Today, the Biden-Harris Administration is announcing new actions to support the conversion of high-vacancy commercial buildings to residential use, including through new financing, technical assistance, and the sale of federal properties. These announcements will create much-needed housing that is affordable, energy-efficient, near transit and good jobs, and reduce greenhouse gas emissions, nearly 30 percent of which comes from the building sector.
Office and commercial vacancies across the country are affecting urban downtowns and rural main streets. A new blog released today by the Council of Economic Advisers finds that office vacancies have reached a 30-year high from coast to coast, placing a strain on commercial real estate and local economies. At the same time, the country has struggled for decades with a shortage of affordable housing units, which is driving up rental costs, and communities are seeking new ways to cut emissions, especially from existing buildings and transportation.
The actions announced today build upon the initiatives in the White House Housing Supply Action Plan, which is lowering housing costs, boosting housing supply, and promoting fair housing, and the Administration’s actions to lower energy costs and tackle the climate crisis. Lowering costs, increasing access to good jobs, and building the clean energy economy are key tenets of Bidenomics — the President’s agenda to grow the economy from the middle out and the bottom up. Today, the Biden-Harris Administration is announcing the following actions:
Sparking Investment through New Federal Funding and Repurposing Property
- The Department of Transportation (DOT) is releasing new guidance to states, localities, and developers on how the Transportation Infrastructure Finance and Innovation Act (TIFIA) and Railroad Rehabilitation & Improvement Financing (RRIF) programs – which combined have over $35 billion in available lending capacity for transit-oriented development projects at below-market interest rates, can be used to finance housing development near transportation, including conversion projects. In addition, DOT released a policy statement with principles for pursuing transportation projects with the dual goals of increasing affordable housing supply and decreasing emissions. By making low-cost financing available for conversions and housing projects near public transportation, this guidance and policy statement will increase housing supply, while encouraging state and local governments to improve their zoning, land use, and transit-oriented development policies.
- DOT is releasing guidance that makes it easier for transit agencies to repurpose properties for transit-oriented development and affordable housing projects, including conversions near transit. Under the new guidance, transit agencies may transfer properties to local governments, non-profit, and for-profit developers of affordable housing at no cost. The new policy has the potential to turn property no longer needed for transit into affordable housing development particularly when combined with loans from TIFIA or RRIF programs.
- HUD is releasing an updated notice on how the Community Development Block Grant fund, $10 billion of which has been allocated during this Administration, can be used to boost housing supply – including the acquisition, rehabilitation, and conversion of commercial properties to residential uses and mixed-use development. HUD is also increasing outreach efforts to support municipalities and developers seeking to use HUD tools to finance conversions. States and localities can also access up to five times their annual CDBG allocation in low-cost loan guarantees to fund projects such as the conversion of properties to housing or mixed-use development. In addition, HUD will make awards through a research-related Notice of Funding Opportunity, which can be used to develop case studies that can serve as roadmaps for other localities interested in pursuing conversions. HUD is also accepting applications for the $85 million Pathways to Removing Obstacles to Housing program, which includes the development of adaptive reuse strategies and the financing of conversions as eligible activities.
- The General Services Administration (GSA) will expand on its Good Neighbor Program to promote the sale of surplus federal properties that buyers could potentially redevelop for residential use. To support this initiative, GSA will work with the Office of Management and Budget (OMB) to identify current and upcoming sale opportunities, maintain a public list of current opportunities, and affirmatively market resources available to support housing development in all targeted materials for applicable properties.
Leveraging Federal Funding to Encourage Conversions
- The White House is releasing a Commercial to Residential Federal Resources Guidebook with over 20 federal programs across six federal agencies that can be used to support conversions. These programs include low-interest loans, loan guarantees, grants, and tax incentives, which, subject to the requirements of each program, may be used together to increase the economic viability of conversion projects.
- To accompany the guidebook the White House is announcing training workshops this fall for local and state governments, real estate developers, owners, builders, and lenders on how to use federal programs for commercial to residential conversions and achieve additional goals including affordability and building zero emissions housing.
- DOT will be announcing new technical assistance through direct engagement with federal agencies and third-party intermediaries to support municipalities and developers seeking to use DOT tools to finance conversions.
- Through the Better Buildings Initiative, DOE also launched a commercial to-zero-emissions housing toolkit that includes technical and financial guidance on how to achieve zero emissions commercial to residential conversions. DOE’s toolkit highlights how the Inflation Reduction Act can bring more capital to conversions through the DOE Loan Program Office’s loans and guarantee programs and tax incentives, such as the new energy-efficient home tax credit (45L), the energy-efficient commercial buildings tax deduction (179D), and the clean energy investment tax credit (48).
- And today, the Treasury is posting a blog that describes tax incentives for builders of multifamily housing. Through the Inflation Reduction Act, several tax incentives may support eligible builders of multifamily housing to lower the investment costs associated with energy efficiency upgrades, clean electricity generation projects, or even the new or substantial reconstruction and rehabilitation of homes meeting certain Energy Star or Zero Energy Ready Home Program energy efficiency standards.
Working with States, Localities, and the Private Sector to Take Action
A number of states and localities have taken steps to address the challenge of high commercial and office building vacancies in their downtowns. As new research from HUD shows, developers commonly use combinations of federal, state, and local resources on individual conversion projects. The White House is encouraging all state, local, tribal, and territorial entities to identify all available public tools and land disposition opportunities to facilitate conversions. The White House encourages the private sector, including non-profit organizations and other stakeholders, to engage in capacity building around conversions in support of this effort today:
- The National Association of Counties (NACo) is expanding its focus to support county capacity to convert commercial properties to residential use, including by leveraging available federal programs and technical assistance efforts. NACo will identify counties that are actively pursuing projects to participate and will hold a series of listening and informational sessions, culminating in a policy paper for county officials interested in pursuing commercial to residential conversion projects.
- The American Planning Association, in collaboration with the Lincoln Institute of Land Policy and Harvard University Graduate School of Design, is expanding its existing work with the planning directors of the 30 largest U.S. cities to include new programs on commercial to residential conversions, with the first meeting already having occurred in October.