The Biden administration has announced new actions to increase housing supply and improve affordability by converting high-vacancy commercial buildings to residential use. The actions include new financing options, technical assistance, and the sale of federal properties.
The White House released a guidebook developed in partnership with the Department of Housing and Urban Development (HUD) and other federal agencies that will help communities and housing providers identify federal resources to finance these conversions to residential and mixed-use developments. The guidebook includes over 20 federal programs across six federal agencies that can be used to support conversions. These programs range from low-interest loans and loan guarantees to grants and tax incentives.
In addition to the guidebook, the White House is announcing training workshops for local and state governments, real estate developers, owners, builders, and lenders on how to use these programs and achieve additional goals such as affordability and creating zero-emissions housing.
As part of the administration’s announcement, HUD released an updated notice on how Community Development Block Grant (CDBG) funding can be used to boost supply, including acquisition, rehabilitation, and commercial-to-residential conversions.
“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.”
HUD also recently released an issue of “Evidence Matters” that focused on office-to-residential conversions, which provided an overview of the issues motivating the surge in conversion interest and highlights examples of conversion projects. According to HUD, it is providing additional research funding to develop case studies that can serve as road maps for interested municipalities. The Notice of Funding Opportunity recently closed, with awards to 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 Adrianne Todman, HUD deputy secretary. “With a shortage of millions of homes nationwide, we need to utilize every resource at our disposal to increase housing supply.”
In addition, the Department of Transportation has released new guidance on how the Transportation Infrastructure Finance and Innovation Act as well as the Railroad Rehabilitation & Improvement Financing programs can be used to finance housing development near transportation, including conversion projects. It also released guidance that makes it easier for transit agencies to repurpose properties for transit-oriented development and affordable housing projects.
The General Services Administration announced it will expand on its Good Neighbor Program to promote the sale of surplus federal properties that buyers could utilize for conversions. It will work with the Office of Management and Budget to identify current and upcoming sale opportunities and market resources available to support housing development.
Bob Broeksmit, president and CEO of the Mortgage Bankers Association (MBA), applauded the guidance, saying the organization will work with the administration, members of Congress who have crafted related legislation, and other stakeholders to create cost-effective ways for multifamily borrowers, developers, and lenders to increase the nation’s housing supply.
“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 Broeksmit. “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 should help facilitate more commercial-to-residential projects.”