Bluffton apartments in process of leaving affordable housing program, causing tenants to panic

An apartment complex in Bluffton has submitted a request to pull out of a federal affordable housing program, causing renters to fear they soon would be evicted.

Hallmark White Oak Apartments on Haigler Boulevard is eligible to begin raising rents for incoming tenants on Jan. 5, while existing renters are safe for three more years.

But the process has caused panic and confusion among renters, none of whom wanted to talk on the record and many who do not speak English.

“I think the whole thing is that we don’t even know what’s going on, and this is our job to try to figure it out,” said Danielle Dekruif with Bluffton Self Help, a non-profit that works to provide basic needs and financial support to the community. “Now imagine what it’s like for people who are working two jobs, raising the family or their car breaks down and they have 10 other things that they are worried about that day, and they have no clue.”

The property submitted a letter a year ago asking to exit the Low-Income Housing Tax Credit program, which provides property owners with a federal income tax credit to create and maintain affordable housing. It must wait three more years before it can get out.

A spokesperson for Hallmark White Oak said owners had no immediate comment on why they chose to exit the program.

But developers in general may want to leave the program if they think they can make more money by foregoing the tax credit and raising their rates instead, according to Bluffton Self Help CEO Courtney Hampson.

“We have increased our emergency financial assistance budget next year, just in preparation for the fact that people may be displaced,” Hampson said. “I don’t know for sure that they will be [evicted], but if they are, we want to be prepared.”

Since the federal program’s inception in 1986, at least 10 properties in Beaufort County have left the program and 12 more are eligible to begin the process, according to SC Housing spokesperson Matt McColl. SC Housing is a state agency that manages housing-related federally funded programs.

Currently there are 75 people in Beaufort County who receive Section 8 vouchers. Hallmark White Oak Apartments has 72 units available for low-income families and all are full.

The action by the Bluffton apartment complex comes at a time when affordable housing for low-income tenants in Beaufort County is already scarce.

Last summer, nearly 300 residents of Chimney Cove on Hilton Head came home to find eviction notices taped to their doors with the majority asked to leave within a month. Those evictions were later delayed but it renewed urgency about the need for affordable housing across the region.

Developments like Chimney Cove — one of the few affordable housing complexes on Hilton Head — are not bound by the same regulations as those in the low-income tax credit program, which is designed to protect low-income renters.

But the process to leave the program is complicated.

Housing developments that participate in the federal program can leave after 15 years through something called the qualified contract process. Upon notifying the program of their intention to leave, it can actually take four years to fully exit. But one year after notification, the complex can begin raising rents for new tenants.

When developments get out of the program, it narrows options available for affordable housing and low-income renters. Currently, there are 12 other housing developments in the program that are eligible to begin the exit process and 18 that are ineligible.

One woman who moved to Hilton Head in 2000 has lived at the 90 Dillion Apartments on Hilton Head for 12 years. It is one of the places that’s ineligible to begin the process of getting out.

She explained the affordable housing program allows her to have a manageable rent, which she pays with the money she earns cleaning houses, and peace of mind that she won’t be evicted.

“I have no complaints,” said the Spanish-speaking tenant, who asked that her name not be used. “I have nothing bad to say. When something breaks they fix it. It’s good rent and a good location.”

Earlier this year, the tenant had serious health issues and underwent surgery. This was the only three-month period since she moved from Miami to Hilton Head in 2000 she needed, and received, help paying rent from the Deep Well Project.

Deep Well Project Executive Director Sandy Gillis said affordable housing strengthens the community by providing essential workers a place to live.

“From a worker standpoint, it’s such a good market to be in where jobs are plentiful and pay well,” she said. “The Achilles heel is the housing piece of it. You can work here, but where are you going to live?”

Developments in the low-income tax credit program must accept Section 8 vouchers, which provide government subsidies for rent for low-income people, and cannot discriminate against voucher families. However, once they fully exit the program, these regulations no longer apply.

What is the qualified contract process?

It takes four years from when an owner requests to start the qualified contract process to when they are fully unbound from price control requirements.

To exit the LIHTC program through the qualified contract process, owners must be willing to sell their property. They request SC Housing find someone else willing to operate the development as a qualified low-income property.

After 14 years in the program, the owner can apply to start this process, then SC Housing lists the property on its website and markets the property by mass email to potential buyers.

When asked whether they’re normally able to sell the property, McColl said, “Typically, no.” If sold, the new owner carries out the 30-year LIHTC compliance period.

If SC Housing can’t find a new owner in one year, the current owner is allowed to raise rent to market rates three years later. For Hallmark White Oak Apartments, that would be Jan. 5, 2026.

However, that restriction doesn’t apply to any currently vacant units or units that become vacant during the three-year period. Any vacant units that are filled in the three-year period can be charged market rate rents.

“The unit is only vacant if the tenant moves out of the unit,” McColl said. “Keep in mind at lease renewal, the owner (or) landlord can increase the rents as long as the sum of rent plus utilities does not exceed the tax credit maximum rent limit. The unit must remain rent restricted until the tenant moves out the unit.”

Property owners in the program must accept Section 8 voucher tenants and cannot discriminate against voucher families during the three-year period.

The 30-day notice dilemma

The owner is only required to inform tenants they intend to raise their rent 30 days prior, in accordance with the South Carolina Residential Landlord and Tenant Act.

Thirty days isn’t enough time, especially for people who are already struggling day-to-day, according to Hampson.

“The short answer is, no, 30 days is not enough,” Hampson said. “But I don’t know how we fix the system and that’s what’s so frustrating. This is a system.”

Affordable housing targets those making 80% or less of the median family income for Beaufort County, which is $69,350 or less for a family of four.

“They don’t know that it’s coming. No one’s telling them and they don’t know what to even look out (or) where or how to begin,” said Dekruif, who is the marketing and communications manager for Bluffton Self Help. “(They) may not even have access to a computer or have digital literacy skills. So I mean, that’s the confusing, scary part.”

Gillies said it is particularly concerning if leases are 30-days. Before the Deep Well project offers their help, they ask for a copy of a client’s lease. At the 90 Dillion Apartments on Hilton Head, they noticed leases were being switched from yearly to monthly at renewal.

“As soon as we started realizing that a lot of these leases were every 30 days, we’re just having a conversation with clients ... to make sure that they understand what a tenuous position that puts them,” Gillies said. “Of course, the way I think it gets presented to them is that if they want to leave or choose to leave, they only have to give 30 day notice. They’re not locked in.”

But monthly leases also give developments more flexibility to raise rent. Even if the apartment is rent controlled, developments can raise rent so long as it doesn’t exceed the tax credit maximum rent limit.

SC Housing’s compliance monitoring department does annual audits of LIHTC properties to ensure they’re following to program’s guidelines, McColl said. If they have issues, tenants can contact SC Housing’s compliance monitoring department.

Additional reporting by Sofia Sanchez.

=================