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HomeMy Public PortalAboutAffordable Housing Financing BasicsAffordable Housing Financing Basics Laura Shufelt Assistant Director of Community Assistance November 7, 2019 The Need for Affordable Housing Naturally occurring affordability, with no restrictions on income or rent “Woah I can’t believe what a good deal this apartment is!” Anyone can live there, as long as you make it past the landlord’s checks. Built or preserved with local, state, or federal funds, or uses these funds to operate. Has restrictions on maximum incomes and maximum rents. Only people earning less than a certain max income can qualify to live there. “affordable” vs. “Affordable” Affordable Housing Financing Basics The Cost of constructing affordable housing exceeds the Revenue affordable housing produces. Therefore, subsidies are necessary to bridge the funding gap. Types of Subsidies: •Federal Subsidies: flow to state or town to award •State Subsidies: Rental only •County Subsidies: HOME funds from HUD •Local Subsidies: CPA, AHTF, general fund Low Income Housing Tax Credits (LIHTC) are the primary subsidy for affordable rental housing. Due to fixed costs and complexities, LIHTC projects must be 30 units or more and must use a variety of subsidies in addition to LIHTC. Smaller projects must piece together sources, all with per unit and per project limits. The most feasible are those with 5-10 units. Who qualifies for Affordable housing in Westminster? Area Median Income (AMI) 1 Person 2 Person 3 Person 4 Person 30% AMI $19,250 $22,000 $24,750 $27,450 50% AMI $32,050 $36,600 $41,200 $45,750 60% AMI $38,460 $43,920 $49,440 $53,220 80% AMI $49,700 $56,800 $63,900 $70,950 Area Median Income (AMI) SRO Studio 1BR 2BR 3BR 30%AMI $360 $481 $515 $618 $720 50% AMI $600 $801 $858 $1,030 $1,190 60% AMI $720 $961 $1,029 $1,236 $1,428 80% AMI $960 $1,281 $1,373 $1,647 $1,903 Barnstable County, MA MSA 2019 Maximum Allowable Rents for Affordable Housing Units 2019 Income Limits for Affordable Housing Units Scenario for 4 Person ‘Very Low Income’ household: 50% AMI: $45,750 Monthly affordable rent including utilities for 3 bedroom unit: $1,190 Fair Market Rent: $1,931 Area Median Income: $91,300 2019 Income and Rent Limits for Barnstable County MSA Project Feasibility: A Balancing Act Land Costs Construction Costs Design Requirements Infrastructure Site Work Legal/Zoning Financing Costs Operating Expenses Debt Payments Local Housing Needs/ Fiscal Feasibility TIME (Predictability) Equity Investors Subsidy Sources – Federal, State, and Local Supportable Debt Rental Income Project Feasibility: A Balancing Act Land Costs Construction Costs Design Requirements Infrastructure Site Work Legal/Zoning Financing Costs Operating Expenses Debt Payments Local Housing Needs/ Fiscal Feasibility Equity Investors Subsidy Sources – Federal, State, and Local Supportable Debt Rental Income TIME (Predictability) Project Feasibility: A Balancing Act Acquisition Permanent First Mortgage Debt Construction Subsidy Sources (Federal, State, and Local)Soft Costs (Financing, Legal, Marketing, Consulting, etc) Developer Fees Reserves Grants USES SOURCES Budget Basics for New Construction Development Budget: Total Sources must equal Total Uses! Project Feasibility: A Balancing Act How do subsidy resources get awarded to projects? FUNDING ROUNDS: The state’s Department of Housing and Community Development holds funding rounds, usually once a year. These rounds are used to award federal and state Low Income Housing Tax Credits, state HOME funds, and most state housing bond funds to eligible affordable, rental housing using project proposals. SCORING: Proposals are competitively scored based on the state’s priorities outlined in the Qualified Allocation Plan (QAP) each year. What is a QAP? As the state allocating agency for the Federal LIHTC program, DHCD is required publish a plan describing how it intends to award the credit, including selection criteria and project preferences. In Massachusetts, the priorities included in the QAP also apply to the state’s other housing programs. https://www.mass.gov/files/documents/2018/04/26/20182019QAP.pdf What can a town do to support increased Affordable housing? 1. Zone appropriate areas to increase density, allow multi-family developments, & require some % of Affordable units 2. Dedicate local resources to affordable housing A. Public Land B. Community Preservation Act funds C. Affordable Housing Trust funds 3. Make Affordable Housing a top priority in town 4. Share data to support the need for Affordable housing Laura Shufelt Assistant Director of Community Assistance lshufelt@mhp.net 857.317.8582