Exponentially increasing insurance premiums—and growing concerns about securing policy renewals—are straining budgets.

An IHC survey of 30 Illinois developers found insurance premiums have, on average, risen 25% over the past year, significantly straining budgets and jeopardizing both current operations and future development.

Vacancies are high for many properties at lease-up, and many local subsidies have requirements that lead to slow unit turnover.

Some developers indicated that rent collection improved somewhat in 2024 but remains a significant issue.

Rent overdue by 90 days is unlikely to be recovered, sometimes necessitating the write-off.

Vacancies are high for many properties at lease-up, and many local subsidies have requirements that lead to slow unit turnover.

Some developers indicated that rent collection improved somewhat in 2024 but remains a significant issue.

Rent overdue by 90 days is unlikely to be recovered, sometimes necessitating the write-off.

Loss of skilled professionals during the pandemic was made worse by intense competition for hiring and retaining property management staff.

Affordable housing organizations struggle to compete with market-rate employers offering higher pay and less complex workloads.

Recruiting and retaining qualified maintenance staff is especially difficult; many providers rely on costly third-party vendors as a substitute.

Some providers pay above national averages for leasing and operations staff yet still face shortages, particularly in leasing.

Staff turnover is often masked in the data—higher labor costs can obscure the reality of persistent vacancies and reduced organizational capacity.

There is a growing demand for Spanish-speaking staff to better serve immigrant populations.

Providers emphasized the need to develop training pipelines, such as community college programs, to bolster the workforce and prepare new property managers and staff for careers in affordable housing.

Properties often rely on multiple layers of soft funding, each with its own compliance rules, leading to duplicative, conflicting, and confusing requirements.

One developer noted compliance can consume 40% or more of a property manager’s time, diverting attention from leasing and rent collection.

Agencies frequently request inspections or site visits with little notice and flexibility, creating scheduling conflicts and disrupting operations.

Properties with multiple funding sources experience exacerbated inspection challenges: each agency sends their own inspectors on different dates, which multiplies the work for the staff who need to be present. Agencies do not coordinate inspections with other agencies and do not share information.

Automated compliance systems may generate errors that take significant staff time to resolve with agency personnel.

Payments from programs can be delayed until minor compliance issues are resolved.

HUD’s new physical inspection protocol (NSPIRE) imposes additional compliance demands.

Inconsistencies among agencies in Cook County and the collar counties create challenges in restructuring loans, with some agencies perceived as particularly difficult to work with.

Tenant placement processes that are required by certain funding sources can conflict with operational feasibility, undermining property stability.

Slow tenant referrals make unit lease up challenging

Providers noted particular challenges in managing unit mix requirements- specifically, compliance with High HOME rent versus Low HOME rent standards.

Competitive funding rounds tend to prioritize new construction over preservation, making it harder for owners to secure resources for existing properties.

Properties in financial distress struggle to qualify for funding, even when support is urgently needed to prevent further decline.

For example, properties with inadequate revenue or housing quality standards will likely not qualify for new funding sources to make repairs and achieve stability.

Funding streams for stabilizing distressed affordable housing are extremely limited and, when available, can strain provider capacity due to complex requirements.

Owners may be reluctant to share with agencies that they are experiencing issues with their portfolio, fearing repercussions to the new development pipeline they depend on to keep operating.

Affordable housing providers are seeing significant shifts in tenant circumstances since the pandemic. Many residents face more severe financial and personal hardships than before, leaving providers to navigate increased service needs alongside limited resources.

Even non-PSH tenants are struggling to meet lease obligations, effectively resembling PSH populations in terms of support needs.

While many tenants retained housing during COVID through assistance programs, their long-term financial stability has worsened due to job loss, reduced income, and rising healthcare costs.

Providers report that they are serving a different, more vulnerable tenant population today than they were pre-COVID.

Many tenants earn far less than the LIHTC program’s income limits, creating a mismatch between resident incomes and restricted rent levels.

This gap makes it difficult for providers to raise rents to keep pace with rising operating costs without jeopardizing tenant stability.

Funding structures, designed two decades ago, have not kept pace with rising costs or the realities of the post-COVID environment.  

Developers often resort to “band-aid solutions” to cover gaps between capital funding and supportive service needs—an approach that is increasingly unsustainable. 

Lack of consistent and stable funding for services; the persistent misalignment between service funding and capital investment remains a critical barrier to PSH stability, both for the tenants and the physical maintenance of the building. 

Slow tenant referrals and unit lease-up.

A single disruptive tenant can destabilize a property, create additional staffing pressures, and compromise community stability.

Providers noted the need for more consistent funding for supportive services, along with enhanced staff training in de-escalation and managing high-needs populations.