HARRIS COUNTYCOMMUNITY SERVICES DEPARTMENT HOME Investment Partnerships Program Program Workshop February 10, 2011
Welcome • Divisions of Community Services Department • Housing and Community Development • Economic Development • Transit Services • Social Services • Financial Services • Administrative Services • Development Staff • Christy Lambright, Assistant Director of Planning and Development • Mayra Guevara Bontemps, Development Manager • Shanna LeBrum, Senior Program Analyst • Kelly Opot, Program Analyst • Mai X. Nguyen, Housing Analyst • Toni Candis, Program Analyst
Welcome Program Funding Available Annually • Community Development Block Grant (CDBG) Program • Emergency Shelter Grants (ESG) Program • HOME Investment Partnerships (HOME) Program Special Program Funding • Neighborhood Stabilization Program (NSP) • Homelessness Prevention & Rapid Re-housing Program (HPRP)
CSD Overview Understanding Harris County Consolidated Plan 2008-2012 • http://www.csd.hctx.net/PYConsolidatedPlan.aspx • Outlines Harris County’s goals and objectives for serving the community Annual Action Plan • http://www.csd.hctx.net/pr_annualactionplan.aspx • Lists all projects funded for each entitlement year Funding Opportunities • http://www.csd.hctx.net/rfq.aspx • http://www.csd.hctx.net/ps_rfp.aspx • Competitive process for distributing all available funds
Service Area Unincorporated Harris County and its 15 cooperative cities: Bellaire Seabrook Deer Park Shoreacres Galena Park South Houston Humble Tomball Jacinto City Waller Katy Webster LaPorte West University Place Morgan’s Point ** Houston, Baytown and Pasadena receive their own entitlement funds and are not included in the Harris County service area.
Program Review What is the purpose of HOME? • To expand the supply of permanent, decent, affordable housing • To expand the supply of affordable housing providers • To strengthen the ability of state and local governments to provide housing • To strengthen public-private partnerships
Program Review In what format do we provide HOME funding? • HUD permits: • Interest bearing and non-interest bearing loans • Forgivable loans • Loan guarantees • Equity investments • Interest subsidies • Grants • Harris County provides funds in the form of: • Forgivable loans • Interest bearing loans
Program Review Program Requirements • Affordable Housing Policy • Maximum Income Limits • Subsidy Limits • Match Requirement • Minimum Property Standards • Long Term Affordability
Program Review Program Requirements Affordable Housing Policy Harris County must administer its HOME program in a manner that provides housing that promotes greater choice of housing opportunities while facilitating and furthering full compliance with Title VI of the Civil Rights Act of 1964, the Fair Housing Act, Executive Order 11063, and HUD regulations.
Program Review Program Requirements Income Limits Median Family Income (MFI) for Houston-Baytown-Sugar Land, TX Currently MFI of a family of 4 persons is $65,100 Source: US Department of Housing and Urban Development, April 2010
Program Review Program Requirements Subsidy Limits • The minimum amount of subsidy for an affordable housing project is $1,000 per HOME-assisted unit • The maximum subsidy is based on the 221 (d)(3) program limits for the metropolitan area established each year • Harris County imposed limit for multifamily is $40,000 per HOME assisted unit
Program Review Program Requirements Match Requirement The HOME Program requires match funds in an amount equal to no less than 25 percent of the total HOME funds requested for project costs. Match is a permanent contribution to affordable housing. It is NOTleveraging.
Program Review Program Requirements Match Requirement – Eligible Match Sources • Cash contributions from a non-federal source • Donated construction materials or voluntary labor • Value of donated land or real property • Value of foregone interest, taxes, fees or charges levied by public or private entities • Investments in on- or off-site improvements • Proceeds from bond financing • Cost of supportive services to families living in HOME-assisted units • Cost of homebuyer counseling to families purchasing HOME-assisted units • Sweat Equity
Program Review Program Requirements Match Requirement How and when is match verified? • As part of the RFP (Request For Proposal), a formal letter or documentation of match commitment for the project must be attached to the application. • When the project is awarded and during project monitoring period. The Finance section will monitor the match committed for the project.
