1. HUD Policy Forum Katherine M. O’Regan Assistant Secretary for Policy Development and Research (PD&R) U.S. Department of Housing and Urban Development NCSHA Housing Credit Connect Conference June 13, 2016

2. Discussion Points LIHTC and ‘Opportunity Areas’ Policy Update: Small Difficult to Develop Areas Implementation (SDDAs) Research Update: Research on QAPs and siting of LIHTC projects in low poverty areas Aging and Aging in place New Research: Seniors and Services Demonstration

3. Small Difficult Development Areas Background DDAs are “areas with high construction, land, and utility cost” relative to area median income (AMI), have been measured using Fair Market Rents (FMR), Metropolitan-wide. They bring up to 30% additional tax credit subsidy. With HERA flexibility, DDAs most relevant for tax-exempt bond projects. HUD’s intent to move to Small DDAs, using ZIP code level FMRs (SAFMRs) was announced in 2012. 2016 SDDAs were published in November 2015 to go into effect July 1, 2016.

4. Small Difficult Development Areas Incentivizing LIHTC in opportunity areas This change better targets high opportunity areas at the ZIP code level. Moving to SDDAs, the average poverty rate in DDAs drops 25 percent, from 14.6% to 10.9%. Equity Under 2015 Metro-DDAs, only 36 metro areas benefitted (in only 11 states and PR). Entire regions– like the Midwest - missed out. Small DDAs cover parts of 300 metro areas. Now almost all states and all MSAs have at least one SDDA.

5. Small Difficult Development Areas Key Changes: Methodological improvements Several changes that better capture neighborhoods with particularly high rent. Adjustments for rent-stabilization programs that result in non-market rent measurements through ACS. HUD invited jurisdictions with rent control laws potentially affecting the accuracy of SDDAs to contact us (data needed by August 1, 2016). Decrease volatility of designations using 3 vintages of ACS data. Eliminate QCT/SDDA overlap, permits an increase in the combined designated population of DDAs and QCTs - an overall net gain.

6. Small Difficult Development Areas Key Changes: Effective Date and timing extensions SDDAs become effective July 1, 2016; 2015 metro-level DDAs are effective until then. Mid year timing: to give more advance notice of impending changes in designation. Extended allowable time period between the application date and completion from 365 to 730 days for retaining basis boost. Projects with applications completed before July 1, 2016 will retain their basis boost as long as the projects are completed within two years.

7. www.novoco.com/webinarsDecember 18, 2015 Effective Date of New Areas July 1, 2016 NEW SDDAsOLD DDAs What will set my date for designation? Complete application Allocation of credit Bond issuance/Placing a building in service

8. www.novoco.com/webinarsDecember 18, 2015 Effective Date of New Areas July 1, 2016 NEW SDDAsOLD DDAs Submit a complete application before July 1 st Application Issue bonds/place a building in service within 2 years For areas losing a DDA designation

9. www.novoco.com/webinarsDecember 18, 2015 Effective Date of New Areas July 1, 2016 NEW SDDAsOLD DDAs For areas gaining a SDDA designation Applications completed Application But: Receives allocation of credits Issue bonds/Placed in service

10. Small Difficult Development Areas Forward looking 2017 SDDAs will be published in early fall, to be effective January 1 st of the next calendar year. 2016 mid year delay was a one-time adjustment to accommodate adequate planning time as we transitioned to SDDAs. All other changes (methodological improvements, extended for retaining an ‘old’ designation to 730 days, eliminating QCT/SDDA overlap) are intended to be permanent improvements.

11. QAP Incentives & Location of LIHTC Properties Primary Research Question: Are changes in QAP priorities associated with changes in the poverty rates of the neighborhoods where LIHTC development occurs? What the Study Examined: Changes in QAPs (2002 and 2010) that are likely to affect siting in low/high- poverty census tracts, and the poverty rates of 9% LIHTC allocation locations in 2002-2003 and 2010-2011. In 21 states. Can’t distinguish rehabilitation/new construction, family/senior.

12. QAP Incentives & Location of LIHTC Properties Results Increasing overall prioritization of opportunity in QAPs increases siting in low income neighborhoods. States that increased priorities for higher-opportunity areas experienced statistically significant: Increases in share of credits in low-poverty areas, Decreases in share of credits allocated in high-poverty areas, and Results are driven by states that made large changes, across several categories, and the report provides some specific details.

13. QAP Incentives & Location of LIHTC Properties Which of 5 categories matter and in what form? Less clear. Suggestive results (not significant but close). Related to increasing share of LIHTC in low poverty neighborhoods: Prioritizing high-opportunity neighborhoods. Avoiding concentration of assisted housing. Related to increasing neighborhood poverty rates of LIHTCs: Stronger community approval measures. https://www.huduser.gov/portal/publications/mdrt/QAP_Incentives.html

14. QAP Incentives & Location of LIHTC Properties New Results Increasing overall prioritization of opportunity in QAPs also shifts siting to lower-minority neighborhoods. Here too, it was due to overall changes, rather than one specific category. States that drove the decreases were: New Jersey Massachusetts, Georgia, Texas and Pennsylvania Increases were found in Mississippi and Florida, which decreased preferences for opportunity areas.

15. Seniors and Services Demonstration Trends in Aging: Elderly as a Share of U.S. Population, 2000-2050 Source: 2013 CBO Report: Rising Demand for Long-Term Services and Supports for Elderly People

16. Seniors and Services Demonstration HUD’s Goal: Develop a housing-with-services demonstration program for low-income elderly to test models that demonstrate the potential to delay or avoid the need for nursing home care. Produce evidence about the impact of housing w/ services on: housing stability wellbeing health outcomes of HUD-assisted elderly residents and costs to the health care system

17. Seniors and Services Demonstration The Model: To existing subsidized senior housing, add: Interdisciplinary team on site Enhanced Service Coordinator Wellness Nurse HUD will also provide: Training, Resources, Technical assistance Specific Components Coordination/support of transitions Support medication self-management Program (Falls prevention, Mental health)

18. Seniors and Services Demonstration Who is eligible: Owners of HUD-assisted multifamily developments with no less than 50 assisted units statutory or owner-adopted elderly occupancy no more than 10% non-elderly of total unit count Specifically, housing that is assisted under: Section 202 Section 8 project based assistance A loan or mortgage insured under Section 221 (d) (3) that bears interest at a rate determined under Section 221(d)5; or Section 236.

19. Seniors and Services Demonstration Demonstration Design The point of the demonstration is to learn and develop the best evidence. The design that supports that involves: Randomization Existence of good Administrative data, which varies by states. A large sample size within selected states to have enough power to find impacts.

20. Seniors and Services Demonstration Selection Process: Review Applications and Select States Determine states with enough applications Rank states using these factors: Health data availability and policy context Large pool of applications Selection Process: Apply the Lottery Randomly assign applicants to treatment and control groups Select at least 40 treatment and 40 control applications

21. Seniors and Services Demonstration Where we are now: NOFA announced January 2016 Webinar held February 2016 ~2,500 viewers Application deadline was April 18, 2016 700+ applicants Awards expected Fall 2016 http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2016/HUDNo_1 6-005