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 projectbased 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 New Unit Make-Up Size # of Units Unit Type Rent 2 Bdrm 42 Tax Credit $530 2 Bdrm 6 NHTF $625
Underwriting Example - #1 Construction Budget Operating Outlook 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 * $310,000 Deferred Developer Fee Bdrm Size # of Units Monthly Rent 2-Bed 6 Units $625/Mo. 2-Bed 42 Units $530/Mo. Yearly Income approx. $312,000 approx. $6,500/unit Operating Expenses Yearly Expenses approx. $212,000 approx. $4,420/Unit
Income w/ Vacancy Underwriting Example - #1 Pro Forma Year 1 Year 5 Year 10 Year 15 Year 20 Year 25 Year 30 290,300 314,200 346,900 383,000 422,871 466,900 515,500 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 0 0 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
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 New Unit Make-Up 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
Underwriting Example - #2 Construction Budget 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 * $366,000 Deferred Developer Fee Operating Outlook Operating Income 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. Yearly Income approx. $291,300 approx. $6,069/unit Operating Expenses Yearly Expenses approx. $212,000 approx. $4,420/Unit
Income w/ Vacancy Underwriting Example - #2 Pro Forma Year 1 Year 5 Year 10 Year 15 Year 20 Year 25 Year 30 270,900 293,000 323,800 357,500 394,700 435,700 481,100 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
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
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