theMReport.com Your trusted source for mortgage banking news
The U.S. Department of Housing and Urban Development (HUD) and the Biden Administration have announced important updates that will help support the nation’s housing supply, and improve housing affordability. The White House released a guidebook, Commercial to Residential Conversions: A Guidebook to Available Federal Resources, developed in partnership with HUD and other federal agencies, that will help communities and housing providers identify federal resources to finance the conversion of commercial properties to residential uses and mixed-use development.
As part of this announcement, HUD is releasing an updated notice on how its Community Development Block Grant (CDBG) funding, $10 billion of which has been allocated during this Administration, can be used to boost housing supply–including acquisition, rehabilitation, and commercial-to-residential conversions. This notice is the latest update on how to use CDBG resources to support the development of affordable housing. States and localities can also access up to five times their annual CDBG allocation in low-cost loan guarantees to fund projects such as the conversion of properties to housing or mixed-use development.
“Addressing the affordable housing crisis requires an all-of-the-above approach,” said HUD Secretary Marcia L. Fudge. “The White House guidebook on commercial-to-residential conversions and the updated CDBG notice are just a few of the steps that HUD is taking to help our state and local partners to boost supply.”
A new blog released by the Council of Economic Advisers finds that office vacancies have reached a 30-year high from coast-to-coast, placing a strain on commercial real estate and local economies. At the same time, the country has struggled for decades with a shortage of affordable housing units, which is driving up rental costs, and communities are seeking new ways to cut emissions, especially from existing buildings and transportation.
“MBA shares the Biden Administration’s commitment to increasing housing supply and appreciates its willingness to engage with us and the industry on ways to incentivize lenders and borrowers to rehab, repurpose, and convert more obsolete commercial properties into affordable rental housing and other usable spaces,” said Mortgage Bankers Association (MBA) President and CEO Bob Broeksmit, CMB. “Housing providers are grappling with higher interest rates and rising labor and construction costs at a time when our nation’s housing supply remains inadequate. The initiatives announced today should help facilitate more commercial-to-residential projects. We encourage state and local governments to ensure zoning laws, tax credits, and subsidies are aligned to take full advantage of these programs.”
HUD recently released an issue of Evidence Matters focused on office-to-residential conversions, which provides a research overview of the issues motivating the surge in interest in conversions and highlights local examples of conversion projects. HUD is providing additional research funding to develop case studies that can serve as road maps for localities interested in pursuing conversion projects. The Notice of Funding Opportunity recently closed, and awards will be made soon.
“HUD is hard at work listening to stakeholders and exploring solutions that will help expand and preserve housing supply in the country,” said HUD Deputy Secretary Adrianne Todman. “With a shortage of millions of homes nationwide, we need to utilize every resource at our disposal to increase housing supply.”
Today’s actions build off the progress the Administration and HUD have already made in implementing President Biden’s Housing Supply Action Plan that details the concrete steps the Administration is taking to ease the burden of housing costs for households by boosting supply. Agencies across the government have taken action to incentivize state and local zoning reforms, pilot new forms of financing, expand and improve existing forms of financing, support innovation in housing production, and much more.
The CDBG notice published today provides updated and expanded guidance on a wide range of housing-related activities that may be funded through the CDBG program–including acquisition, adaptive reuse, rehabilitation, reconstruction, housing counseling, and fair housing planning activities. The notice also clarifies that manufactured housing units that are part of the community’s permanent housing stock are eligible for acquisition or direct homeownership assistance through the CDBG program. Additionally, the notice highlights the importance of planning in protecting and preserving housing and community resilience and provides guidance on how CDBG can support energy and climate-related rehabilitation and tornado safe homes and public facilities.
“We will work with the Administration, members of the House and Senate that have crafted related legislation, and other engaged stakeholders to fashion cost-effective ways for multifamily borrowers, developers, and lenders to increase the nation’s rental housing stock,” added Broeksmit.
