Saving the Stock

By Donna Kimura Affordable Housing Finance

It’s not enough to build new affordable housing. To meet the nation’s growing needs, the existing affordable housing stock needs to be protected.

Without preservation, the nation is at risk of falling further and further behind in having homes affordable to seniors, working families, people with disabilities, veterans, and others.

The numbers tell the story: 104,088 federally assisted homes were added to the federally assisted rental stock in recent years, but 71,096 homes were lost, leaving a net gain of just 32,992 new affordable homes in this period, according to a 2024 report from the Public and Affordable Housing Research Corp. and the National Low Income Housing Coalition.

The loss of affordable housing can happen in different ways—affordability restrictions expiring at developments, properties converting to market-rate, and physical or financial decline of the housing. Another risk is inadequate government support to preserve the federally assisted housing stock.

To better understand the challenges and trends around preservation, six developers working in preservation share their insights:

• Jason Bordainick, managing partner and co-founder of Hudson Valley Property Group (HVPG);
• Alice Carr, CEO of April Housing;
• Jeffrey Goldberg, CEO of Fairstead;
• Aaron Gornstein, president and CEO of Preservation of Affordable Housing (POAH);
• Priya Jayachandran, CEO of the National Housing Trust (NHT); and
• Eric Price, president and CEO of The NHP Foundation (NHPF). 

What role does preservation have in the overall affordable housing sector?

Gornstein: Preservation is essential to achieving net growth in the number of affordable housing units. We must preserve our existing inventory because we can’t afford to build enough new housing to replace affordable units lost to expiring restrictions or physical distress.

Preservation also protects existing households at risk of displacement and promotes the stability of the surrounding community.

Jayachandran: Preservation efforts allow us to maintain our housing so scarce and valuable homes stand the test of time, remain affordable for generations, and prudently leverage our public investments.

Share an interesting stat or fact about preservation:

Carr: According to 2025 Yardi Matrix data, more than 520,000 low-income housing tax credit (LIHTC) units are on track to reach the end of their compliance period between 2025 and 2038. Another 330,000 LIHTC units nationwide will reach the end of their extended use period in that time. Preservation must be a focus for the industry in order to maintain the existing affordable units.

Jayachandran: Time and weather don’t discriminate. All of the new supply we are building today will be tired and in need of preservation just 15 to 20 years from now. We need to be thinking simultaneously about building new supply AND how we maintain the new homes for generations.

Why aren’t more projects preserved?

Gornstein: Most affordable housing preservation challenges do get met. But when preservation doesn’t succeed, the primary reasons are fierce competition from buyers who may convert the property to market-rate housing; deferred maintenance or other operational failures; or lack of state and local commitment to resources and continued affordable use. Also, preservation isn’t all or nothing: Many properties have both rental assistance contracts for all or some units and a variety of regulatory agreements that constrain all rents to be affordable to various income levels. Over time, these mandates can expire, permitting unassisted rents to rise, and shifting the population that is served.

Jayachandran: As a country and as housers, we have a capital bias. Long-term operations are unsexy. We like to build new things and punt on how we will maintain our investments for the long term.

What is the biggest threat to preserving affordable housing?

Bordainick: The most acute threat today is the proposed cuts to Department of Housing and Urban Development (HUD) programs, which have historically underpinned the operating and capital budgets of affordable properties. Without reliable HUD subsidies, properties are at risk of deterioration or market conversion. It’s worth noting that the cuts initially proposed have not been upheld in subsequent draft budgets by Congress and the Appropriations Committee.

How has your strategy for preserving affordable housing communities evolved?

Bordainick: HVPG has shifted from targeting mostly single assets to acquiring entire portfolios, which allows us to prioritize investments where we can have the greatest collective impact. By aggregating deals, we achieve greater scale and can negotiate more favorable financing terms. This portfolio-centric approach also streamlines capital deployment, reducing transaction costs and accelerating preservation timelines. As a result, we’ve become more nimble and cost-effective in safeguarding affordability at scale.

