The ABC’s of Housing Assistance in Tennessee

June 10, 2013

This presentation serves…..

…..to provide the communities an overview of housing programs available in Tennessee:

Tennessee Housing Development Agency

Community Development Block Grant program

USDA—Rural Development

THDA

What does THDA stand for?When was it created?

Who created it?Answers

Tennessee Housing Development Agency

1973 The Tennessee General Assembly,

under Acts of 1973, Chapter 241

The Mission of THDA

“Leading Tennessee Home by creating safe, sound, affordable housing opportunities.”

THDA's goal is to provide housing assistance to those in need by offering a variety of housing-related programs.

THDA—statutory powers

TCA 13-23-101 thru 133

Creation Board of Directors

Officers and delegation of duties General Powers

Energy use considered in making loans Issuance of bonds and notes

THDA is………….

Making A Positive Impact on Tennesseans…and Tennessee’s Economy!

› Provided mortgage financing to over 100,000 first-time homebuyers in Tennessee 

› Helped create/preserve 47,000 affordable, rental units

› Provides monthly rental assistance to over 35,000 Tennessee households

› THDA’s total economic impact in 2011 was $728.6 million

THDA is……. Self-Sustaining

› THDA receives no state appropriations to fund operations, but does receive administrative fees to service some federal programs.

› Generates annual earnings through its Single Family Mortgage program ($18 million in FY2012)

› THDA’s earnings are used to cover operational expenses and fund several critical THDA housing initiatives

THDA is…..

High-Performing › THDA bonds rated AA+ by Standard & Poor’s

and Aa1 by Moody’s › Holds over 26,000 mortgages in its portfolio,

assets valued at $2.1 billion › $557 million in total Net Assets › Recognized for program and operational

excellence by the National Council of State Housing Agencies

The Programs of THDA

The Divisions

o Community Programso Rental Development

o Section 8 Rental Assistanceo Single Family

oCommunity Programs Division

Community Investment Tax Credit (CITC)

Emergency Shelter Grant (ESG) HOME Program Housing Trust Fund (HTF)

Competitive Grant

Community Investment Tax Credit (CITC) Financial institutions may obtain a credit against the

sum total of taxes for low-income housing activities engaged by eligible housing entities

Administered in collaboration with the TN Dept. of Revenue

THDA certifies the eligibility of the housing entity and the low income housing activity

TN Dept. of Revenue awards the tax credits to the financial institutions

Eligible Housing Entities: › Tennessee nonprofit organizations› Development Districts› Public Housing Authorities› THDA

CITC, cont’d Eligible Activities:

› Activities that create or preserve affordable housing for low-income Tennesseans*

› Activities that assist low-income Tennesseans in obtaining safe and affordable housing

› Activities that build the capacity of an eligible non-profit organization to provide housing opportunities for low-income Tennesseans

› Any other low-income housing related activity by the THDA Executive Director and the Commissioner of Revenue

*Low-income Tennesseans are defined as those who are at or below 80% of the area median income adjusted for family size

CITC, cont’d

Application Process

Applications may be secured from the THDA website. Upon receipt of the completed application and supporting documentation, THDA will certify the housing entity and the low-income housing activity as eligible for participation in the program.

THDA will forward the application to the TN Dept. of Revenue and the department will award the tax credits.

Emergency Shelter Grant (ESG) Emergency Solutions Grant (ESG) provides services,

emergency shelter and rapid-rehousing to the homeless and to assist individuals and families at risk for homelessness through prevention assistance

ESG funding is allocated to areas outside the CDBG entitlement communities that receive their own funding directly from HUD

ESG activities are focused on helping meet the needs of emergency homeless shelters and other agencies who provide services to the homeless or those at risk for homelessness

THDA assists with developing and expanding services in rural areas that lack ready access to other homeless assistance funds, placing a priority on maintaining and securing permanent housing

HOME Program

THDA administers the HOME program to help meet the housing needs of low and very low income individuals and families

