PORTLAND, OR—When most people buy a home or sign a lease for a conventional rental property, they can expect to see an inspector maybe once a year, less often in most cases.
But if you reside in what is defined as “affordable housing,” you might as well make up a spare bedroom for the inspectors. Studies done in the states of Washington and Oregon revealed that those who manage and reside in affordable housing properties frequently are forced to undergo compliance inspections annually from multiple agencies—all with essentially the same inspection checklist.
“Someone might have to let as many as six inspectors a year tromp through their apartment – inspectors from the Housing Authority, from the State, from the City, from other investors,” says Margaret Mahoney, Director Of Property Management at REACH CDC in Portland.
While residents are inconvenienced, property managers of those buildings have to schedule each inspection and then waste time and money filling out complicated, duplicative reporting forms for each funder. The result? Higher rents for those who can least afford to pay more.
In Oregon, this is where the Housing Development Center enters the picture. The nonprofit developer offers a wide range of services to builders, owners and managers of affordable housing projects. Its staff also uses its collective experience to change housing policy and the way things work in the marketplace, something most for-profit developers don’t do.
HDC’s team is especially adept at asset management—addressing practices and processes at properties that are underperforming. HDC has built a reputation for bringing efficiency, sustainability and better operating costs to project after project. It also facilitates a property and asset management working group for nonprofit owners, sponsored by the Oregon Opportunity Network. This working group led the initial study to quantity the costs of compliance. HDC was the obvious choice to take the lead on the streamlining initiative.
“The streamlining initiative will make the public dollars targeted for affordable housing do what they’re supposed to do: improve housing and related services for the people who need them,” said Robin Boyce, executive director, Housing Development Center.
The state of Washington had taken on the job of streamlining affordable housing inspections some years ago. Without much of a roadmap, it proved to be a long, thorny undertaking. But Oregon Housing and Community Services was watching, and once Washington had a handle on the process, HDC and nine public and private funders were ready to test it in Oregon. In 2009, HDC led a team of lenders, property managers, and owners that studied the issue and created a plan to address it.
On March 31, Portland’s Housing Development Center streamlining coalition and others prominent in the affordable housing industry met to announce the results of the first year of the project, and to set the agenda for Year Two. The luncheon took place at Station Place, a property owned by REACH CDC and located in Portland’s decidedly unaffordable Pearl District. But the event was held just minutes away from Madrona Studios, another affordable housing project that benefited greatly from HDC’s expertise. The room was packed with participants in the project: housing execs, lenders, funders of the initiative, bureaucrats, affordable housing facility owners and managers—all committed to streamlining.
Everyone involved wants it to succeed, so they can all spend more time improving living conditions for affordable housing residents instead of filling out duplicate forms. (Oregon’s Meyer Memorial Trust, one of the most prominent foundations in the state, gave streamlining its endorsement by providing crucial financial support for the project.) The research phase of the project (involving 20,000 affordable units across Oregon) found that providers spend up to 10% of their total project operation costs just on complying with overlapping government rules – an average of $8 million dollars a year.
“We manage over 6,500 units of affordable housing,” says David Bachman, CEO at Cascade Management in Portland. “It uses a lot of resources, filling out up to eight annual financial reports and demographic data forms for each funder or lender. Those reports are typically in a different format from each other. In addition, scheduling an average of four inspections for each unit consumes even more staff time, not to mention the burden it places on residents.”
Currently, the Oregon team is field-testing the plan it created in 2009 on 28 properties across the state. It’s rolling out the strategy with a select few affordable housing facilities to see what works and what needs fine-tuning. The plan hinges on getting all the agencies involved to coordinate their efforts – which they’ve spent the last year doing. If the pilot project goes well, new rules might be adopted statewide next year. The savings could reduce housing providers’ compliance costs by half, which could mean shifting $4 million dollars a year towards helping residents and improving and preserving affordable housing.
“Everybody wins – the residents, the funders, the housing providers,” said Molly Rogers, the Housing
Development Center manager supervising the project. “And ultimately our communities win, because it means more resources can go towards giving people the opportunity to build better lives by having a place to call home. Oregon would be only the second state in the U.S. to streamline – we could be a model for the country.”
“We’re reducing the complexity of housing compliance for our government and nonprofit partners,” says local federal housing director Doug Carlson, who participates on the Funders Workgroup of the project. “By cooperating, we can save a lot of money and spend it where it belongs: on ensuring everyone has a safe, decent place to live, while at the same time, meeting the program requirements of federal, state and private housing lenders.”