Converting empty offices into much-needed housing is a “no-brainer.” That is unless you have to design, construct, and finance one of these conversions. As helpful as turning empty downtown office buildings into homes, it has proven to be rather difficult for a number of reasons. But help is coming down from the highest level of the government. The Biden administration has spearheaded a number of federal initiatives to help speed up office-to-residential conversions. The problem is that these programs and incentives have been hard to find and sometimes even harder to understand.
To help the real estate industry navigate the complex web of programs, incentives, and governmental agencies, the White House has just released a useful guidebook that brings all of the important information into one place. These include, amongst others, HUD’s Community Development Block Grant Program, The Pathways to Removing Obstacles to Housing Program, and The Department of Transportation’s Transportation Infrastructure Finance and Innovation Act. The resource does a great job of not only outlining all of the programs but also highlighting what funding it would provide and how it would be applicable for residential conversions. The guidebook even comes with a few great case studies that show the actual capital stack of certain development projects.
This guidebook goes a long way toward closing the knowledge gap when it comes to federal programs. There are lots of incentive programs available, but since many of them are often less than straightforward, they can go underutilized. But what is still missing from the information available about conversion incentives is clarity on exactly how it will be received by each local municipality. The hard part about the top-down approach that the White House has taken is that they don’t have full control of what states, cities, and counties do. A Federal program might give tax credits for affordable housing, but there is still no guarantee that it will get approved by the local councils.
Interestingly, the White House is using the Department of Transportation to push its agenda around the country. Transportation Authorities repurpose their own land to support affordable housing projects. Even more still, the DOT will provide funding and grants to help municipalities build housing (particularly affordable housing) next to public transit. America’s decentralized government structure often makes it hard for the Fed to influence what happens on the city level, but with some good policies, alongside useful resources that help communicate the programs available, the White House might be able to further push its affordable housing agenda.