Preservation. Key QAP Criteria

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Anthony Morrison
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1 Key QAP Criteria A growing need for affordable housing, limited resources and an increased focus on providing opportunities for low income residents have lead to changes in QAP criteria in several areas key to our work: o Preservation o Community Revitalization o Opportunity 1 Preservation o What is it? n Preserving privately owned, subsidized/restricted property to ensure that it remains as affordable housing. Normally includes repair and recapitalization o Why do it? n The stock is at risk- natural maturity, market forces n Lost subsidy cannot be replaced n Preservation is cost effective 2 1

2 Preservation in QAPs o 49 states address preservation in their QAP n Set Asides n Points n Priority (non-numerical) o Impact for allocation to preservation projects vary o Seems to a trend of encouraging use of 4% credits for preservation o www. PrezCat.Org NHT/Novogradac 3 Community Revitalization What is it? Investment in distressed communities where there has been historic disinvestment by the public and private sector Why do it? Disinvested neighborhoods are home to many low income families in need of safe, affordable housing and an equitable and comprehensive reinvestment in the communities In many cities, these neighborhoods are centrally located and threatened by gentrification and displacement pressures. 4 2

3 Community Revitalization Section 42 Preference Definition of Qualified Allocation Plan (26 U.S.C. 42(m)(1)(B)) Any plan (i) which sets forth selection criteria to be used to determine housing priorities of the housing credit agency which are appropriate to local conditions, (ii) which also gives preference in allocating housing credit dollar amounts among selected projects to (I) projects serving the lowest income tenants, (II) projects obligated to serve qualified tenants for the longest periods, and (III) projects which are located in qualified census tracts (as defined in subsection (d)(5)(c)) and the development of which contributes to a concerted community revitalization plan 5 Qualified Census Tracts What is a QCT? Census tracts with a poverty rate of at least 25% or in which 50% or more of the households have incomes of less than 60% of AMI Also receive a basis boost What is a concerted community revitalization plan? No federal guidance 6 3

State Implementation o Defining Concerted Community Revitalization n Vary broadly, some states have no definition n Many require local govt letter of support

plan n HUD PDR/NYU Study: Effect of QAP Incentives on the Location of LIHTC Properties- Appendix C o Implementing preference n Bonus points n Set asides n

4 State Implementation o Defining Concerted Community Revitalization n Vary broadly, some states have no definition n Many require local govt letter of support if not govt. plan n HUD PDR/NYU Study: Effect of QAP Incentives on the Location of LIHTC Properties- Appendix C o Implementing preference n Bonus points n Set asides n Balancing with development in higher income areas 7 Building Sustainable Communities Expanding investment in housing and other real estate Increasing family income and wealth Stimulating economic development Improving access to quality education Supporting healthy and safe environments and lifestyles 4

5 Other Community Plans o Choice Neighborhoods o Promise Neighborhoods o Disaster Resilience/Recovery Plans o Tax Increment Zone Plan o Comprehensive or Consolidated Plan o Small Area Plans o Other 9 BSC lessons for identifying Concerted Community Revitalization Basic elements of comprehensive approach Value of community driven planning Not always a govt. plan Need local capacity and leadership to implement and sustain Variation in model among neighborhoods and weak vs. strong markets Timeline Some investments predate a formal plan Long-term commitment Accountability for leveraging resources 10 5

Investment in High Opportunity Areas o What is it?

areasdefinitions and metrics vary n According to the National Housing

Examples of criteria related to opportunity p Good Schools p Low Poverty p

6 Investment in High Opportunity Areas o What is it? n Criteria designed to target investment towards higher opportunity areasdefinitions and metrics vary n According to the National Housing Trust, 26 states incentivized development in opportunity areas in 2015 n Examples of criteria related to opportunity p Good Schools p Low Poverty p Economic and Job Growth 11 National Housing Trust: Opportunity Indicators in QAPs by State (August 2015) 12 6

7 Targeting Opportunity - Considerations - Schools: where charter schools are prevalent neighborhood school metrics may not reflect student experience - Transit and Walkability: How is it measured? WalkScore has limitations for some communities - Are there local approval requirements that may impede development in high opportunity areas? Waivers? - Cost provisions can preclude development in certain high opportunity areas and redevelopment in urban areas 13 QAP and LIHTC Investors Review and comment on QAP Addi:onal industry voice Influences developer environment Support or diminish HUD na:onal policies and programs Page 14 7

8 QAP and LIHTC Investors Pricing impacts Adap:ve re- use Market: mixed- income Opera:ng Expenses Influence investor special:es Balancing policy with outcomes QAP can t do it all or alone Page 15 How can LISC help? Across its 32 local offices and rural footprint, LISC is a subject matter expert and financial resource for CDCs and other affordable housing developers engaged in LIHTC development. o Technical Assistance o Early stage predevelopment, construction and permanent financing o Partnership with NEF 16 8

9 How can LISC help? Permanent Veterans Supportive Housing Buffalo, New York LISC identified and provided assistance to meet QAP criteria Obtaining ACCs from BMHA Nailing down site control of City owned property Sourcing non-nys funds to leverage State funds Underwriting to competitive operating standards Finding service providers and tenant referral partners for enhanced scoring 17 How can LISC help? Permanent Veterans Supportive Housing Capital Stack Sources Amount LIHTC $7,682,036 NYS Housing Trust Fund $2,200,000 Homeless Housing Assistance Program $1,750,000 Sponsor Loan (Equity) $240,000 Total Sources $11,872,

sliding scale using a project's Walk Score.] No.

sliding scale using a project's Walk Score.] No. State: MICHIGAN (QAP Michigan State Housing Development Authority (MSHDA) 2013-14) Measure Evidence HOUSING LOCATION: Site and Neighborhood Standards A1. Mandatory restrictions prohibiting increases in