Program Review Program Requirements Minimum Property Standards Properties must meet both: • Harris County’s Minimum Property Standards* • State/local code/standards (If no state/local code, meet model codes identified in 24 CFR Part 92.251 **) • Must meet Model Energy Star Codes • Must meet latest IRC (International Residential Code) *Found on our website at http://www.csd.hctx.net/ps_homerepairprogram.aspx **Found on HUD website athttp://www.hud.gov/offices/cpd/affordablehousing/lawsandregs/regs/finalrule.pdf
Program Review Program Requirements Housing Quality Standards Inspections Harris County Inspection Services must inspect all housing units prior to leasing/purchase and every year thereafter for rental properties.
Program Review Program Requirements Long Term Affordability To ensure that HOME investments yield affordable housing over the long term, HOME imposes rent and occupancy requirements over the length of an affordability period. Period of Affordability = Period of Compliance
Program Review Eligible Costs Hard CostsSoft Costs -site acquisition -credit reports -site improvements -financing fees -lead hazard reduction -legal fees -contractor overhead -architectural fees -direct construction -pj incurred
Program Review Eligible Activities • Homebuyer Activities (Single family, two – four family homes, Condominiums) • Multifamily Rental Housing • Community Housing Development Organization (CHDO) activities
Program Review Homebuyer Activities • Acquisition of land for the development of single family homes. • Construction of single family homes. • Down payment and closing cost assistance.
Program Review Homebuyer Activities Affordability Period The affordability period represents the minimum length of time a recipient of homeownership assistance must maintain and reside in the property as his/her primary residence. How is this done? • Lien is placed on property • Monitoring to ensure property still primary residence
Program Review Homebuyer Activities - Affordability Period Exercise I Homebuyer receives $14,200 in down payment assistance. What is the amount of time that they must remain in the residence as their primary home?
Program Review Homebuyer Activities Affordability Period
Program Review Homebuyer Activities - Affordability Period • Exercise II • HCCSD provides $25,000 of HOME subsidies per unit to a for-profit developer. The developer sells the homes at market price once the development is complete. • Homebuyer is purchasing one of these assisted HOME units and also receives down payment assistance in the amount of $14,200. • What is the affordability period or amount of time that they must remain in the residence as their primary home?
Program Review Homebuyer Activities - Affordability Period Mechanism to recapture all or portion of original HOME investment Resale: New buyer needs to be low-income and occupy as primary residence Recapture: Any willing buyer, but Harris County recaptures the entire amount of original HOME investment
Program Review Homebuyer Activities - Affordability Period Exercise II • Affordability period under resale option: 10 years • Development subsidy as an indirect assistance to homebuyer: $25,000 • Downpayment assistance as an direct assistance to homebuyer: $14,200 Total benefit to homebuyer $39,200
Program Review Homebuyer Activities - Affordability Period Exercise II 2) Affordability period under recapture option: 5 years • Downpayment assistance as an direct assistance to homebuyer: $14,200 Development assistant to the unit for $25,000 is not counted under recapture option in determining the affordability period
Program Review Multifamily Rental Housing • Acquisition of land for the development of affordable rental multifamily units. • Acquisition and rehabilitation of existing multifamily units for affordable permanent or transitional rental housing. • Construction of new multifamily affordable rental housing.
Program Review Multifamily Rental Housing Maximum HOME Investment HUD provides guidelines, 221 (d)(3) program limits, for the maximum amount of HOME funds that may be expended per unit based on size (one bedroom, two bedrooms, etc.). Harris County has set a maximum per unit subsidy of $40,000
Program Review Multifamily Rental Housing Maximum HOME Investment Exercise III Twenty one (21) units of a multifamily rental housing project will be built with HOME funds provided by HCCSD. What is the maximum HOME subsidy for this project?
Program Review Multifamily Rental Housing HOME-Assisted Units Exercise IV A project consisting of construction of a 120 unit multifamily development is requesting $1,000,000 in HOME funding. What is the number of HOME-assisted units?
Program Review Multifamily Rental Housing HOME-Assisted Units Unlike other federal grant programs, HOME distinguishes between the units in a project that have been assisted with HOME funds and those that have not.
Program Review Multifamily Rental Housing HOME-Assisted Units • HOME-assisted units must be identified as “fixed” or “floating”. • HOME-assisted units have rent and occupancy rules that apply.
