1. City of Asheville COMPREHENSIVE AFFORDABLE HOUSING STRATEGY
Affordable Housing Financial Incentives

2. Contents Housing Strategy Framework Tools Example
General Obligation Bond
Land Banking
Permanently Affordable Homeownership
Housing Trust Fund
Land Use Incentive Grant
Permit Fee Rebates
Federal HOME and CDBG Program Income
Capital Improvement Program
City-Owned Property
Density Bonus
Example

3. Housing Needs Assessment
BOWEN NATIONAL RESEARCH
Primary Work Elements
Analyzed more than 100 demographic & economic metrics
Conducted ~40 community stakeholder interviews/surveys
Surveyed nearly 170 multifamily rental properties (14,000+ units)
Surveyed over 100 non-conventional rentals
Evaluated 171 mobile home parks
Analyzed for-sale data on 25,999 units (3,669 listed/22,330 sold)
Surveyed 58 Senior Care Facilities (Adult Care, Nursing Home, & Multi-Unit Assisted)
Completed a housing needs/gap analysis by tenure & affordability (up to 120% AMHI)
Made more than 200 contacts with individuals & organizations
Over 200 housing properties were visited and rated

4. Median Market-rate Rents by Bedroom Type
Surveyed/Inventoried Housing Supply
What’s Affordable?
Median Market-rate Rents by Bedroom Type
Studio
One-Bedroom
Two-Bedroom
Three-Bedroom +
Buncombe County
$875
$930
$1061
$1,127
HUD Fair Market Rents
$709
$713
$917
$1,073
City Affordable Rents
$685
$773
$870
$949
Note: Rents without utilities

5. Income/Rent Affordable Housing Standards Maximum Rent-80% AMI
Family Size*
Utility Allowance**
80%
Max affordable rent at 80% AMI***
Rent + Utilities****
0 BR 1
126
32,450
685
811
1 BR 2
133
37,050
793
926
2 BR 3
173
41,700
870
1,043
3 BR 4
209
46,300
949
1,158
4 BR 6
228
53,750
1,116
1,344
Low Income Housing Standards
Maximum Rent-60% AMI
60%
Max affordable rent at 60% AMI***
24,338
482
608
27,788
562
695
31,275
609
782
34,740
660
869
40,313
780
1,008

6. Rental Housing Gap 3,580 affordable rental units needed by 2020
64% are needed by households earning 80% or less of median income
45% of all renter households pay >30% of their gross income for rent
21% pay >50% of their gross income for rent
75% <60% AMI pay >30% for housing costs

7. Red shading = Unable to afford Fair Market Rent
Mean Hourly Wage
Employment
% of Total
Efficiency
Bedrooms 1 2 3
Total all occupations
$17.14
116,920
Retail Salespersons
$10.71
4,690
4.0%
Food Preparation & Serving Workers
$8.08
3,780
3.2%
Registered Nurses
$28.96
3,630
3.1%
Cashiers
$8.45
3,350
2.9%
Waiters & Waitresses
$8.90
3,250
2.8%
Home Health Aides
$10.57
2,310
2.0%
Stock Clerks & Order Fillers
$10.74
1,970
1.7%
Laborers, Freight, Material Movers
$11.08
1,930
Secretaries
$13.74
1,900
1.6%
Janitors & Cleaners
$9.84
1,740
1.5%
Office Clerks, General
$11.73
1,720
Customer Service Representatives
$13.14
1,700
General & Operations Managers
$49.62
1,600
1.4%
Cooks, Restaurant
$10.42
1,500
1.3%
Supervisor/Mgr of Retail Sales Work
$17.62
1,450
1.2%
Bookkeeping & Accounting Clerks
$15.20
1,390
Maids & Housekeeping Cleaners
$8.77
1,310
1.1%
Executive Secretaries & Admin Assts
$16.55
1,270
Truck Drivers, Heavy/Tractor-Trailer
$18.11
1,200
1.0%
Receptionists & Information Clerks
$11.39
1,180

8. What’s Affordable? To a family of 4, annual income of $46,300
$1,158 month
Mortgage: $187,295.74
To a family of 2, annual income of $37,000
$926/month
Mortgage: $156,507.40
These are households at 80% of the median income

9. Owner Housing Gap 3,879 affordable new ownership units needed by 2020
73% of that total needed by senior households
70% of households are looking for homes priced under $200,000
13% of current homes listed are listed $200,000
Current median sales price: $270,000

