013, andincreases occurred in eight regions and they ranged from 11%in the southeast to 66% in the northwest.multi-family permits remained unchanged in the pacific regionrelative to a year ago, and they declined by 6% in themid-atlantic.

now let's take a look at rentalmarket conditions. vacancy rates continue todecline throughout much of the country, and those are shown inthe three shades of the brown dots.according to reif data. the average u.s. vacancy ratedeclined by 0.7 percentage points from 5% in the firstquarter of 2012 to 4.3% in the first quarter of 2013.there were eight markets with a decline of two percentage pointsor more, and those are shown in dark brown.if you look, five of those are

in florida.the light brown areas declined by less than the nationaldecline. according to the census bureaufor the entire u.s., the rental vacancy rate was 8.6% in thefirst quarter of 2013, town from 8.8% a year ago.now a closer look at the southeast region vacancy rates.vacancy rates were down in 38 of the 48 areas.those are shown in brown. they were down in all themarkets in florida, and again, five of those down by twopercentage points or more shown

in dark brown.the rates were up in eight areas, although only two ofthose increases were by more than 1%.rates remained unchanged in the other two areas.now looking at rents across the country, rents were up by 3%nationally according to reif data.the average market rent in the first quarter was $1,102.this compares with $1,070 a year ago.rents increased in 196 of the 200 areas.rents increased by more than 3%

in 34 of those areas, and thoseare shown in dark blue. areas in light blue increased byless than the national increase, and four of those areas in brownhad a decline in rents. let's take a closer look atrents in the southwest. rents were up in all 29metropolitan areas, and 11 of those areas increased by morethan the national average shown in dark blue.this was led by a whooping 21% gain in midland odessa, which isrelated to the gas and oil industry exploration going on inthat area.

so in summary, year-over-yearjob growth for the first quarter of 2013 was 1.6%.sales markets continue to improve and are now balanced inmany areas around the country. prices had the most significantincrease in years. sales were up as well.rental market conditions are balanced throughout the country,and they continue to tighten with rents continuing to riseand vacancy rates continuing to decline.for additional information, you can talk to me.you can talk to your local

regional or field economist, oryou can go and check out our new u.s. housing market conditionswebsite as folks hopefully are aware.we're no longer putting out the printed copies of the u.s.housing market conditions report, but it's a brand-newwebsite for folks to check out. what i have on the screen is asnapshot of the landing page for that site where you can get allof your national, regional, local data, everything that wasin the printed copy on the website.it's new and improved.

it's better.any questions folks have about that, feel free to e-mail any ofthe emed staff and myself included.thank you very much. it's my pleasure at this pointto hand things over to margaret salazar, who is the actingdirector of the office of affordable housing preservationhere at hud who will lead our panel discussion this afternoon.>> thank you so much, kevin. can everyone in the audiencehear me okay? great.thank you again so much,

everybody, for joining us today,especially on a friday afternoon.i want to also thank for panelists, some of whom havetraveled to be with us today. we certainly appreciate that andappreciate their time. before i introduce ourpanelists, i'd like to talk to you a little bit about the hudperspective on the issue we're about to discuss today which, ofcourse, is the critical issue of preserving affordable rentalhousing. certainly what we just heardtells us that many vacancy rates

in parts of the country aregoing down and rents are going up, which says now more thanever we have a critical need to preserve affordable rentalhousing. as many of you know, hud ismaking a dedicated and concerted effort to come up with newopportunities and flexibilities for the owners, public housingauthorities and other partners we work with to preserve thelong-term affordability and viability of hud-assistedproperties. we're at a crossroads today andwe'll hear about this in our

presentations.we have aging properties. we also have an aging populationthat has growing needs. we have changing demographicsincluding family composition. we also have, you know, changingneeds in terms of the types of housing we require.at the same time we have growing needs for infrastructure in ourcities and communities. together, it really does pose uswith a number of challenges, but what i'm pleased to let you knowtoday is hud has enacted a number of new programs andinitiatives to help to address

those challenges.it's really a wide array of programs that we wanted to atleast give you a little flavor for today.among the many things that we've been able to put into place inthe last few years, we've come up with a streamlined platformfor fha mortgage insurance, which is a really importantproduct for folks that are looking for financing topreserve rental housing. so we've implemented a number ofreforms to speed up and improve our delivery of those fha loanproducts.

that's having a tremendousimpact for folks as an option for financing.we've put in place a number of new notices and administrativereforms to really streamline our approvals on the hud side forthings like mortgage prepayments, deferral offlexible subsidy debt. for owners that want to, forexample, combine efficiency units to create bigger units toimprove the occupancy of their properties.also, to let section 8 owners better accommodate low-incomehousing tax credits, which are,

of course, a key source ofequity financing for these rental properties.on the public housing side as well as multi-family, the choiceneighborhoods initiative is a powerful new program thatincorporates housing, people and neighborhood strategies forcomprehensive neighborhood transformation.of course, one of our signature problems as well is the rentalassistance demonstration for public housing and multi-familyhousing. you'll hear a lot about thattoday.

we're pleased to share updateson that program. >> together all the strategiesdo pose a number of flexible options for the owners andcustomers that we serve as practitioners, but what's reallyexciting, i think, about today's conversation, particularly as ahud official, is that it really gives us an opportunity to stepback from our day-to-day role at hud as practitioners, regulatorsand hopefully as really good partners to the industry.it allows us the opportunity to step back and learn about someof the cutting edge strategies

that folks are employing in thefield to engage players from various arenas to tackle theissue of preservation and also gives us an opportunity to thinkabout how we can incorporate some of the cutting edgeresearch out there that folks are using to make decisionsabout preserving properties, which is so critical and informsthe work that we all do. so i'm very pleased to be ableto have that conversation with folks today.so without further ado, i'd like to introduce you to today'spanelists.

we're very pleased to have themwith us today. to my immediate left is ann rayfrom the florida housing data clearinghouse of the shimberghouse for housing studies at the university of florida.ann ray manages the florida data clears house, which is supplyand demand data for cities and counties in florida.since joining in 2001, she's performed research on publichousing, the housing needs of personals with disabilities,farm worker housing and states' implementation of the low incomehousing tax credit.

miss ray directed the center'sactivities associated with the grant from the mcarthurfoundation. its window of opportunityinitiative, under which the center developed data and earlywarning systems for the analysis of preservation risk toflorida's subsidized housing supply.she received a b.a. from the university of michigan and amaster in urban planning and policy from the university ofillinois at chicago. to ann's left is stacy young.we're pleased to have stacy with

us today.stacy's the director of the preservation exact, which islocated at community investment corporation.as director of the compact, she coordinates policy and programinitiatives to further rental preservations that includingenergy retrofits, data analysis, property taxes and governmentprocesses. prior to her work with thecompact, she worked for the city of chicago office the mayor andat the chicago department of housing as director of policyand research.

