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Affordable Housing in Nebraska. Pat Compton – Housing Development Specialist DEPT OF ECONOMIC DEVELOPMENT pat.compton@nebraska.gov 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
Affordable Housing in Nebraska
  • Pat Compton – Housing Development Specialist
  • DEPT OF ECONOMIC DEVELOPMENT
  • pat.compton@nebraska.gov
  • 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