LeadingAge, as part of the Preservation Working Group, a national coalition dedicated to the preservation of multifamily housing for low income families, on September 20 sent a letter to the Department of Housing and Urban Development (HUD) in support of an affordable housing preservation proposal to limit qualified contracts for Housing Credit properties. The letter also calls on HUD to expand the proposal to enact better preservation measures for both new and existing affordable housing communities.

Qualified Contracts allow affordable housing communities financed by the Low Income Housing Tax Credit (LIHTC, also known as Housing Credits) to exit affordability restrictions early, causing housing to become unaffordable for low-income households.

HUD’s proposal would require developers seeking a new allocation of Housing Credits to waive the qualified contract (QC) option on those properties as a condition of accessing Federal Housing Administration (FHA) Multifamily loan insurance programs and Risk Share transactions. LeadingAge supports the proposal, which would effectively eliminate the QC option for properties receiving a new allocation of Housing Credits.

In addition, the letter urges HUD to prevent existing properties from exercising the QC option, which currently put those properties at risk of exiting the program after as little as 15 years. The letter reads: “To safeguard these properties, we ask HUD to expand and strengthen its proposal by preventing owners from accessing FHA Multifamily rental and Risk Share insurance if they exercise the QC option on older properties, on which they have not previously waived the option, after December 31, 2024. While the current notice incentivizes owners of future properties to waive the QC option, this recommendation would mitigate the continued loss of existing affordable properties, too.”

LeadingAge is a long-time member of the Preservation Working Group, whose members include housing owners, developers, advocates, tenant associations, and state and local housing agencies, dedicated to the preservation of multifamily housing for low income families. Read the Preservation Working Group letter here.