The State of Affordable Housing 2017
Panel 1: Federal Updates Moderator: Jay Harris Peter Lawrence, Novogradac Marion Mollegen McFadden, Enterprise Mike Hawkins, VHDA
State of Affordable Housing 2017 Alliance for Housing Solutions www.novoco.com/blog Peter Lawrence Novogradac & Company LLP @novogradac May 15, 2017 www.novoco.com
LIHTC Pricing Sensitivity Analysis May 15, 2017 www.novoco.com
LIHTC Pricing Sensitivity Analysis May 15, 2017 www.novoco.com
A Two Step Recommendation STEP 1 Increase allocable LIHTCs May 15, 2017 www.novoco.com
A Two Step Recommendation STEP 2 Modernize Credit Percentage Formula May 15, 2017 www.novoco.com
A Two Step Recommendation STEP 2 Modernize Credit Percentage Formula May 15, 2017 www.novoco.com
The State of Affordable Housing Federal Funding & Budget Outlook Marion Mollegen McFadden May 15, 2017
FY 17 HUD Funding Program Tenant-Based Rental Assistance FY 17 Ominbus Funding $20.29 billion Amount Change 2016-2017 + $663 million Project-Based Rental Assistance $10.8 billion + $194 million Public Housing Capital Fund $1.94 billion + $41.5 million $4.4 billion - $100 million Housing for the Elderly $502.4 million + $69.7 million Housing for the Disabled $146.2 million - $4.4 million Public Housing Operating Fund
FY 17 HUD Funding Program Community Development Block Grant (CDBG) FY 17 Omnibus Amount Change Funding 2016-2017 $3 billion 0 HOME Investment Partnerships $950 million 0 Homeless Assistance Block Grant $654 million + $4 million $137.5 million + $12.5 million Lead Hazard Reduction $145 million + $35 million Fair Housing $65.3 million 0 Choice Neighborhoods Initiative
Action Items Invite your member of Congress or their staffer to come tour an affordable housing development and meet with residents this is the most effective way to make an impact on your members. Reach out to your members district staffers and organize inperson meetings to discuss which programs are important to your work. Send letters to your members on the importance of housing programs in your community. Engage your members on social media. Sign up for Coalition list-servs (CDBG, HOME, Housing Credit) and collaborate with other advocates.
Panel 2: Local Responses Moderator: Mary Hynes Jennifer Daniels, Arlington County Michael Scheurer, Cornerstones John Welsh, AHC, Inc. Jim Edmondson, E&G Group
State of Affordable Housing Jennifer Daniels, Arlington County
Funding Sources Federal Funds CDBG: Housing, community development and neighborhood revitalization programs. HOME: Housing development, rehabilitation, rental assistance or homeownership programs. Housing Choice Vouchers: Provides direct rental assistance to very low-income renters. Local Funds AHIF: Arlington's Affordable Housing Investment Fund provides loans to developers to build or rehabilitate affordable housing. Housing Grants: Provides rental assistance to low-income Arlington residents.
CDBG, HOME, AHIF Allocations 2008-2016 $14,000,000 $12,480,623 $12,955,716 $12,456,017 $12,000,000 $9,480,623 $10,000,000 CDBG $8,000,000 $6,000,000 $6,048,001 $5,628,292 HOME $6,893,147 AHIF $5,228,532 $4,789,962 $4,000,000 $2,000,000 $0 $1,809,216 $1,753,768 $1,914,758 $1,124,725 $1,761,533 $1,609,959 $1,222,028 $1,151,014 $1,133,749 $1,124,762 $1,263,978 $1,143,664 $1,274,346 $1,119,329 2008 2009 2010 2011 2012 $519,436 $532,435 2013 2014 $545,639 2015 $487,865 2016
AHIF Funding Sources FY2010 FY2016 ($150 Million) $ ARLINGTON AFFORDABLE HOUSING INVESTMENT FUND [SERIES NAME] 31 $ [SERIES NAME] 5 [SERIES NAME] 40 $ Developer Contributions[SER IES NAME] 18 [SERIES NAME] Other Income 2 4 $
Federal HCV / Local Housing Grants FY 2016 Allocation Local Housing Grants $9,677,75 5 Federal Housing Choice $17,396,3 08 Households Served Fiscal Year Local Housing Grants (monthly) Federal Housing Choice Vouchers (annual) 2011 1,040 1,382 2012 1,140 1,384 2013 1,178 1,383 2014 1,219 1,356 2015 1,302 1,350 2016 1,299 1,396
FY 2016 Community Development Fund Activities Workforce Training Housing 7% 23% 12% Planning & Admin Public Services County Outreach Homeless Services 17% 21% 20%
FY 2016 Community Development Fund Programs Served more than 2,000 Arlingtonians CDBG subrecipients leveraged over $4 million (72%) from other sources (private, local, state) 22,000+ hours of volunteer time recorded
