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HARVARD UNIVERSITY
AFFORDABLE AND MIXED- INCOME HOUSING DEVELOPMENT, FINANCE AND MANAGEMENT
Harvard Graduate School of Design (SES-5490)
Harvard Kennedy School (SUP-666)
Spring Term 2018
Canvas Course Website: https://canvas.harvard.edu/courses/40668
INSTRUCTOR
Edward H. Marchant Lecturer, Department of Urban Planning and Design (GSD) Adjunct Lecturer in Public Policy (HKS) Telephone: 617-739 2543 (Office) [email protected] [email protected]
CLASSROOM AND CLASS TIME
Harvard Graduate School of Design
Gund Hall, Room 518 Tuesday, Thursday 8:30 a.m.-9:59 a.m. (Class begins promptly at 8:30 a.m.)
Office Hours: By appointment (and normally will be scheduled to be before or after class)
COURSE OBJECTIVES
1. To introduce students to the practical elements and complexities of promoting,
developing, financing, and managing affordable and mixed-income housing from
community-based, public, and private perspectives;
2. To enable students to recognize and understand seven basic subsidy categories
through which housing for low and moderate income individuals and families can be made affordable: development cost, financing, operating, rental assistance, tax credit, entitlement, and project-generated cross income subsidies;
3. To have students demonstrate their understanding of the affordable housing
development, financing and management process by participating in the Affordable Housing Development Competition (AHDC) or by completing an Alternative Final Project based upon a course-relevant topic in which a student has a particular interest; and
4. To establish a more comprehensive understanding of public housing policies and
affordable and mixed-income housing projects through a comparative analysis and ranking of the proposed AHDC projects’ respective “Net Public Values.”
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COURSE DESCRIPTION
SES-5490/SUP-666 is designed for students interested in understanding the fundamentals of affordable and mixed-income housing, including its sponsorship, permitting, financing, design, construction, and management. The course begins by defining the problem that exists in many communities: a lack of decent, well-managed housing affordable to individuals/families paying no more than 30% of their household income toward housing expenses. The “funding gap” that prevents the development of affordable housing is then calculated and alternatives to “plug” this funding gap are explored. Although numerous federal, state and local subsidy programs will be discussed along with private subsidy programs, the course focuses on several of the most significant and representative federal, state and local housing programs used to create rental and/or home ownership affordable housing, including but not limited to the following programs:
IRS Section 42/Low Income Housing Tax Credit Program (LIHTC)
Community Development Block Grant (CDBG)
Choice Neighborhoods Planning and Implementation Grants
Section 8 Rental Assistance Payments (Section 8) –now officially referred to as the
Housing Choice Voucher Program
Rental Assistance Demonstration Program (RAD)
HOME Investment Partnerships Program (HOME)
Tax-Exempt Bond Financing
Tax Increment Financing (TIF)
Federal Home Loan Bank Affordable Housing Program (AHP)
Community Reinvestment Act (CRA)
State and Local Affordable Housing Trusts
Local Inclusionary Zoning By-laws
Massachusetts Comprehensive Permit Program (aka Chapter 40B)
The course does not focus on the specific details of any of these programs. Rather, these programs are explored in general to review how the use of each of them contributes to making the development of affordable housing economically feasible. Normally, several of these federal, state and local subsidies must be aggregated to create a financially feasible and financially sustainable development. Regardless of particular program changes at the U. S. Department of Housing and Urban Development (HUD) and other state and local funding agencies, the fundamentals learned in this course will be useful in working with future federal, state, or local affordable housing programs. The financing principles and development fundamentals learned in this course should also be applicable to designing housing policy programs and developing affordable housing globally. Given the high cost of developing and managing quality affordable housing, the course also discusses various strategies that help maintain affordability over the longest feasible time period so that the scarce available housing resources can be preserved and the public and/or private housing subsidy investments can be “amortized” over an extended time period.
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Students gain practical experience and synthesize their understanding of affordable housing by participating in the Affordable Housing Development Competition (AHDC) or, in exceptional cases, by completing a final project on a course-relevant topic approved by the Instructor in which they have a particular interest. Over the past eighteen years a growing majority of the students have elected to participate in the AHDC, including all students over the last three years. Former students have stated that participation in the AHCD was an extremely valuable learning experience—not to mention a great enhancement to their resumes. However, either final project alternative is acceptable, subject to topic approval by the Instructor. More detailed information on the AHDC is provided below.