we're pleased to have stacy withus today. finally to stacy's left is willlavey. we're pleased to have will as anemployee in hud. he works in the office of publicand indian housing specializing in hud's rental assistancedevelopment or r.a.d. he's worked with dozens ofpublic housing authorities across the can you understand touse r.a.d. to preserve the public housing stocks.we look forward to hear an update on the r.a.d. program.without further ado, i'd love to

hear what ann can tell us abouther work at the shimberg center. >> thanks so much, margaret.what we saw about the florida housing markets in kevin'spresentation very much confirms what we're seeing at the statelevel, which is that rental markets are really tighteningup. we have a real affordable rentalhousing need, so preservation is even more and more important.as margaret mentioned, i coordinate the florida housingclearinghouse at university of florida.we kind of function as the

state's affordable housingresearch arm. we work closely with floridahousing finance corporation, our statehousing finance agency.as a partner with florida housing, we produce the dataclearinghouse where we have a website with information abouthousing needs, about the housing supply.one specific aspect of that is our assisted housing inventory,which is a database of affordable rental housing in thestate. so the assisted householdï¿½--what i want to do is talk

briefly about that database,which very much forms the basis for work and preservation.talk about a similar database of formerly assisted propertiescalled the lost properties inventory and the affordablehousing suitability model, which is a model for evaluatinglocations and sites in terms of their suitability in terms ofaffordable housing. they're ahi, that's ourpreservation database. it consists of roughly 22, 2300developments in florida with over 450,000 units.these are rental units that have

funding from hud itself, fromusda world development, from florida housing financecorporation or bond financing from local housing financeauthorities. in many cases they have morethan one layer of funding and more than one source.hud's really been a key partner in the development of thedatabase. we get an annual data feed fromthe hud state office and have since 2000, and we also make alot of use of hud's online multi-family database to add tothe information.

we provide basic propertyinformation. where is the property located?how many units do we have in the property?how many are rent-restricted and how many have rental assistance?we provide information about the subsidy layers of the propertyand what the expiration dates are, which is key to forecastpotential losses to the inventory.is the owner for-profit for nonprofit?we add information about tenant-paid rents and what theutility allowances are.

more recently we addedinformation about tenant characteristics at eachdevelopment. when we look at the housing,there's a real range in the tenants they target and thetenants they attract. we also have on our websitesimilar if not somewhat more limited information aboutflorida's public housing stock, which is quite a bit smaller.we have 33,000, 35,000 units state wide.we provide information about the units and how many units are ineach development.

what building type it is.this is used in strez rags in a lot of different ways.our statehousing in particular defining the universe ofpotential projects. advocates use it to findspecific information about specific properties in theircommunities or get a sense of the inventory as a whole.developers use it online or requests when they're looking atpotential properties for preservation and because ourstate has a set-aside of tax credits for preservation.it's a tool for identifying the

properties that may be eligiblefor that kind of funding. we started to collect thisinformation in the early 2000s and launched the onlineapplication, that we update every year in 2004.shortly after that we started to use as a tool to track what welost in the state. we have units coming into theinventory, but we have units leaving the assisted housinginventory. our lost properties inventory isa mirror image of the housing inventory.their properties that had at one

point since 1993 funding fromhud, from rd, from our state, or from local housing financeauthorities but have since exited those subsidyrestrictions. it's a substantial amount.it's about 600 developments with over 52,000 affordable units.so we also put that information online.it's been an advocacy tool that allows people to look at the netgains and losses to our stock over time.in recent years we took two steps forward and one step backin the inventory, and on the

slow years we have lost morethan we gained. we're also using it as aresearch tool both to look at how the inventory has changedand what we lost when. then we do an annual survey.we look at the current status of properties that were subsidized.have they remained at rental housing or demolished?if they're rentals, are they affordable rents.we'll talk briefly about the results of these things.we used the lost property incident vent to her to trackloss properties over time.

while the lost to the assistedhousing inventory got attention and preservation got a lot ofattention in the 1990s with the beginning of prepayment ofhud-subsidized mortgages, some of that certainly did happen inflorida during that time. where we start to loseproperties in the early 2000s, and that's with the expirationof the 15-year tax credit developments that have beenbuilt in '87, '88 and '89 and also with the beginning ofmaturing of mortgage revenue bonds.we get this spike in our loss of

properties, and for the mostpart that spike hasn't gone away but changed in character overtime. after that we saw a lot of condoconversion, which was just a huge boom both in the subsidizedand private market stock. in the mid 2000s following thatwe still continue to see losses not because of condo conversionbut because of foreclosure and vacancy, deterioratingconditions with older properties.more recently we continue to see that, and some significantforeclosures and property losses

because of that.we're also seeing the maturing of some of the last insuredmortgages for the last 236 projects, some of the worlddevelopment projects. so while we want to look intothis and it appears that in 2012, actually, we experiencedquite a bit of loss of our subsidized housing stock.some of that deeply subsidized. it was project-based rentalassistance. some of the tax creditproperties, and some of the bond finance properties that havemodest income restrictions.

maybe they're required to keep20% of the units at 80% of the median income or less.so as i mentioned, we've done follow-up to see what happenedto the properties to help us think about what we need toprioritize for preservation. in our surveys we found thatmost developments do continue on as rental housing.as i said, there was a brief spike for a couple of years inconversion of condos. in our survey about 20% of theunits were condo conversions. of the remaining ones most arevacant or demolished because of

poor property conditions.following up on the rentals that stated the rental inventory,most of them are affordable to some degree.most of them are affordable to householding at 60%.nearly all are affordable to households, but none of them areaffordable to extremely low income households.none have units that are affordable at 30% of variantmedian income or less. the market does not do that.although the loss to the project rental assistance and the hudand rd subsidized inventory

might not be the biggest losseswe're facing, they're the deepest losses we're facing.these units are not affordable to the types of tenants rentingthem before. we also asked the properties ifthey accept section 8 vouchers. we found the majority actuallydo not. again, particularly the oneswith relatively light income restrictions before.the majority of those do not accept section 8.most of the former project-based rental assistance and tax creditdevelopments do, but not all of

them.so between the loss of the inventory from condoconversions, vacancy and demolition, and the loss toï¿½--and the loss of properties that would accept voucher holders.i can think of one, for instance, that was a section 8development. very specifically excludingsection 8 voucher holders under a new owner and more upscalehousing development in downtown. so there's a loss there, too,and it's a loss we need to be aware of.i would say as i mentioned

before, one thing that the lossproperties inventory taught us is these preservation crises orevents come in waves. one thing that while we've beenfocused on early warning systems, one thing that makes itchallenging to develop an early warning system is looking atproperty losses in 2002. conditions were different.we were losing a lot of tax credit properties.that's not really happening right now, so we have to be veryaware of what current conditions are that may push properties outof the market.

the next one coming in the early2020s is the loss of the 30-year tax credit properties.it sounds like a long ways before, but it's not that faraway now. in fact, florida in five yearshas 9,000 units that were exiting tax credit restrictions.so because we have this database, we have to startthinking now. what do we do when theproperties hit year 30? another thing we learned is whenwe started to work and think about risk assessment and earlywarning systems, a lot of times

we heard don't worry about thenonprofit properties or the elderly households and peoplewith sdablths. those organizations are missiondriven and won't leave. while the majority of propertiesin our lost property inventory are for profit there are a smallminority that serve elderly tenants with people withdisabilities. they leave for the same reasonthat the for-profit stock leaves.they leave because they're deteriorating or because theorganization is moving onto

other types of projects or aconflict with their funder. and so while we may want to keepour eye on the less mission-driven organizations, wecan't assume all the other ones will be okay.finally, we learn that property loss and preservation are notall-or-nothing phenomenon. in some cases properties haveremained affordable to the folks they were serving before.the loss of subsidies and income and rent restrictions aren't anautomatic loss to the inventory, although they can be.we've seen a lot of preservation

life.it's not an official preservation process, but maybeit's a property staying in the inventory that received anenergy retrofit, so their costs are going down.some places the properties are not officially subsidizedanymore, but the local government is using nsp money orits own resources to provide some measure of affordabilityand rehab. while it drops off our assistedhousing inventory, we're still very much serving low incometenants.

