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TRANSCRIPT
A Brief History of Federal
Housing Legislation (and a little bit of State)
Housing NOW! Conference
October 11, 2017 1
The Beginning
National Housing Act of 1934
Federal Housing Administration
created
2
Next
U.S. Housing Act of 1937
Created the US Housing
Authority for building low-rent
public housing by local
housing authorities
3
Next
Agricultural Adjustment Acts
of 1933 and 1938
Created the Farmers Home
Administration to insure loans
made by private lenders in
rural areas
4
Then Came…
Amendment to the National
Housing Act in 1938
Created the Federal National
Mortgage Association
“Fannie Mae”
5
Followed By…
Housing Act of 1949
Created the Urban Redevelopment
Administration and first introduced the term “urban
renewal”.
6
Followed By…
GI Bill - 1944
Created the Veterans
Administration Home Loan
Guaranty Program
7
Followed By…
GI Bill - 1944
Created the Veterans
Administration Home Loan
Guaranty Program
8
And also,
Housing Act of 1949
Created the Rural
Development Section 538
Multifamily Loan Guaranty
Program
9
And
Housing Act of 1949
Created the Rural
Development Section 515
Multifamily Direct Loan
Program
10
And
Housing Act of 1949
Created the Rural Development Section 514
and 516 Farm Worker Housing Grant and Loan
Programs
11
Followed by…
Housing Act of 1949
Created the Rural Development Section 521
Rental Assistance Program for Rural Rental and Farm
Worker Housing
12
And Then
Housing Act of 1954
Modified urban renewal by requiring communities to adopt code enforcement,
relocation, and other measures.
13
And Then Came…
Housing and Urban
Development Act of 1965
Created HUD as a Cabinet Level
Agency
14
And Then…
Housing and Urban Development Act of 1968
Divided FNMA into a private corporation and the
Government National Mortgage Association,
a publicly supported entity
15
Moving Right Along…
Housing and Community
Development Act of 1974
Amended the U.S. Housing Act
of 1937 to create the Section 8
rental assistance program
16
Next came..
Community Reinvestment
Act of 1977
Created law requiring banks to
take steps to make more loans
in low and moderate income
neighborhoods
17
Followed by…
Tax Reform Act of 1986
Created the Low Income Housing
Tax Credit Program
and the
Private Activity Bond Program
18
And after that,
Community Renewal Tax Relief
Act of 2000
Created the New Market Tax
Credit Program for economic
development
19
Then…
Housing and Economic Recovery Act of 2008
Created temporary fixed rate for 9% LIHTC, supplemental LIHTC
funding and National Housing Trust Fund
20
And to really help…
American Recovery and
Reinvestment Act of 2009
More stimulus funds for LIHTC
programs and other economic
development
21
And finally…
Protecting Americans from Tax
Hikes Act of 2015
Amended 1986 Tax Reform Act
to make 9% LIHTC rate
permanent
22
Housing and Economic Recovery Act of 2008
Housing Trust Fund
$174MM in funding announced in May 2016 – DOH
23
And at the Colorado General Assembly
Div. Of Housing - 1970
CHFA – 1974
State LIHTC – 2001-2, 2015-16
HB 1465 – 2017-19!
24
Rodger Hara
Principal
Community Builders Realty Services LLC
720.323.0253
25
the power of tax credits
Steve Johnson, Director, Community Development
what is chfa?
CHFA’s mission is to strengthen Colorado by investing in affordable housing and community development.