Following the class presentations of the AHDC proposals, each student will rank the respective AHDC projects based upon evaluation criteria formulated and discussed during the course. Each student will also define his/her personal “Net Public Value” criteria and describe each project’s “Net Public Value” (Public Benefits less Public Expenses).
AFFORDABLE HOUSING DEVELOPMENT COMPETITION (AHDC)
Several enterprising Harvard graduate students with an interest in affordable housing initiated the Affordable Housing Development Competition (AHDC) in 2001 and enlisted the organizational and financial support of the Federal Home Loan Bank of Boston (FHLB Boston) and Citizens’ Housing and Planning Association (CHAPA). Sponsors of the 2018 AHDC also include Kevin P. Martin & Associates, P.C.; Boston Society of Architects/AIA; The Kuehn Charitable Foundation; and ICON Architecture, Inc. The primary objective of this competition is to create opportunities for local graduate students “to work with both for-profit and nonprofit housing developers to find creative solutions to the challenge of developing affordable housing in the Boston metropolitan area and to introduce students to the issues related to affordable housing development and to the individuals and organizations active in the production of such housing.”
Students from this course have traditionally shared in the cash prizes ($10,000, $7,000, and $4,000) awarded to the three top-ranked proposals, including all three of last year’s winning proposals. These cash awards are shared equally by the project sponsor and the student team. The winning proposals from last year’s competition have been posted on the AHDC website listed below. Students should review each of these winning proposals as early in the course as possible. More comprehensive AHDC information is available at the Federal Home Loan Bank of Boston website at www.fhlbboston.com/compete. A copy of the Preliminary Information Timeline that is included at the AHDC website is attached at the end of this syllabus. This timeline includes a link to the three AHDC Student Coordinators (Aliya Bhatia, HKS; Jack Popper, GSD; and David Tisel, MIT DUSP), all of whom have taken this course.
The Instructor strongly encourages participation in the AHDC for any student who desires a practical “hands-on” team experience in developing affordable or mixed-income housing.
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COURSE AUDIENCE
The course is designed to be useful to students with any of the following interests: affordable housing development, permitting, financing, design, construction, and/or property management; affordable housing preservation; mixed-income housing; special needs housing; housing-based supportive services; syndication of low income housing tax credits; local, state, or federal housing policy program design, implementation and/or evaluation; public private partnerships; affordable housing advocacy; comprehensive neighborhood revitalization; and/or community development corporation (CDC) and nonprofit sponsorship of affordable or mixed-income housing.
COURSE COMMUNICATION
Communication with the class regarding announcements, assignments and other matters will be done primarily through Canvas (https://canvas.harvard.edu/courses/40668). All enrolled students will have access to Canvas.
COURSE PREREQUISITES
Students should have an interest in any of the components of affordable housing listed above in the Course Audience description. Although a basic real estate finance course similar to the Instructor’s Real Estate Finance and Development Fundamentals for Private and Public Participants course (SUP-665/ SES-5492) would be helpful, a prior understanding of real estate development finance is not required. The course will include three ungraded financial exercises at the beginning or the course. These financial exercises have been designed to introduce students to or reinforce students’ understanding of fundamental affordable housing financing principles and practices.
FORMAT
The course will be a mix of lectures, case discussions, exercises, student presentations, and a field
visit to each of the proposed AHDC sites. Leading practitioners in the field will participate in at least
two classes.
Active classroom participation by students is encouraged and expected throughout the
course. Given the Instructor’s interactive teaching style, classroom participation will be an
important grading component.
Students are expected to attend all classes. The class will begin promptly at 8:30 a.m. and
students are expected to arrive on time. Cellphones must be turned off and placed out-of-
sight. Laptops are to be used for note taking only.
A bus tour has been scheduled for Saturday, March 3 from 8:00 a.m. to Noon. The sites for each of the proposed 2018 AHDC projects located within the Greater Boston will be visited to the degree practical within this four hour time period.
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READING ASSIGNMENTS
Detailed reading assignments for each class will be posted on Canvas and/or emailed to enrolled students in advance of each class. Students are responsible for checking for posted assignments and/or announcements in advance of each class.
The Internet is the best source for historical and current information on affordable housing and students will be asked to utilize it throughout the course. An annotated list of useful affordable housing and community development Internet resources will be distributed early in the course and most of the assigned reading will be available on the Internet.
Materials not available on the Internet or Canvas will be distributed in class.