last thing i want to talkaboutï¿½-- i want to mention too that florida has its ownpreservation initiative. from 2005 we had to set aside onour tax credit program for preservation, and it made a dentin what i showed you before. they've preserved about 5,000units and specifically focused on ones that serve the most lownorthï¿½carolina tenants that have the highest levels project-basedrental assistance from hud or rural development.most of those properties preserved are elderly ordisabled properties or through

their programs have been able toadd some units reserved for extremely low income and specialneeds households that didn't have it before.we are through policy-making a dent in those property lossesand doing it in a way that targets those most deeply you besiddized units won't be affordable after the law.the last thing i want to talk about the affordable housingsuitability model. this focuses on location.moving away from what's most at risk to where we want to seeafford believe housing?

it's a way to set priorities forpreservation and new construction, to look for thesites and locations in neighborhoods most suitable foraffordable housing. we developed a model where welook at physical characteristics of a site, and this goes town tothe parcel level, neighborhood socioeconomic characteristics.s it mixed income, higher income, lower income?how are the schools rated? neighborhood accessibility.is the neighborhood easily accessible to services and anenknits.

two transportation-relatedvariables. the driving costs, so howaccessible through driving. a lot of people in our assistedhousing units are driving to work, to shop, and torecreation. and then how transit accessiblein the neighborhood. if it's near the transit stop,and if so, does it take you to places to go he is special slijobs. what we do with the assistedhousing inventory is we score every parcel in the regionagainst other parcels in the

region or compare it to theother multi-family housing in the region.put those layers on top of each other and see where theycoincide. where you have places that aretransit accessible and in environmentally good locationsand away from superfund sites and with good infrastructure.where these things may conflict and where you have to makedecisions. planners that use this model canweight these characteristics differently and weight themwithin each one differently so

they get something that fitstheir needs. we did the most development fororange county, and to give you an idea of where this conflictcan come up, transit accessibility in orange countygenerally is moreï¿½-- this is where orlando is.generally the more centralized something is, the moreaccessible parcel. green is the most accessible andorange is for the least. if we look at neighborhoodsocioeconomic diversity, the pictures looks quite different.a lot of outlying areas less

transit accessible have thehigher socioeconomic status. then what the model allows us todo is find places that have both, all of the above.the greens are transit accessible and neighborhoodswith good quality schools, low crime, lower poverty.that gives us some idea to be able to prioritize whereaffordable housing development might look best.we're using this right on two projects.one in a six or seven-county rural area in south florida, andone in the orlando area planning

around the development of acommuter rail system. so in each case with thesuitability model allows us to do is find the areas mostsuitable for affordable housing according to the interest ofthat particular planning process.we make changes to the assumptions of models to see howthe suitability changes and help that regional planning effortfind the best places in the region for affordable housing.so that's another piece of information that we're using tostart to think about and

prioritize preservation.with that, i'm going to turn things over to stacy.>> thank you. thank you, ann.that was very interesting. we're going to travel fromflorida to chicago in cook county for the preservationexact. the preservation compact is acollaboration of housing stakeholders in cook county.cook county is where chicago is. the stakeholders are workingtogether on a number of strategic programs and policiesto preserve rental housing in

cook county.when i say affordable, both subsidized and unsubsidizedhousing. the preservation compact ishoused out the community investment corporation.cic is a nonprofit multi-family rehab lender.most of the loans we do are in low and moderate income areas inthe metropolitan chicago area. most go to smaller, privatelyowned, mom and pop 5 to 49-unit kinds of building mostly in lowand moderate income areas. we've done a billion dollars offinancing in the past 30 years

to finance 50,000 units ofaffordable rental housing. there are 39 lender investorsfor a $400 million pool. cic does property managementtraining. you can imagine how important itis they have high capacity. it's not just for the borrowersor any property manager or owner in the region.we also have innovative partnerships with the city ofchicago and others. the city of chicago and cic havean interesting program called the troubled buildingsinitiative which focuses on

preserving rental buildings thatare troubled in some of our more challenging neighborhoods.the preservation compact launched in 2007 in the heightof the housing boom to extend the loss of affordable rental.i'll talk more in a minute about what we're doing in cook county.a couple years later they took their show on the roadnationwide and funded 12 different efforts for state andlocal initiatives around preserving affordable rentals.many were similar to what the preservation compact is doing.now, the burning question i know

most of you are going to havehere is, what's a compact? so, if you're really thinkingnow, these could all potentially be compacts, we're talking abouta historic agreement, i mayflower agreement is oneexample. the preservation compact and theinteragency work. here's what i'll talk abouttoday. i'll talk about preservationcompact initiatives and spend more time talking about thisinteragency initiative we have where we focus on sub sid diedhousing and talk about how to

set it up, what the structureis, and how it works and what we think about when we look backand what we think about as we move forward.so the compact was created in 2007.as i said, subsidized, and in 2005 or so the mcarthurfoundation convened a broad group of stakeholders, cic,lenders, policymakers to figure out why we're loses affordablerental housing and what to be done about it.the group came up with a number of reasons.for instance, we need more

information.ann said this is key, right? we need to make strategicdecisions, think about our activities in a strategic way.we need information, data and analysis.the mcarthur foundation funded the institute for housingstudies at depaul university, and we work a lot with them.another reason we lose stock. operating costs and energy costskeep going up. we created an energy retrofitenergy program for multi-family rental.in the last four years we did

35,000 audits, so 35,000 unitshave been audited through the program.12,000 units were retrofitted through the program.a very powerful and affected program.property taxes is another important prarth cost.in cook county, i don't know if this is true in other counties,property taxes very unpredictable, very confusing.we're trying to make sure that owners know you need to appealyour taxes. it makes a big difference incook county.

we're working with the cityassessor office. two to four unit buildings.a couple of years ago we took a step back and said this economicenvironment is different. we ignored this stock.it used to take care of themselves.two or four unit buildings, 30% of the rental stock in cookcounty, we'd only paid attention to these five and upmulti-family buildings. it so happens that those two tofour-unit buildings are located in some of the areas that werehit hardest by foreclosure.

those buildings are reallydragging down neighborhoods, and one of the problems is ourfinancing system has not set up for investors buying groups ofthose buildings. so we're looking at financingtools to make some impact in geographically small areas tohelp good, responsible investors purchase groups of thesebuildings. tenants also need to be in theloop. they need to get informationfrom government and from owners about what's happening to theirbuildings in terms of program

and policies.we need information from them. they know what's happening intheir buildings. interagency coordination ongovernment-assisted buildings. so the challenges.they maybe obvious to some of the you.why do we need coordination? public agencies can't do italone. there's the hud layer.there's the state layer. the county layer and the citylayer. they talk to each other the dayof the crisis.

before the crisis hits, we needto be looking at early as ann was talking about, earlyintervention. how do we identify theproperties before the crisis hits, and that's where thepreservation compact interagency council comes in.again, this is the only initiative where we focusexclusive on subsidized housing? who is part of it?hud, the illinois housing authority, the city of chicago'shousing and economic development department and cook countybureau of economic development.

what do we do aside frombringing public agencies together to chat?we use the data to keep up focused and strategic.we're spending our time talking about properties that matter.we make sure we're engaged in tenant groups and make sure weleverage existing resources and programs.that property tax and energy initiative are tools to use.we're leveraging every partnership.we have most of the preservation players in the country.the interagency structure.

