9-6-2019 Housing Council - Proposed Charge Increase

9-6-2019 Housing Council - Proposed Charge Increase

Proposed Charge Increase for Affordable Rental Housing Programs Caleb Yant, Chief Financial Officer Natasha Detweiler-Daby, Senior Policy Analyst and Interim Multifamily Program Section Manager September 6, 2019 Statement of Intent Create a Revenue Model that: Where possible, ensures each program generates sufficient revenue to cover its costs of operation Maintains appropriate working capital reserves to provide funding during times of reduced program activity Reduces dependency on state programs to subsidize operating deficits from federal programs

Doesnt turn a profit September 6, 2019 Impact to Program Subsidization Programs Subsidization Needed Notes Conduit Bond Program No Local Innovation Fast Track Housing Program

Yes Proposed charges reduce subsidization rate from 79% to 9% Low Income Housing Tax Credit 9% Yes Proposed charges reduce subsidization rate from 46% to 32%, and shifts the primary source from state programs to the Conduit bond program Low Income Housing Tax Credit 4% No

HOME Investment Partnerships Yes State Gap Financing Programs (GHAP, HDGP, Lottery Bonds for Preservation, Mental Health Housing, Permanent Supportive Housing, etc.) No Proposed charges reduce subsidization rate from 56% to 53% and shifts the primary source from state programs to the Conduit bond program September 6, 2019 State Comparison of Application Charge

Application Charge $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $- LIHTC 4% LIHTC 9% *Assumes application with 100 units September 6, 2019 State Comparison of Reservation Charge

Reservation Charge 14% 12% 10% 8% 6% 4% 2% 0% LIHTC 4% LIHTC 9% September 6, 2019 State Comparison of Monitoring Charge

Monitoring Charge $42 $40 $38 $36 $34 $32 $30 LIHTC 4% LIHTC 9% September 6, 2019 Other Significant Changes Proposed Reservation Charges for all current and future Gap

Financing Programs From 0% (in most cases) to 1% for grants and 1.5% for loans Monitoring Charges for non-LIHTC units From $0/unit to $25/unit Conduit Bond Program issuance charge From maximum of $100,000 to $150,000 September 6, 2019 Impacts to Rental Housing Developments Statement of Intent: Not impact current budgets; minimize cost increases for monitoring Balance ensuring long-term program delivery viability for OHCS staff and wanting to foster applications that are fully

conceptualized with not wanting to artificially create a barrier to entry; policy trade-off Acknowledge that increases to development budgets may result in a nominal need for increase in Gap resources September 6, 2019 Project Example LIFT & LIHTC 4%: For-profit sponsor, Willamette Valley 102 Units for a total cost of $12,395,086 (LIFT funding request was $4,590,000, annual allocation of LIHTC 4% was $524,708, Conduit funding request was $7,300,000) Prior Application Charge: 102 units x $25 a unit = $2,550 Proposed Application Charge (4% application charge would apply): $5,000 (a net increase of $2,450) Prior Reservation Charge: LIFT = $0 LIHTC 4% ($524,708 x 12%) = $62,965 Proposed Reservation Charge:

LIFT ($4,590,000 x 1.5%) = $68,850 (a net increase of $68,850) LIHTC 4% ($524,708 x 12%) = $62,965 (no change) Prior Conduit Issuance Charge: $7,300,000 x 1.5% (Max $100,000) = $100,000 Proposed Conduit Issuance Charge: $7,300,000 x 1.5% (Max $150,000) = $109,500 (a net increase of $9,500) Total Net Increase: $80,800 September 6, 2019 Project Example 9% LIHTC: Non-profit sponsor, Central Oregon, resident services 36 Units for a total cost of $17,768,022 (annual allocation of LIHTC 9% was $1,200,000, GHAP funding request was $778,125) Prior Application Charge: 36 units x $25 a unit = $900 Proposed Application Charge (9% application charge would apply): $5,000 (a net increase of $4,100) Prior Reservation Charge: GHAP = 0% LIHTC 9% ($1,200,000 x 6.5%) = $78,000

Proposed Reservation Charge: GHAP (778,125 x 1.5%) = $11,672 (a net increase of $11,672) LIHTC 9% ($1,200,000 x 9.5% ) = $114,000 (a net increase of $36,000) Total Net Increase: $51,772 September 6, 2019 Project Example Gap Financing (GHAP) & LIHTC 4%: Non-profit sponsor, central Portland 173 Units for a total cost of $ 42,117,561 (GHAP funding request $2,824,713, annual allocation of LIHTC 4% was $1,350,286, Conduit funding request was $23,300,000) Prior Application Charge: 173 units x $25 a unit = $4,325 Proposed Application Charge (4% application charge would apply): $5,000 (a net increase of $675) Prior Reservation Charge: GHAP = $0 LIHTC 4% ($1,350,286 x 12%) = $162,034 Proposed Reservation Charge:

GHAP ($2,824,713 x 1.5%) = $42,371 (a net increase of $42,371) LIHTC 4% ($1,350,286 x 12%) = $162,034 (no change) Prior Conduit Issuance Charge: $23,300,000 x 1% (Max $100,000) = $100,000 Proposed Conduit Issuance Charge $23,300,000 x 1.5% (Max $150,000) =$150,000 (a net increase of $50,000) Total Net Increase: $93,046 September 6, 2019 Questions and Feedback

Recently Viewed Presentations