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