Overview of the National Housing Trust Fund June 3, 2015 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 1 year of HTF operation before developing final rule. National Housing Trust Fund (HTF) Background Information

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. On November 13, 2008, Federal Housing Finance Agency (FHFA) suspended contributions due to financial condition of GSEs. On December 11, 2014, FHFA lifted the suspension. – 60 days after end of 2015, set-aside will be transferred to FHFA to be deposited in the U.S. Treasury No HUD official estimates. Funding for the HTF

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

HTF funds will be allocated to States by formula. -Summer 2016 Four Need Factors: -Sum of four need factors (weighted by priority) and multiplied by the cost of producing housing in the State relative to the national average. -The formula factors focus on the shortage of both affordable and available rental housing for extremely low-income and very low-income households. HTF Formula

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. HTF Allocations

Each grantee must submit to HUD an “HTF Allocation Plan.” -the portion of its Consolidated Plan’s annual action plan which identifies the State’s priority housing needs and describes how HTF funds will be distributed within the State, application requirements, and criteria for selecting applications of eligible recipients. HTF Allocation Plan ≠ Qualified Allocation Plan. Subgrantees HTF Allocation Plans must be consistent with the grantee’s HTF requirements. The grantee/subgrantee must follow the Consolidated Plan citizen participation plan. HUD will issue Notice on HTF Allocation Plans. HTF Allocation Plan

Total HTF Funds Available < $1 billion: – 100% for ELI families (≤ 30% AMI) or for families with incomes at or below the poverty line (whichever is greater). Total HTF Funds Available > $1 billion: – 75% for ELI families (≤30% AMI) or for families with incomes at or below the poverty line (whichever is greater). – up to 25% of each grant for VLI households (< 50% of AMI). Income Targeting Requirements

HTF funds may be used for production of affordable housing through: acquisition, new construction, reconstruction, or rehabilitation of non-luxury housing with suitable amenities. Eligible project costs include: Acquisition Site improvements and development hard costs Related soft costs Demolition Financing costs Relocation assistance Operating costs of HTF-assisted rental housing (up to one third of each annual grant) Eligible Activities and Costs

At least 80% of each annual grant must be spent on rental housing. HTF funds may 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. – VLI Rents= the > of 30% of income of a family whose income is equal to 50% of AMI. – Project-based rent= rental subsidy program’s rent. – HUD will publish rent limits annually. 30 year period of affordability. Rental Activities

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

Maximum Per-Unit Development Subsidy: – Grantees must establish the limits annually – Limits must be reasonable and based on actual costs of developing non-luxury housing in the area – No Match requirement – Limits must be included in Annual Action Plans – HUD will provide guidance on calculating limits Maximum Per-Unit Development Subsidy

Operating Cost Assistance & Operating Cost Assistance Reserves: – Project must be HTF-assisted – Up to one-third of each annual grant – Cannot be combined with project-based assistance – In addition to initial operating deficit reserve HUD will issue Notice on Operating Cost Assistance. Operating Cost Assistance/Reserves

HUD funds grantees and grantees fund projects. Recipients must have capacity and experience. Contact the HTF grantee: – HUD official HTF Grantee list How to Access HTF funds

Summer/Fall 2015: – HUD Notice: HTF Allocation Plan – HUD Guidance: Maximum Per-Unit Development Subsidy – HUD Notice: Operating Cost Assistance/Reserves March 1, 2016: GSEs will transfer funds to FHFA. March- April 2016: HTF Allocations Determined and Published. April- May 2016: HTF Grantees publish Allocation Plans for public comments. Summer 2016: Grants Agreements Executed. HTF Schedule

For more information, please visit the HTF website at

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