there's a director level.in the early years we spent a lot of time with these folks tomake sure they were on board with this idea of theinter-agency council. we don't meet with them as muchanymore. we get a lot of guidance anddirection from them. we make sure they're tellingtheir staff, this is a priority. we don't meet with them as much.now we have a monthly working fwrup group with staff.this is where all the action happens.the staff meets monthly and i'll

talk more in detail about thatin a minute. we try to provide resources toowners. it's about new hud policies andprograms and the old new re row fit program and r.a.d. program.we meet one on one with owners especially if we see issue withtheir properties. so what's our process toidentify properties? ann just talked about a lot ofthe same elements that i would have mentioned.we are focused on project-based section 8 properties.not to say we aren't paying

attention to expiring use taxcredit properties or even unsubsidized.when you look at value, the project based properties, onceyou lose the projects you lose them forever.we start by looking at react scores knowing that this is notthe be all and end-all. it's one indicator to throw outthe low react scores first, type of property, again, as ann saidsometimes it's surprising. you think, well, gee, it's atenant-owned building. it's a co-op.which opt out and convert to

condo?it's shocking. we have a policy aroundgovernment-assisted co-ops because some of them are kind ofa disaster. we, of course, look at contractexpiration, what market the properties are in and, ofcourse, checking in with the tenant groups because they seethings we never see. they're our eyes on the street.so what's our process to intervene here?this is kind of easy, basic stuff.occasionally we get into

something big with severalstrategy meetings about one particular property, but for themost part this is pretty straightforward stuff.we know that hud project managers are swamped, so a lotis raising up the properties so the project manager is payingattention. they call the owner a manager.make i sit town with the hud project manager and the owner.perhaps the property owner is unaware of the problem and theycan solve it. maybe they aren't aware of aproblem or resource or policy to

help them.sometimes tenant engagement can push an owner to act wherenothing else will. it depends on the owner, thesituation, the management company, and sometimes when apolicy is raised, we work on that policy.government-assisted co-ops is a good example to see a bunch onthe list and saying they're a bigger problem here.we're trying to strategize around a group of those in cookcounty. we worked a lot with oursubstantial weatherization

agency when that money came downa couple of years ago. we got 3,000 of our rental unitsweatherized in a program typically for single-family.to make sure we don't miss anything over time, we we have aroundup to look at low score properties to make sure the oneswith bad conditions don't slip through the cracks overtime.this last point is not exciting at all.monthly tracking and feedback. actually, everyone feels alittle more pressure to get something done when you have toshow up to a meeting and report

on a property that's in yourjurisdiction. so that actually, i think,moving things along for us in a way that if we weren't havingmonthly meetings, the properties wopt be making as much progress.so what works? i can't say enough about howwonderful our local hud office is.our multi-family office has been so committed, so supportive, andso responsive to this initiative.they are the key to success. certainly you have to have allthe agencies engaged, and as i

said, at the director level wehave buy-ins. they're interested in this andpaying attention, and as a result staff is.snacks help a lot. predictable snacks at themeeting. people have to make decisionsabout what to go to or not go to.they like the cookies i provide. looking into the future, we lookat strengthening markets. we haven't thought about strongmarkets in a good, long time. we need to dust off these oldtools and look and see if some

of them are working six yearsago. i don't think a lot of themwere. maybe we can take some of thoselessons learned and fix our tools.we need to take a second look at the list of properties and makesure we identify the properties in strong markets.we also have the most boring initiative in the world, butthis is actually important. we've been doing a lot of jointmonitoring compliance work. so two years ago the city, thestate and county all had

different tenant incomecertification forms. so if you were a manager orowner and you had funding from the city and funding from thestate, you had to fill out two different sets of incomecertification forms, which is crazy.now we have one uniform form. we also are doing an experimentwith jointly scheduled file inspections on site.again, a lot of duplicative process going on here for mostof these buildings that do have jointly funded layers offunding.

so this is good for both themanagers and for sharing information across agencies.we're working on lots of other uniform forms and we're reallyexcited the city of chicago is looking at the state'smulti-family application. not the process.we're still working on the process, but the applicationitself so that the applications are going to be already mirrorimages of each other and look similar.it's easy for the owners to apply to both agencies.it's apples to apples as the

agencies work together tocompare information. that's it.i'll hand it over to my colleague, will.>> thank you, stacy, and thank you for your great work but kindwords about the chicago field office.glad it's working out. so i'm here to talk about therental assistance demonstration or r.a.d., which was authorizedby congress in 2012. we are quick on theimplementation now. r.a.d. is not only a signatureinitiative of hud, but as some

of my colleagues who haveworking in public housing for a long time say, it's probably thebiggest thing to happen to public housing since it'sinception in 1937. so this is something certainlyworth paying attention to in all locations.so the r.a.d.'s purpose is for public housing authorities andowners of public housing, section 8 mod rehab and therental assistance payment program.my presentation will focus on public housing, but i'llcertainly touch on the other

programs called legacy programs.the approach is simple. move these projects to along-term project base section 8 subsidy.it's the project based section 8 program has been around for 40or so years. it has a strong record ofsuccesses creating a stable funding platform for projects toserve very low income populations while remaining ingood shape and has accessed very importantly to capital sourceswhen they're in need of rehab. so just to have a quick update.so we'veï¿½-- congress authorized

r.a.d. in 2012.we've since published a notice, pih notice in 2012-32, whichsets out the rules. we are actively working withprojects as they convert their properties.i'll provide updates on public housing and mod rehab throughoutthe presentation. some background.the public housing inventory, there's about 1,152,000 fundedunits across the country. they're owned and managed byover 3100 housing authorities, so, of course, all of the bigcities but much smaller cities

and kouns across the country.estimated more than 20 housing in rural areas actually.a recent study and it'sï¿½-- it's old.so it was originated in the new deal in 1937.most of public housing was built in the '40s and '50s and '60s.so this is an aged stock. washlly as a result.a recent study shows that the had been housing inventory has acapital backlog of nearly $26 billion or over $23,000 perunit. that's very large compared toother forms of affordable

housing.the public housing is funded differently from other forms ofaffordable housing. there's so such thing as acontract for rent structure where an owner has anexpectation of what they'll receive each year based on ourrent. instead, they collect our rentsfrom tenants that pay 30% of the income.they receive a formula by estimate of operatingsuspensions and receive a capital fund grant, which isintended toï¿½-- for the housing

authority to make repairs on theproject as needed. however, the capital fund eachyear is funded most recently around $2 billion.the capital backlog is at $26 billion.so there's noï¿½-- and given the appropriations environment,there's no shorter or mid-term expectations that congress willprovide capital funding with these projects.partially as a result of aum of these forces over the past 15years on average we lose anywhere from 8,000 to 15,000units of public housing every

year through demolition ordisposition. the twoï¿½-- the three technicallyother projects that r.a.d. impacts are the section 8 modrehab program, which is a program that began in the '80sand there's about 22,000 units left.the barrier there isï¿½-- the barrier to preservation i shouldsay is that mod rehab prorments were new on terms.they were rehabbed in the '80s, and that's 30, 40 years agonowï¿½-- 30 years ago now or so. they're in need of additionalrepairs, but because of the

one-year renewal terms, theyhave a hard time accessing the capital markets, the debt andequity they need to continue to be preserved as affordablehousing. then two additional programs,the rent supplement and rental assistance pam program, there'sabout 17,000 units left there. these were contracts initiatedin the 60s and then again in the '70s or so.okay. they were long-term contracts,but when those contracts expire, they have no renewal option.most of the properties are

