National Housing Trust Fund Alissa Ice Missouri Housing Development - PowerPoint PPT Presentation

National Housing Trust Fund Alissa Ice Missouri Housing Development Commission

Purpose The National Housing Trust Fund (HTF) is a new affordable housing production program that will complement existing federal, state, and local efforts to increase and preserve the supply of decent, safe, and sanitary affordable housing for extremely low-income (ELI) households including homeless families.

ELI Defined… • Extremely Low Income – Low-income families whose annual incomes do not exceed 30% of the median family income of a geographic area

Missouri’s Allocation • $3 Million – Up to $2,700,000 for New Construction Rental Production • Up to $1 Million of $2.7M for Operating Assistance – Up to $300,000 for Administrative Activities

Eligible Costs • Development Hard Costs • Site Improvements • Acquisition Costs • Related Soft Costs • Operating Cost Assistance and Reserves* • Relocation Costs

Operating Cost Assistance and Reserves MHDC can provide up to one-third of each annual grant for operating cost assistance and operating cost assistance reserves.

Operating Cost Assistance and Reserves • Eligible Costs Include: – Insurance – Utilities – Real Property Taxes – Maintenance – Scheduled Payments to a Reserve for Replacement of Major Systems

Operating Cost Assistance and Reserves • Can only be provided if the HTF-assisted units do not have project-based assistance • Must be based on the underwriting of the project • Must be specified in agency’s written agreement

Operating Cost Assistance and Reserves • As the HTF is currently funded (through Fannie Mae and Freddie Mac), – The reserve may be funded for the amount estimated to be necessary through the affordability period – Must be funded at the time of executing the written agreement

Eligible Forms of Assistance • Equity Investments • Interest-Bearing Loans or Advances • Non-Interest Bearing Loans or Advances • Interest Subsidies • Deferred Payment Loans • Grants • Other Forms of Assistance Approved by HUD

Rental Housing Guidelines Rents • Maximum is 30% of the income of a households at 30% AMI, adjusted for number of bedrooms – Rent limit includes utility allowance • If HTF Unit receives federal or state project- based rental subsidy, the maximum allowable rent is the allowable rent under the subsidy program as long as tenant does not pay more than 30% of their adjusted income

Rental Housing Guidelines Affordability Period • HTF Units must have at least a 30-year period of affordability • If affordability restrictions are terminated before 30 years, total HTF allocation must be repaid to HUD

Underwriting Example • 48 Units in Balance of State • Family Site • 6 Set-Aside Units • 2 Bedroom Units • All Units Affordable at 60% AMI

A Note On Income Limits… What does 30% AMI look like in our example? # of People Yearly Monthly 30% of in Household Income Income Monthly Income 1 $10,680 $890 $267 2 $12,210 $1,018 $286 3 $13,740 $1,145 $343 4 $15,240 $1,270 $396

Underwriting Example - #1 With Vouchers $900,000 – NHTF Funds 6 NHTF Units NHTF rents set by subsidy program, and tenants paying 30% of income $900,000 in Fund Balance w/ 3.25% Interest Rate $725,000 in Federal LIHTC New Unit Make-Up Size # of Units Unit Type Rent 2 Bdrm 42 Tax Credit $530 2 Bdrm 6 NHTF $625

Underwriting Example - #1 Construction Budget Operating Outlook Total Development Budget $8,047,000 TC Equity 1,233,000 Bdrm Size # of Units Monthly Rent Construction Loan 5,100,000 2-Bed 6 Units $625/Mo. NHTF 900,000 2-Bed 42 Units $530/Mo. Developer Fee Post-Const. 665,000 Other Costs Paid Post-Const. 150,000 Yearly Income approx. $312,000 approx. $6,500/unit * $310,000 Deferred Developer Fee Operating Expenses Yearly Expenses approx. $212,000 approx. $4,420/Unit

Underwriting Example - #1 Pro Forma Year 1 Year 5 Year 10 Year 15 Year 20 Year 25 Year 30 Income w/ 290,300 314,200 346,900 383,000 422,871 466,900 515,500 Vacancy Expenses 197,800 222,600 258,000 299,100 346,800 402,000 466,000 14,400 16,200 18,800 21,800 25,300 29,300 33,900 Reserves 46,000 46,000 46,000 46,000 46,000 0 0 Debt Service 32,180 29,500 24,200 16,200 5,000 35,600 15,600 Cash Flow Assumptions – * 2% Yearly Increase in Income * 3% Yearly Increase in Expenses and Reserves

Underwriting Example - #2 No Vouchers with Market Rate Units $800,000 – NHTF Funds 5 NHTF Units $800,000 – HOME Funds 5 HOME Funds $715,000 – Federal LIHTC New Unit Make-Up Size # of Units Unit Type Rent 2 Bdrm 1 TC/ Low HOME $425 2 Bdrm 35 TC/ High HOME $530 2 Bdrm 5 NHTF $185 2 Bdrm 7 Market $625

Underwriting Example - #2 Construction Budget Operating Outlook Operating Income Total Development Budget $8,043,000 TC Equity 1,222,900 Bdrm Size # of Units Monthly Rent Construction Loan 4,500,000 2-Bed 5 Units $185/Mo. NHTF 800,000 2-Bed 1 Units $425/Mo. HOME 800,000 2-Bed 35 Units $530/Mo. Developer Fee Post-Const. 664,000 2-Bed 7 Units $625/Mo. Yearly Income approx. $291,300 Other Costs Paid Post-Const. 156,000 approx. $6,069/unit * $366,000 Deferred Developer Fee Operating Expenses Yearly Expenses approx. $212,000 approx. $4,420/Unit

Underwriting Example - #2 Pro Forma Year 1 Year 5 Year 10 Year 15 Year 20 Year 25 Year 30 Income w/ 270,900 293,000 323,800 357,500 394,700 435,700 481,100 Vacancy Expenses 197,700 222,500 258,000 299,100 346,800 402,000 466,000 14,400 16,200 18,800 21,800 25,300 29,300 33,900 Reserves 58,800 54,300 47,000 36,600 22,600 4,400 -18,800 Cash Flow Assumptions – * 2% Yearly Increase in Income * 3% Yearly Increase in Expenses and Reserves

Underwriting Notes • NHTF will use same cost limits as LIHTC • Designated NHTF units within larger developments – Same analysis as HOME to determine number of NHTF units

Priority Factors • Merits of the Project – Priorities described in the QAP – Set-Aside Preferences and Service Enriched Priorities are prioritized over others listed • Rent Levels – Maximum rent per unit determined by HUD – Committed Project Based Rental Assistance is preferred

Priority Factors • Geographic Distribution – MHDC seeks to award funds throughout the state • Ability to Deploy Funds Quickly – Development team’s experience and their standing with MHDC

Priority Factors • Affordability Period – Minimum period of affordability is 30 years • Ability to Leverage Funds – Reduction of development costs and/or rents is more important than type of leverage

Additional Resources • HUD Exchange – www.hudexchange.info/programs/htf • National Low Income Housing Coalition – www.nlihc.org/issues/nhtf • Novogradac – www.novoco.com • MHDC – www.mhdc.com

Contact Information Alissa Ice NHTF Program Coordinator Aice@mhdc.com 816.759.7234

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