The Technical Assistance Collaborative (TAC) released a report on April 9, co-authored by Ann O’Hara and Jim Yates, entitled Creating New Integrated Permanent Supportive Housing Opportunities for ELI Households: A Vision for the Future of the National Housing Trust Fund. The report highlights innovations in affordable housing financing strategies designed to benefit Extremely Low Income (ELI) households, including people with significant and long-term disabilities who need permanent supportive housing (PSH). Each financing strategy in the report can serve as a model for financing affordable ELI housing using National Housing Trust Fund (NHTF) capital and operating subsidy resources.
TAC’s report focuses on non-traditional financing strategies from Pennsylvania, North Carolina, and Illinois that are consistent with recommendations in a recent NLIHC companion report entitled, Aligning Federal Low Income Housing Programs with Housing Need. NLIHC calls for federal investments in housing to be better aligned with the nation’s need for housing affordable to ELI renter households.
TAC features the achievements of Pennsylvania, North Carolina, and Illinois because each state’s strategy added ELI renter units to the overall supply without relying on existing HUD subsidy programs, created integrated PSH units that can help states comply with the community integration mandates of the American With Disabilities Act, and is also suitable for the creation of non-PSH ELI units.
The Pennsylvania Housing Finance Agency (PHFA) created the Rent Subsidy Fund as part of its Low Income Housing Tax Credit (LIHTC) program. The Rent Subsidy Fund finances a 15-year ELI subsidy for a small number of units set aside within LIHTC properties. Rents at these set-aside units are 30% of the income of a household at 20% of area median income (AMI). To cover the cost of the 20% of AMI units, PFHA allows a developer to request an additional 5% developer’s fee. The LIHTC program allows an additional developer fee in order to generate equity to fund a rent subsidy escrow or reserve account. This approach has created 200-300 ELI units in approximately 60 properties since the program’s inception in 2005.
North Carolina’s Targeting/Key Program, administered by the North Carolina Housing Finance Agency (NCHFA), sets aside a small number of PSH units in every new LIHTC property financed by NCHFA. The Key Program offers developers state-level project-based rental assistance for these units so that tenants pay no more than 30% of household income for rent. Voluntary supportive services are made available to the PSH/Targeting residents through the North Carolina Department of Health and Human Services (DHHS). More than 2,400 Targeted PSH units have been created, with an average of 200 new PSH units added to the portfolio every year.
In Illinois, the Maryland-based Harry and Jeanette Weinberg Foundation (Weinberg) partnered with the Illinois Housing Development Authority (IHDA) to test an innovative philanthropic approach to funding integrated PSH units for ELI households with disabilities through the LIHTC program. IHDA uses Weinberg capital grant funds as an incentive for a LIHTC developer to establish rents for these units at 30% of household income. The grants are committed to the project by IHDA at the closing of the project’s permanent financing to enable the project to reduce permanent debt and apply the debt service savings to support the PSH units.
“With funds finally going into the National Housing Trust Fund, we have the opportunity to begin closing the enormous gap between the need for housing among extremely low income households and the supply,” said Sheila Crowley, President and CEO of the National Low Income Housing Coalition, in a press release about the TAC report. “We are grateful to TAC for identifying state agencies that are thinking outside of the box to build integrated permanent supportive housing, and for highlighting their successes in this illuminating new report. It is our hope that every state agency tasked with administering the NHTF will use this report as a guide when deciding on the most efficient use of funds.”
TAC’s report is available here.
NLIHC’s report is available here.
The joint press release from TAC and NLIHC about the report release is available here.