In 2014, HJC co-authored a report titled “The Space Between,” emphasizing the need for policymakers to pay more attention to the part of the affordable housing sector most low income households rely upon—unsubsidized but still affordable rental housing, or “naturally occurring affordable housing” (NOAH) as it has come to be called. The report highlighted both challenges to preserving this housing resource and opportunities to better utilize it to meet the needs of low income households.
By 2016, “NOAH“ housing was getting everyone’s attention. The Crossroads Apartments in Richfield had been upscaled, resulting in the loss of 700 units of quite affordable units. Many other buildings were seeing similar changes, as national investors discovered bargains in the Twin Cities rental market and opportunities to pursue a “value add” business model by making cosmetic changes and escalating the rents to bring in more affluent residents. Rents were rising across the region, vacancy rates were as low as any region in the country, and the metro area’s supply of NOAH housing was rapidly diminishing. Affordable housing leaders in the region began confronting this threat. Affordable housing developers like Aeon and CommonBond began competing to buy NOAH properties in order to preserve their affordability. The Greater Minnesota Housing Fund led the way in creating the NOAH Impact Fund, which provides below market financing to preservation buyers making it easier for them to compete to buy these properties and still keep them affordable.
HJC focused on policy ideas that local governments could pursue to do their part to preserve this resource. In 2016 HJC issued a memo with a series of proposals for local governments to consider, available here. That memo has sparked many conversations among policymakers across the region since then, with 8 to 10 cities now actively exploring these policy ideas.
One set of ideas involves how to make it easier for preservation purchasers like Aeon or CommonBond to buy these properties, and includes requiring 90 days advance notice of any sale of NOAH buildings so preservation purchasers have the chance to come to the table.
Another set of policies focuses on creating incentives for owners of NOAH buildings to keep them affordable, such as packaging attractive rehab financing with tax breaks in exchange for affordability commitments.
A third set of policies focuses on protecting tenants, and includes rent increase delays, just cause eviction, relocation benefits, and anti-discrimination protections for Section 8 voucher holders.
As we near the end of 2017, we are hopeful that a number of these ideas will make it into law. HJC monitors how other strong market cities across the country are considering how to protect their supply of NOAH housing and our region appears to be in the forefront of policy reform.