(The Center Square) – A program designed to help people in low-income rental housing eventually buy their homes has yet to be used, according to a new performance audit by the Office of the Washington State Auditor.
The audit focused on the federal Low-Income Housing Tax Credit program, which is managed in Washington by the Housing Finance Commission.
Senior Performance Auditor Brenton Clark with the Washington State Auditor’s Office provided some background in a Tuesday interview with The Center Square.
“The federal Low-Income Housing Tax Credit was passed back in the 80’s and it works to help support the development of low-income rental housing by providing federal tax credits to developers,” said Clark, who explained a further aspect was added in the mid 2000s. “That also allowed for projects to make the rental units available for purchase to their tenants after a certain length of time and that’s what we focused on in the audit.”
That length of time requires the properties be rental only for the first 15 years.
The state has nearly 1,300 program projects, but only 18 offer tenant purchase options.
The audit found of those 18 projects, six had properties old enough to qualify for tenant purchase as of 2023.
“One of the big concerns that we saw was that even though there were several projects that reached that point of eligibility, with about 135 homes that were eligible to be offered for sale, none of those had been successfully sold and transferred to tenants,” Clark said.
The auditors found the tenant ownership option is little-known and largely misunderstood.
“The commission was complying with the relevant state and federal laws regarding the tenant purchase options, but the laws themselves were not particularly clear,” Clark said. “It just said it needs to be an option, but really didn’t provide any additional guidance.”
Clark said there was a plan in place, but officials don’t appear to have executed it.
“The commission had developed an online monitoring plan to keep track of how projects were doing in terms of preparing for offering units up for sale, the problem was they didn’t do anything to implement it,” he said.
External Communications and Legislative Relations Officer Adam Wilson said the audit included focus groups with tenants.
“Some folks didn’t even realize there was an option to purchase at all and others described it as rent-to-own, which is also not how it really works, so the level of understanding was not very strong,” Wilson said, explaining that most tenants did at some point hear about an option to purchase, “but what that entailed and how they could actually go about it wasn’t clear.”Another challenge Clark explained is that almost all of the involved properties are tribal owned.“And we have very limited authority around tribal issues,” he said, “so there is some complexity around that.”The Housing Finance Commission responded to the audit, saying, “In January 2023, our staff embarked on a process to research and analyze the LIHTC eventual tenant ownership option, soliciting guidance from other states and project consultants as well as feedback from project owners, and a staff work group was formed to turn those recommendations into policies and procedures for applicants, project owners, and our own compliance staff,” wrote wrote Steve Walker, executive director of the Washington State Housing Finance Commission.Clark said a legislative hearing on the matter is scheduled for Dec. 4.