Jayachandran: NHT was founded to focus on preservation. In our early years, preservation largely meant preserving subsidy contracts. Today, the biggest threat we see—and the greatest need for preservation—are deteriorating property conditions and no easy ways to improve them.

Gornstein: POAH’s first activity was exclusively preservation of affordable housing, as our name indicates. We purchased Section 8-assisted properties, navigated the complicated HUD process, often restructured the debt, and utilized 4% LIHTCs to achieve modest renovations.  Amy Anthony, POAH’s founder, built a talented and entrepreneurial team that successfully purchased property portfolios across the country, which accelerated POAH’s growth.

The factors that have changed the most since those earlier years are: The costs and scope of renovations are much higher and more complex; the need for subsidies is greater; there is much stiffer competition for purchasing Section 8 properties; and the “buy and hold” periods (before renovations are completed) are longer and carry greater risks.

Our preservation strategy has always been about protection from displacement, which has led us to a broader approach—not just building by building, but community preservation.  As such, our organization has evolved to pursue a mix of preservation, new construction, and comprehensive neighborhood development.

One major innovation at POAH is the creation of a robust Community Impact program, which is a platform for resident opportunity, economic mobility, and community empowerment. This program demonstrates how housing can create pathways to financial independence, educational achievement, and improved health outcomes. Another is the incorporation of robust energy-efficiency and sustainability principles that are applied to all our work—rehabilitation and new construction.

How are preservation efforts changing overall in the field? 

Jayachandran: On the one hand, there are a lot more groups—for-profit and nonprofit—that are motivated to preserve our existing housing stock. On the other hand, we still let investor returns drive the level of rehab we perform without a common understanding of what is decent, safe, and sanitary.

Carr: It is gratifying to see preservation—both LIHTC and naturally occurring affordable housing (NOAH)—become an increasingly investible asset class. There are more funds dedicated to the acquisition and preservation of affordable housing at scale—and the investments include models that range from acquisition, retrofitting/maintenance projects, to investments in resident services. The preservation of April Housing’s national affordable housing portfolio was made possible with capital from Blackstone.

Data refinement continues to shape the preservation landscape. We can identify where we are losing affordable housing and extrapolate why we are losing it with more visibility than we had in the past—this allows for more efficient data-driven response and engagement.

Bordainick: Preservation is increasingly driven by private capital and institutional investors who are deploying dedicated pools of equity into the sector. These investors often partner with experienced operating platforms like HVPG to source, structure, and manage deals at scale. Their entry brings new liquidity and long-term hold strategies that complement traditional nonprofit and public funding, underscoring the importance of public private partnerships in affordable housing preservation. This trend is transforming preservation from a historically cottage-industry effort into a robust, market-driven asset class.

Are there any new financing programs or deal structures for preservation?

Bordainick: One notable innovation is GP [general partner] cash-flow securitization, where projected rental revenues from preserved properties are rated and bundled into securities for institutional investors. This structure provides additional financing at competitive rates. By unlocking cash flows in this way, sponsors can bridge equity gaps, creating a scalable tool across diverse geographies.

Gornstein: POAH was a pioneer in the use of the 4% LIHTC for preservation, and that is still a critical tool, but in many states the 4% credit is being prioritized for new production.  We are hopeful that, with the reduction of the 50% bond test to 25%, more states will reserve 4% credits and bonds for preservation work.

The LIHTC average-income test is also an important tool for preserving existing housing because it can accommodate existing residents whose incomes are up to 80% of the area median income (AMI).

The Rental Assistance Demonstration program has also been vital for the redevelopment of public housing across the country while preserving existing tenancies. POAH has forged partnerships with several local housing authorities to redevelop public housing and create additional units on the same site. And we are working on a project now that will utilize so-called Faircloth authority, called Restore-Rebuild, to increase public housing units within a mixed-income building.