expected to expire within thenext four or five years. so for all these properties,they're literally hitting a cliff where the subsidy willstop and the affordability of those projects will be lost.okay. so, again, i'm going to focusprimarily on public housing with the demonstration.the key features in r.a.d. we introduced to ensure that theproperties upon conversion are preserved are really in twocategories. i'll say it in the contracts andsecond in our underwriting of

projects before they convert.so in the contract, they're long-term section 8 contracts,20 years, which the rents of which increase by an operatingcosts each year. the contracts automaticallyenew. there's no opt out option andthere's a long-term use agreement to make sure itremains affordable. what we require of any projectis they show us a physical conditions assessment and puttogether a financing plan that not only shows they can raisewhat they have or commitments to

raise the capital to address allof the project's immediate needs, but also that they canaffordï¿½-- that they're putting aside enough in a capitalreplacement reserve to ensure for the next 20 years a projectwill notï¿½-- these projects won't, again, accumulate abacklog of capital repairs and create a crisis for the nextgeneration. there's, of course, much morecomplexity to r.a.d. than these things, but i want to highlightthese as the preservation features that we find veryimportant.

so here's a quick case study,and it's based on a real example.there's a 351-unit public housing project in georgia.it's mostly a family project. it has an estimated repairs.the pca shows repairs of over $6.5 million or $18,000 a unit.today in the capital fund, the pha receives just under $550,000in total for this project. so it would takeï¿½-- if the phadid nothing for next 12 years, it could accumulate enoughcapital funds and take care of $6.5 million in work.of course, over that time the

product continues to age andthings deteriorate, so that's not a viable option.so theï¿½-- under the public housing program, the options aremuch more limited for this project.so i'm going to walk us through what this would look like underr.a.d. this is an extremely simple,straightforward example. i don't mean to say this is acookie cutter in any way, but i think it's a niceï¿½-- just a niceexample to watch there. so today the project receives824,000 through the operating

funds that could separateoperating subsidy. it collects 716,000 in rents andreceives just under 548,000 from the capital fund.in total it's pulling in $2 million, which would come out to$500 per unit per month. under r.a.d., we don't have anymoney to give out. we convert projects usingexisting funding available. we take that $2 million and turnthat into what they never had before, a contract rent.in this case this is $500 per unit per month.many say, well, if you're not

providing them more money, howdoes this work? how is this a preservation toolif there's not an additional hud investment?so the question is, well, let's look.let's see. would $500 per unit per monthsolve the capital backlog for this project?i'm sorry. the numbers are a little small,but this is justï¿½-- i'm a numbers guy, so i apologize.this may be less interesting for some.this is just the income and

expense statement for theproject. at $500 a month, it can collect$2.1 million. after making assumptions ofabout vacancy and the operating expenses and a capitalreplacement reserve, it has net operating income of $480,000.this is exactly the process a lender would go through.a lender would say, what are your rents?what do you expect to receive in income?what do you expect your expenses to be?show me data backing that up,

historical or otherwise, andshow me why i should trust that net operating income number of$480,000. if the owner or the pha in thiscase can prove that, the lender says, well, i will make a loanto you based on that amount. so in this case it can supportfirst mortgage debt service of $364,000, which i'll show whatthat means in a second. here's, then, a continuation ofthat. a quick sources and uses.so at today's really great fha terms, those they are startingto rise at 3.5%, i know for 35

years thatï¿½-- the project couldsupport debt ofï¿½-- principal of $6.7 million, which is uncannilyclose to the needs of the project.there are some additional costs associated with taking out thefha insured loan as well as some of the planning involved inthese repairs, paying an architect, et cetera.so the housing authority is filling the gap with a couple ofother sources from the federal home loan bank as well as usingthe operating reserves currently already at the property to fillthe gap and they're making it

work.i think the bottom of the screen is cut off, but the sources anduses balance in this case. there's 7.5 million in sourcesand 7.5 million in uses. this is a very simple case.they're taking out a loan, which is completely typical inaffordable housing finance, promising to pay that loan overthe next 35 years and taking care of it today.meanwhile, it puts aside a decent amount, pretty niceamount, $568 a unit for capital replacement reserve to take careof the needs of the project to

make sure this project is ingood shape over the next 20 years.so, again, very simple example. you can see how this is just theinitial analysis, depending on how the numbers work out.the capital needs might be much higher, in which case thehousing authority will start to look at 4% tax credits or higher9% tax credits or other gap financing.if lower, this deal is a slam dunk.that project converts and moves to more stable fundingplatforms.

we have much more assurance thatit's going to beï¿½-- it's going to continue to be part of thedeeply affordable housing stock for the long-term.more numbers. so to give a sense of theprojects we're working with now, we have receivedï¿½-- in theinitial round, 12,000 units, in the past month we have gottenanother 4,000 units, and that's just growing now.the demand for this program is picking up, and we fully expectto get to the 60,000-unit cap, which congress imposed on thisdemonstration, possibly by the

end of this year.for theï¿½-- for those that we've alreadyï¿½-- that we're alreadyworking with and now processing conversions for, many are doingnew construction. more than a fifth of them aredoing new construction. they're tearing down projectsthat potentially could be rehabbed, but they're so old andoutdated that it makes more sense to tear them down as longas they can put together the financing to replace thoseunits. many are using, of course, 9%tax credits that are

competitive, but a surprisingnumber do this with 4% tax credits, which are generallynoncompetitive in many states. then the other 78% of the unitswe work now with performing rehab, anywhere from substantialrehab over 50,000 a unit to pretty low amounts of rehab,under 10,000 a unit. so this last slide tries tosummarize the variety of things that the housing authorities areachieving. he showed so far only a verysimple example. 351 units, rehab it, andstabilize the property moving

forward.there's actually a ton of other things housing authorities cando under r.a.d. modernized aging family andelderly properties, that was the basic example.substantial rehab. that means they're bringing in4%, 9% tax credits. they're engaging many otherpartners very significantly in the project.they are demolishing and replacing some severelydistressed properties. what once was the realm of hopesix, we see some housing

authorities pull off withoutthat humongous additional capital grant from hud.not to say that it's universally replicaable, but people arepulling it off. it's impressive and transformingcommunities. they're mixing incomes, and insome cases you have the ochs opposite of thinning densities.they can add market rate units, and that helps to finance someof the repairs or tax credit units that are at higher rents.very importantly, which people are just starting to do now orthink much more seriously and

creative about is under r.a.d.you can transfer assistance. this is something almostunprecedented in any hud project-based program where youcan take assistance to spin a site for decades and say, hud,it doesn't make sense here anymore.it was built here in 1942 or handed to us as war-time housingwhen the second world war ends, and it's not in a location thatmakes sense. it's not serving our residentswell. it's also in very tough shape.can we move it closer to the

downtown area?can we spread it out to four or five or six different propertiesaround the community so that it's not thisï¿½-- the drain onthe community that it's been while making sure that thetenants are protected and that there's still one-for-onereplacement? in the first few applicationsthat we have received, there are a few cases of this.but the proposals were starting to get in and people arebalancing off of us are fweth getting more and more creativeand really transform al.