HOME funds are awarded through an annual

competitive application process to cities, counties and eligible nonprofit organizations

Local governments in TN that receive HOME funds directly from HUD are not eligible to apply

HOME Program, cont’d Eligible Activities

• Homeowner Rehabilitation Programs: designed to rehabilitateowner-occupied, dilapidated houses in order to bring thestructure up to local building code. Program beneficiariesreceive the funds as a forgivable grant with a complianceperiod (5 yrs on rehab houses, 15 yrs on new-built houses)

• Rental Housing Programs: designed to provide affordable rental units for low income households through new construction of rental units or acquisition and/or rehabilitation of rental units. Program beneficiaries receive funds as a grant with an affordability period of 5 to 20 years.

HOME Program, cont’d

Eligible ActivitiesHomeownership Programs: designed to promote homeownership opportunities for low and very low income individuals and families.

Restricted to a down payment assistance program in which funds are awarded to program beneficiaries as a soft second mortgage not to exceed $14,999 with an affordability period of 5 years.

HOME Program, cont’d

Application Process Application workshop in January in each Grand Division of the state Applications are due in mid-March Successful applicants are notified at the end of May HOME contracts begin on July 1st for a 3-year term

HOME Program Requirements

Income Limits: Households with incomes of 80% or less of area median income, adjusted for family size. For rental projects, 90% of the households must have incomes below 60% of area median income and adjusted for family sizeSubsidy Levels: Levels for units range from a minimum of $1,000 per unit to a maximum of $108,523 for a unit with 4 or more BR’sProperty Standards: Housing must meet all applicable local codes, rehabilitation standards and zoning ordinances at project completion. New construction projects must be Energy Star qualified and certified by an independent Home Energy Rating System rater.

Housing Trust Fund (HTF) Purpose: Establish a pool of funds that would

be allocated to local entities to meet the housing needs for very low income, elderly, and special needs citizens.

General Program Uses: Assistance to those person of very low income (those earning 50% or less of the area median income.) Competitive HTF grants support the chronically homeless, persons with mental retardation or mental illness, developmental disabilities, single mothers recovering from substance addiction or physical abuse, veterans with multiple needs and ex-offenders reentering society

Housing Trust Fund (HTF), cont’d Emergency Repair Fund: The dollars are

allocated to the state’s 9 development districts specifically to repair a home to keep it livable for its elderly homeowner USDA/Rural Development has an established home repair fund United Cerebral Palsy partners with THDA to construct ramps for the disabled

Housing Trust Fund (HTF), cont’d Project Requirements

› Serve the targeted populations: very low income, very low income elderly, or very low income with special needs

› Match grant funds with new local funds› Extra consideration given for projects that use

the funds as loans as opposed to grants (to create a local revolving fund for future use)

oRental Development Division

Low-Income Housing Tax Credits (LIHTC)

Multifamily Tax-Exempt Bonds

Low Income Housing Tax Credit (LIHTC)

LIHTC: a credit against federal income tax liability each year for 10 years for owners & investors in affordable rental housing. Amount of tax credits is based on reasonable costs of development, as determined by THDA, and the number of qualified affordable units.

EligibilityA development must have a minimum of either: - 20% of its units occupied by households with incomes no greater than 50% of area median income, or - 40% of its units with incomes no greater than 60% of area median income. -Income limits are adjusted for household size-Max. rents are established for each size of unit, not to exceed 30% of the area maximum income for specified household sizes -All requirements of the relevant qualified allocation plan developed by THDA and approved by the Governor must be met

Low Income Housing Tax Credit, cont’d Compliance

Developments must remain income and rent restricted for as long as 30 years. Tenants of low income are protected against eviction or large rent increases under certain circumstances.

THDA allocates tax credits to eligible developments through a competitive process or through a non-competitive process in conjunction with use of tax-exempt financing, all subject to the relevant qualified allocation plan.

