In a move aimed at increasing the nation’s housing supply
and improve housing affordability, the U.S. Department of Housing and Urban
Development (HUD) and the Biden-Harris administration announced a partnership
with other federal agencies to make critical updates to applicable policies. The
development has gained support from the mortgage industry’s largest trade
organization, which has made expanding affordable homeownership a top
priority for the next year.
The agencies released a guidebook to help communities and
housing providers identify federal resources for financing the conversion of
commercial properties into residential and mixed-use developments.
As part of this new development, HUD announced the release
of an updated notice explaining how it plans to use the $10 billion in Community
Development Block Grant (CDBG) to boost housing supply. These funds will be
used for the acquisition, rehabilitation and conversion of commercial
properties into residential spaces, according to a HUD press release.
“Addressing the affordable housing crisis requires an
all-of-the-above approach,” HUD Secretary Marcia Fudge said in the release.
“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.”
HUD’s notice represents the latest guidance on how to
leverage CDBG resources to facilitate affordable housing development. States
and localities also can access up to five times their annual CDBG allocation in
low-cost loan guarantees to fund projects like property conversions for housing
or mixed-use developments.
Mortgage Bankers Association (MBA) President and CEO Bob
Broeksmit expressed support for the administration’s new guidance on
commercial-to-residential property conversions.
“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,” Broeksmit said in a statement. “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.
“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.”
In a recently published edition of HUD’s “Evidence Matters”
blog, focusing on office-to-residential conversions, HUD provided a research
overview of the factors driving the increased interest in conversions and
showcases local examples of conversion projects. The agency also is providing
additional research funding to develop case studies that can serve as
guidelines for localities interested in pursuing conversion projects.
“HUD is hard at work listening to stakeholders and exploring
solutions that will help expand and preserve housing supply in the
country,” HUD Deputy Secretary Adrianne Todman said in the release. “With
a shortage of millions of homes nationwide, we need to utilize every resource
at our disposal to increase housing supply.”
HUD’s actions are intended to build upon progress
implementing the administration’s Housing Supply Action Plan, according to the
release. The plan outlines steps taken to alleviate the housing cost burden for
households by increasing housing supply.
Various government agencies have already taken measures to
incentivize zoning reforms at the state and local levels, pilot new financing
methods, expand and enhance existing financing approaches, support innovation
in housing production and more.