Commonwealth Housing Forum 2004 Presentation by Milton R. Pratt, Jr. HUD Regional Director Wednesday, December 15, 2004

Sustaining Development & Building Communities “This Administration is working specifically to promote the production of affordable homes.” HUD Secretary Alphonso Jackson

HUD’s Financial Resources ä Community Development Block Grant/HOME ä 202/811 Programs ä Capital Bond Fund Financing ä FHA Multi-Family Insurance ä Housing Choice Voucher Program

Community Development Block Grant Programs (CDBG) ä Community Development Block Grant Programs -The rehabilitation of affordable housing has traditionally been the largest single use of CDBG grants. -CDBG funds are distributed by formula around the country based on population, income levels, poverty rates and age of housing stock.

HOME Investment Partnerships Program ä CDBG is the largest Federal block grant to State and local governments designed to create affordable housing for low-income households. ä Since 1992, through the HOME program, we have committed to produce nearly 130,000 affordable housing units in Pennsylvania.

CDBG Funds for Pennsylvania ä CDBG Funds for FY’ $348.7 million ä Eligible Uses for the Funds -70% must be used for activities that benefit low- and moderate-income persons. -Funds can be used for rehabilitation, new construction and infrastructure improvements.

CDBG Funds for Pennsylvania ä Innovative Uses of CDBG Funds in Pennsylvania -The McFarland Press Apartments: a 49-unit affordable rental property in Harrisburg’s South Allison Hill neighborhood. -This adaptive reuse project included $450,000 of city HOME funds. -Completed in 1997, it has received multiple accolades including a PAHRA award of excellence.

What does the future hold for CDBG? ä The trend over the past two years reflects reductions in the program funds because of declining population in Pennsylvania and other factors used to determine funding levels. ä Program continues to be very popular with Congress and local elected officials; however, CDBG experienced a 6% decrease in the budget this year.

202/811 Programs ä Funds for FY’ $38.5 million for Pennsylvania ä Eligible Uses for 202 Funds -Finance construction, rehabilitation or acquisition with or without rehabilitation of structures that will serve as supportive housing for very low- income elderly and provide for rent subsidies to make them affordable.

202/811 Programs ä Eligible Uses for 811 Funds -Provide interest-free capital advances to non- profit sponsors to help finance the development of independent living condominium units and small group homes for persons with disabilities. ä Both programs provide funding assistance to project owners to subsidize operating expenses.

202/811 Programs ä Innovative Use of 202 Program -South Philadelphia Presbyterian Apartments were officially dedicated on October 8, The apartments provide 66 affordable one bedroom units in a five story building. -HUD provided more than $5.7 million to fund the mortgage of the building and an additional $1.2 million to subsidize the rent for the units.

What does the future hold for the 202/811 Programs ? ä Pennsylvania continues to produce competitive projects; however, environmental issues have hampered funding for some projects. ä Nationally, congressional support for these programs is strong. The programs have faced some pressure regarding completion of projects in a timely manner.

Capital Fund Bond Financing ä Pennsylvania’s leading the charge with the allocation of capital fund bonds. ä Housing Authorities in the Commonwealth are trying to raise $40 million to be used for infrastructure upgrades in public housing and mixed finance projects. ä Housing Authorities can borrow private capital and pledge part as debt service. ä Structured as a bond transaction which can be done on an individual or group basis.

Capital Fund Bond Financing ä Funds for FY’2004 -Congress appropriated approximately $2.7 billion in ‘04 for the Capital Fund Program. -Housing Authorities can use up to 33% of the annual capital fund for debt service.

Capital Fund Bond Financing ä Eligible Uses for the Funds -Mixed finance projects and improvements to building systems such as HVAC, windows, doors, deferred maintenance.

