On February 8, the Department of the Treasury published a revised interim rule and a notice of funding availability (NOFA) for the Capital Magnet Fund (CMF). Established by the Housing and Economic Recovery Act of 2008 (HERA) along with the National Housing Trust Fund (NHTF), the CMF is to be funded with the same annual assessment of 4.2 basis points of the volume of business of Fannie Mae and Freddie Mac as is the NHTF. HERA directs 65% to the NHTF and 35% to the CMF.
The precise amount that will be available for both the CMF and the NHTF in 2016 will become known on February 28.
The CMF, administered by the Community Development Financial Institutions Fund (CDFI Fund), provides grants through a competitive process to Community Development Financial Institutions (CDFIs) or nonprofit organizations that have demonstrated that the development or management of affordable housing is among their principal purposes. Grantees must leverage their award by ten times the grant amount and may use the grants to invest in the development, preservation, rehabilitation, or purchase of affordable housing for low-income families. The grants can also be used to promote economic development activities or community service facilities, such as day care centers, workforce development centers, and health care clinics, that are developed in conjunction with affordable housing activities.
The revised interim rule makes several changes to the interim rule initially published in December 2010, and includes updated definitions, requirements, and parameters for the implementation and administration of the CMF. The revisions are modeled after the program requirements for the HOME Investment Partnerships program and the credit requirements for the Low Income Housing Tax Credit (LIHTC) program.
The rule addresses the definition of affordable housing and what is meant by the statutory requirement that housing activities be primarily for the benefit of extremely low, very low, and low-income families. To qualify as affordable housing, a multi-family rental housing project financed with CMF funds must have at least 20% of its units occupied by any combination of low, very low, or extremely low income families. CMF-financed developments must also comply with specific rent limits and remain affordable for ten years. The maximum rent for an extremely low income family living in CMF-funded developments is 30% of 30% of the area median income.
The NOFA invites applications for the CMF’s FY16 round of funding. The CDFI Fund expects to award approximately $80 million in new funds with no more than 15% going to a single applicant. The NOFA outlines both the qualitative and quantitative review processes for grant applications and the criteria by which they will be judged. The NOFA states that to meet its rental housing priorities, the CDFI Fund will award “applications that propose to finance and/or support rental Affordable Housing Projects in which a minimum of 20 percent of the units in each project are targeted to Very Low-Income households and/or Extremely Low-Income families.” Applications are due by March 30.
Read the revised interim rule at: https://www.gpo.gov/fdsys/pkg/FR-2016-02-08/pdf/2016-02132.pdf
Read the NOFA here: https://www.gpo.gov/fdsys/pkg/FR-2016-02-08/pdf/2016-02372.pdf