Financial Assistance: Resources for Workforce Housing Development
The development of affordable housing units is always the result of multiple partners and funding sources. Financial and In-kind resources are pooled together to provide operating support, pre-development funds, construction funds, and permanent sources of funds to cover long-term lending or equity needs.
Affordable Housing partners and funding sources range from small local businesses to Federal Agencies. All are important in the development of affordable housing units. These organizations and their associated resources have been categorized below.
LOCAL BUSINESS SUPPORT
Several area businesses and financial institutions have provided program development funds, tools and material donations, and operating support funds. These businesses include Lowe’s, Home Depot, Stock Building Supply, and Burton Lumber, who have donated tools or materials. Further, State Bank of Southern Utah recently provided a donation to a needy handicapped individual, and the Wal-Mart Foundation has donated funds to assist with the operational aspects of affordable housing creation.
Ruby’s Inn, Garfield County’s largest employer supported a small project in Tropic, Utah by making available some low-cost land, and then subordinating the land loan and donating over $180,000 in construction infrastructure.
United Way has provided grant monies to support Rental Assistance programs which help families with emergency needs, thus preventing them from becoming homeless.
LOCAL MUNICIPALITIES
Without the support of the Cities, Towns, and County governments, affordable housing projects would be very difficult to complete. Most of the local jurisdictions where affordable projects are developed participate in some form or another. St. George City, Hurricane City, the Town of Springdale, Tropic Town, the City of Kanab, and Garfield County have participated through: cash donations, legal assistance, donations of city materials or labor, sponsoring of CDBG funds, impact fee deferrals or impact fee forgiveness.
Three established Housing Authorities operate in St. George, Cedar City, and Beaver City, respectively. Each provides critical housing services, typically focusing on HUD Section 8 vouchers and rental assistance. Each Housing Authority has a number of affordable units that they have acquired or developed. These units serve low- and very low income renters. Additionally Beaver City Housing Authority recently developed a number of Rural Development Farm-labor Housing Units, to assist low-income individuals or families working in the agricultural sector of Beaver County.
The Five County Association of Governments provides important housing resources, such as: technical assistance with GIS and planning, Down-payment Assistance, Weatherization Assistance, Housing Rehabilitation Loans, HEAT, and Emergency Loan Funds.
STATE OF UTAH
The State of Utah provides several important sources that aid the development of affordable housing. These resources range from training and technical assistance to project grants, low-interest loans, and administering Federal Low Income Housing Tax Credit funds and HOME Funds. These agencies are listed below:
Olene Walker Housing Loan Fund (OWHLF) This fund is administered by the State Department of Community and Economic Development (DCED). These funds are typically a mixture of HUD HOME funds and Utah State ‘match’ or program funds. Most funds are loaned to developers to be used on affordable projects, at significantly below-market interest rates, ranging from 1 % to 5%, depending upon the unit types and the income levels served. These funds have sometimes been granted to needy projects, to ensure the success of viability. The OWHLF also administers a Pre-development loan fund, which provides short-term loans of up to $20,000 to help developers with the upfront costs of developing affordable projects.
Community Development Block Grants (CDBG) DCED oversees this HUD grant program which is administered at the local levels by entitlement communities or local Associations of Governments (AOG’s). These grant funds may be used to further affordable housing projects or programs, and are sponsored by a local jurisdiction, such as a city, town, or county government. These funds have been used very successfully to help affordable projects leverage additional funds in Southwestern Utah.
Rural Development Fund Board These grant funds are available to Towns or Cities in several rural counties in Central and Southern Utah. Funded by set asides from Mineral, Oil, & Gas leases, some of these funds have been used to help bring infrastructure to affordable housing developments in Garfield and Kane Counties.
State Community Service Office Working under the umbrella of the DCED, this office administers Emergency Shelter Grants (ESG), Critical Needs Housing (CNH) grants (and one other type that I haven’t used and can’t remember). These grants typically range from $5,000 to $30,000.
Utah Housing Corporation (UHC) This quasi-state agency administers the distribution of Utah’s Federal Low-income Housing Tax Credit (LIHTC) allocation. LIHTC’s usually form the core source of funds in Affordable Multi-family Apartment projects. Federal LIHTC’s that are awarded to Affordable Housing developers are sold to investors, who bring equity funds as a source of project development funds. UHC also oversees Tax Credit compliance issues associated with LIHTC’s and supports various low-interest loan programs, which can provide below market loans to low-income families.
The CROWN (Credits-to-Own) Program, which is UHC’s innovative Single-family ‘lease-to-own’ program, allows families to rent single-family homes for 15 years, and apply a portion of the lease payment towards the purchase of the home at the end of the affordability period. At that time, the families can opt to purchase the home at a deep discount.
REGIONAL & NATIONAL NON-PROFITS
Several Western and National Non-profits have been instrumental in providing timely funds that ensures the success of affordable housing projects, in addition to giving much-needed training and operating funds.
