Preserve Naturally Occurring Affordable Housing

A significant share of Miami’s affordable housing supply is in privately owned, unsubsidized naturally occurring affordable housing (NOAH). These NOAH units are typically in distressed, older, small multifamily buildings and in subdivided single-family homes across Miami-Dade County.

Typical Characteristics of NOAH in Miami

• Smaller: Small or mid-sized buildings with 2-9 units
• Older: Built before 1980
• Distressed: Deterioration resulting from deferred maintenance
• Lower rents: Rents affordable to low and moderate-income households

Source: Urban Institute, 2017 & Enterprise Community Partners, 2017.

According to the Urban Institute, various areas in Miami contain a sizable supply of housing built before 1980 with below-average rents that are more affordable to low and moderate-income households. These neighborhoods include Allapattah, Little Haiti, Little Havana, and Overtown. The Urban Institute also found a substantial reduction in Miami’s NOAH units between 2000 and 2015 due to rapid development and population growth, thereby limiting the supply of much-needed affordable housing.

Preserving NOAH units can be an important community development strategy for various types of neighborhoods, including communities facing growing redevelopment pressure such as Little Haiti and Allapattah as well as high-cost neighborhoods like Wynwood. Rehabbing older, smaller scale buildings that are substandard or at-risk of loss will also help to create more quality affordable housing options in distressed communities.

Recent research from the National Trust for Historic Preservation has demonstrated that neighborhoods with a mix of older, smaller buildings also tend to contain more age diversity, women and minority-owned small businesses, and greater walkability than areas with newer, larger structures.

Chicago’s Community Investment Corporation (CIC) provides flexible financing to purchase and rehab small multifamily buildings. Since 1984, CIC has made $1.2 billion in loans to rehab more than 55,000 units of NOAH throughout the Chicago area. CIC launched a 1 to 4 Rental Redevelopment Loan Program in 2014 and has successfully rehabbed 280 units of unsubsidized affordable rental housing.

The Federal Housing Finance Agency recently required Fannie Mae and Freddie Mac to focus on affordable housing preservation, particularly small multifamily rental properties of 5 to 50 units. The rule becomes effective in 2018.

Cook County’s Class 9 program provides a reduction in property taxes to developers who complete a substantial rehab on multifamily buildings and set aside a percentage of the units for low and moderate-income tenants.

Bring NOAH properties into a subsidy program: Miami-Dade County’s Surtax program has recently included set-asides for small multifamily rental developments in Little Haiti and Liberty City. This set-aside for small developments with 40 units or less is an effective way of upgrading NOAH properties to expand the supply of quality, affordable housing. In addition, the Southwest Overtown/Park West Community Redevelopment Agency provided a $300,000 grant in 2012 to rehabilitate a distressed 9-unit NOAH property in Overtown. In exchange for the grant, the property owner agreed to cap rents at an affordable price. Additional private and public resources could help supplement these efforts.

Zoning overlays could be used to preserve NOAH: The City of Miami’s Neighborhood Revitalization District zoning overlay could be adapted to effectively preserve and rehab historic NOAH structures in areas such as Little Havana, Overtown, and West Coconut Grove. This type of adaptable, neighborhood-level overlay could provide various protections to help maintain the traditional scale and historic fabric of the built environment in Miami’s communities facing growing redevelopment pressure while also providing quality affordable housing opportunities.

Establish a loan fund to for small-scale property owners to preserve NOAH units: Local lenders and banks could form a nonprofit lending consortium focused on rehabbing and preserving smaller NOAH properties across Miami. This fund would help preserve NOAH units, maintain neighborhood scale, and increase investment in Miami’s low and moderate-income communities.

Provide tax incentives for preservation: Various localities and states offer tax abatements for owners of market-rate properties to bring their properties to standard quality. Similar incentives could be adopted in Miami to encourage the preservation of NOAH.