National Housing Law Project Housing Preservation

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State and Local Initiatives

Because federal laws no longer guarantee preservation of federally assisted use-restricted properties,  many states and localities have provided further protections for these properties through supplemental laws and policies. This can be accomplished through either regulatory or programmatic means.

Many states and localities, for example, have passed statutes or ordinances granting some form of "right of first refusal"-- an opportunity to purchase the property and preserve it as low-income housing before the owner converted it to market rent. Such rights resemble, and may find their source in, the existing eminent domain power of the government to appropriate private property for valid public uses upon the payment of just compensation to owners. The purchase opportunity created by current state or local laws comes in many different forms – from a true "right of first refusal," which permits a designated purchaser to match another sale offer and thereby acquire title, to a "right to make an offer," with no obligation on the owner’s part to sell. It can cover any federally assisted, restricted use property or only, for example, prepayments of HUD-subsidized mortgages. It may be triggered by various events -- from a planned sale or other disposition of the property to any action that would affect its current low-income use, such as expiration or termination of use or affordability restrictions or any subsidies. It may provide rights to tenant organizations, to nonprofits and public agencies, or to other preservation purchasers including for-profit entities that commit to specified preservation terms. And it can be accompanied by a variety of procedural requirements and enforcement mechanisms that give tenants, nonprofits or other interested parties important tools to advance the preservation policy.

Another regulatory method states and localities use to encourage preservation of federally subsidized low-income properties is to create notice provisions, which are often contained within "right of first refusal regulations," but can also stand alone. Programmatic means include: rent control laws; laws requiring owners to pay for tenant relocation; and land use planning laws.

Statutes and Ordinances

• Cal. Gov’t. Code § 65863.10 and § 65863.11 (termination of HUD-subsidized housing)
• Cal. Gov’t. Code § 65580-65589.8 (land use planning law containing some features that encourage preservation)
• Rhode Island Gen. Laws § 34-45-4 et seq. (sale, conversion, prepayment of HUD-subsidized housing)
• Maine Revised Statutes Annotated Title 30-A, § 4972 and § 4973 (termination of HUD-subsidized housing)
• Texas Govt. Code Annotated § 2306.185(f), et seq. (termination of HUD-subsidized housing)
• 310 Ill. Comp. Stat. § 60/3 (sale or disposition of properties with HUD-subsidized mortgages)
• 20 Ill. Comp. Stat. § 3805/8.1 (prepayment of certain state-financed loans)

• Md. Ann. Code of 1957, Art. 83B, § 9-101, et seq. (sale or disposition of HUD-subsidized housing)
• Denver Mun. Code §12-106, et seq. (opt-out or sale of HUD-subsidized property, Section 8 contracts)
• San Francisco Admin. Code § 60.4, et seq. (intended sale or disposition of properties with Section 8 contracts)
• Portland City Code § 30.01.030, et seq. (opt-out or sale of HUD-subsidized property, Section 8 contracts)
• D.C. Code §§ 42-2851.01 et seq., 47-864 et seq. (2002) (termination of HUD-subsidized housing, right of first refusal, tax incentive for renewal) (Title II of the attached document).
  

• chart summarizing all state initiatives

Articles 

"California Housing Element Law May Help Preserve Federally Subsidized Projects," 32 HOUS. L. BULL. 50 (Feb. 2002).

"‘Rights of First Refusal’ In Preservation Properties: Worth a Second Look," 32 HOUS. L. BULL. 1 (Jan. 2002).

"Texas Adopts Affordable Housing Preservation Law," 31 HOUS. L. BULL. 242 (Oct. 2001).

"California Adopts Improved Notice Requirements for Federal Housing Conversions," 31 HOUS. L. BULL. 14 (Jan. 2001).

"Denver Adopts Preservation Ordinance," 30 HOUS. L. BULL. 164 (Oct. 2000).

"Preserving Federally Assisted Housing at the State and Local level: A Legislative Tool Kit," 29 HOUS. L. BULL. 183 (Oct. 1999) (survey of state and local preservation initiatives).

"Section 8 Renewal and Restructuring: Working At the State Level", 28 HOUSING LAW BULLETIN 35 (Mar. 1998) (commencing state and local activities).

Parkway Towers Associates v. Godfrey, 688 A. 2d. 1289 (R.I., 1997) (Owners challenged validity of mortgage-prepayment regulations promulgated by Rhode Island Housing and Mortgage Finance Corporation (RIHMFC). The Rhode Island Supreme Court upheld declaratory judgment upholding validity of regulations, holding that regulations requiring advance approval by RIHMFC for proposed prepayment of RIHMFC mortgages were valid means to preserve affordable housing and that Rhode Island’s Affordable Housing Act did not restrict RIHMFC's power to promulgate prepayment regulations.)

Kenneth Arms Tenant Association v. Martinez
No. Civ. S-01-832 LKK/JFM (E.D.Ca. order July 3, 2001)
Court preliminarily enjoined a proposed prepayment of 236 BMIR mortgages and termination of Section 8 project-based contract. The decision was based primarily on violation of state law, Govt Code Secs. 65863.10 and 65863.11. The court found no federal preemption of state statute, determined HUD has no duty to enforce state law, and dismissed HUD.