2. The Need for Affordable Housing
Year-Round Housing Units: 2,828,592
Subsidized Units: 250,863
*as of Dec from DHCD Subsidized Housing Inventory
Rental Households with Worst Case Housing Needs: 240,875
(Below 30% AMI with gross rent ≥ 50% of income)
Data from DHCD Subsidized Housing Inventory (as Dec. 2014) and U.S. Census Bureau, Year ACS Estimates

3. The Need for Affordable Housing
Year-Round Housing Units: 2,828,592
Subsidized Units: 250,863
*as of Dec from DHCD Subsidized Housing Inventory
Rental Households with Worst Case Housing Needs: 240,875
(Below 30% AMI with gross rent ≥ 50% of income)
Our system for producing affordable housing can address only a small percentage of this demand:
Over the past 10 years, DHCD-awarded state subsidy has supported over 30,000 affordable units – or 3,000 annually – and only 12,600 new production units.
Data from DHCD Subsidized Housing Inventory (as Dec. 2014) and U.S. Census Bureau, Year ACS Estimates

4. Affordable Housing Development with State Awards 2007-2016
Total Projects: 622
Production: 357 (57%)
Preservation: 265 (43%)
Total Units: 34,311
Production: 12,651 (37%)
Preservation: 21,660 (63%)
Total Affordable Units: 31,642 (94%)
Below 30% AMI: 14,456 (53%)
Below 50% AMI: 2,685 (6%)
Below 60% AMI: 9,614 (18%)
Median Project Size: 35

5. 9% LIHTC 4% LIHTC State LIHTC AHTF TCX/ TCAP HOME
Affordable Housing Development
Subsidy Sources,
WAP
TOD
HPSTF
CATNHP
CIPF
CBH/FCF
HIF
HSF
AHTF
State LIHTC
HOME
TCX/
TCAP
4% LIHTC
9% LIHTC
Subsidy Source
Average Annual Amount (MMs)
9% Tax Credits
$133.5
4% Tax Credits
$123.7
State LIHTC
$17.0
AHTF
$11.3
HSF
$54.6
TCX
$30.8
HOME
$18.0
HIF
$10.7
FCF
$9.8
TCAP
$3.8
CBH
$2.5
CIPF
$1.2
CATNHP/TOD
$0.5
WAP
$0.2
Total
$417.5
Federal Sources
State Sources

6. Project Distribution by City and Town
Affordable Housing Development with State Awards
Project Distribution by City and Town 1 10
100

7. Affordable Housing Development with State Awards

8. How can we stretch scarce subsidy resources farther?
Increasing development costs  Higher demand for scarce subsidy
In the past 5 years, new production in Metro Boston has required an average of $240,000 of state subsidy per affordable unit
20% of these projects have required more than $300,000 per affordable unit
This does not include subsidy from local municipalities or other sources
Cost Distribution for Metro Boston New Production Projects
TDC/Unit
State Subsidy/
Affordable Unit
400K+ 17 1
300K-399K 22 9
200K-299K 13 28
100K-199K 11
50k-99K 3
1K-49K

11. 2016 Qualified Allocation Plan (QAP):
Many Objectives, Competing Priorities
Among the rental housing issues DHCD intends to address during 2016, through its allocations of credit and subsidy funds, are the following:
The need to better manage project costs;
The need to produce more units for extremely low-income (ELI) and homeless families and individuals;
The need to produce more mixed-income housing;
The need to produce more housing opportunities for persons with disabilities;
The need to continue promoting thoughtful and strategic efforts to affirmatively further fair housing in every community in the Commonwealth.
Funding Priority Categories:
ELI units (≥ 20%)
Investment in distressed and at-risk neighborhoods
Preservation of existing affordable housing
New production for families in high-opportunity neighborhoods

12. 2016 Qualified Allocation Plan (QAP):
Many Objectives, Competing Priorities
Threshold Requirements:
Meet at least 1 of 4 Priority Funding Categories
Quality of site
Local support or processing
Creditworthiness of sponsor/owner
Evidence of site control
Identification of all financing sources
Compliance status of other tax credit projects
Good standing with other state housing programs
30-year commitment to affordability
Tenant supportive service plan
ELI units (10-15%)
Consistency with principles of sustainable development
Fair housing narrative
Scoring System:
Fundamental Project Characteristics (100 pts)
Financial feasibility
Design
Development team
Marketability
Readiness to proceed
Special Project Characteristics (82 pts), including:
Part of neighborhood planning effort
MBE/WBE development team members
Non-profit sponsorship
Special needs tenant population
Market rate units
High opportunity area
Local support
Environmentally friendly design
Transit accessibility