Everyone in Colorado will have the opportunity for housing stability and economic prosperity.
homeownership business finance affordable
rental housing
financing multifamily housing
70% debt
30% equity
financing affordable housing
Lower rents results in lower revenue
Lower revenue results in lower cash flow
Lower cash flow results in lower debt
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Denver Metro Two Bedroom 60% AMI Rents Compared to Market Rents for a two person household and average weekly earnings 2007-2016
Denver Metro Two bed, one bath Denver Metro Two bed, two bath
Denver Metro Two bed 60% AMI rent Denver Metro average weekly earnings
affordable to 70% AMI
affordable to 90% AMI
0
50
100
150
200
250
300
350
400
450 Metro Denver Home Price Index (Federal Housing Finance Agency index)
recession
ten years with average annual growth of 9% (Dot Com bubble time period)
slowed growth to average 2% annually, (Dot Com bubble burst Q2 2003)
home prices fall, prior to the Great Recession, at an annual average of 7%
"the lost decade" for home price appreciation
federal stimulus: FTHB tax credit
strong growth, at an annual average of 11.5% means lower affordability
financing affordable housing
financing affordable housing
30% debt
70% gap
low income housing tax credit
the impact of 9% lihtc
Debt 30%
LIHTC 65%
Soft Funds/Equity
5%
low income housing tax credits
the players
Allocation agency
Population based allocation of credits
Developer
For profit, not for profit, housing authority
Investor
Valuing the federal tax liability offset
Treasury
why lihtc works
The developer agrees to long-term affordability
Private sector assumes risk for project success
Competitiveness generates strong projects
Each state customizes its program through a Qualified Allocation Plan
qualified allocation plan
Section 42 requires:
lowest for the longest
priority for projects located in QCT and part of a development plan
only the minimum amount of credit necessary for financial feasibility
but the state can decide…
Unique priorities
Set-asides
Process for awarding credits
Maximum award
Geographic distribution
Demographic distribution
colorado priorities include
Homeless units
Developments that provide supportive services
Counties under 175,000 population
the cost of housing
lihtc volume
696 832 849 864
700 751 692 633
184
923
1582
1331 1272
1642
1243
1902
1062 1299
0
500
1000
1500
2000
2500
3000
3500
4000
4500
2010 2011 2012 2013 2014 2015 2016 2017
un
its
9 percent 4 percent state lihtc and 4 percent
division of housing
Private Activity Bonds (PAB)
Housing Colorado NOW!
October 11, 2017
• NOT CASH
• Tax-exempt bonds issued for privately developed projects.
• IRS allows a limited amount, also know as PAB “Cap”.
• Municipalities (or Authorities) issue the bonds, but have no
obligation to repay investors.
• Investors buy the bonds.
• Underwriters use the investors’ $$, or “bond proceeds,” to make
a loan to the project.
• The project pays back the loan & investors get repaid + interest.
• PABs make rental housing eligible for 4% LIHTC.
What are Private Activity Bonds?
Initial PAB Allocation Process
$100 per person in the state = the “Volume Capacity”
$545,657,400 in 2016; $554,054,500 in 2017
50% of Allocation 50% of Allocation
Statewide Authorities
• Colorado Housing and Finance
Authority (CHFA)
• CO Agriculture Development
Authority (CADA)
Local Governments
• 20,000 Persons or more
• $50 per capita
Statewide Balance
Remaining cap administered by
CO – DOLA/DOH
January 2017 PAB Allocation
Locals 46%
SWB 4%
CHFA 48%
CADA 2% 53 Local Issuers - $257,305,000
CHFA - $267,027,250
CADA - $10,000,000
SWB - $19,722,250
• List of all direct allocations available
at:
https://www.colorado.gov/pacific/dola/
private-activity-bonds
• Receive allocation by January 15th
• Establish priorities & act by September 15th
Bond issuance requires an inducement resolution and closing
by December 23rd; OR
Carry-Forward bond cap for eligible purpose to close within a
3 year period – requires filing with IRS; OR
Relinquish to Statewide Balance; OR
Assign to another issuer for an eligible purpose
If you Receive an Assignment – issue it or carry it forward, or
it will also relinquish on 9/15.
