Affordable Housing Law Overview
Affordable housing law is a group of complex and often interrelated regulations that govern the creation, management, and oversight of affordable housing units. These regulations have been designed to ensure that a range of housing options are available for low to moderate income families, seniors, or those with disabilities. The laws that regulate affordable housing vary at the federal, state, and local levels, and often involve numerous stakeholders and regulatory requirements, making them a challenging area of practice for any attorney.
At the federal level, the Department of Housing and Urban Development (HUD) oversees many of the programs and regulations that govern affordable housing in the U.S. Under the Housing Act of 1949, for example, HUD was charged with the responsibility of facilitating housing for "all Americans." Subsequently, a number of significant legislative acts impacted affordable housing, such as the Fair Housing Act (FHA), first enacted in 1968, and the Housing and Economic Recovery Act (HERA) of 2008. These laws, and others, formed an expansive and complicated framework of federal regulations that continue to shape the availability and construction of affordable housing.
State and local regulations also play a significant role in the development of affordable housing . For example, land use zoning laws and building codes differ from one municipality to another, but they can have a major impact on new housing construction. Local housing authorities, often created in response to the FHA Fair Housing Amendments, can also play an important role in affordable housing development through their oversight of voucher programs and public housing. In addition, "inclusionary zoning" laws, which require developers to build or set aside a specific portion of affordable units in relation to market units as part of their projects, and "density bonus" laws, which provide extra units in exchange for set aside affordable units, can both be key pieces of affordable housing legislation in a given city.
Finally, affordable housing funding laws can also impact development, such as the LIHTC, which provides federal tax incentives to developers. These tax incentives are usually administered through a partnership between the federal and state governments. In addition to these federal laws, some states offer additional programs, such as state-level tax credits and affordable housing loan programs, as well as anti-discrimination laws that go beyond those found in the federal FHA.
Why Utilize Affordable Housing Legal Expertise?
When it comes to dealing with the fine print of affordable housing development, having the right legal guidance can mean the difference between a project moving forward or falling flat. Unlike traditional types of real estate transactions, affordable housing projects often come with a unique set of challenges that require complex solutions. As state and federal guidelines continue to evolve within the sector, affordable housing projects have become increasingly difficult to navigate. From compliance issues to funding challenges, these developments come with a long list of obstacles that can complicate the process. Unfortunately, many developers still try to make sense of these issues without an understanding of their complexities. An expert affordable housing law firm can help ensure that your next project is a success.
State and federal laws have created a delicate balance between developer interests and community benefits. In order to help communities reach their affordable housing goals, the law requires developers to play a key role in providing financial, physical, and environmental benefits. As this delicate balance shifts from time to time, the role of legal guidance becomes increasingly important. Many developers approach these projects unaware of the long-term legal implications. Outside of the deal itself, the next most important responsibility often includes securing funding for the project. From tax credits to local grants, understanding the ins and outs of funding sources can be critical to getting a project off the ground. Specialized affordable housing attorneys have a deep understanding of these complexities.
The process doesn’t stop there. Once affordable housing units are developed, they need to be maintained, marketed, and rented or sold. Keeping owners and investors compliant with housing programs requires a sustained commitment. The entire lifecycle of development is fraught with possible risks. Affordable housing projects can also be more susceptible to fraudulent and abusive housing practices. As they continue to adapt, underlying laws and policies are constantly changing. Leveraging the expertise of specialized affordable housing attorneys can provide the advantage you need. Staying ahead of the curve can make all the difference.
How to Find Affordable Housing Law Firms
When it comes to selecting the right affordable housing law firm, your best bet is to find a team that specializes in this particular area. The challenge may be locating those firms. To help, start by searching online using keywords such as "affordable housing attorney near me" or "affordable housing attorneys." This should yield results that include not only names and contact information but also reviews and testimonials from past clients. Another way to go about your search is to ask for recommendations from industry contacts as you network. Once you have a few options, take the time to research each potential firm. Visit their websites so you know which areas of housing law they specialize in. You can look for things such as whether these firms are part of the National Leased Housing Association, which is involved with advocacy efforts for affordable rental housing. Additionally, you want to look at each firm’s history, experience, and their past results and client testimonials. While you might think you need an international firm with dozens of lawyers devoted to landlord-tenant cases, that does not mean you will find it. A small, niche-based law firm might be or have one of the best lawyers for your situation. Finding the best company is about narrowing down a larger group of potential candidates to the firms that best meet your needs. To do this, you want to make sure these firms are experienced in all aspects of affordable housing, including local, state, and federal programs.
Affordable Housing Law Firm Services
Affordable housing law firms provide a wide range of services to their clients. One of their main functions is to offer legal advice and guidance on many aspects of affordable housing law, including complex financing options. Law firms specialized in affordable housing offer assistance to developers seeking to obtain tax credits and other financial incentives for their projects. This includes help with the intricate process of applying for funding from state and federal agencies that support affordable housing.
