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5/13/02: The following is an article
from "The National Tenants' Voice", the newsletter of the National Alliance
of HUD Tenants. Makes you wonder where is the rest of the mainstream media on this
U.S. Loses 200,000 Affordable
HUD's "Mark Up to Market" Program Falls Short
By Peter Scheehle
HUD's vaunted Mark Up to Market Program, created in 1999 to stop the loss of HUD-assisted
housing, has failed to stop the tide of units lost through owner decisions to prepay
mortgages or opt-out of Section 8 Contracts
A startling 200,000 affordable units have now been lost nationwide, according to
the most recent numbers compiled by the National housing Trust. More than 113,000
units have been lost due to prepayments, where owners with HUD mortgage loans pay
off the remainder of their loan and are therefore no longer under HUD regulations
to keep building to keep their building affordable. In addition, 87,000 more units
have been lost from Section 8 opt-outs, where owners who signed 20-year Section
8 contracts with HUD are allowed to choose not to renew these contracts when they
expire. Since 1996, when Congress restored owners' ability to prepay their HUD-subsidized
mortgages and long-term Section 8 contracts began to expire, there has been a cascade
of affordable units dropping by the wayside. But the problem is not simply the large
number of units lost, but that units are being lost at a steady rate of 40,000 units
"What is most alarming is the rate at which units continue to be lost,"
said NAHT Board President Louise Sanchez. Here in New York alone we have lost nearly
4,000 units in the past year."
Over 53,000 units were lost to prepayments between 1998 and 2001, a 90% increase
from the prior two and half years...Nationally, this correlates into an average
of 21,467 units of affordable housing stock lost each year from mortgage prepayments.
This alarming rate of loss is even more evident when looking at Section 8 opt-outs.
While 37,898 Section 8 were lost in the years immediately following HUD's 1996 decision
to allow opt-outs, an additional 48,504 units have been lost since 1998, resulting
in a 128% increase nationwide...
Because of the lack of substantial preservation programs at the federal level, local
governments in cities with tight housing markets and ever-escalating rents are forced
to tackle the loss of affordable housing through legislation at the local level.
In order to deal with California's ever increasing loss of Section 8, the cities
of Los Angeles and San Francisco have extended local rent controls to buildings
where owners have opted out of federal contracts. City Councils in Boston and other
eastern Mass. cities, hit hard by the combined effects of unrestricted opt outs/prepayments
and the statewide end of rent control, have enacted home rule petitions that allow
municipalities to regulate the rents of properties that prepay or opt out. In Portland,
Oregon and Denver, Colorado, local governments have adopted measures and taken at-risk
properties by eminent domain from owners who threaten to opt-out.
As tens of thousands of affordable units are going by the wayside each year, we
are seeing that, despite what some officials think, the loss of affordable housing
is a problem that is not going away.
Loss of Affordable Housing Due to Opt-Outs
Units Opted Out through 1998: 1,282
Units Opted Out 1998-2001: 526
% Increase Units Lost Since 1998: 41%
Total Units Opted Out as of 2001: 1,808
Loss of Affordable Housing Due to Prepayments
Units Prepaid April 1996 to Dec. 1998: 2,565
Units Prepaid Dec. 1998 to Aug. 2001: 679
% Increase Units Lost Since 1998: 26%
Total Units Prepaid as of Aug. 2001: 3,244