1. NATIONAL HOUSING TRUST FUND FOR KANSAS Kansas Housing Resources Corporation

2. Highlights ■$3 Million for Kansas ■Develop rental housing for Extremely Low Income ■30% AMI or Poverty ■30 Year Affordability Restriction ■Applications Due February 2017

3. Background Housing and Economic Recovery Act of 2008 (HERA) ■Established the National Housing Trust Fund (HTF) –To be administered by HUD –Granted to designated State entities –Funded from fees on Fannie Mae and Freddie Mac transactions –2016 is the first year funds will be available

4. Purpose ■The HTF provides grants to States to increase and preserve the supply of decent, safe and affordable housing for extremely low income and very low income households, including homeless families and individuals.

5. Funding Levels ■KHRC is the State-Designated Entity (grantee) for HTF ■Each state will have a minimum allocation of $3 Million –KHRC expects approximately $3M for Kansas –Anticipated allocation late summer 2016 –First project awards spring 2017

6. Eligible Applicants ■For-profit or non-profit entities –Experience and capacity for complex rental housing development ■Ability to layer multiple sources of funds ■Ability to design and building a project that will be financially viable throughout the affordability period ■Strong understanding of project financing –A structure in place to manage rental housing in compliance with applicable requirements –Understanding of and ability to comply with Federal requirements

7. Kansas HTF Funding Round ■HTF funding in Kansas will follow the Low Income Housing Tax Credit and HOME funding cycle –Applications available in the fall –Deadline is the first Friday in February –Allocation decisions are made by early May

8. HTF Funding ■KHRC may hold additional application rounds for HTF –Depending on response and strength of applications received –TBD, to coincide with the availability of other resources

9. Income Targeting ■Must serve extremely low income households –30% of AMI, or Federal Poverty Guideline ■Whichever is higher –HUD will publish rent limits annually –HUD is expected to publish income limit charts by county

10. Eligible Activities ■HTF funds will be used for: –Development or preservation of decent, safe and affordable rental housing ■New Construction ■Reconstruction ■Acquisition and rehabilitation

11. Home Ownership ■The HTF statute allows up to 10% of a state’s allocation to be used for home ownership ■KHRC does not propose to exercise this option –The need is strongest for rental housing –Home ownership activities are particularly challenging at that income level –KHRC has a HOME-funded down payment assistance program that can be accessed by qualified purchasers

12. Admin Fees ■The statute allows KHRC to use up to 10% of the annual allocation for eligible planning and administrative expenses

13. Eligible Costs ■Acquisition of real property ■Site improvements ■Conversion from other uses ■Demolition ■New construction ■Rehabilitation ■Other associated costs

14. The End Result ■HTF funds are to create new or preserved units of decent, safe and affordable housing for households with extremely low income –The activities under ‘eligible costs’ can only be done with HTF funds if housing is produced as a result

15. One and Done ■Funding is up-front, during development ■No additional HTF funds can be invested during the 30 year affordability period –Except for limited operating assistance, if approved

16. Rental Assistance ■Direct rental assistance (either project based or tenant based) is not an eligible use of HTF funds. ■However………. The availability of rental assistance from other sources is a big plus.

17. Operating Assistance ■The HTF statute allows a portion (up to 1/3) of the State’s grant to be used for ‘operating deficit assistance’ ■HUD trainers are recommending not using this option the first year, for simplicity of new program roll-out ■KHRC has not determined whether to include this as an eligible cost

18. Citizen Participation ■KHRC must develop an allocation plan for HTF funds and comply with citizen participation requirements ■The Kansas HTF will be included in the State’s Consolidated Plan and Annual Action Plan ■KHRC will invite public input, and will hold one or more public meetings for this purpose in late spring or early summer ■Individuals and other entities will be invited to submit comments, questions and suggestions related to priorities and implementation of the HTF

19. Priorities – may include : ■Communities with a high rate of poverty –Towns or cities –Counties –Neighborhoods –Census tracts –Other?

20. Priorities (continued) Populations with historically high rates of poverty ■Homeless ■Persons with disabilities ■Domestic abuse victims ■Frail elderly ■Youth aging out of foster care ■Families with children ■Other?

