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Connecticut's Preservation Challenge

21 February 2020
Source
Kelly McElwain, PAHRC

Kelly McElwain headshotby Kelly McElwain
Research Analyst III, Public and Affordable Housing Research Corporation

Place-based rental housing subsidy programs helped make 74,062 homes affordable to low-income families in Connecticut in 2019. These programs give housing providers funding to build, rehabilitate, or operate affordable homes for low-income families for a set period of time. However, expiring affordability restrictions and deteriorating building conditions threaten the long-term affordability of these homes. Ongoing capital needs and slim operating margins make it challenging for housing providers to keep homes affordable and in adequate condition absent continued support. Continued investment is needed to preserve the affordability and quality of publicly supported homes and to close the affordable housing gap. Connecticut faces a shortage of nearly 87,000 rental homes that are affordable and available to the lowest income households.

How big is the challenge?

According to the National Housing Preservation Database (NHPD), 4,955 publicly supported homes in Connecticut have affordability restrictions expiring in the next five years. Among these homes, 33% were built before 1975 and 87% haven’t received new funding in the past 20 years, indicating many of these homes have high capital needs. An additional 2,206 homes assisted by public housing failed their last REAC inspection and likely need funding to address maintenance deferred due to years of funding cuts.

A map of units at risk of losing their affordability restrictionsOverall, 46 towns in Connecticut have publicly supported rental homes with affordability restrictions expiring in the next five years or public housing with failing REAC scores. These homes are clustered in Bridgeport (1,408 homes), Hartford (920 homes), Waterbury (869 homes), and New Haven (837 homes). Smaller towns are also at risk of losing a large portion of their publicly supported rental homes. Over a third of publicly supported rental homes have affordability restrictions expiring in the next five years or have failing REAC scores in Woodbridge (100%), Norfolk (100%), Chester (47%), Plainville (43%), Burlington (43%), and Shelton (37%).

What does this mean for towns and families in Connecticut?

While many of these properties will continue to remain affordable, their upcoming subsidy expiration presents an opportunity for the owner to exit the program. Research suggests that properties assisted by Section 8 contracts are less likely to renew their subsidy if the property is located in a strong market. Additionally, 19% of publicly supported homes with expiring affordability restrictions in Connecticut are assisted by non-renewable subsidy programs. These homes will likely need new funding to keep the property affordable and in adequate condition for low-income families.

If the owner repositions the property on the private market after their affordability restrictions expire, residents living at the property could face rent increases or displacement. Some of these residents are eligible to receive Tenant Protection Vouchers (TPVs) which can reduce the likelihood that they will experience housing instability. However, research suggests that structural barriers limit the effectiveness of TPVs, especially for households headed by someone who is black or over the age of 62. Additionally, residents living in homes assisted by Low Income Housing Tax Credits, the largest housing subsidy program, are not eligible for these vouchers. Residents impacted by expiring units should dial 211 to get connected to health and human services in their community.

What can Connecticut’s legislators do?

Support networks that facilitate training and technical assistance for affordable housing preservation

Networks and technical assistance programs that provide affordable housing developers and towns with the opportunity to build collaborative relationships, receive training, and share best practices on affordable housing preservation can boost capacity for complex preservation deals. Three such networks in Connecticut include Housing Connections of Connecticut, Community Developers Network, and Housing Academy.

Continue to fund state housing programs

State and locally funded housing programs help fill the funding gap left by federally funded housing programs and can increase the viability of preservation deals. State-funded housing subsidy programs that support housing preservation include the Connecticut Housing Trust Fund, Affordable Housing FLEX Fund, Predevelopment Loan Fund, and the State Housing Tax Credit Contribution (HTCC) Program. Continuing to support these programs is essential to building new and maintaining existing affordable homes.

Support policies that promote long-term ownership

Policies that encourage long-term ownership by mission-driven organizations dedicated to expanding and preserving affordable housing access can promote long-term housing affordability. This includes closing policy loopholes that allow property owners to exit affordability restrictions early, prioritizing funding for mission-driven developers, and increasing the notification requirement for when an owner opts out of affordability restrictions.

Develop a data-driven preservation strategy

Connecticut legislators can develop a data-driven strategy to preserve the state’s aging housing stock, similar to efforts made by the DC Preservation Network and the Colorado Preservation Network. By leveraging data from the NHPD, local officials can identify properties with high exit risk and assess the preservation needs of affordable rental homes in towns across Connecticut. This can be used to efficiently allocate preservation resources and develop a vision for Connecticut’s housing preservation strategy.

Kelly McElwain is a Research Analyst with the Public and Affordable Housing Research Corporation, a Cheshire-based nonprofit dedicated to promoting the importance of affordable housing on a national level.