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 in Household Yearly Income Monthly Income 30% of 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

Size # of Units Unit Type Rent 2 Bdrm 42 Tax Credit $530 2 Bdrm 6 NHTF $625

New Unit Make-Up

Underwriting Example - #1

Construction Budget

* $310,000 Deferred Developer Fee

Operating Outlook

Yearly Income approx. $312,000

• approx. $6,500/unit

Operating Expenses

Yearly Expenses approx. $212,000

• approx. $4,420/Unit

Total Development Budget $8,047,000 TC Equity 1,233,000 Construction Loan 5,100,000 NHTF 900,000 Developer Fee Post-Const. 665,000 Other Costs Paid Post-Const. 150,000 Bdrm Size # of Units Monthly Rent 2-Bed 6 Units $625/Mo. 2-Bed 42 Units $530/Mo.

Underwriting Example - #1

Year 1 Year 5 Year 10 Year 15 Year 20 Year 25 Year 30 Income w/ Vacancy 290,300 314,200 346,900 383,000 422,871 466,900 515,500 Expenses 197,800 222,600 258,000 299,100 346,800 402,000 466,000 Reserves

14,400 16,200 18,800 21,800 25,300 29,300 33,900

Debt Service

46,000 46,000 46,000 46,000 46,000

Cash Flow

32,180 29,500 24,200 16,200 5,000 35,600 15,600 Assumptions – * 2% Yearly Increase in Income * 3% Yearly Increase in Expenses and Reserves

Pro Forma

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

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

New Unit Make-Up

Underwriting Example - #2

Construction Budget

* $366,000 Deferred Developer Fee

Operating Outlook

Operating Income

Yearly Income approx. $291,300

• approx. $6,069/unit

Operating Expenses

Yearly Expenses approx. $212,000

• approx. $4,420/Unit

Total Development Budget $8,043,000 TC Equity 1,222,900 Construction Loan 4,500,000 NHTF 800,000 HOME 800,000 Developer Fee Post-Const. 664,000 Other Costs Paid Post-Const. 156,000 Bdrm Size # of Units Monthly Rent 2-Bed 5 Units $185/Mo. 2-Bed 1 Units $425/Mo. 2-Bed 35 Units $530/Mo. 2-Bed 7 Units $625/Mo.

Underwriting Example - #2

Year 1 Year 5 Year 10 Year 15 Year 20 Year 25 Year 30 Income w/ Vacancy 270,900 293,000 323,800 357,500 394,700 435,700 481,100 Expenses 197,700 222,500 258,000 299,100 346,800 402,000 466,000 Reserves

14,400 16,200 18,800 21,800 25,300 29,300 33,900

Cash Flow

58,800 54,300 47,000 36,600 22,600 4,400

• 18,800

Assumptions – * 2% Yearly Increase in Income * 3% Yearly Increase in Expenses and Reserves

Pro Forma

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

The End