NLIHC updated its estimates of the amount of funding each state, the District of Columbia, and the U.S. territories will receive as a result of the Federal Housing Finance Agency (FHFA) directing Fannie Mae and Freddie Mac to begin setting aside funds for the National Housing Trust Fund (NHTF) and Capital Magnet Fund (CMF) (see Memo, 12/15/14).
The total amount in the first year will depend on the volume of business for Fannie Mae and Freddie Mac in 2015. The statute requires that the companies transfer 4.2 basis points of their annual volume of business to fund the NHTF and the CMF, 65% for the NHTF. The new estimates are based on $250 million or $500 million being available for the NHTF in February 2016.
The estimates for each state are based on HUD’s proposed rule for the formula for allocating NHTF dollars (see Memo, 12/4/09) and 2007-2011 Comprehensive Housing Affordability Strategy (CHAS) data, the newest available data.
The proposed allocation formula gives a combined weight of 75% to the two factors in the formula that address the needs of extremely low income (ELI) renter households, those with income at or below 30% of area median income (AMI). One of these two factors, the ratio of the shortage of standard rental units both affordable and available to ELI renters in the state to this shortage at the national level, has the highest priority with a weight of 50%. The other factor addressing ELI renters has a weight of 25% and reflects renter households paying more than 50% of their income for rent and utilities, or living with incomplete kitchen or plumbing facilities, or having more than one person per room.
The remaining two factors in the formula are weighted at 12.5% each and address very low income renters (VLI), those with income between 30% and 50% of AMI. These two factors reflect the shortage of affordable and available rental units for VLI households, and the number of VLI renter households paying more than 50% of their income for rent and utilities, or living with incomplete kitchen or plumbing facilities, or having more than one person per room.
The formula also takes into account the relative cost of construction in each state compared to the national cost of construction.
The minimum allocation that a state can receive is $3 million, so any states with an estimated allocation below that amount will receive $3 million, and the allocations to all other states will be adjusted down accordingly.
The District of Columbia and Puerto Rico are defined as states for the purpose of receiving NHTF dollars. In addition, allocations to American Samoa, Guam, the Northern Mariana Islands, and the Virgin Islands are based on the proportion of renter households in each of these areas to the total number of renter households in the U.S. These amounts are subtracted from the total available for the 50 states, the District of Columbia, and Puerto Rico.
NLIHC’s updated estimates of state allocation amounts are at http://nlihc.org/sites/default/files/StateAllocations_0115.pdf.