to conclude, we believe r.a.d.is probably the most innovative tool available broadly to mostpublic housing authorities to transform the public housingstock. to modernize it and achievewhatever local community objective they have for thisrental assistance. it certainly doesn't mean it'seasy. the numbers don't always workout. $500 per unit per month doesn'tmean you can do anything you want.that's, obviously, a constraint,

but itï¿½-- for the first timethisï¿½-- these properties are treated and have the access tothe resources and expertise of the full real estate industry.the partnerships that they're forming in their communitieswith nonprofits, with other public agencies, with for-profitdevelopers is ground-breaking. so we're extremely excited tosee how this program evolves moving forward.>> thank you so much, will. thanks so much to all of ourpanelists. what i'd like to do now is openit up for question and answer

session.i have a few questions to kick us off.folks here feel free to come up to the microphone, and i knowfolks who are watching outside of this space can also e-mail inquestions. we'd be happy to take those.just to sort of kick us off on the topic of public housingpivoting from will's presentation, since we'rediscussing public housing preservation, i wonder for bothann and stacy, you talked a little bit about incorporatingpublic housing.

do you see the models that youare using as being able to bridge the divide and bring inpublic housing? what do you think some of theopportunities are for that and some of the challenges for thatto incorporate public housing in your strategies?>> sure. because of our partnership withour state housing finance agency and look at public housing more,we looked at it more, too. one of the challenges we facewith that is it's harder to get data on the public housingstock.

there's such a history of havingthat data in the multi-family programs, and so getting thatsame information on the public housing programs would be a bighelp. we do a rental market study forour state every three years. that's really a needs assessmentof the affordable rental housing needs in florida's counties andfor different special needs groups.we look at our housing supply. for the firstï¿½-- we do it everythree years, so 2013 is probably the cycle.we were specifically asked to

look at florida's public housingstock. our stock is newer becauseflorida is a little newer. a lot is built in the '60s, '70and early '80s. we've had a lot of hope sixredevelopment. knowing the tenantcharacteristics where a typical income on this these propertiesis $10,000 a year or less has been really helpful.the state is responding, and the state has taken the lead byspecifically setting aside 9% tax credit for public housingrevitalization.

i have an rfp out right nowlooking for revitalization projects for phas and smallercounties. we're starting to get moreinformation about it, and they're definitely kicking inresources and working. there's a nice partnershipbetween the phas and florida housing.>> when the preservation compact started, the chicago housingauthority had a big plan. there were a lot of cooks in thekitchen. we said, you know, we got enoughto deal with here with our

assisted housing stock.let's leave the public housing on its own.that being said, recently the chicago housing authority andthe housing authority of cook county did interesting thingswith their project-based vouchers.this has become an opportunity to preserve not just theunsubsidized stock, fwauz there's a lot of unsubsidizedrental buildings that need help and project-based vouchers areone way to get to where you need to go.the chicago housing authority

has also been entertaining someinteresting ideas and proposals. a lot of our tenant-based groupsare very creative and very thoughtful about, for instance,when we're able to trigger new vouchers from hud for maturing236 to prepay the mortgage, talking to the housing authorityabout project-basing some of them.we don't have a hard and fast program right now.we're still talking about it. this is a resource we're realinterested in. it's a huge opportunity, andwe're talking to them more and

more.>> that's great. stacy, in particular you talkedabout all the different players that you have at the table.i heard a couple things. one is i heard all the differentagencies, the federal, state, county and city agencies at thetable. of course, there are differentagencies. it's not justï¿½-- it's thevarious agencies at the city and county level.also tenant groups and advocacy groups.you talked about creating a

shared strategy.can you tell us a little bit about what goes on the in theroom. i imagine the competinginterests folks have. we know that they have subsidieson them. we have an invested interest inthose. how do you bridge that to createa strategy? >> we decided to focus onproject section 8 properties. we think about self-preservationand think about the same properties.we're getting tax credit

properties on the table.if they did we'd be happy to entertain those.a lot of the project section 8 has resources from the state andcity. so those actual workouts occuroutside the room. we're talking about how are weprioritizing, how are we listing our properties and then sort ofgiving other people marching orders to take care of stuffoutside the room. so we're notï¿½-- we're not inthose conversations necessarily. certainly there areï¿½-- there'spotential tensions, having the

tenants in the same room as theagencies, but really, you know, over the years we built uptrust. we know that what we're talkingabout in the room isn't going to leave the room.that helps a lot. we don't sing or anything likethat, but it has, urn, over the years you can imagine we'vebecome sort of aï¿½-- more of a tight-knit group and managed tonavigate that. >> ann, any tales from thetrenches in terms of folks with competing interests?>> the big one is the limited

pool of resources and thetension between new construction and preservation.in a volatile market like florida's, you hear from thestate legislature, why are we doing any new construction atall given vacancies? with some of the tighter rentalmarkets that came up in the first presentation, that focusis starting to shift some. i so i think the tension betweennew development and preservation is a big one.there's really only so many resources to go around, andthat's not behind closed doors.

that is playing out verypublicly. to some extent it's political.>> you shared with us the locational focus of some of yourwork, which is really interesting to think about thedifferent priorities that go into deciding where to cite newconstruction. i wonder if folks are startingto use that for preservation as well.i just noted that, you know, will also mentioned in terms oftransferring assistance, that locational aspect.for all of us really, what do

you think the opportunities areto think spatially and locational and things like thatfor preservation? >> the model we've absolutelythought about preservation all along in doing it.we've put the existingï¿½-- if i can put themï¿½-- i won't put themaps up again, but we put the existing properties on thosemaps. you see some real differences,and a lot of those have to do with time where you have theolder property with hud rental assistance or the lost hudmortgages centrally located.

you have for them more recentlycredit properties and a mix of urban and suburban properties.one example where the model is used, the sun rail sustainablecommunities project. that's a multi-county regionfocused around orlando where a new commuter rail line is comingin on an existing freight line. a lot of changes are happening.what looks transit accessible now will be different because ofthe new rail stations and also because the bus system isreconfigured to serve those new rail stations.so what the model allows you to

do is find the existingsubsidizedï¿½-- we're working to try to identify unsubsidizedrental housing to make sure we're doing it in places wherethe new bus lines allow you to get to to jobs to the extentthere's transit development and they're existing affordablehousing within the areas so that that housing doesn't disappear.we're not only looking at conditions like they are rightnow but how they change as the sustainable development planningprocess goes on and we identify the affordable housing withineach buffer around these sites.

>> stacy, have you all looked atthe spatial or locational aspect of your preservation priorities,and do you think that's something that could work foryou all? >> so we consider chicago justto be transit-oriented development.the state of florida is obviously much different, and isthe far-flung suburban areas are much different.we are looking at market strength.for instance, when a strong suburban market of propertycomes up, there's a mobile home

park unsubsidized in a alleystrong market in the suburbs that doesn't have othersubsidized housing practically. what can we do for that?we look more at markets rather than transit because our metroarea is very accessible already. >> okay.will, anything you wanted to add?>> when i spoke with housing authorities about this, they'reoften very intrigued and it opens up a new world for them.they often think on two tracks. one is, okay, that's great.i don't like theï¿½-- it doesn't

make sense where it is, andthere are opportunities to put it in neighborhoods of greateropportunity. the other side is i've gotanother project without deep rental assistance.it might be a tax credit project that's struggling and putting asection 8 contract would really help to shore it up.so there's, i think, both, of course, there are good ideas,but there's a little bit of tension there, right, just likeyou demonstrated a tension between a transit-orienteddevelopment and socioeconomic

diversity and things like that.>> since you get at things like socioeconomic diversity andother opportunities, of course, we know that both constructionof affordable housing as well as preservation of affordablehousing can also be tied to some other very critical benefits forcommunities such as economic opportunities, improvements itneighborhoods. so i'm curious if you all haveseen examples of this, of actually preservation work sortof tieing into other benefits for residents.>> one thing that we've really