No textbook will be required. The Instructor will be happy to recommend reference resources for interested students. MIDTERM QUIZ AND WRITTEN ASSIGNMENTS
1. Midterm Quiz focused on Affordable Housing Finance Fundamentals (February 20)
2. Personal Definition of “Net Public Value” and "Net Public Value" Ranking of AHDC projects (April 17)
3. Final Team Project (AHDC Submission/Supplementary Report or Alternative Final Project) (no later than April 17, dependent upon class presentation date).
In addition to the quiz and two written assignments listed above there are two additional written assignments that are interim components of the AHDC Submission. The following interim submissions will not be graded but brief comments will be provided by the Instructor:
1. AHDC Project Schedule with Current Project Status (March 6 or March 8, dependent on meeting date with Instructor)
2. AHDC Project Progress Report (March 27)
The Final Project will be a team effort requiring a formal classroom presentation and the submission of an AHDC Proposal. The AHDC proposal (including, if required, a brief Supplemental Memo addressing question raised by the Instructor or c lassmates following the team classroom presentations). Students will also be required to complete a Team Contribution Allocation Form for each AHDC team member who is a student in this course. The Team Contribution Allocation Form will be a confidential document for review by the Instructor only.
Alternative Final Project topic proposals are due no later than January 30; earlier submissions
are strongly encouraged and the Instructor encourages students with a particular topic
interest to discuss the proposed topic with the Instructor after the first or second class.
There will not be a Final Exam in this course.
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CLASSROOM PRESENTATIONS
The Affordable Housing Development Competition (AHDC) /Alternative Final Project classroom presentations have been scheduled for April 10, April 12, and April 17.
GRADING
Grades will generally conform to the GSD recommended grading distribution policy and will be determined based upon the following inputs:
Attendance and Classroom Participation Quality (20%),
Midterm Quiz (15%),
Written Assignment (Net Public Value Definition and Project Ranking) due April 17 (20%), and
Final Project: Project Proposal (if applicable), Interim Project Schedule and Project Status Reports, Classroom Presentation, Final Report or AHDC Submission/Supplementary Report, and Team Contribution Allocation Form (if applicable).
Consensus critical evaluations of an AHDC team member’s performance will be seriously considered by the Instructor in assigning final grades (45%).
As noted previously, participation in classroom discussion is a very important component of this course. Each class is designed to encourage active participation by all students. With the exception of required university-sponsored travel for studios and extraordinary events, health issues, or religious observances, students are expected to attend all classes. Classes will begin promptly at 8:30 am and sign-in sheets will be distributed at each class.
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COURSE OUTLINE (GSD SES-05490 / HKS SUP-666) SPRING 2018
AFFORDABLE AND MIXED-INCOME HOUSING
DEVELOPMENT, FINANCE AND MANAGEMENT
Detailed assignments and readings for each class will be posted on Canvas
https://canvas.harvard.edu/courses/40668
and/or emailed to enrolled students throughout the course.
CLASS DATE DAY TOPIC COMMENTS
1 JAN
23
TUES Course Overview
Affordable Housing Development Competition (AHDC) Overview, Benefits, and Requirements Alternative Final Project Option Affordable Housing Development Process (Introduction of Assignment for Next Class)
Please bring a
name card to
each class with
a minimum font
size of 125.
2 JAN
25
THUR Affordable Housing Development
Process: Stages and Steps
Interrelationships and Relative
Importance of Respective Components
in the Affordable or Mixed-Income
Housing Development Process
Exercise to be
prepared for
discussion
Distributed at
prior class and
available on
Canvas
3 JAN
30
TUES Fundamentals of Affordable Housing
Finance (Gap Financing) (Class I)
Defining and Plugging the Affordable Housing Funding Gap
Understanding Seven Basic Gap Financing Subsidy Vehicles
Exercise to be
prepared for
discussion.
Available on
Canvas
Reminder: Students
not planning to participate in the
AHDC must submit proposals for their
proposed Alternative Final Project no later
than today.
NOTE: STUDENT INTRODUCTORY SESSIONS FOR THE AHDC PROGRAM HAVE BEEN SCHEDULED FOR FEBRUARY 5 AND FEBRUARY 6. DETAILS ARE
PROVIDED IN THE ATTACHMENT AT THE END OF THIS COURSE OUTLINE.
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CLASS DATE DAY TOPIC COMMENTS
4 FEB
1
THUR Understanding Seven Basic Gap
Financing Subsidy Vehicles (Class II)
Quantifying Each Subsidy’s Financial
Impact to Better Understand its
Contribution to Affordability
N/A FEB
5
or
FEB
6
MON
TUES
Affordable Housing Development
Competition (AHDC) Student Intro
Sessions
“Students learn about the competition
and meet other students to form teams.