Another important service that affordable housing law firms offer is compliance. These firms often help their clients navigate the various federal and state regulations regarding affordable housing, ensuring that all legal obligations are met. This can include regulatory compliance, as well as compliance with ongoing reporting requirements for affordable housing programs.
In addition to compliance and financing , affordable housing firms also provide services in relation to zoning and land use issues. They can help with zoning applications, land use permits, and other administrative matters that are integral to the development and management of affordable housing projects.
Finally, affordable housing law firms also represent their clients in negotiations with financing partners, state and local agencies, and other stakeholders in the affordable housing industry. This may include negotiating terms and conditions for financing, partnership agreements, and other legal documents that are needed to move an affordable housing project from conception to reality.
Overall, affordable housing law firms have a broad range of skills and services that they offer to their clients. These services provide important legal and practical support for developers, investors, and other stakeholders in the affordable housing sector.
Case Studies on Successful Affordable Housing Developments
We have highlighted model law firms and partners who are setting the bar when it comes to providing legal services to affordable housing developers. Here, we take a closer look at a few affordable housing developments and the roles that savvy legal counsel played in their successful completion.
Cascade Townhomes in Portland, Oregon: The law firm of Howard, Noble & Hallinger represented the owner/developer in a complicated 2004 five-year tax exemption negotiation program with the City of Portland and the State of Oregon. Two Cascade Townhomes buildings were part of the Northeast Portland New Construction Initiative funded in part by Metro and the Oregon Housing and Community Services Department. The Initiative was a multi-agency catalytic development program that provided funding to facilitate the development of new single-family or cluster housing, single-room occupancy housing, and multifamily rental housing, which is sold or rented to low- and moderate-income families and individuals.
The project was funded in part by Oregon Housing Finance Agency (OHFA) private activity bond financing. The client first engaged the law firm in 1996 for assistance in developing its application to OHFA for Low-income Housing Tax Credits for a large multifamily rental housing project in northeast Portland. Later, the law firm was engaged to advise the client in negotiating tax exemption agreements with the City of Portland and the State of Oregon through OHFA and the District of Columbia Housing Financing Agency. Other state agencies contributed funds toward the project through grants, including the Special Public Works Fund, Neighborhood Opportunity Fund and Housing Development Grants-in-Aid. Ultimately, the client received a five-year tax exemption from the State of Oregon and a property tax exemption from the City of Portland through OAR 150-32-030.
The client was very satisfied with Howard, Noble & Hallinger’s services. According to the client, a key legal service and primary benefit in working with the firm "is its experience with the full range of affordable housing tools and knowledge of the programs offered by various funding sources."
The Upcoming Era In Affordable Housing Legal Services
As we look to the future, the landscape for affordable housing programs will continue to evolve. Current demographic trends, including the growing elderly population, the persistently high cost of rental housing and home ownership, and the need to address racial and ethnic disparities in housing, all provide impetus for new approaches in affordable housing programs which will require access to specialized legal expertise. Efforts to increase the supply of rental housing will rely heavily upon existing HUD rental programs. Unfortunately, such programs have largely been funded through public financing sources which are now under attack. Changes in federal tax policy may impact the amount of tax credit equity funding available for affordable housing deals. The private and public law firms that represent affordable housing developers often assist their clients with federal tax issues, as well as tax incentives available at the state and local level.
Changing demographics will drive the need for affordable housing. With baby boomers aging, affordable housing needs for seniors will continue to increase. Providing services and supports for seniors allowing them to age in place will increasingly be a priority while changes in health care policies may reduce the availability of capital to finance affordable senior housing. Other policy changes may impact affordable housing developments which include supportive services for residents.
Older communities with an abundance of single-family homes on small lots which are being purchased as rental properties will continue to struggle with code enforcement, tenant, owner and business complaints. States like Illinois, which have a lot of single-family homes built prior to 1940 , have adopted policies which encourage the creation of affordable rental housing as a way to increase the housing supply. This trend is occurring in many other regions around the country.
Given the aging stock of rental housing, cities will need to look for ways to preserve and rehabilitate these properties to ensure that they remain affordable rentals. There is an active market for the purchase and rehabilitation of old apartment buildings yielding affordable rents, private equity groups that specialize in this niche are quick to seize the opportunity to earn a good return on their investment. The specialized legal skills needed for preservation and rehabilitation are distinctly different from those of general real estate attorneys.
There is also considerable activity in the preservation of affordable housing itself. In some states, including Texas, certain developments financed by the U.S. Department of Housing and Urban Development are subject to new conversion opportunities which allow the low-income tenants residing there to purchase the development. A significant number of such purchases have recently occurred in the Austin area. These conversions involve complex issues and closing structures which will require the services of lawyers with specialized skills in this area.
New policies to address racial discrimination, income inequality and environmental concerns may drive the need for affordable housing developers to partner and provide affordable housing in markets where they have not done so previously. Many of these types of developments are the result of strong advocacy and the input of low-income community groups who have become more involved in the development process. Such groups frequently engage small affordable housing law firms which have experience in Latino and African-American communities.