Program Review Multifamily Rental Housing HOME-Assisted Units For properties with both assisted and non-assisted units, there must be a designation of “fixed” or “floating” units. Fixed units - The specific units that are HOME-assisted are designated and never change (these specific units are subject to HOME rents and occupancy requirements). Floating units – The units that are designated as HOME-assisted may change over time as long as the total number of HOME-assisted units in the project remains constant.
Program Review Multifamily Rental Housing- Maximum Rents Every HOME-Assisted unit is subject to rent limits designed to help make rents affordable to low-income households. These rent limits are called “HOME Rents” There are two HOME Rents used in the HOME program. High HOME Rents Low HOME Rents
Program Review Multifamily Rental Housing- Maximum Rents High HOME Rents are the lesser of: • The Section 8 Fair Market Rents (FMRs) for existing housing; or • 30% of the adjusted income of a family whose income equals 65% of median income. Source: U.S. Department of Housing and Urban Development, April 2010
Program Review Multifamily Rental Housing- Maximum Rents Low HOME Rents For projects with 5+ HOME-assisted units, 20% of HOME-assisted units must have rents no greater than: • 30% of the tenant’s monthly adjusted income, OR • 30% of the annual income of a family whose income is 50% of the median income Source: U.S. Department of Housing and Urban Development, April 2010
Program Review Multifamily Rental Housing PROGRAM RULE The program funds rule requires that at least 90 percent of HOME-assisted units must be reserved for residents whose income does not exceed 60 percent of the median family income at lease up. • For rental properties of which five or more units will be HOME-assisted, at least 20 percent of the units must be reserved for families who meet the threshold as very-low income (at or below 50 percent median income). • The balance of rental units must assist tenants with incomes that do not exceed 80 percent of the median family income.
Program Review Multifamily Rental Housing- Rents Don’t Forget: utility allowances must be accounted for in your rent structure Where do I get these? Local public housing authority
Program Review Multifamily Rental Housing - Affordability Period
Program Review HOME Beneficiaries All beneficiaries of HOME-assisted units must be low to moderate income
Program Review Calculating Income Eligibility HCCSD has adopted the Section 8 Annual Income (Part 5) method of calculating annual income Basic Guidelines • Anticipated Annual Gross Income • All Adult Members Count • All Sources of Income Count* • Value of Assets Must be Considered – Greater than $5,000 *Applicable income per HUD guidance
Program Review Calculating Income Eligibility Basic Process • Determine Household Size • Determine Whose Income Counts • Determine How Much Income is Counted • Determine Value of Assets
Program Review Calculating Income Eligibility EXERCISE V The King household situation: John (38) and Mary (35) are married and have three children, Josh (18), Sophie (17), and Kim (9). Mary is 7 months pregnant with her fourth child. Household Size? Who’s income is counted?
Program Review Calculating Income Eligibility EXERCISE V John works full-time at Chick&Fry making $8.50/hr. as a cook in the evenings. He receives a $200.00 annual bonus and is not going to receive overtime. He is paid bi-weekly. $8.50 x 80 hrs./prd. x 26 py prd./yr = $17,680.00 +Bonus $200.00 Total Income = $17,880.00 Source Documentation: Three (3) months worth of paycheck stubs or a Verification of Employment
Program Review Calculating Income Eligibility EXERCISE V Mary baby sits for the neighbors every week during the summer, and they pay her cash in the amount of $300.00 per week for her services. $300.00/wk. x 12 wks/yr = $3,600.00 Total Income = $3,600.00 Source Documentation: Three (3) months worth of paycheck stubs or a Verification of Employment
Program Review Calculating Income Eligibility EXERCISE V Josh works part-time at Sunny, a convenience store while he is going to school for his business degree. Josh gets paid $7.00/hr. as a stock clerk, and does not have a set schedule of hours. Josh also receives financial aid of $3,000.00 for school, and is enrolled part-time. (20+30+17.4+34+34+20+30+10+20+30+17.4+24) = 286.8 hrs/12 wks = 23.9 hrs. $7.00 x 23.9 hrs/wk x 52 wks/yr = $8,699.60 Total Income = $8,699.60 Source Documentation: Three (3) months worth of paycheck stubs or a Verification of Employment