Interested students must attend at
least one of these sessions and
complete the online student registration.
Registering will help identify you and
your skill set to help the student
coordinating committee form teams.”
Old South Church
645 Boylston Street
Boston, MA
6:00 – 8:00 PM
Directions
available at
AHDC
Website
5 FEB
6
TUES Critical Affordable Housing
Information Resources Available on
the Internet
Please bring
laptop to class
6 FEB
8
THUR Fundamentals of Affordable Housing
Finance (Rental Housing) Preserving Long Term Affordability
Financial
Exercise to be
prepared for
discussion
Available on
Canvas
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CLASS DATE DAY TOPIC COMMENTS
7 FEB 13
TUES Fundamentals of Affordable Housing Finance (For Sale Housing) Alternatives to Preserve Long Term Affordability
Financial
Exercise to be
prepared for
discussion
Available on
Canvas
N/A FEB
13
TUES Meet the Developer Night and Finalize
Team Formation
“Meet with developers, learn about the
projects. Finalize team formation.”
Old South Church
645 Boylston Street
Boston, MA
6:00 – 8:00 PM
8 FEB 15
THUR Preparing a Capital Cost Pro Forma
Defining the Development Program and
Establishing Site Plan and Building
Design Objectives
N/A FEB
16
FRIDAY Individual Registration Deadline
“Final date to complete online student
registration.”
N/A FEB
19
MON AHDC Team Registration and
Developer Preference Deadline
“Team leaders email student
coordinators list of team members, team
project managers, and top three project
preferences.”
9 FEB 20
TUES MIDTERM QUIZ: AFFORDABLE
HOUSING FINANCE FUNDAMENTALS
10 FEB
22
THUR Low Income Housing Tax Credit
(LIHTC) Program and the Qualified
Allocation Plan (QAP): Policy Objectives
and Basic LIHTC Program
Characteristics
Preparation
includes a Tax
Credit Yield
exercise to be
prepared for
discussion
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CLASS DATE DAY TOPIC COMMENTS
11 FEB
27
TUES Guest Speaker (TBA)
The Guest Speaker will be a LIHTC
Industry Expert.
12 MARCH
1
THUR Preparing an Operating Pro Forma
Defining the Preferred Income Mix
Preparing a Sources and Uses of
Funds Statement
Defining the Proposed Subsidy Mix
13 & 14 MARCH
3
SAT Site Visits to Proposed AHDC Sites
within the Greater Boston Area
Site Visit to Charlesview Residences in
Allston) (Time Permitting)
Bus Tour will be held “Rain or
Shine.”
Bus Tour will be held “Rain or Shine.”
Bus leaves
promptly at 8:00
a.m. from Gund
Hall. Returns to
Gund Hall at
noon.
15 MARCH
6
TUES AHDC Project Team Meetings with
Instructor and Team Meetings
Instructor will meet with each AHDC team individually to review each Team’s Project Schedule and current project status.
Written
Project Schedule
Required
16 MARCH 8
THUR AHDC Project Team Meetings with
Instructor and Team Meetings
Instructor will meet with each AHDC team individually to review each Team’s Project Schedule and current project status.
Written
Project Schedule
Required
N/A MARCH
13
TUES Spring Recess
N/A MARCH
15
THUR Spring Recess
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CLASS DATE DAY TOPIC COMMENTS
17 MARCH
20
TUES Putting Together a Comprehensive Debt, Equity and Subsidy Application for Publicly-Assisted Affordable Housing Projects: The Massachusetts “OneStop” Financing Application
18 MARCH
22
THUR Property Management and Asset
Management Tasks Appreciating the Importance of Quality Property Management In Achieving Long Term Economic Sustainability Critical Property Management Issues for Proposed AHDC Projects
AHDC Progress
Report
(based upon
previously
distributed
Progress Report
Form)
to be submitted by all AHDC teams at the beginning of class on March 27
19 MARCH
27
TUES YIMBY: Developing Affordable
Housing in an Affluent Suburban Community
The Massachusetts Comprehensive Permit Law: Creative Legislation to Expand the Supply of Affordable Housing in Massachusetts Advantages and Disadvantages of Mixed-Income Housing
Case study to be
prepared for
discussion
AHDC Progress
Report due today
20 MARCH
29
THUR Affordable Housing: A Global Perspective
Guest Speaker (Confirmed):
David A. Smith Founder and CEO Affordable Housing Institute™ Boston, MA
“Mr. Smith is the founder of the Affordable Housing Institute AHI), a not-for-profit corporation. AHI develops sustainable housing financial ecosystems worldwide. With more than 30 years direct experience in affordable housing, Mr. Smith uniquely combines the roles of practitioner and theoretician, participant and policymaker.”
