If there are no units at risk of conversion in the locality during the 10-year period, the housing element must include a description of how the locality determined and verified no units are at-risk.
Inventory of At-Risk Units
The inventory must list:
- each development by project name and address.
- the type of governmental assistance received.
- the earliest possible date of conversion from low-income use.
- the total number of units for elderly and non-elderly tenants that could be lost from the locality’s low-income housing stock.
Where a property has more than one subsidy type, analyze each type separately.
Assess the Conversion Risk
Risk of conversion and displacement of low-income tenants varies significantly from project to project depending on market, ownership, and project-based factors (size of units, location, condition of property, etc.).
Assess overall potential conversion risk based on the total number and type of units at risk, total number of potentially displaced households, conversion intent of the owner, and the economic condition of the local housing market, especially in areas with high housing costs and/or low vacancy rates.
Determine the condition of existing, assisted-housing developments to facilitate the replacement versus preservation cost analysis. Depending on the age and condition of the project, rehabilitation costs often have to be added to the acquisition costs in order to preserve the project.
Estimate and Analyze the Costs of Replacement Versus Preservation for Units at Risk in the Current Planning Period
This purpose of this is to determine whether replacement (new construction) or preservation (acquisition and rehabilitation, and/or direct rental subsidy commitments) will be the most economical approach to preserving at-risk units. Current local market rents are the key to determining whether use restrictions and affordability controls can be feasibly extended under other federal, state, or local preservation programs.
The housing element should estimate the costs of producing new rental housing (comparable in size and rent levels to existing at-risk units) to replace the units that could convert from low-income use. Use current land costs and either current construction costs (square footage rates for multifamily development) or the actual cost of recently completed units.
Estimate the cost of preserving the identified assisted housing developments, including acquisition and rehabilitation costs, long-term affordability controls, and project-based rent subsidies.
A project-by-project cost estimate is not required. The housing element can make an assessment of the appropriate strategy (replace vs. preserve) based on sample cost estimates as described above.
Identify Entities Qualified to Preserve At-Risk Units
Identify local public agencies, public or private nonprofit corporations, and for-profit organizations with the legal and managerial capacity to acquire and manage at-risk projects (Government Code Section 65583(a)(9)(C)). New purchasers must agree to long-term affordability controls.
Contact potential qualified entities to assess their interest in acquiring and managing at-risk properties. Contact the California Department of Housing and Community Development for a list of entities interested in participating in the state’s Opportunity to Purchase and Right of First Refusal program or to refer potential, local qualified entities who wish to be placed on the list.
Identify Financing and Subsidy Resources
Identify and consider the use of all federal, state, and local financing and subsidy programs as preservation resources. At a minimum, include federal Community Development Block Grant program funds, tax-increment funds received by a redevelopment successor agency, and the administrative fees received by a housing authority operating within the community, as well as other available local financing/subsidy programs. Also include federal HOME funds as a potential source of revenue.
Identify the amount of funds under each program that have not been legally obligated for other purposes and could be available for use in preserving assisted housing development (Government Code Section 65583(a)(9)(D)).
Indicate which available federal, state, and local financing and subsidy programs will be targeted for specific preservation programs (e.g., replacement, preservation through acquisition, extended affordability controls, regulatory actions, direct rental subsidies, rehabilitation, tenant and sponsor technical assistance).