Happy Tuesday and welcome to another edition of Rent Free. This weekâs stories include:
- The federal government has given a âtenant empowermentâ grant to the AIDS Healthcare Foundation, which just settled a lawsuit filed by its own tenants about the âinhumaneâ condition of its properties.
- Seattleâs affordable housing mandates are leading to less housing getting built.
- Affordable housing in D.C. is in financial crisis, thanks to rising operating costs and a court process that takes years to remove nonpaying tenants.
But first! Our lead story about Senate Republicansâ new housing bill.
Tim Scott Versus the Chassis Requirement
On Thursday, a group of Republican senators led by Sen. Tim Scott (RâS.C.) introduced the Renewing Opportunity in the American Dream (ROAD) to Housing Act, which proposes a grab bag of reforms to federal housing programs.
Unlike the slew of federal YIMBY (Yes in my backyard) bills that have been introduced in recent years, Scottâs bill doesnât try to poke, prod, or bribe local and state governments into liberalizing their zoning codes. âHousing policy is inherently local, and federal legislators should encourage local solutions to local problems,â reads the press release on the bill.
Nevertheless, the bill does include at least one idea to increase housing supply.
That includes a repeal of the federal regulation requiring that manufactured housing sit on a permanent steel chassis.
Residential building codes for traditional, site-built housing are set by state and local governments. Manufactured housing, which is built off-site and shipped to its destination, is regulated by the U.S. Department of Housing and Urban Development.
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Housing wonks have long singled out HUDâs requirement that manufactured homes sit on a permanent steel chassis, even once theyâre delivered, as a major headwind on manufactured home productions.
Thereâs some debate about whether HUDâs chassis requirement is primarily responsible for a massive, post-1970s drop in manufactured home production, or whether itâs a slightly less ruinous but still unnecessary, costly regulation.
Wherever one lands on that debate, everyone would seem to agree that repealing the chassis requirement will reduce the cost of building the cheapest form of housing on the market.
Scottâs bill would also repeal the cap on the number of public housing units that can be âconvertedâ to other types of subsidized affordable housing under HUDâs Rent Assistance Demonstration (RAD) program.
RAD is intended to address the massive backlog of capital improvements needed at public housing complexes by shifting these units into other programs where funding is more dependable and private capital is available.
Current law caps the number of public housing units that can be converted using the RAD program at 455,000 (or close to half of public housing units).
Nonprofit Accused of Operating Slum Housing Gets $10 Million âTenant Empowermentâ Grant
This past week, I reported that the U.S. Department of Housing and Urban Development (HUD) gave the AIDS Healthcare Foundation (AHF), along with the Massachusetts Alliance of HUD Tenants, a $10 million grant which they will jointly distribute to tenant associations at privately owned, federally subsidized multifamily housing. The tenant groups will use that money to ensure their landlords maintain their buildings and provide habitable living conditions.
HUDâs decision to give this grant to AHF is highly questionable, given the organizationâs track record of managing its own residential properties. From my article:
A detailed Los Angeles Times investigation published in November 2023 reported a number of issues at AHF-owned properties, including apartments infested with cockroaches, exploding radiators, water shut-offs so regular that tenants had to defecate in wastebaskets, violent crime and drug dealing left unaddressed, and months-long elevator shut-offs that left disabled tenants stuck on upper floors or forced to sleep in the lobby.
While many of these problems are common at residential hotels on Skid Row, AHF-managed properties were more frequently hit with code complaints and emergency calls than similar properties, reported the Times.
A former AHF employee described the living conditions at foundation properties as âinhumane.â
Just yesterday, AHF settled a class action lawsuit filed by tenants of one its Los Angeles buildings. The nonprofit agreed to refund tenants a portion of their rent, hire an elevator consultant, and work with pest control experts to fight bug infestations in its buildings.
HUD told me in a statement that AHF âis part of a team that applied for these awards. The team is not only eligible, but the best qualified applicant.â
One would think that a nonprofit that hadnât been accused of leaving their tenants in âinhumaneâ conditions would be more qualified to help tenants fight for better living conditions. According to HUD, thatâs not the case.
In Seattle, Affordable Housing Mandates Mean Less Housing
Seattleâs Mandatory Housing Affordability (MHA) Program, like all âinclusionary zoningâ programs, is predicated on the idea that building new housing somehow makes housing less affordable.
When Seattle upzoned the cityâs âurban villagesâ to allow denser construction under the MHA program, it also required developers to offset the alleged affordability impacts of their new, larger projects by either building below-market-rate housing or paying an in-lieu affordable housing fee.
The program has been controversial from the jump.
City staff alerted that the costs of the MHAâs affordable housing mandates would make fewer projects feasible. One Seattle homeowner is suing the city over a $77,000 MHA fee charged when trying to add units on her property to house her adult children.
A recent study by researchers Jacob Krimmel and Betty X. Wang confirmed criticsâ complaints about the MHA. They found that new construction decreased in affordability-mandated areas, with developers choosing to build in nearby blocks without affordability requirements instead.
The construction rates in MHA-zoned areas were 70% lower compared to non-MHA blocks, according to the study. This aligns with past research on inclusionary zoning policies in other cities, which have raised building costs and hindered construction.
In Washington, D.C., the majority of subsidized housing units are struggling to cover their operating expenses, putting them at risk of foreclosure. More than 80% of housing properties funded by the District arenât generating enough rental income to pay their mortgages and maintenance costs, putting 22,000 units and 48,000 residents at risk.
Landlords attribute the crisis to higher operating costs and delays in housing court proceedings due to pandemic-era eviction policies. These policies have allowed nonpaying tenants to stay in their units for extended periods, accumulating significant debts and reducing landlordsâ revenue to maintain operations.
Quick Links:
â Kevin Erdmann discusses RealPage and its critics.
â California voters will decide on repealing state limits on rent control policies.
â Atlanta plans to use eminent domain to address blighted properties.
â Britainâs new Labor government aims to build new towns to tackle the housing cost crisis.
â Minnesota YIMBYs regroup after an unsuccessful legislative session.
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