Rural Community Assistance Corporation (RCAC) This regional non-profit provides important resources for low-interest loans, pre-development funding, and technical assistance. RCAC also provide loans for water systems and waste water systems, and is the Regional Technical Assistance Contract provider for USDA’s Rural Development (RD) MSHP.
The Rural Collaborative (RC) The RC is another regional non-profit that assists emerging and small non-profits with training and technical assistance expertise. The RC spearheaded the Utah Capacity Building Collaborative (UCBC), which provided capacity building funds to 18 affordable housing non-profits to help with growth and training. Small short-term operating loans and bridge loans can be utilized to help pull small non-profits through difficult cash flow crunches.
Neighborhood Reinvestment Corporation This national non-profit’s mission is to provide funds, training and technical assistance to non-profits to assist with blighted urban area.
Housing Assistance Council Headquartered in Washington, DC, this nationwide non-profit administers key HUD funding that supports USDA’s RD Mutual Self Help Program. Self-Help Opportunity Program (SHOP) funds, are a key ingredient to developing land or infrastructure for MSHP projects, or supplies needed subsidy for very-low income families.
The Enterprise Foundation provides important training and operating fund support to build capacity. The Foundation provides: low-interest loan funds which are used to bridge funding gaps; hosts an electronic library that covers hundreds of topics relating to affordable housing and housing development; and, offers grants to help cover the costs of planning and implementing green components of affordable housing developments, refer to http://www.greencommunitiesonline.org/tools/funding/grants/
REGIONAL & NATIONAL BANKS
Several large banking institutions provide support through unrestricted operating support and construction lending services for affordable housing developments. Some of which include: Washington Mutual, Wells Fargo, Zions Bank, US Bank, Bank of American Fork, Bank One, State Bank of Southern Utah, Key Bank, and Heritage Savings.
Utah Community Reinvestment Corporation (UCRC) This Utah-based lending institution is a coalition of 34 banks who have invested a portion of their profits into a fund to provide Permanent Loans at attractive terms and below-market rate interest rates.
INDUSTRIAL & COMMERCIAL BANKS
Utah is home to several industrial or commercial banks who have located to this state because of a strong financial markets and favorable market conditions. Foremost in this group is American Express Centurion Bank. Several other industrial banks here in Utah also support affordable housing through the purchase of LIHTC’s, including Chase Bank, Merrill Lynch, Morgan Stanley Bank, Pitney Bowes, Chevron Texaco Bank, Advanta Bank, Merrick Bank, and CIT Bank.
GOVERNMENT-SPONSORED ENTITIES
Chartered by Congress, these entities were created to support and stabilize the Secondary Lending markets, and provide favorable lending terms to member banks. These GSE’s include:
FANNIE MAE This entity has a Utah partnership office located in Salt Lake City, and has been very active in supporting affordable housing projects and initiatives in Utah. FannieMae has given training, technical assistance, and operating grant funds. With many innovative lending products, FannieMae supports local banks with loan products that help low income borrowers purchase homes. Fannie also has been credited with developing Employee Assistance Programs, to help employers create incentives to retain valued employees. This GSE is also a major purchaser of LITHC’s, which supports multi-family products.
FREDDIE MAC Although this GSE’s presence in Utah’s affordable housing arena is much less known than its sister FannieMae, Freddie Mac is also an important purchaser of LIHTC’s in Utah.
FEDERAL HOME LOAN BANK (FHLB) OF SEATTLE This organization is one of twelve sister banks located across the country. The FHLB’s Affordable Housing Program (AHP) is a grant program that is funded by profits set aside by this bank to support affordable housing projects. The Seattle FHLB also has the ‘Challenge Fund’, which is a pre-development loan fund. Other programs sponsored by the FHLB include Economic Development Loans, and Down-payment assistance funds.
FEDERAL AGENCIES
Two Federal agencies have been in the forefront of affordable housing development in Utah:
Dept. of Housing & Urban Development (HUD) HUD has of course been known for its Section 8 program, which provides project and individual-based vouchers to assist low-income properties or individuals with Rental Assistance. While these vouchers are now hard to obtain, they are still an important source of existing Rental Assistance. HUD also sponsors two special needs project types, namely the Section 202 “Elderly individuals” and the Section 811 “Disabled individuals” projects. These special needs projects are subsidized by HUD, and constructed using HUD grant funds and low interest loans.
USDA’s Rural Development (RD) Most of RD’s programs can be utilized only in small rural communities, typically with populations of less than 20,000, depending upon the program. Several RD project types have been successful in Southern Utah. Most notable is the RD Section 523 Mutual Self Help program. Participants partner with a non-profit who supplies tools and construction supervision, and Rural Development who provide Grant Technical assistance and Permanent 502 Loan funds. Using their own labor, program participants create ’sweat equity’, and get into a home with no money down. Other RD programs include the RD 515, which is a subsidized Rental Assistance property, and the RD 514, Farm Labor subsidized housing to assist low-income agricultural workers.