Affordable housing in nebraska
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Affordable Housing in Nebraska. Pat Compton – Housing Development Specialist DEPT OF ECONOMIC DEVELOPMENT [email protected] www.neded.org. Housing Funding Sources. Community Development Block Grant—CDBG HOME Partnership Act funds—HOME Nebraska Affordable Housing Trust Fund--NAHTF.

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Affordable Housing in Nebraska

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Affordable housing in nebraska

Affordable Housing in Nebraska

  • Pat Compton – Housing Development Specialist

  • DEPT OF ECONOMIC DEVELOPMENT

  • [email protected]

  • www.neded.org


Housing funding sources

Housing Funding Sources

  • Community Development Block Grant—CDBG

  • HOME Partnership Act funds—HOME

  • Nebraska Affordable Housing Trust Fund--NAHTF


Eligible activities

Eligible Activities

  • Build new rental units for persons that are low to moderate income.

  • Adapt a building from another use such as an old school or hotel to rental housing.

  • Rehabilitate an existing rental property owned by a non-profit or Public Housing Authority to meet local building codes and DED Rehabilitation Standards.


Eligible activities cont

Eligible Activities (cont)

  • Administer a homebuyer assistance program.

  • Develop new single family housing for home ownership, including infrastructure.

  • Purchase homes, rehabilitate to meet local building codes and DED Rehabilitation Standards and provide down payment assistance to a new homebuyer to purchase the homes. (PRR)


Eligible activities cont1

Eligible Activities (cont)

  • Administer a program to assist homeowners in rehabilitating their houses.

  • Strengthen the operations of non-profit organizations to develop affordable housing.


American dream

American Dream?

  • Homeownership not for everyone:

  • Rental may be best option because:

    • Bad credit

    • Job moves to different locations

    • Future not known

    • Don’t want the upkeep

    • Income does not support ownership


Rental with tax credits

Rental With Tax Credits

  • Larger projects of more than 10-12 units

  • Application for DED funding is included with LIHTC application

  • Applications due in the fall

  • Income eligible tenants at 60% AMI and below


Rentals without tax credits

Rentals Without Tax Credits

  • DED funding cycle begins in Febr. with Pre Ap

  • Awards announced after June 30

  • ROF in the fall

  • Sustainability depends on debt, expenses, revenue

  • Funding sources may include DED; FHLB; Private Foundations; Capital Campaign Fund


Rural community commonalities

Rural Community Commonalities

  • Population does not support need for larger LIHTC projects

  • Capital investment limited

  • Empty buildings may be available but uncertain condition

  • Few housing choices available

  • Labor force may be temporary/commute elsewhere


Rental units developed w o lihtc

Rental Units Developed w/o LIHTC

  • Income eligibility-80% AMI or below

  • First steps

    • Determine market, need, location/service area, budget

    • Determine financing sources

    • Who’s in charge—create the

      team

      • Lender, developer, architect,

        engineer, construction mngr


Variety of approaches to satisfy housing need

Variety of Approaches to Satisfy Housing Need

  • New Construction

    • Single family housing units—scattered sites

    • Duplex

    • Multifamily – up to 10 units

  • Existing building

    • Purchase; convert to rental by rehabilitation

    • Non profit ownership of rental

      properties—rehab to fit market:

      1 br > 2 br; 2 br > 1 br; ADA accessible


You may need a developer for

You May Need a Developer for

  • Creating the development concept

  • Testing the market

  • Evaluating site and design and costing out construction

  • Preparing the pro forma income and expenses statement

  • Preparing the sources and uses of funds statement


The developer cont

The Developer (cont)

  • Obtaining the construction financing

  • Locating permanent financing resources

  • Obtaining the construction Loan

  • Constructing the Project

  • Managing the Project during construction


Filling the gap at construction

Filling the Gap at Construction

  • Subsidizing Capital Costs

    • Smaller projects will have greater sustainability with less debt service

    • Monthly operating costs per unit may run approx. $350/mo. (taxes; insurance; maintenance)

  • NEDED AHP funding, FHL Bank AHP funding, USDA-Rural Development programs; private foundations


Filling the gap and serving the customer

Filling the Gap and Serving the Customer

  • Rental Subsidies

    • Consumer pays 30% of income

    • SSI Consumer with income at $715 per month

      • Pays $215

      • Rental Subsidy $185 (Sect 8 voucher)

      • Rental Income $400

      • $350 Taxes/insurance

      • $50/mo Debt Service?

      • Maintenance?


Rental subsidies

Rental Subsidies

  • HUD Section 8 Vouchers

    • Tenant-based – Can be used in any approved housing with the geographic service area of the Public Housing Authority

  • HUD-funded Public Housing Authority Project

    • Project-based – must live in that rental project and tenant must meet the application criteria

  • USDA-Rural Development Project

    • May have project-based assistance

  • Other HUD funded projects (811)

    • Project-based


Challenges

Challenges

  • Over estimated market

  • Limited rental assistance (Sect. 8)

  • Mismatched amenities, design.

    services with tenant market

  • Workforce unstable/mobile

  • Vacancies

    • result in decreased revenue and

      failure to cash flow

    • demand improved marketing strategies

    • may result in property deterioration


Conclusions

Conclusions

  • Rental Housing projects need adequate income to operate/cash flow

  • Success depends on:

    • Proven market need

    • Affordable rents

    • Maintenance of property

    • Debt reduction


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