Finally, the Housing Opportunities and Preservation Enhancement (HOPE) Act of 2025 would preserve aging affordable rental housing properties by creating tax incentives for individual investors that fund rehabilitation and preservation of existing affordable rental housing. This new legislation is expected to be introduced in the fall.

Jayachandran: Obviously with the historic expansion of the LIHTC program there is hope that there will be more resources for preservation as well as new construction. The reality will depend on how states implement the expansion. In high-cost areas like where we develop, 4% credits require significant infusions of soft debt to balance development budgets, and many local tax bases have not recovered from the pandemic. Many projects may need a greater allocation of credits in order to compensate for credit pricing and scarcity of soft debt.

Are you seeing any promising state or local initiatives aimed at preservation?

Bordainick: Yes, New Jersey’s Aspire program stands out for offering state tax credits specifically for the preservation of existing affordable housing. By providing an additional equity source, it helps close financing gaps on projects that may have previously been infeasible. Similar programs in other states are emerging, signaling a growing recognition that dedicated local preservation incentives can multiply federal public dollars.

Jayachandran: We’re seeing more tax abatements and exemptions used as incentives to encourage owners of both NOAH and subsidized properties to preserve and maintain housing … sometimes depending on how flush a jurisdiction is, they might also offer grants or loans. I’d highlight the Cook County Affordable Housing Special Assessment Program in Illinois that is a partnership between The Preservation Compact and the County Assessor’s office. The program incentivizes multifamily rehab, in return for a lessor property tax assessment value. Eligible properties must have seven or more units, and the units themselves need to be rented to households with qualifying household incomes at or below 60% of the AMI. The program has two preservation tracks that are dependent on the local market strength to encourage owners to invest in property upgrades and retain affordability.

Policies related to right of first refusal (ROFR), like Prince George’s County ROFR, allow the jurisdiction or a nonprofit partner to step in to preserve a property that is for sale. The Maryland county’s ROFR requires owners of multifamily properties with 20 or more units to notify the county when they enter into a bona fide contract of sale with an interested party.

Noting that many housing finance agencies are now limiting the minimum size of eligible projects for LIHTC, Colorado has developed a Small-Scale Housing Permanent Loan Program to support small multifamily properties that are often deemed too small to use conventional multifamily financing or may not support large debt burdens. Aimed primarily at NOAH properties with five to 19 units between 80% to 120% of the AMI, the program offers long-term, fixed-rate loans for new construction, acquisition-rehabilitation, and refinancing. Colorado Housing and Finance Authority has on-the-ground outreach teams based in each geographic region who bring potential projects to the main office.

Price: Another promising example is Colorado’s Middle Income Housing Authority (MIHA), which was created to address the growing challenge of workforce housing across the state and up to 20% of their housing can be aimed at preserving workforce housing. NHPF and MIHA recently completed its first investment—the Galena Apartments in Frisco—which demonstrates how state and local collaboration can deliver lasting housing solutions.

Through a public-private partnership with The NHP Foundation, the town of Frisco, Summit County, and state agencies, MIHA issued $18.6 million in tax-exempt 501(c)(3) bonds—its first-ever bond transaction since being established in 2022—to finance the 54 units of income-restricted housing. The town contributed land via a $1/year lease, adopted zoning changes to allow higher density, and provided $8.1 million in gap financing.

We are excited to explore new ways of using this new tool to preserve the state’s existing workforce housing as market dynamics shift and gentrification puts pressure on naturally occurring middle-income housing, which is especially acute in resort communities in the mountains.

Goldberg: At the state and local level, we’re seeing a shift away from large-scale demolition and mega projects toward preservation-focused strategies. Many cities we’ve worked with initially planned to demolish aging housing and rebuild, but those projects often faced significant delays from local opposition, unachievable visions, or material changes in market conditions. As a result, localities are increasingly recognizing that preservation is not only faster but also more realistic than grand master planning. Our approach at Fairstead, which has always favored gut rehabs over demolition, allows us to create units that match the quality of new construction, but in a fraction of the time. For example, a new ground-up can easily take six to eight years to complete, whereas the vast majority of our developments are completed in under three years from award. That means the residents who live in substandard housing get reliable, high-impact change years faster. Cities like Washington, D.C., and Detroit have embraced this approach, recently issuing RFPs focused on preservation rather than demolition, which we fully support as a more viable path forward.