latched onto in chicago is thoseweak market areas, there's a whole lot of affordable rentalhousing. unfortunately, those same areaswere hit very hard by the foreclosure crisis.what we've been talking about is community development element inservice to preserve affordable rental.how do you build a market? how do you attract demand inthese areas that don't have a lot of amenities and are, infact, losing populations? it's not the weakest of the weekmarkets but markets that could

make it, and we lose a lot ofaffordable rental because there isn't demand.how can we build community development strategies in orderto preserve those? i'm talking largely aboutunsubsidized rentals in these weak markets.>> and will, i know that for r.a.d., you know, a lot of folksare incorporating r.a.d. with other benefits.any thoughts on that? anything you see that you thinkis interesting there? >> so on the first point, on theeconomic development front one

of the things we're very proudof is section 3, which requires that a certain amount of theemployment opportunities that arise from construction go tolow income families. all of the repairs under r.a.d.,the initial repairs are subject to section 3.we estimate just in the initial properties where they're doinghalf a billion dollars worth of work, that will create 10,000jobs, many of which will go to the families who are alsoresiding there, other low-income families in the neighborhood.also more and more assist as

housing authorities are morecomfortable with r.a.d. instead of getting feet wet but thinkingabout a greater portion of their portfolio.obviously, in some neighborhoods there's a density of publichousing and assisted housing. so to the extent there'ssubstantial work going on in a large camp of assistedaffordable housing, the economic effectsï¿½-- i think it will beexiting to see, but it's too early to tell right now.>> that's right. a nice laboratory for us to lookat.

stacy, you mentioned somethingin your presentation about the high operating costs of a lot ofolder properties, and of course one of the things that youmentioned as one of the potential solutions for that isnshl efficiency, which is something that the department isvery interested in. in fact, we have a number ofï¿½--just to plug or programs initiatives we work on includingthe energy innovative fund, exploring new ways toincorporate new financing models for energy efficiencyimprovements in multi-family

properties as well as thingslike the green retrofit program and the market-to-market greeninitiative. on the public housing side wehave the energy performance contract model as well.are you seeing a lot of multi-family property ownersshowing an openness to energy efficiency?are you seeing more of that and what's the update from theground from what folks are doing on energy.>> a very interesting question. we have a conference in july,and one of the questions we're

asking is how to bring moreowners in the door. we already have seen 12,000units that rb retrofitted through this program.here's the interesting thing. 35,000 units have been audited,so this is, you know, the center for neighborhood technology, cncenergy that walkingses through. here's what you can do.here's the pay-back schedule. it will pay itself back in fiveyears. it's a wonderful thing.these are typically 3,000 per unit.we're not talking about

windmills and green roofs.this is basic. ceiling, pipe insulation, thatsort of thing. it's kind of a no-brainer.the payback times are pretty short, so once the owner walksin the door, again, 35,000 units have been audited and 12,000have been retrofitted. of those 12,000 we have low-costfinancing at cic. only 3,000 of those haveactually come to us for financing.the information is powerful. the owners are self-financing.they're doing it out of their

pockets, they're going to thelenders. our question is, we're delightedthat we did 12,000 units. this is great.guess what? there's 500,000 rental units incook county that could be retrofitted that could beaffordable. the owners are not interested inbeing green and healthy. they are interested in bottomline. you know, how do you bring themin the door. >> some are and some aren't.>> there's some.

we're having a lot ofdiscussions with owners about how to bring them in the door.there's a lot of programs out there.it's confusing. had you say green they assumegreen roofs and geothermal. there's nothing wrong with that.these are like quick and easy. this saves 30% on their energybills. so we're trying to figure outhow to bring them in the door. we've been okay successful, butthis is a great program. more people should beparticipating.

>> great.great to hear. any our thoughts, ann, or willon energy efficiency? anything you see or hear in thework? >> i think there's a couple ofthings. i think florida has a verydifferent situation where in multi-family stock, typicallythe utilities are tenant paid, so we deal with the splitincentive problem. how do you get owners to makeinvestments in energy efficiency when the tenants get thebenefit?

conversely in the propertieswhere the owners pay the utility bills, which is fairly rare, howdo you get taenlt tenants to conserve energy?so i think in our community the incentive is really the publicprograms. we didï¿½-- so in orlando, forinstance, the utility company there worked with a sistercenter of ours at university of florida that works in energyefficiency to retrofit half the units in five multi-familybuildings. now they measure the energysavings.

it took some incentives from theutility and from our office. from what we've heard is theowners are delighted. the tenants are happy with it.they want to retrofit. we have to evaluate whathappened to the ones we didn't retrofit.i think it will take that outside involvement to bust thatsplit incentive problem. to have financing available andhave the utilities get involved. something like half theircustomers are multi-family units in orlando.in competitive processes, so in

our tax credit allocationprocess, there are points for energy efficiency, and peopleare going after those points. so, you know, whether it'sï¿½--somehow there needs to be a money incentive coming in inorder to make this happen. where that money is coming in,it is happening. >> great, thank you.will, in the r.a.d. program we have that incentive.can you describe that a little bit.>> it's interesting what you mention about florida.virtually every case where

project is proposing to use 9%tax credits, they're achieving avery high level of efficiencyand going after a green certification of one form oranother. it's universal across the board.that seems to have seeped across the states or at least the onesparticipating in r.a.d. so i mentioned earlier thatevery project has to go through a psa, we identify the needs andthey have to address those needs with financing.the pca that we use not only identifies what's broken andwhat needs to be replaced but

provides options for the housingauthority. this is what it would cost toreplace as is, and here's the estimated impact on utilitiesmoving forward. here's replacing at a higherlevel, more modern level, and the effect on utilities, andhere's a third option of going even greener and assessing foryou what the payback is, if it's three or 25 years.it makes a recommendation. so the physical conditionsassessment like any other psas is a planning tool.it doesn't tell you what you're

going to do, but it gives thehousing authority really good sense of what their options areand helps them to think through the different possibilities.so a lot of housing authorities are saying that it's a littlebit more than they're used to in some of the physical needassessments they've use the in the past.it's helpful in their planning process.>> i'm sorry. i have to pose a challenge tohud actually on this. so weï¿½-- in the 12,000retrofitted these are typically,

mid-sized, small, subsidizedbuildings. in the ones that are able totake second mortgages if they're going to get some low-costfinancing from us, it's a regular second old mortgage.of course, fha and fannie and freddie don't typically allow asecond mortgage behind their liens.for properties to try and finance a second tone to doenergy efficiency is almost impossible, if they have an fhaloan or fannie and freddie. on-bill financing is one way toget around it, and we just put

together an on-bill financinglaw in illinois to allow multi-families to use it andtrying to put together a program design to work well to help withthat project. it will be paid back.there won't be a lien. it will be paid back on yourenergy bill. i think some of those largersubsidized buildings have to do a big rehab and incorporate theenergy into that. >> a lot of what we see is folksthat come in and do the whole scale recap talization.they take a loan for the rehab,

and they incorporate the energywork in there. of course, we do allow secondarymortgages on a case-by-case basis.in certain circumstances it is limited, and it's typically softdebt. so it's a different scenario.we hair the challenge. we'll take it under advisement.no promises there. we'll definitely take thatchallenge noted. you know, one of the things thati wanted to ask you that we hear a lot is about ownership andowner capacity.

