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

  2. Housing Funding Sources • Community Development Block Grant—CDBG • HOME Partnership Act funds—HOME • Nebraska Affordable Housing Trust Fund--NAHTF

  3. 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.

  4. 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)

  5. Eligible Activities (cont) • Administer a program to assist homeowners in rehabilitating their houses. • Strengthen the operations of non-profit organizations to develop affordable housing.

  6. 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

  7. 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

  8. 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

  9. 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

  10. 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

  11. 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

  12. 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

  13. The Developer (cont) • Obtaining the construction financing • Locating permanent financing resources • Obtaining the construction Loan • Constructing the Project • Managing the Project during construction

  14. 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

  15. 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?

  16. 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

  17. 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

  18. 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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