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19 <br /> <br />restrictions that exist, and when they are due to expire.57 Second, local officials can play a useful <br />role in persuading owners to not opt out. There have been several occasions where local officials <br />directly intervened with the owner or participated in coalitions seeking to influence the owner <br />that produced positive results. Third, the city or county should be alert to opportunities <br />presented by virtue of its own funding. With respect to funding previously provided, the <br />expiration of the funding and the restrictions can provide an opportunity in some cases to reopen <br />discussions about extending funding and restrictions. Recently the City of Eden Prairie took <br />advantage of the opportunity to extend 15 year tax increment financing (TIF) restrictions on <br />several properties by adding as a condition the owner’s commitment to accept Section 8 Housing <br />Choice Vouchers. A second lesson from the Eden Prairie experience is that the TIF restrictions <br />should have been longer in the first place. Our extensive experience with preservation of <br />federally subsidized projects leads us to believe that 15 years is never long enough for affordable <br />housing use restrictions. The facts that developers are never entitled to TIF funding and that <br />Cities have to find that a project could not proceed but for the TIF funding gives cities a lot of <br />leverage. <br /> <br />Low Income Housing Tax Credit (LIHTC) restrictions can also be temporary. A few <br />LIHTC projects have been able to exercise their rights to opt out at year 15 through the Qualified <br />Contract process, but in most cases this will not become an issue until projects reach the end of <br />their 30 year use restrictions. This time will come for many projects in the early to mid 2020s. <br />In some cases, projects will seek further tax credits extending their affordability, which is <br />particularly likely in the case of mission-driven owners. In other cases, owners will simply want <br />to convert to market rate properties. The consequences from expiration of rent and income <br />restrictions will vary. In a number of cases, the LIHTC rents will probably already be at market <br />levels for that community, so there will not be an immediate impact on rents due to the <br />expiration of restrictions. However, in some cases, particularly in higher income communities, <br />rents at expiration may be below market, threatening the tenants with significant increases. <br />Equally importantly, with the expiration of LIHTC restrictions comes the expiration of the <br />owner’s obligation to accept Section 8 vouchers, which potentially shrinks the number of rental <br />opportunities in the community for voucher-holders. <br /> <br />The implications from the wave of tax credit expirations coming in the mid-2020s and <br />beyond is a larger problem that needs further attention from multiple layers of government and <br />policymakers. Cities and counties, however, should be alert to opportunities they may have to <br />induce owners to extend rent and income restrictions or at the very least, willingness to continue <br />taking Section 8. <br /> <br />Finally, restrictions accompanying local funding such as TIF or housing revenue bonds <br />will also expire. Cities need to pay attention to these and consider opportunities to extend and <br />renegotiate terms. Public funders should also review the use restrictions that accompany new <br /> <br />57 Maintaining good records in the case of larger cities that have been funding affordable <br />developments in a number of ways for a long time can be challenging. A city or county does not <br />want to be in a position where the expiration of its use restrictions come as a surprise, or where <br />they expire without the agency even being aware. This is all apart from the challenge of <br />ensuring ongoing compliance with restrictions over what can be a 30 year period.