so, you know, in particularlyann when you describe the lost property inventory, to me that'sreally ground-breaking information to have to seewhat's happening to the properties.you know, how many of them are actually maintained asaffordable, and it sort of begs the question about if they'renot changing hands, was the owner just had a lack ofcapacity or lack of interest in this.stacy you talked about this, too, about not the for-profitsbut nonprofits.

one of the things i hear all thetime is there are committed nonprofit organizations thatwant to purchase the properties and would love to do that andwould love to preserve them. now, it's a very small group ofpeople that say that to me, but they are very committed.my question to you from your experience both of you is do youget the sense there's something more that hud could do to helpidentify those purchasers, empower them, lipg link them upwith owners who maybe want to exit the affordable housingworld?

dufï¿½-- do you have any kind ofadvice on that? >> my experience is varied, sowe have some very strong capacity in chicago in cookcounty already. that's wonderful, and we'redelighted about that. there's also, you know, littleguys that are trying to do things.they don't necessarily have the capacity.in fact, one of the cdfis in town has aï¿½-- i forget what theycall it, but they call it the scared straight for potentialcdcs because it's hard work.

i don't want to sound limitingand exclusive, but a lot of small groups get in over theirheads. we've encouraged that in someways over the years, and again, in some cases it works outwonderfully that you're building capacity and they're able to doit. in other cases it doesn't, andyou're contributing to the problem.so i would just say sort of tread lightly and carefully andtry to strike a balance there. >> great.thank you.

i think we had a question here.>> thanks for this fantastic presentation.i'm todd richardson from the policy development research.one thing i noted in ann's presentation, you had that nicechart about lost inventory in florida, and you have this spikein 2012, right? it's really a big number therepretty high. is your sense that that sort ofbuilt up because folks weren't exiting during the sort ofï¿½--during the down cycle, the recent down cycle, or is thatthe new form and we will see

over 2013 and '14 a lot moreexits from the inventory? >> the number surprised me whenwe put this together recently, and we're trying to figure outexactly what's going on. we've learned a couple ofthings. one is that many of theseï¿½--most of these are not the traditional way i think of optouts where somebody is converting a property to marketrate housing. it's been a while since we'veseen much of that going on. in looking at those 2012numbers, what that spieb is, ï¿½--

spike is, a lot of propertiesfinanced with revenue bonds are paying them off.we may have hit a spot where a lot are maturing or refinancing.based on our research about affordability, the ones thatdon't have other subsidy layers keep the rents lower, it'sprobably okay to let them go. they're going to be affordableabout the same rates they were before because they weren't thatdeeply subsidized. the other thing we saw, though,is these expiration of section 236 projects of section 515 rdprojects.

we saw an unusual spike ofthose. we're hitting year 40 for thelast ones from the early '70s. what that shows me is we need tobe thinking hard about a mechanism to save those to keepthose in the program. we may not have them now.we've been very focused on the project section 8, and we shouldcontinue to be. the other way to lose propertiesis through deterioration. every year we do see someproperties that fail out of the inventory somehow.either hud abates the contract,

which happenedï¿½-- there wereseveral of them in the past couple of years or the ownerdecides they can't keep it going anymore.and by the time we got to those, it's way too late.there's one in our area, for instance, which looking atlocation would have been off the charts on ours.on a bus route between the university and hospital.very mixed income neighborhood down the street from a wonderfulelementary school in such poor condition by the time we got it,by the time people were talking

about that people were glad toleave with vouchers and who can blame them, really.i so i think when stacy was talking about keeping an eye onreact scores, that was an idea of an annual react round joupand getting ahead of things will take a few years to get to wherewe can preserve those. so i think some of the thisyear's spike might be an anomaly in timing, and we'll see ifthere are other ones coming right behind that.some of them might be things that it's kind of okay to let goin this market.

>> please.i think we have time for a couple more questions, but sirnlif anyone else here in the audience or over e-mail wants tosubmit anything. todd, take it away.>> the multi-family folks, but the two to four, you talkedabout that being a big part of the market in chicago thatyou're concerned about preservation.what are some of the tools you're using on the two to fourmarket? >> so our concerns, let's startwith those, right?

they're dragging down entireneighborhoods. they're kind of all over theplace. there's a scattered sitemanagement concern, right? i mean, anyone who livesanywhere it seems like when investors are buying, thesepeople freak out. they don't want to see aninvestor-owned small building. then there's kind of this issueof scattered improvement. maybe, you know, there's anowner occupant that buys here and an investor that buys onehere and there, you don't reach

scale and have impact.when we look at challenges as i said before the financing worldis split up into owner occupied. we're like britain ï¿½-- bring inyour owner occupants but if you have two or three flatsinvestors try to buy, they say we don't finance investors.cic is putting together a financing pool with i think sixlenders and we're hoping to affect 200 or so buildingspotentially. the idea is we're going toprovide takeout financing, so we're trying to get to investorsthat have some capacity to go

out and get acquisition andrehab financing on their own. then they can come to us oncethe buildingï¿½-- the buildings are stabilized and will providethat takeout term financing. again, one of our ideas is we'renot going to finance something here, there, there, or there.we're looking at tight geographies, and we're lookingat a minimum of nine units. maybe that's three three-flats,but we're trying to achieve some scale and have some impact onlylooking at areas where there's other targeted investment goingon.

maybe the city's gotï¿½-- making alot of investments or focuses in some areas.maybe there's a bank that has a focus or a cdc with a focus.we don't want to do it in a vacuum.we're looking to maximize impact with this financing tool.it's kind of a pilot program. luckily cic knows what a goodinvestor looks like, so we're looking for investors withstrong track records to avoid the scattered site managementquality problem that so many people have seen in othercommunities.

>> another question from theaudience. >> good afternoon.i have a question to will in regards to r.a.d.basically i heard a lot about the whole notion ofpreservation, but what i don't hear is how does that impactresidents in public housing as it relates to, say, fsaservices, other services. does r.a.d. sort of eliminatethose activities when a public housing authority converts?>> sure. so under the public housingprogram, there are, of course, a

few programs available includingross and fss to facilitate services for residents.converting properties, first of all, the tenants who are livingthere today after rehab have a right to return to thoseproperties and can continue under the existing fss program.or ross program they're under. they can continue under that forthe duration of the grant. if theyï¿½-- if the project isconverting, i didn't go into this level of detail, butthere's two forms of project-base the existence theycan convert to.

there's an fss program under theproject based option program. so they would haveï¿½-- they wouldcontinue to have that option moving forward to remain abeneficiary of fss. >> any further questions, folks?well, i think we're at time, so i'd love to justï¿½-- if you allcould join me in thanking today's panelists for yourinformative presentation. [ï¿½applauseï¿½]>> i wanted to thank, again, our speakers today.it's really important in terms we got a great update in termsof what we're doing at the

federal level in terms ofstreamlining loan products and issuing notices and, of course,launching our signature program, the r.a.d. program.we also heard how powerful it is to have data and to have theinventories established as well as suitability models from ann.of course, from stacy in terms of how critical it is toestablish interagency structures to serve as a resource both intechnical assistance and to establish a body of work wherekey voices can be heard and can weigh in on important decisions.our next briefing will be in

october, and i hope everyonewill join us again. next time we'll be hearing aboutaging in place issues, and we also are going to working on anext evidence matters edition on that very topic.so thank you again for joining us, and have a great summer.caption associates, llc www.captionassociates.com

Rent Apartment Property

Wednesday, March 22, 2017

rent apartment california

No comments:

Post a Comment