Local Issuers & Statewide Authorities
September 2017 PAB Allocation
Locals 22%
SWB 21% CHFA
56%
El Paso Co - $33,851,100
Denver/DHA - $34,154,800
7 Other Locals - $62,140,050
CHFA - $352,197,950
CADA - $1,525,000
SWB - $70,185,600
• Identify your issuer
• Talk with your local governments – City, County & neighbors
Assignments of “fresh” or current year cap – act by 9/15
Delegations of cap they have carried forward
• Talk with CHFA (especially if they will be the issuer)
• Talk with DOH & Apply to the Statewide Balance
Also, save some cap for the rest of us – only use 55% of TDC
How to Assemble PAB Cap
• DOLA receives allocation by January 15th & relinquished bond
cap on Sept. 15th
• Monthly application cycles:
March thru November, $750 application fee.
Review criteria are similar to DOH’s Grant/Loan review
8 week process, inc. PAB Allocation Committee & award letter
Relinquished bond cap distributed through November round.
• All must close by December 23rd
0.033% issuance fee on Statewide Balance Awards
0.011% issuance fee on bonds issued from direct allocations
Statewide Balance Applications
• Demonstrated local need & support:
Certified copy of an inducement resolution from the local
government/issuer.
Local financial commitment of PAB allocation or other local
financial subsidies.
Market study demonstrating need.
Housing Affordability – going beyond IRS requirements.
Statewide Balance Applications
• Feasibility:
Reasonable costs for development & operation.
Readiness to proceed – site under control, local planning &
zoning approved, credit enhancement secured, tax credits
reserved.
Financially sound – income/expense estimates reasonable,
good underwriting ratios, sources & uses balance.
Development team experience, capacity.
• Typical bond issue size is $6 – $27 million
For rental, TDC of $12MM - $54MM, or 50 - 210 units
Statewide Balance Applications
2015-16 Statewide Balance Awards
Date Allocation Project or Program
Kestrel
VOCC
Villas at Wadsworth Station
5800 Alameda
Ann Watts Community Access Team Manager
& PAB Program Manager
Department of Local Affairs
Division of Housing
(303) 864-7820
https://www.colorado.gov/pacific/dola/division-housing
4% LIHTC
Same concept as the 9% credit but,
Non-competitive
Reduced equity benefit
Doesn’t work for all deals
Need to fill the gap
4% lihtc capital stack
Debt 60%
LIHTC 30%
gap 10%
tale of two credits
59
25% Owner Equity
75% Debt
Conventional
62% LIHTC Equity
30% Debt
8% Other
9% LIHTC
30% LIHTC Equity
60% Debt
10% Other
4% LIHTC
rents
you might be a 4% deal if…
Your project includes acquisition rehab
Your project includes market rate units
Your project is over 100 units
Market rents are significantly higher than LIHTC rents
You gave up competing for 9% credits
You can access soft funds or state credit
addressing the gap
Utilizing state credit
Adding market rate units
State and local funds
Serving higher incomes
Gap Funding &
The Colorado Division of Housing (DOH)
Housing Colorado NOW!
October 11, 2017
• DOH was created by statute in 1970 to improve the access of all
Coloradans to decent, affordable housing.
• Provides state and federal funding to private housing developers,
housing authorities, non-profits, and local governments.
• Provides state and federal funded rental assistance through
housing authorities and non-profit service organizations.
• Served 32,000 households in 2017.
• Fostered the creation of 3,500 new affordable housing
opportunities.
• More than 83% of DOH vouchers serve persons with disabilities.
DOH Overview
• DOH funds are GAP-filling.
• Competitive, monthly applications.
• Contact your Housing Development Specialist BEFORE applying.
• Local $ support, market, cost per unit, & overall feasibility.
• Rentals below 60% AMI. Prefers most below 50% AMI, and at
least 5% of units at or below 30% AMI.
• Grants available only to Non-Profits, Local Governments &
Housing Authorities – loans available to For-Profits.