10. Key Regional and National Trends
Rising Labor and Material Costs
Continued Growth in Asheville and region, Urbanization
Lower Income HH pushed further from job centers
Uncertain Economic Environment
Likely Reduction in Federal Housing $
Greater Reliance on Local Resources

11. Challenges Housing that is affordable
Housing that will stay affordable
Housing for families with children
Housing for smaller households
Housing that creates opportunities
Housing that is close to where people work, shop, go to school, worship

12. Affordable Housing Strategy
The Comprehensive Affordable Housing Strategy
A “living strategy” that will guide ongoing work related to affordable housing policies and programs.
Inform annual work program priorities
Continual action, monitoring and evaluation to expand housing opportunities through a variety of tools and coordinated initiatives.

13. Strategy Goals Strengthen Our Current Commitments Maintain the Middle
Create Diverse Housing Choices in Every Neighborhood
Create Vibrant Neighborhoods
Strengthen Partnerships and Leverage Resources

14. Actions Goal: 2,800 units in next 7 years
New Public-Private Partnerships
Continue to remove regulatory barriers, increase density
Increase Transportation- Housing Connection
Prioritize Incentives for maximum impact

15. Asheville Tools and Strategies
General Obligation Bond
Housing Trust Fund
Land Use Incentive Grant
Permit Fee Rebates
Federal HOME and CDBG repayments
Capital Improvement Program
City-Owned Property
Density Bonus

16. General Obligation Bond
$10 Million for “Housing Trust Fund”
$5 Million, Direct Project Investments
$3 Million, Land Banking
$1 Million, Community Land Trust
$1 Million, Down Payment Assistance
$15 Million for “Repurposing City Owned Land”
Evaluation of 3 Highly Visible Properties

17. General Obligation Bonds
Issues
Spend in 7 years from Voter Approval
Loan, Grant, Land Investments
Must be Capital Uses
Size to Have an Impact
Impact on Tax Rate
Importance to Voters
Support of Governing Board
Prioritized Activities

18. General Obligation Bonds
Affordable Housing Uses Allowed
Infrastructure
Loans to Developers
Loans to Consumers
Grants to Developers
Grants to Consumers
Land Purchasing, Land Banking

19. Asheville “Allocation Principles”
Fund the creation of diverse unit types:
New affordable homeownership creation with affordability restrictions
Rental units affordable to those with a range of incomes, but emphasizing lowest income households
Diversify and expand partnerships
Continue to support highly leveraged developments e.g. LIHTC
Support private-sector partnerships creating mixed-income communities

20. Asheville “Allocation Principles”
Recognize that greater benefit may require larger investments, such as
Developments serving those with lowest incomes
Developments that are walking or bicycling convenient to jobs, schools and services
Developments that have extended and permanent affordability
Support investments that leverage other resources to the maximum extent feasible
Make investments that can repay bond capital, with the ROI put back into funding for future affordable housing creation
Provide operational support to enhance the City’s partnership with affordable housing developers (i.e. adequate staff)

21. Land Banking Purchase and Hold Land for Future Development
Slow or stop the speculative increase in value
Lay out the terms for development
Partner with neighborhood in development planning
Partner with developers to create pipeline

22. Permanently Affordable Homeownership
Community Land Trusts
Capital Investment in Land or Existing Housing
Limited profit-taking from appreciation
Community holds that equity, making the house affordable for new generations
Limited Equity Co-op Housing
Corporation formed to own housing
Financing not based on individual credit
Resident control of rules, investment decisions

23. Permanently Affordable Homeownership
Issues
American Dream of wealth creation vs creation of place-based affordability
Often not considered when housing stock is “affordable”
Small pool of financial institutions lending
Need for operating supports
Not common practice in NC

24. Housing Trust Fund General Fund Allocation ($.01/$100)
Rental and Ownership Housing Finance
Ownership: Construction Loans only
Rental: Permanent financing, minimum 15 years, 2% Interest
Special terms (for units at 60% AMI): 2% interest only, deferred principal; or, 0% interest

25. Housing Trust Fund Rolling applications accepted
Analyzing the “subsidy”
Minimum of 20% affordable
Creating flexible terms that can yield return
Underwriting Challenges:
When is enough enough? When is it not enough?
When HTF funds are not likely to be repaid
Highly leveraged deals

