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We Have Reached the Housing Cliff

As we look back on Affordable Housing Month, marked every year in May, it's clear that the need for safe, affordable housing—as well as the threats to providing it—have never been more acute. Denise Scott, LISC's EVP for Programs, makes a compelling case for why, during the Covid era and beyond, we need a robust national plan to safeguard homes for all of our country's vulnerable residents, as well as for the organizations that make those homes possible.

The Covid-19 pandemic poses an urgent threat to one of the basic requisites of wellbeing: the right to quality, affordable housing. Affordable housing organizations, especially community-based nonprofits that create and manage affordable homes, are facing an uphill battle against the economic impact of the crisis. Forty-five percent of renters earning lower incomes work in the industries that have lost the most jobs in recent weeks. Unemployed workers can’t pay rent, which means housing providers are facing a devastating drop in rental income.

We know we are at the edge of a housing “cliff”, and we must act now to shore up the groups that make housing accessible for everyone, but especially for our most vulnerable residents. Like small businesses, affordable housing developers need a big, bold infusion of support from the federal government—no amount of creativity on the part of these organizations can remedy the loss of income from tenants, combined with increased operating and development costs related to resident and worker safety, delays, supply chain problems and dampened investor interest in financing repairs.

Prior to Covid-19, the availability of quality, affordable housing was in short supply. Many communities, particularly low-income and communities of color, relied on this scarce resource. Currently, housing providers across the country are stress-testing their inventories. They are especially concerned about the impact of rent reductions on their bottom lines, which will affect their ability to maintain buildings, provide adequate services and pay their bills. Now, when it’s more important than ever to have a safe, affordable home, the shock affecting the entire industry will inevitably hurt community-based housing providers the most.

We know we are at the edge of a housing cliff, and we must act now to shore up the groups that make housing accessible for everyone, but especially for our most vulnerable residents.

Vulnerable populations—seniors with low-incomes, people with disabilities, those without homes, and citizens returning from incarceration—are particularly endangered by the pandemic. Exposure to or infection with the virus in crowded living situations such as homeless shelters, coupled with negative social determinants of health (skyrocketing unemployment and limited access to transportation and healthy food among them) is a recipe for disaster. In order to minimize COVID-19’s transmission, people need a safe, stable place to live, quarantine, and recover.

Affordable housing developers and organizations create these homes: they are community first responders. They work to maintain affordability in perpetuity while providing needed services, from low-cost childcare to transportation to food assistance. They are integral to supporting the wellbeing of individuals and to creating strong, resilient and equitable communities and economies. Given the current situation, they are also vital in helping to stem the pandemic and save lives.

And they need help right now.

As a nation, we need the federal government to take up this challenge head on. While the CARES Act has provided some housing protections, as of today, there is no comprehensive and funded plan for what happens to tenants and owners after the temporary forbearance and eviction moratoriums end, and unemployment rates continue to rise. Absent this support, social inequality will only deepen.

Strategies for an economic recovery focused on quality, affordable housing must include the following policies and resources from the federal government:

  • Additional affordable housing resources through the HOME Investment Partnership and Community Development Block Grant programs, as well as the Rental Assistance Demonstration Program, and the authority to issue tax-exempt private activity bonds to assist housing providers and tenants.
  • Capacity building resources for nonprofit affordable housing developers so they can sustain their operations during the crisis and be positioned to lead long-term recovery efforts when the crisis abates.
  • A new infusion of flexible rental assistance to reduce homelessness and housing instability.
  • Tenants need financial assistance to pay their rents, not just forbearance, which will only push the crisis off a few months. The moratorium on evictions also needs to be extended and applied to more households. Without large scale financial assistance and eviction protection, there will be a cascading impact of evictions and homelessness.
  • Owners need mortgage forbearance by accruing and deferring debt service payments to the “back-end” of deals. A restructuring or modification of lease and mortgage terms to be more flexible, including extensions and reduction of penalties, should be done in return for owners extending the moratorium on evictions.
  • Restructuring the Paycheck Protection Program so that nonprofit affordable housing organizations can access forgivable loans to support their employees and operations.
  • Increase in resources for community development financial institutions to support patient financing options.

In the coming months, as recovery becomes possible, we must focus more than ever on affordable housing preservation strategies, shoring up the value of taxpayer investments made over the last 50 years. LISC and others will be providing technical assistance and building the capacity of housing groups to help them avoid making decisions under duress—selling assets that leads to tenant displacement, for example—or going bankrupt.

Housing groups are nothing if not inventive and adaptable. For years, in the face of dwindling federal investment in affordable housing, they’ve had to assemble multiple funding streams to support their work.  This very minute, they’re out there, keeping people sheltered, safe, healthy, informed, and nourished. In the unprecedented crisis of the COVID-19 pandemic, they’re also struggling to survive—and, frankly, putting out an SOS. We cannot afford to let it go unanswered.

Denise ScottABOUT THE AUTHOR

Denise Scott, Executive Vice President for Programs
With three decades of experience in community development, Ms. Scott leads LISC’s neighborhood investment efforts in 35 cities and hundreds of rural communities across the country. She previously managed LISC’s flagship program in New York City, focusing on affordable housing, commercial corridors, education, health, and jobs in some of the city’s toughest neighborhoods.