Multi-Family Tax Exempt Bonds THDA authorizes the allocation of Multifamily Tax-

Exempt Bond Authority to local issuers for multifamily developments

Bonds must be issued by a local board or other issuing entity with jurisdiction in the area of the proposed development

Some units must be occupied by households of low income:› 20% of the units must be occupied by households with

income no greater than 50% of area median income, or› 40% of the units with household incomes no greater

than 60% of area median income› 75% of the units must be occupied by households with

incomes no greater than 115% of the area median income

Multi-Family Tax Exempt Bonds, cont’d Per development limits involving new

construction and for developments involving conversion and/or acquisition rehabilitation apply

Multifamily Tax-Exempt Bond Authority will be allocated only to eligible applications on a first come, first served basis.

Applicants must meet THDA and federal tax requirements and all other applicable federal, state, and local laws or ordinances

oSection 8 Rental Assistance Division Rental Assistance Voucher Program• A rental assistance program funded through HUD• Assistance for affordable, decent, safe and sanitary

housing in the private market for very low-income families, the elderly, and the disabled.

• The program is federally funded but run by a network of about 2,300 state and local housing agencies THDA administers the Housing Choice Voucher program

in 72 Tennessee Counties (see THDA’s Rental Assistance Housing Voucher link for listing of Rental assistance field offices)

• Who is eligible for Vouchers?• How Does a Family Apply for a Voucher?• How Long will a Family wait for Assistance?

oSingle Family Division

BUILD Loan Program Foreclosure Prevention Initiative Homebuyer Education Homeownership Choices Homeownership Choices – New

Start Homeownership for the Brave

BUILD Loan ProgramPurpose: promote the production, preservation, and rehabilitation of housing for low and very low income households by making low interest short term loans available to eligible non-profit organizations that help meet their housing needs. Eligible Participants Eligible Activities BUILD Program Loan Options

Foreclosure Prevention Initiative

Launched in Fall 2007 through the partnership efforts of the Statewide Affordable Housing Coalition and THDA. Major Components of this Initiative: Public Awareness Campaign Counseling Grant Funds Certification Training Great Save Loan

Homebuyer Education“The First Step towards Successful Homeownership” THDA maintains a list of certified homebuyer education trainers who can help consumers considering the purchase of a home. Trainers address the following basic areas: Budgeting and Credit Shopping for a Home Getting a Mortgage Loan Keeping Your Home and Managing Your Finances

Homeownership ChoicesTHDA’s Homeownership programs are designed for low-and moderate-income borrowers. 3 programs offering these choices: Great Rate Program

Offers a below-market interest rate loan secured by a first mortgage

Great Advantage Program Offers a loan at a slightly higher interest rate,

secured by a first mortgage, but offer assistance with down payment and closing costs.

Great Start Program Same as Great Advantage Program, except interest

rate and closing cost percentage is higher

Homeownership Choices – New Start

Designed to promote the construction of new homes for low and very low income Tennesseans

Delivered through non-profit organizations with established programs for the construction of single-family housing for this income level The program selects the homebuyer, determines eligibility, constructs the home, provides homebuyer education

Homeownership for the BraveWhat is this? It’s a ½ percent reduction off THDA’s 30-year fixed mortgage interest ratesWho is eligible? Active duty members of the armed forces and National Guard, veterans discharged under conditions other than dishonorable, reservists with at least 180 days of active duty service, spouses of service members and qualified veterans as well as their surviving spouses. Example:Homeownership Choice Rate Homeownership for

the Brave RateGreat Start: 4.2%/1.25+.25/4.40%APR 3.7%/1.25%+.25/3.84%APR

Community Development Block Grants (CDBG’s)*

CDBG dollars are available to communities with a population of fewer than 50,000 residents for the purpose of attracting new or expanding existing companies, as long as the projects align with one of three objectives:

Principally benefit low and/or moderate income people.

Eliminate or prevent slums and/or blight. Address imminent health and/or safety problems.

*This is part of the Small Cities CDBG program. Other communities receive money directly from HUD (see ECD’s website for those communities.)

CDBG’s (1974)

Goal of program: extinguish poverty and “urban blight.”