How are your latest preservation deals different from 10 or 15 years ago?

Price: Our preservation deals have gotten increasingly complex over the past decade.  This is true of their renovation and construction, as well as their financing.  

Localities are setting higher standards and requirements for their building and energy codes, most often for very good reasons, but they are getting more difficult to meet as old buildings reach the end of their intended life. Layered on top of this, our public funding partners are requiring higher sustainability, historic, access, and labor requirements, again with the best intentions of managing our limited public resources well, but they have added additional costs and complexities. NHPF’s in-house construction management division has added expertise and streamlined our renovation work, which has helped us manage risks and reduce time and costs.

Most of our projects in the last decade or so have been financed via LIHTC, the most robust tool affordable housers have had since its inception. However, LIHTC isn’t always the best answer, and NHPF has developed creative solutions to financing several of our recent preservation projects. 

For example, in 2019, we purchased Ridgecrest Phase II in Washington, D.C., on behalf of the Ridgecrest Village Tenant’s Association and are almost complete with a substantial rehabilitation that is focused on energy efficiency and sustainability. Rather than apply for and compete for the district’s limited private-activity bonds, we worked with the D.C. revenue bond program to issue 501(c)(3) bonds and D.C.’s Department of Housing and Community Development to finance the project’s acquisition and renovation.

Finally, we have adopted a much more region-focused preservation strategy.  We are focusing on opportunities in our key priority states and on our local communities’ needs.

What changes to existing policies or programs would make preservation more achievable?

Gornstein: We hope the new administration will focus on streamlining the process for HUD approvals so preservation transactions can be expedited. We also need to have better coordination of the inspection process from multiple government and private-sector agencies to avoid duplication and intrusiveness.

At the same time, for both preservation and new construction, we need to continue to reduce cost and mitigate risk. Materials and labor cost are primary of course, and we need to continue innovating. There are no panaceas—for example, modular housing brings many cost and time benefits, but only with sophisticated construction planning and management.

Jayachandran: Rental assistance!  Rental assistance is an undervalued tool. LIHTC and other capital subsidies help offset development/construction costs. Long-term rental assistance contracts help defray the operating costs of serving low-income tenants with below-market rents.

Price: Streamlined regulatory approvals for preservation projects. Dedicated preservation funds at the state or local level that can be deployed quickly to acquire at-risk properties before they convert to market-rate, as well to help acquire vacant properties for adaptive reuse.

Another is incentives for public-private partnerships, ensuring that local agencies, nonprofits, and private investors can co-invest in preservation deals while maintaining affordability commitments.

What will be the next evolution of preservation?

Bordainick: The next frontier will likely be converting naturally affordable properties into permanently regulated affordable housing through targeted state programs. We’re already seeing a handful of jurisdictions craft incentives and regulatory frameworks to enable these conversions at scale. Coupled with emerging deal structures, this approach could dramatically expand the affordable stock. Ultimately, embedding affordability requirements into a wider range of property types will define the next phase of the field.

Goldberg: There are over a million affordable housing units that need to be preserved or renovated, and public housing units will continue to fall into disrepair if not actively addressed. Fortunately, we’re seeing a real shift in the industry’s response, with federal programs, state and local advocacy, and, most important, public-private partnerships driving progress. The evolution of preservation lies in continuing these partnerships to improve public housing nationwide. Many public housing communities include uninhabitable units that have been vacant for decades. Restoring existing, unoccupied units is one of the most straightforward and cost-effective ways to increase affordable housing stock. This opportunity can be realized within current local and federal financial frameworks, but it requires continued collaboration between public agencies and private developers to succeed and grow.