As I noted in an earlier article, HUD has published interim regulations regarding how the Housing Trust Fund (HTF) program will be administered when funds are made available (hopefully in 2016). A final rule is anticipated before Summer 2015. Developers and agencies in the affordable housing field need to begin now the job of influencing how the program will work in your state.
HUD estimates that $120 million will be allocated the HTF in 2016. The money will be provided to states in the form of grants to increase and preserve the supply of affordable rental housing and homeownership opportunities for extremely low and very-low income families. Funds will be distributed by formula to states or state designated entities to be used mostly for the construction, preservation, and rehabilitation of affordable rental housing. Some key points about the program:
- States will have great discretion over how the funds will be used;
- If total program funding is less than $1 billion, all program beneficiaries will have to be extremely low-income (30% of median income). If total funding is more than $1 billion, at least 75% of funds must support extremely low-income households, and remaining amounts may support very low-income households (50% of median income).
- At least 80% of HTF must be used for rental housing and no more than 10% for first-time homebuyers. Up to 10% may be used to cover Agency administrative costs.
- The funds may be used for grants, equity investments, loans, advances, interest subsidies, deferred payment loans, and other HUD approved assistance.
- Eligible costs include development costs, acquisition costs, refinancing costs, relocation costs, and some operating costs.
- HTF funds may only be used for public housing unless it is the rehab of existing public housing under the HUD RAD or Choice Neighborhoods Initiative programs. However, HTF funds may be used to leverage the use of other subsidies such as low-income housing tax credits. (It is expected that combining HTF and LIHTC will be a major component of the program).
Funds will be allocated to States based on a formula that will include five factors:
- Shortage of standard rental units affordable to extremely low-income household (this will be the most heavily weighted factor);
- Shortage of standard rental units affordable to very low-income households;
- Number of extremely low-income renter households that are rent-overburdened, living in crowded housing, or living without complete plumbing or kitchen facilities;
- Number of very low-income renter households that are rent-overburdened; and
- Cost of construction.
No state will get less than $3 million, including DC, Puerto Rico, Northern Mariana Islands, Guam, the Virgin Islands, and American Samoa.
At this point, I recommend that those interested in the program contact your State Housing Finance Agency to see if they will be administering the program in your state. If they are, stay abreast of how they will implement the program so that you will be prepared to move when funding is available. If your HFA will not be the administering agency, find out who will be and get in touch with them.