One of the longest running HUD programs Has less federal oversight and largely used

at the discretion of state and local governments

Must be used to benefit low and moderate income people, preventing or eliminating blighted areas and slums, and addressing urgent threats to health or safety

CDBG grants administered two ways:

Economic Development› Grants for industrial infrastructure,

buildings, and equipment Community Development

› Grants for water and wastewater treatment facilities

› Housing rehabilitation and projects aimed at improving community livability

CDBG Housing

Covers owner-occupied housing rehabilitation

Occasional new construction

General Guidelines for 2011 CDBG Housing Rehabilitation Applications

All activities in the application should be directly related to housing

Funds are limited to the renovation of owner-occupied dwellings

Funds are limited to grants Funds used for rehabilitation will be

dispersed only through competitive bids

New construction should be minimal

Community Development grants

Eligible Projects

CDBG "regular round" projects: anything that is eligible under the federal legislation, such as rural fire protection, primary health care, and other health and safety-related conditions in the community

CDBG Application requirements

Application Requirements

Applications may be submitted only once a year, normally in February

Previous projects must be completed before another application can be submitted

Eligible cities, with the exception of metros, or counties can submit only one application

Maximum grants are $500,000 for lines, systems and housing rehabilitation.

Maximum grants for community livability projects are $300,000. Regional projects can receive up to $1 million grants.

Grant rates are based on the ability-to-pay of the applicant as calculated by the Center for Business and Economic Research at the University of Tennessee.

Evaluation Criteria

Measures the program on four factors:

Need

Feasibility

Impact

Essentialness

Project Rankings/Approvals

Projects are reviewed, scored and ranked based on evaluation criteria and based on total number of points earned.

The Governor’s set-aside fund

Additional Resources for CDBG Grants

2013 Applications

Handbooks

Title VI Compliance

http://tn.gov/ecd/CDBG

For more information on the CDBG program

For information about the Community Development CDBG Program, contact Brooxie Carlton at(615) 741-8806

For information about the Economic Development CDBG Program, contact Jeff Bolton at (615) 253-1909.

For information about the disbursement of funds, contact Stephanie Burnette at (615) 253-1912.

For additional information and assistance, contact Charlotte Tugwell with GNRC at (615) 862-8828

USDA—Rural Development

The office of Rural Development:› Runs programs intended to improve the economy & quality of live in Rural America› Created to administer the former Farmer’s Home

Administration’s non-farm financial programs for rural housing, community facilities, water and waste disposal, and rural businesses.

USDA—Rural Development

Rural Housing Service (RHS)› Homeownership options to individuals› Housing rehabilitation and preservation funding› Rental assistance to tenants of RHS-funded

multi-family housing complexes› Farm labor housing› Assistance to developers of multi-family

housing projects (assisted housing for elderly and disabled, community facilities such as libraries, child care centers, schools, municipal buildings)

USDA—Rural Development Has helped more than 650,000 American

families achieve homeownership the Rural Refinance Pilot Program – that has

helped more than 5,500 homeowners refinance their mortgage at lower rates

This initiative has expanded from 19 to 34 states in an effort to provide assistance for more families.

USDA—Rural Development Housing Assistance

› Housing for Individuals•Single Family Direct Homeownership Loans•Single Family Guaranteed Homeownership Loans•Rental Assistance Subsidy

› Housing Development Opportunities•Single Family "Self-Help" Technical Assistance Grants•Rental Housing Direct Loans•Farm Labor Housing Loans and Grants•Housing Preservation Grants•Housing Application Packaging Grants•Housing Site Loans

› Lender Opportunities •Single Family Homeownership Loan Guarantees• Rental Housing Loan Guarantees

USDA—Rural Development

Tennessee—Nashville area

Christopher Westbrook, Area Director 615-783-1359 | 800-342-3149 x 1359 3322 West End Ave, Ste 302 Nashville, TN 37203

Serves all thirteen counties in the GNRC.

www.rurdev.usda.gov/tn/