• For more info:
https://www.colorado.gov/pacific/dola/grant-loan-programs
DOH Application Process Summary
• HOME Investment Partnership Program (HOME)
• Community Development Block Grant (CDBG) &
CDBG-Disaster Recovery (CDBG-DR)
• Housing Development Grant (HDG)
• Housing Development Loan Fund (HDLF)
• Colorado Housing Investment Fund (CHIF)
• Neighborhood Stabilization Program (NSP)
• National Housing Trust Fund (HTF)
• New! Homeless Solutions Program (HSP)
DOH Available Grants & Loans
• Federal $ given to states & local governments
• State CDBG available only if local government does not get its
own allocation (non-entitlement areas)
• CDBG – Local government is Applicant, & may either grant or
loan the funds to the project
• HOME requires Long-term monitoring
• HUD Environmental Clearance, Davis-Bacon, Section 3,
Affirmative Marketing & other cross-cutting federal regulations
HOME & CDBG
• Federal $ given to state – $320 million
DOH received approximately 1/3 of the funds
• 19 Presidentially declared flood & fire-impacted counties
• 80% of funds must go to Boulder, Larimer, & Weld Counties
• All funds must be spent by Sept 2019
• Coordinated application review with CHFA for rental housing to
make most of CDBG-DR and State Tax Credit
• Household Assistance Programs still underway in several
counties restoring private access and repairing/replacing homes
• For general information: http://dola.colorado.gov/cdbg-dr/
CDBG - Disaster Recovery (CDBG-DR)
• State General Fund $
• HDG is for grants or loans, & especially for:
o Homebuyer and low-income rentals
o Permanent Supportive Housing
o Rural – statewide
• HDLF is only for loans.
Housing Development Grant (HDG) &
Housing Development Loan Fund (HDLF)
• State Attorney General’s mortgage settlement custodial funds
• Revolving Loan Pool
• Up to 30% can convert to long-term debt (up to 17 years) – 70%
of the loan must be repaid within 7 years
• Up to 100% of the loan can convert to the 17-year term if the
project serves a designated percentage of special needs
households
• Limited availability - contact your Housing Development
Specialist
Colorado Housing Investment Fund (CHIF)
• Federal $ given to state & some local governments
• Funds may continue to be recycled semi-indefinitely within the
State until exhausted.
• Blends regulations of CDBG/HOME
• Multi-family rental projects with minimum of funds serving 50%
AMI or below, remainder may go up to 120% AMI. DOH’s goal is
to have at least 75% of units at or below 50% AMI.
• Properties must be:
(1) in a HUD identified eligible census area;
(2) abandoned, foreclosed or vacant by HUD definition; and
(3) zoned residential.
Neighborhood Stabilization Program (NSP)
• Federal $ allocated to states.
• Funds are available as grants or loans.
• Priorities are permanent supportive housing and mixed-income
developments with 30% AMI rents that would not be financially
feasible but for HTF funding.
• Supportive housing eligibility requires a minimum set-aside of
25% of the units for individuals with special needs.
• Applications are accepted on a monthly basis.
National Housing Trust Fund (HTF)
• A continuing allocation of State funds
• Funds can be used for new construction, acquisition,
rehabilitation, and DOH vouchers
• Targeted populations are:
Homeless
Veterans
Individuals exiting mental institutions into homelessness
Individuals exiting correctional facilities into homelessness
• Funds are designed to support permanent supportive housing,
rapid rehousing, and limited supportive services.
Homeless Solutions Program (HSP)
• Talk with your DOH Housing Development Specialist BEFORE you
start writing your application
o Describe your project & get advanced warning of potential minefields
o Get your questions answered on how to fill out the application
• Be thorough with your application – if you’re tempted to write
in “N/A,” ask first!
• Make sure your pro-forma works. Take DOH’s “Hammering Out
the Deal” course to learn what we’re looking for & how to use
our pro-forma.
• Be available to answer questions.
How to Succeed in your DOH Grant Application
Wayne McClary Housing Development Specialist
Department of Local Affairs
Division of Housing
(303) 864-7819
https://www.colorado.gov/pacific/dola/division-housing