Federal Funding in the Region FY 2016 FUNDING Jurisdiction HOME Allocation CDBG Allocation SELECTED OUTCOMES Public Services Homeless Prevention Homeowner Rehab Multifamily Development Arlington/ Falls Church $487,865 $1,133,749 220 households 943 persons 94 units 79 units Alexandria $357,258 $742,789 15 households 95 persons 28 units $1,431,830 $4,873,926 3,152 households 549 persons 29 units 383 units $0 $1,083,086 1,722 households 3,549 persons 343 units $565,522 $2,124,045 341 households 221 persons 15 units 0 units $2,842,475 $9,957,595 5,450 households 5,357 persons 833 units Fairfax Loudoun Prince William TOTAL 8 units 10 units 156 units
For More Information Local: housing.arlingtonva.us National: hudexchange.info Advocacy: nacced.org jldaniels@arlingtonva.us
Local Response to Financing Affordable Housing ALLIANCE FOR HOUSING SOLUTIONS STATE OF AFFORDABLE HOUSING THE CHURCH AT CLARENDON MAY 15, 2017 John Welsh AHC Inc. welsh@ahcinc.org 703-486-0626 x113
AHC History briefly Housing developer since 1975, predominantly in multifamily for last 25 years Developed 51 properties with 7,000+ apartments, primarily in Northern Virginia & Maryland Range of financing 4% LIHTC + tax-exempt bonds, 9% LIHTC, GSE loans, third-party equity Some all-affordable and some mixed-income properties Services: Development, Construction Management, Asset Management, Property Management, and Resident Services
AHC--Affordable Housing Issues/Risks Market Hard to compete in broker-only sales, e.g., close in 60 days Hot market properties trading at 4-6% cap rates Financing Issues Third-party mezzanine debt and equity unavailable or expensive (~14%+ IRR) Tax credits are valuable but have limits: typically one 9% project per year, and smaller projects Housing Needs Dramatic loss of affordable housing Unmet Need: affordability between 61-80% AMI Tax reform could threaten tax credits, or reduce equity values Anticipate rising interest rates
AHC s Response Identify sources of patient, non-tax credit equity, enabling AHC to buy and hold properties at-risk of gentrification and wide-scale resident displacement. Social Impact Investment CRA Capital Investment Innovative, financial investments from local jurisdictions (Montgomery, Arlington, & Baltimore Counties) Equity from long-term property hold
Low-Income Investment Fund (LIIF) Quick Strike Acquisition Line (QSAL) Enables nonprofit developers to close quickly even when takeout financing has not yet been identified Underwritten at the enterprise level, with limited focus on individual projects Terms allow up to 100% LTV, some unsecured available
Housing Partnership Equity Trust (HPET) Innovative impact investing/cra vehicle launched 2013 First REIT owned and operated by nonprofits Sole equity REIT focused on affordable housing Triple bottom-line impact (economic, mission, environmental) Naturally affordable rental housing near areas of opportunity Investors include: Prudential, Citi, Morgan Stanley, Charles Schwab, MacArthur Foundation, Ford Foundation, 12 Members, and HPN Recently completed second capital raise, on track for $1 Billion in property by 2020
Serrano Apartments, Arlington Rationale for acquisition Revitalization target area for County High-quality building in good condition 51% of units multi-bedroom Built in 1963 8.74 acres 280 units Mixed-Income: 60% AMI, 61-80%, 80%+ 60-year commitment for affordability Additional density 86 units (0.9 acres)
Birches at White Oak, Montgomery Rationale for Acquisition Prevent displacement of current residents 228 units Good market--adjacent to FDA Campus Mixed-income operations, generating cashflow for both HPET and for AHC without local or state soft financing Utilize traditional real estate equity to provide workforce affordable housing in a well-located Washington, D.C. suburb
Summary AHC solution is not for all requires internal capital to invest & necessitates refinance or sale in 7-10 years Not meant as replacement for tax credits (refi with tax credits possible with future renovation) Additional staff and/or training commonly required for marketing and leasing, e.g., higher turnover New, supplemental tool in the continuum of affordable housing May be catalyst to address other issues, e.g., insurance pools
Q&A John Welsh AHC Inc. welsh@ahcinc.org 703-486-0626 x113
Jim Edmondson 4% TAX CREDITS (LIHTC) GAP Local Government First Mortgage LIHTC Equity Typical Cost = $300,000
9% TAX CREDITS (LIHTC) GAP Local Government First Mortgage LIHTC Equity Typical Cost = $300,000
ALTERNATE SOURCES FOR GAP Local Government Tax Revenue Bonds Assignment Fees Free Land Federal/State IZ Rules Public Private (Churches)
2 BEDROOM LIHTC RENTS $1,400 $1,200 $1,160 $850 $1,000 $800 $560 $600 $400 $200 $0 Rents 60% 50% 30%