13. How can we stretch scarce subsidy resources farther?
Status Quo - Past 5 Years
$100,000,000 in state subsidy awarded annually in Metro Boston
$240,000 state subsidy/affordable unit
417 new, affordable units per year

14. How can we stretch scarce subsidy resources farther?
Status Quo - Past 5 Years
$100,000,000 in state subsidy awarded annually in Metro Boston
$240,000 state subsidy/affordable unit
417 new, affordable units per year
If we can reduce subsidy needs by 5%
$228,000 state subsidy/affordable unit
439 new, affordable units per year – 22 additional units

15. How can we stretch scarce subsidy resources farther?
Status Quo - Past 5 Years
$100,000,000 in state subsidy awarded annually in Metro Boston
$240,000 state subsidy/affordable unit
417 new, affordable units per year
If we can reduce subsidy needs by 5%
$228,000 state subsidy/affordable unit
439 new, affordable units per year – 22 additional units
If we can reduce subsidy needs by 10%
$216,000 state subsidy/affordable unit
463 new, affordable units per year – 46 additional units

16. How can we stretch scarce subsidy resources farther?
Goal: Reduce state subsidy needs
Levers:
Reduce development costs
Acquisition
Construction
Soft Costs
Leverage non-state resources
Local funding
Grant resources
Increase supportable debt
Increase operating income
Decrease operating expenses

17. How can we stretch scarce subsidy resources farther?
Budget Basics
Development Budget
Sources:
Debt
State Subsidy
Local Subsidy
Other Subsidy
Developer Equity
Deferred Fee
Uses:
Acquisition
Construction Hard Costs
Soft Costs
Construction Soft Costs
Financing
Legal
Marketing/Lease-Up
Consulting & Dev. Fees
Reserves
Total Sources must equal Total Uses!

18. How can we stretch scarce subsidy resources farther?
Budget Basics
Development Budget
Sources:
Debt
State Subsidy
Local Subsidy
Other Subsidy
Developer Equity
Deferred Fee
Uses:
Acquisition
Construction Hard Costs
Soft Costs
Construction Soft Costs
Financing
Legal
Marketing/Lease-Up
Consulting & Dev. Fees
Reserves
Total Sources must equal Total Uses!
Operating Budget
Income:
Rental Income
Less Vacancy
Commercial Income
Other Income (Laundry, Parking)
Expenses:
Administrative & Management
Maintenance
Utilities
Taxes
Insurance
Replacement Reserves
Resident Service
Net Operating Income (NOI) = Income – Expenses
Debt Service
NOI/Debt Service must be greater than 1.00!
( depending on lender/source of capital)

19. How can we stretch scarce subsidy resources farther?
Fellow Thinkathon
Project Summary
You work for the Boston Neighborhood CDC and recently submitted a 50-unit, 100% affordable, new construction project to DHCD for award consideration. The budget that you submitted assumed a total development cost of $400,000 per unit and a state subsidy amount of $250,000 per unit. DHCD is willing to fund the project at the TDC of $400,000 per unit or less, but can only allocate $225,000 in state subsidy for each affordable unit.
What changes will you make to the project to reduce its subsidy needs by $25,000 per unit?
Project Details
50 units, 100% affordable (10% at 30% AMI, 90% at 60% AMI)
Mix of 1, 2, and 3 BR units, with 750 average sq. ft.
Project is urban infill and adjacent to transit, but site requires $2MM acquisition
Building includes 1,500 sq. ft. of common/community space
Construction will be to the minimum green/energy efficiency standards as required by DHCD
Parking is provided on-site, with ½ surface and ½ underground spots
Operating budget includes $100,000 per year in resident services

20. How can we stretch scarce subsidy resources farther?
Options
You can make any of the following changes to the project.
Each change affects the development cost, supportable debt, and/or non-state subsidy available.
The sum of your changes must result in a reduction of state subsidy by at least $25,000 per unit.
Total development cost cannot exceed $400,000.
Changes may affect local support for your project; increase the chances of your project moving forward by minimizing negative impacts to local support.
Budget Impacts ($ per unit)
Impact on State Subsidy
Change in Local Support
Project Changes
Development Cost
Supportable Debt
Local or Other Subsidy 1
Defer portion of developer fee
-5,000 2
Provide outdoor community space
+5,000 +1 3
Reduce resident services -1 4
Reduce underground parking
-10,000 5
Select less transit-oriented site 6
Increase number of ELI units
+10,000 7
Increase number of market rate units 8
Use less costly interior finishes 9
Use less costly exterior finishes 10
Reduce unit square footage 11
Reduce number of 3-bedroom units 12
Add energy efficient utility features 13
Add green building features (non-utility) 14
Reduce indoor common space