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CLASS DATE DAY TOPIC COMMENTS
21 APRIL
3
TUES Housing for Special Needs Targeted
Populations: What Are the Special
Development Team, Site, Design,
Funding, Property Management and
Supportive Service Requirements for
Special Needs Housing?
Be prepared to
discuss Matrix
that you have
prepared
N/A APRIL
4
WED AHDC PROPOSALS DUE AT FEDERAL HOME LOAN BANK OF BOSTON
BY 10:00 AM
FHLB Boston
800 Boylston
St
Boston, MA
22 APRIL
5
THUR Final Project Presentations
(Affordable Housing Development
Competition Projects)
AHDC Team
Presentations
23 APRIL
10
TUES Final Project Presentations
(Affordable Housing Development
Competition Projects)
AHDC Team
Presentations
24 APRIL
12
THUR Final Project Presentations
(Affordable Housing Development
Competition Projects)
AHDC Team
Presentations
25 APRIL
17
TUES Personal Definition of Net Public Value
(NPV) re: Affordable Housing
Developments
Comparative Net Public Value Ranking
of AHDC Projects
Discussion/Critique of Proposed AHDC
Projects
Written
Assignment
(Individual)
26 APRIL
19
FINAL
CLASS
THUR Continued Discussion/Critique of
Proposed AHDC Projects
Course Evaluations
Course Review
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Housing Development Competition – Timeline
Event Date & Time Location
Invitations Mailed to
Developers
December 2017
Applications Due from
Development Organizations
Mid-January 2018
Student Intro Sessions Students learn about the
competition and meet other
students to form teams.
Interested students must attend
at least one of these sessions
and complete the online
student registration.
Registering will help identify
you and your skill set to help
the student coordinating
committee form teams.
Monday, February 5
6:00 to 8:00 p.m.
Tuesday, February 6
6:00 to 8:00 p.m.
Old South Church
645 Boylston Street
Guild Room, 4th floor
Boston, MA
Directions
Meet the Developer Night
and Finalize Team
Formation Meet with developers, learn
about the projects. Finalize
team formation.
Tuesday, February 13 6:00 to 8:00 p.m.
Old South Church
645 Boylston Street
Mary Norton Hall, 2nd floor
Boston, MA
Directions
Individual Registration
Deadline Final date to complete the
online student registration.
Friday, February 16
Team Registration and
Developer Preference
Deadline
Team leaders email student
coordinators list of team
members, team project
managers, and top three
project preferences.
Monday, February 19
2018 Student Coordinators
Competition Begins! Team and developer pairings
are emailed to project
managers.
Wednesday, February
21 6:00 to 8:00 p.m.
Mentor Night Student teams meet with
finance and design mentors.
Developers are welcome.
Wednesday, February 21 6:00 to 8:00 p.m.
Old South Church
645 Boylston Street
Mary Norton Hall, 2nd floor
Boston, MA
Directions
Related Links
Articles about the
Competition
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Workshop Night
Affordable housing finance
Sustainable development
Submitting a successful
proposal
Wednesday, March 7 6:00 to 8:00 p.m.
Old South Church
645 Boylston Street
Mary Norton Hall, 2nd floor
Boston, MA
Directions
Second Mentor Meeting Mid- to late-March To be scheduled by team.
Submission Deadline Wednesday, April 4
10:00 a.m.
Please submit the Competition
Proposals, the Executive
Summary, and Printing
Directions (letter or legal size
and preferred binding
placement) to the Dropbox set
up by the student
coordinators.
Please direct questions to
the 2018 Student Coordinators
Awards and Reception including presentation of final
proposals. If you are not a
participant in the competition
(student team, developer,
mentor, advisor, or
sponsor),click here to register
for the event.
Tuesday, April 24
Boston Society of Architects
280 Congress St., Suite 200
Pearl and Fort Point Rooms
Boston, MA
Directions
Post Competition Breakfast Tuesday, May 1
Boston Society of Architects
280 Congress St., Suite 200
Pearl and Fort Point Rooms
Boston, MA
Directions
Address: 800 Boylston Street, 9th Floor, Boston, MA 02199 | : 617-292-9600 | : [email protected]
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