HB 2002: new tools to help preserve Oregon’s affordable homes

This guest blog post by Rob Prasch from the Network for Oregon Affordable Housing is the first post in a series summarizing important housing bills that passed during the 2017 legislative session.

A safe, stable, and affordable home is the foundation for wellbeing and opportunity. For Oregonians who cannot afford market rents, including seniors, people with disabilities, and young families with low incomes, publicly supported affordable homes provide them with a foundation to thrive. Oregon’s shortfall of homes affordable to low-income renter households is estimated at over 137,000 units. This shortage of affordable rental homes has placed growing pressure on renters with low incomes, which has been made worse recently by real estate speculators purchasing existing affordable apartment buildings and converting them to higher cost market rate rentals.

Over the last five decades, billions of dollars in public resources have been invested in the development of privately-owned, publicly supported housing here in Oregon. During that time, more than 70,000 affordable apartment homes were developed with federal assistance programs including HUD assisted mortgages, project-based rental assistance contracts, low income housing tax credits, funds from USDA Rural Development, and other subsidy programs. These apartment homes have provided affordable homes for area residents for the last 30 or 40 years or more. The people who live in these homes are seniors, people with disabilities, and families just starting out. Annual incomes for these households average around $11,500 per year. As we face a housing crisis, we cannot go backwards and lose any of our existing affordable homes.

When rent-restricted properties come to the end of their subsidy contract or restricted use period, owners may elect to convert them to market rate rentals or other uses. This is the time to act. According to the Oregon Housing Preservation Project, between 1996 and 2016, at least 101 federally-assisted properties made up of over 3,500 units were lost in Oregon due to the mortgage having been paid off, foreclosure, or the owner deciding to opt out of an affordability contract going forward. Nationally, for every new affordable home developed, three are at risk of loss either to disrepair or conversion to market rate.

Many states, including Oregon, have implemented public policies to help preserve publicly supported housing. Since 2006, Oregon has prioritized preservation of affordable housing with federal rent assistance contracts and has preserved over 200 properties to date with over 9,000 units statewide. Preservation has proven to be good public policy as it safeguards the original public investments in these properties and extends the stream of federal subsidy dollars for an additional 20 to 30 years. When affordable housing properties are preserved, residents can stay in their homes and communities. With market rents out of reach and long waitlists for most affordable housing properties, preservation is critical to keeping thousands of vulnerable Oregonians in their homes.

In 2017, Oregon House Speaker Tina Kotek believed Oregon should be doing more to safeguard our existing affordable rental housing. The Speaker worked with affordable housing industry stakeholders, advocates, and local governments to craft a bill, HB 2002, that would expand and strengthen existing law and provide new tools to help preserve Oregon’s publicly‐supported housing. The Speaker helped carry it through the session with the support of a bipartisan group of co-sponsors including Representatives Keny-Guyer, Gorsek, McLain, Noble, Olson and Sanchez. HB 2002 passed on a vote of 56-4 in the House and 24- 6 in the Senate and will become law in October 2017.

HB 2002 does these four major things:

Track Oregon’s Inventory of Affordable Housing

Creates a statewide database at Oregon Housing and Community Services (OHCS) to monitor Oregon’s inventory of affordable housing supported through federal, state, and local resources.

Require Notice of Expiring Affordability

Requires an affordable housing property owner to provide two‐years’ notice to OHCS and the local government agency where the property is located, of contract expiration or another action that would terminate affordability. The increased notice requirements enhance Oregon’s ability to track units that are at risk of losing affordability so OHCS can facilitate their preservation and/or support residents who may be displaced from their homes.

Provide Opportunity to Purchase for Existing Contracts

Under HB 2002, for the first time, property owners subject to an existing affordability contract must provide OHCS, the local government agency, or a designee, an opportunity to purchase and preserve the property’s affordability.

Provide Right of First Refusal for New Contracts

With the passage of HB 2002, Oregon becomes just the fourth state to adopt a first right of refusal on the sale of publicly supported housing. For new rent-restricted projects placed in service after its effective date, HB 2002 requires a property owner to provide first right of refusal to OHCS, the local government, or a designee. If the owner accepts an offer from a third party, the owner must provide OHCS, the local government, or a designee with an opportunity to match that purchase offer.

The bill also provides OHCS with funding for two full-time positions for the oversight of a new preservation program which will involve creating and maintaining the state-wide affordable housing inventory, working with external stakeholders and local governments, overseeing contracts, and administering the rulemaking process. Over the next few months, OHCS will be filing these new positions and engaging stakeholders as they implement this new program.

Note from the Housing Alliance: Thank you to House Speaker Tina Kotek, Representatives Gorsek, Keny-Guyer, McLain, Noble, Olson, and Sanchez, and Housing Alliance member the Network for Oregon Affordable Housing’s leadership in developing and advocating for this bill!