The U.S. Department of Housing and Urban Development will now allow private investment in its senior affordable housing portfolio. The move is being made due to Congress’ lack of appropriation of funds to maintain the over 125,000 apartment units built and funded by the government over the last 30-years.
Under the proposed reform, senior housing owners would be able to apply to HUD for permission to use private financing sources. HUD has been allowing operators of nearly 150,000 low income apartments owned mostly by public housing authorities to take similar steps since 2012. Public housing, much of which is older than these senior buildings, has for years suffered from inadequate reserves for major renovations and repairs. The National Low-Income Housing Coalition, an affordable housing group, estimates the capital repair and improvement backlog for public housing is some $40 billion.
“Fundamentally what we’re trying to do is avoid the kind of capital backlog problem that other parts of the affordable housing portfolio have, like public housing,” said Tom Davis, director of the Office of Recapitalization at HUD.
TAAHP member National Church Residences, an Ohio-based senior home landlord that owns over 5,000 apartments in Ohio, Texas and other states is eyeing private financing according to the story in the Wall Street Journal. “We did capital needs assessments on all of them,” said Michelle Norris, executive vice president at National Church. “We are short approximately $27 million.”