26. Housing Trust Funds Management Challenges
Getting to scale in smaller towns and cities
Managing as an enterprise fund
Initial loans rolled into “silent second” mortgages
City as consumer lender, collections
When deals go bad: on the courthouse steps

27. Capital Improvement Program
Debt and “Pay-Go” funds
Debt Funds for Capital Uses Only, such as
Subsidies
Land banking
Construction
Financing
Pay-Go: wide variety of uses, such as
Market studies
Engineering and architectural studies and plans
Traffic analysis
Infrastructure improvement

28. Capital Improvement Program
Issues and Challenges
Debt limits
Amount of “pay as you go” funds available
Prioritization
Return on Investment

29. Local Government-Owned Property
What land does your City/Town/County own?
What are you doing with it?
If It can be repurposed, is affordable housing a priority?
If so, you can make it available for a direct sale or lease for affordable housing- no upset bid process required

30. Local Government-Owned Property
Due diligence activities
Phase 1 and 2 environmental
Zoning review
Title review
Geotechnical testing if any question
Neighborhood feedback
Appraisal
Survey

31. Local Government-Owned Property
Issues and Challenges
Is Affordable Housing the right use?
Sale vs. Lease
Is the value of the property going to be the subsidy?
Credibility of developer
Period of affordability
Deed or other restrictions

32. Development Team Minimum Experience Qualifications
Minimum Developer Experience: :
New Construction of at least one 24-unit or larger residential development in the past 5 years;
Past experience with at least one of the following:
New affordable housing for low income families and for low income seniors;
Development of housing in Asheville
Low Income Housing Tax Credit financing.
Minimum Ownership Experience:
Owned at least one residential development for at least 5 years prior to the Submittal Deadline of this RFP.
Minimum Architectural Experience:
Design and construction of at least one multifamily housing development.
Design and completed construction of at least one 24-unit or larger residential development within the past 5 years.
Minimum Property Manager Experience:
Managed at least one family rental project for at least 24 months.
For any Developer team member, the experience of key staff members may be substituted for the experience of the organization as a whole

33. Land Use Incentive Grant
Focused on affordable housing and location
First passed in 2010, first real agreement in 2014
Designed like “Tax Increment Financing” (TIF), but deferred revenues are not set-aside for the project
Annual grant equal to City (only) property tax
Additional grant of a percentage of permits fees

34. Land Use Incentive Grant
10 points = 1 year grant equal to the City of Asheville property tax that results from the increase in value due to the development.
10 points = 10% reduction in City of Asheville building permit fees.
At least 10% of the units must be affordable for households earning 80% or less of the Area Median Income.
The affordable units must be affordable to and leased to income-eligible households for at least 15 years.
Must be located to provide convenient access to jobs, schools and services. The applicant may make the case for convenient access.

35. Points 5 10 15 20 30 40 50 60 70 80 90
100
10%+ Affordable x
20%+ Affordable
30%+ Affordable
40%+ Affordable
50%+ Affordable
60%+ Affordable
70%+ Affordable
80%+ Affordable
90%+ Affordable
25%+ Workforce
50%+ Workforce
75%+ Workforce
Location: .25 mile ½ hour transit stop
Location: 1 mile from job center
Location:.5 mile from transp. Amenity
Tenant Affordability: 20 years
Tenant Affordability: 30 years

37. Example 8 Unit New Development , all 2 BR
All-in Cost/per unit: $120,000
Land $20,000
Site/Utilities $20,000
Bldg. Constr. $80,000 (800 sq $100/sq ft)
Total cost: $960,000
Equity 30% $288,000
Debt 70% $672,000

38. Rent Structure Scenarios
100% AMI Rents: $1,194/month
Scenario 2:
100% at 50% AMI (Vouchers): $992.00/month
Scenario 3:
50% at 100% AMI, 50% at Voucher Rate

39. Other Assumptions Annual Rent increase: 2% Annual Vacancy rate: 3%
Annual Cost Increase: 3%
Other Income: 3% of gross rent
Annual Operating Cost: $38,792 (yr 1)
33% of year 1 net market rent income
Conventional Debt: 5%, 15 Years
Cash-on-Cash analysis

40. Bottom Line Cash-on Cash Analysis 100% AMI Rents: Year 5= $18,403
All Voucher Rents: Year 5= $13,558
Affordable also brings savings on
- Permit Fees

41. More information Jeff Staudinger Heather Dillashaw
Jeff Staudinger
Heather Dillashaw