Capital Fund Bond Financing ä Innovative Use of Capital Fund Bond Financing ä Philadelphia Housing Authority has completed the first bond pool transaction in Pennsylvania in the amount of $150 million. ä Grays Ferry Estates in Philadelphia is a multi- phased mixed finance project undertaken by the Philadelphia Housing Authority.

What does the future hold for Capital Fund Bond Financing? ä The future is very promising for this program. ä Currently, a second round pool of funding is underway thanks to PHFA’s leadership and PAHRA support; the leverage amount is greater than the first round.

Multi-Family FHA ä FY’ 2004 FHA Initial Endorsements in Pennsylvania and Production/Refinanced Units -$25.6 million -1,403 Units ä Eligible Uses for Funds - HUD provides insurance for loans generated by private lenders for development of multi-family projects. - These may not generate affordable units but they do keep housing stock growing in areas where units are needed.

Multi-Family FHA ä Innovative Use of Multi-Family FHA - Heinz Factory in Pittsburgh, Pennsylvania - FHA insured mortgage amounts to $35 million which is approximately ½ of total development cost. -The development includes 267 loft units and is located along the Pittsburgh waterfront. - It is a source of pride and has stimulated additional development in the area.

Multi-Family FHA ä Innovative Use of Multi-Family FHA ä Heinz Factory -This project helped to preserve historically significant buildings. -Historic investment tax credits and a conservation easement helped this project which is approximately 83% complete.

What does the future hold for Multi-Family FHA? ä Congress looks favorably on this program. ä HUD will continue to refine it to remain competitive in the conventional market.

Housing Choice Voucher Program ä Funds for FY’ 2004 for Pennsylvania -$885 million (Section 8, Public Housing Operating Funds, Capital Fund Program, Section 8 Moderate Rehab/SRO, Resident Opportunity and Self Sufficiency Grants) ä Eligible Uses for the Funds -Rental Assistance. -Spur development because developers can rely on subsidies from low-income tenants. -Majority are administered through Housing Authorities, PHFA and HUD directly.

Housing Choice Voucher Program ä Innovative Use of Funds -Upland Terrace Development and Pusey Estates Mixed Finance Project: 51 project based units consisting of 2, 3 and 4 bedroom units are currently under construction and could be complete by Funding secured from PHFA, HUD Capital Funds and Low-Income Housing Tax Credit Equity among other sources. -Delaware County HA partnered with Pennrose Properties for this project.

What does the future hold for the Voucher Program? ä The program must be reformed as it continues to put pressure on all other programs. ä Program was funded in the 2005 Budget at an increase of $300 million for tenant-based vouchers and $800 million across the board. ä HUD will now provide each housing agency with a specific budget amount rather than a fixed number of vouchers.

Technical Resources ä Regulatory Barrier Reforms ä Energy Star Program ä Economic Market Analysis ä HUD’s Regional and Local Staff

Technical Resources ä Regulatory Barrier Reforms -Regulatory Barriers Clearinghouse, a national Web-based forum that provides state and local governments with opportunities to share ideas and develop solutions to address unique housing challenges.

Technical Resources ä Energy Star -Voluntary government-supported labeling program that identifies appliances and products that are more efficient. -Energy Star labels can be applied to new homes or substantially rehabilitated homes under CDBG and HOME Program that are 30% more efficient than a standard house.

Technical Resources ä Energy Star Applications -Energy savings by public housing agencies through replacing appliances with Energy Star appliances. -Energy savings attained in HOPE VI new construction. -Energy savings through the use of combined heat and power or cogeneration.

Technical Resources ä Economic Market Analysis - HUD has published Comprehensive Housing Market Analyses for the Allentown-Bethlehem- Easton, Erie, Lancaster, Reading and York Housing Market areas. - We’re working on completing analysis for State College and plan to do one for Harrisburg Housing Market in 2005.

HUD’s Financial/Technical Resources More information on HUD’s programs is available on the HUD website:

HUD’s Financial/Technical Resources Today’s presentation is available on: &topic=news &topic=news under the Highlights section