21. Priorities (continued) ■Projects which significantly leverage other resources –Low Income Housing Tax Credits (LIHTC) –USDA Rural Development programs –Home Investment Partnerships Program (HOME) –Supportive Housing Program (Continuum of Care) –Other state/federal programs –FHLBank Affordable Housing Program (AHP) –Foundation grants, local sources, etc. –Properties with rental assistance –Projects with a long term commitment to supportive services

22. Affordability Requirements ■Units assisted with HTF funds must remain affordable for 30 years after completion –Longer than many programs –Requires careful evaluation of the project’s financial viability –Will include annual reporting and regular, periodic inspections and file review –Requires very good management ■Tenant selection ■Strong management plans ■Budgeting for the long haul

23. Some Likely Applicants ■Private developers with experience using the Low Income Housing Tax Credit (LIHTC) and/or other complex programs ■Community Housing Development Organizations (CHDOs) with experience using HOME and/or LIHTC programs ■Non-profit organizations with experience developing Section 811 or 202 projects, or similar ■Non-profit entities who have successfully developed SHP (Continuum of Care) projects

24. Public Housing Authorities ■PHAs can use HTF for new construction or rehabilitation of public housing only: –As part of the Choice Neighborhoods program –Where units will be converted under the RAD program ■A PHA may use HTF funds to develop affordable housing in a project containing public housing units, if the HTF funds are not used in those units

25. Fixed and Floating Units ■HTF units can be ‘fixed’ or ‘float’ in a project ■Fixed units are always the same units –Simpler for management, but less flexibility when finding new tenants ■Floating units mean the ‘HTF’ designation can be assigned to any comparable unit in the project –Allows more flexibility with tenant selection and unit mix

26. Likely HTF Projects ■Multi-family rental development (typically LIHTC) with a small number of HTF units reserved for ELI –If/when income increases, a different unit would be designated as the HTF unit (if ‘floating’) ■Targeted special needs housing where supportive services are critical and available (but not required) –May require ‘internal’ subsidy or other sources of operating funds to be viable

27. Likely Projects (continued) ■Rental (not transitional) housing for homeless families and individuals –Could be limited # of homeless units in a larger property (such as LIHTC) –Could be stand-alone property or scattered sites, but might need other resources to cash flow ■Could work well with SHP, or perhaps 811/202. ■Preserve and revitalize older properties with project based rental assistance (PBRA).

28. HTF Only? ■Funding a development with only HTF funds would be difficult. –Deep rent limits – 30% of AMI or Poverty –Increasing operating expenses over time –Property needs to cash flow for 30 years ■Best scenarios will involve layers of funding with different income limits, or….. ■Other sources of revenue to support operations

29. Managing Risk ■Biggest Risk: 30 year affordability period for ELI –Potential for repayment of funds –Cannot invest more HTF after completion ■Avoiding and managing the risk –Strong development team with experience –Layering other financing to reduce exposure –Mix of income/rent restrictions –Careful, accurate assessment of market

30. Q: We do a great job providing services, but have not developed housing. How can we use the HTF program? ■Partnerships – partnering with experienced developers (for-profit or non-profit) –What developers in your area have a strong track record (development and management)? –What developers have a history of partnering with service providers? –What developers understand or are invested in the needs of your constituents?

31. Partnering – What do you bring to the table? ■What is your target population? ■What is your area of expertise? ■Is there a role you can (or should) take in management? ■What can you provide to help assure project success? –Tenant counseling –Financial literacy –Early intervention re: housing issues –Referrals of good tenants –Good publicity

32. Program Regulations ■The HTF Interim Rule is at 24 CFR Part 93 –For the most part, the HTF closely follows the requirements of the HOME program (24 CFR Part 92). –Interim Rule: https://www.gpo.gov/fdsys/pkg/FR-2015-01- 30/pdf/2015-01642.pdf https://www.gpo.gov/fdsys/pkg/FR-2015-01- 30/pdf/2015-01642.pdf –Guidance and resources: https://www.hudexchange.info/programs/htf/ https://www.hudexchange.info/programs/htf/

33. Some requirements for HTF housing ■Income restricted at 30% of AMI or Federal Poverty Guideline ■Rents restricted to be affordable at 30% of AMI (published by HUD) ■30 year affordability period ■Ongoing monitoring for property condition, compliance with other regs ■No match required ■Davis Bacon requirements do not apply ■Environmental Review: similar to HUD Part 58, but a separate process ■Maximum per-unit subsidy will follow HOME program limits

34. Requirements ■Underwriting required to determine appropriate level of subsidy ■New construction: must be built to code ■Energy efficiency: must meet minimum efficiency standards ■Accessibility: Section 504, FHAct, KSA 58 Article 14 ■Lead Based Paint Hazard requirements – for rehab built prior to 1978 ■Tenant protections: –Lease required –Prohibited lease terms –Termination only for cause –Fair Housing, Kansas Landlord Tenant Act

35. Some Other Federal Requirements ■Uniform Relocation Act ■2 CFR 200 ■Affirmative Fair Housing Marketing ■Conflict of Interest ■MBE/WBE reporting ■FFATA