Getting Started with the Housing Trust Fund March 14, 2016 U.S. Department of Housing and Urban Development

HTF was created by the Housing and Economic Recovery Act (HERA) on July 30, HTF’s goal is to increase and preserve the supply of decent, safe, and affordable housing for extremely low-income (ELI) and very low-income (VLI) households, including homeless families. January 30, HUD published an Interim Rule (24 CFR Part 93). HUD will solicit public comment after HTF has been in operation before developing final rule. Background

HERA requires Fannie Mae and Freddie Mac (GSEs) to reserve 4.2 basis points of each dollar of unpaid principal balance of total new business purchases for the HOPE Reserve Fund, the Housing Trust Fund and Capital Magnet Fund. Contributions suspended - November 2008 Suspension lifted - December – 60 days after end of 2015, set-aside will be transferred to FHFA to be deposited in the U.S. Treasury No official HUD estimates. Funding

Eligible grantees are “States” – defined as the 50 States, D.C., Puerto Rico, and the insular areas. The State may authorize a State-Designated Entity (e.g., state housing finance agency) as the grantee. The grantee may directly fund recipients and/or make subgrants to state agencies and/or units of general local government. Eligible HTF recipients are entities (including non- profit and for-profit developers) with demonstrated development experience and capacity. Grantees

HTF Statute: The minimum HTF allocation for each of the 50 States and DC is $3 million. Interim Rule- Alternative Methodology: – If HTF funds are insufficient to provide minimum award of $3 million to each State and DC, then HUD will publish a notice in the Federal Register describing an alternative methodology and solicit public comments. HUD will publish allocations in Federal Register. – Within 60 days from date of determining formula amounts. < $1 billion = 100% ELI. Formula

At least 80% of each grant must be used for the production, preservation, and rehabilitation of affordable rental housing. Rents: – ELI rent= the > of 30% of income of a family whose income is equal to 30% of AMI or 30% of federal poverty line, whichever is higher. – Project-based rent= rental subsidy program’s rent. – HUD will publish rent limits annually. 30 year period of affordability. Eligible Activities: Rental

Up to 10% of each annual grant may be used for new construction, acquisition/rehab, or direct assistance to first-time homebuyers. Homeownership counseling is required before purchase. Period of affordability 10, 20, or 30 years based on amount of direct investment. Eligible Activities: Homebuyer

Up to one-third of each annual grant may be used for operating cost assistance and/or operating cost reserves Project must be HTF-assisted Cannot be combined with project-based assistance In addition to initial operating deficit reserve (up to 18 months during project rent up) HUD will issue further guidance on Operating Cost Assistance. Operating Cost Assistance/Reserves

Each grantee must submit to HUD an “HTF allocation plan” as part of its annual action plan. If the State subgrants HTF funds to a subgrantee, the subgrantee must submit an HTF allocation plan with its annual action plan and it must be consistent with grantee’s HTF requirements. The grantee/subgrantee must follow the consolidated plan citizen participation plan. VERY SHORTLY - HUD will issue a CPD Notice on HTF allocation plans. HTF Allocation Plan

HTF grantees must comply with citizen participation requirements at 24 CFR Difficult in 2016 because there are no previous year allocations to use as estimates. Grantees can conduct citizen participation for HTF along with CDBG, HOME, etc. Grantees cannot submit their HTF allocation plans until their formula allocations are published. Citizen Participation

After HUD publishes HTF formula allocations, an HTF grantee must amend the affordable housing section of the strategic plan included in the consolidated plan to include: Specific objectives & proposed accomplishments for HTF measured over a specific period of time The number of ELI families provided w/affordable housing from HTF over a specific period of time Consolidated Plan

Submitted with grantee’s annual action plan Distribution of HTF funds Application requirements & selection criteria for HTF funds Maximum per unit development subsidy limit for housing assisted w/HTF Resale / recapture guidelines Distribution of HTF funds to subgrantees and/or recipients HTF Allocation Plan

If the grantee will be selecting applications from eligible recipients the allocation plan must include the following funding priorities: Geographic diversity Development capacity Affordable rents Extended affordability periods Other application merits in meeting the State’s priority housing needs Leveraging HTF Allocation Plan

If the grantee will be selecting applications from eligible recipients the allocation plan must include the following required elements: Eligibility and certification Performance goals and benchmarks Rehabilitation standards Resale / recapture provisions Affordable homeownership limits Limitation on beneficiaries or preferences Refinancing existing debt HTF Allocation Plan

HUD Notice CPD Guidance on submitting FY 2016 consolidated & annual action plans includes HTF HTF allocation plan is submitted as part of the annual action plan Substantial amendment required if submitting HTF allocation plan after annual action plan Submission

eCon Planning Suite (IDIS) will not include HTF in 2016 “Template” will be posted to the HTF website Send MS Word or PDF file to your CPD Field Office Director and to OAHP reviewing HTF allocation plans Submission

HUD will review HTF allocation plan within 45 days of receipt. HUD may disapprove all or a portion of a grantee’s consolidated plan when HUD determines that the plan is substantially incomplete Developed without the required citizen participation or consultation; Fails to satisfy all of the required elements; or HUD rejects a certification as inaccurate. Review & Approval

If the grantee will be using HTF funds for homebuyer projects, HUD must approve separately resale / recapture provisions This is also true for HOME. Review & Approval

HTF grantees will use IDIS to: – Set up HTF activities – Subgrant funds to subgrantees – Commit funds to activities – Drawdown funds – Enter completion information Costs Beneficiaries HTF & IDIS

IDIS is currently being enhanced to accommodate HTF. The project is expected to be completed in July The eCon Planning Suite will not be ready for HTF until after the first year’s HTF allocation plans are due, but it is expected to be used for future years’ HTF grants. HTF & IDIS

March 2016: GSEs transfer funds to FHFA. March- April 2016: HTF formula allocations determined and published in the Federal Register. Spring/Summer 2016: HTF grantees complete and submit HTF allocation plans to HUD. Summer 2016: HTF grant agreements executed. HTF Schedule

For more information, visit the HTF website at:

Questions? U.S. Department of Housing and Urban Development