Funding Calendar for 2020-2021

1. Funding Calendar for 2020-2021 Affordable Rental Housing Division

2. Agenda • Need For Funding Calendar • Stakeholder Outreach • Funding Calendar • SWHP Alignment and NOFA Principles • Key Policy Question #1 • Key Policy Question #2 • Key Policy Question #3 • Next Steps

3. Need For Funding Calendar • As OHCS Development resources and priorities have expanded, it has become necessary to address stakeholder needs by publishing a calendar of fund offerings for the upcoming biennium. • Allow for better project planning, • Give surety on upcoming NOFA offerings, and • Will help to further drive affordable housing investments toward the Statewide Housing Plan priorities.

4. Stakeholder Outreach To inform the calendar and framework discussions: • Held September 9thto discuss upcoming funding opportunities and to garner feedback on a funding calendar and priorities for the 2019-2021 biennium; follow up survey recently closed. • “Mapping the Pipeline” exercise • Small Group Discussions • Equity and Racial Justice in NOFAs • LIFT 3.0 Rental Framework • Guiding Principles in Project Scoring • NOFA Standards • Project Development Manual (PDM)

5. Stakeholder Outreach

6. Funding Calendar Allow for better project planning, give surety on upcoming NOFA offerings, and will help to further drive affordable housing investments toward the Statewide Housing Plan priorities. • Things to consider: • Resource Demand • Resource Availability • Statewide Housing Plan Priorities • NOFA Guiding Scoring Principles

7. Resource Demand • “Mapping the Pipeline” exercise provided general project concepts that are in development or early stage planning. Preliminary information included: • 6,500 units across 84 projects • Mostly urban, new construction • Preservation remains a focus considering over 50 projects at risk of expiry

8. Resource Availability

9. SWHP Alignment and NOFA Principles • Equity and Racial Justice Priority: in funding affordable rental housing development we intend to build the following principles into our NOFA frameworks: • Affirmative Fair Housing Marketing • MWESB Construction Workforce Engagement • Resident Services; point incentive for culturally responsive partnerships with resources • Opportunity Area and Vulnerable Gentrification Area preference • Diversity, Equity and Inclusion (DEI) agreement

10. SWHP Alignment and NOFA Principles • Homelessness Priority: in developing fund offerings we would ensure that our NOFA frameworks give priority to: • Setting-aside units for those experiencing Homelessness • Setting-aside units for serving Homeless Veterans • Serving Lower Incomes • Including Project Based Rental Assistance

11. SWHP Alignment and NOFA Principles • Permanent Supportive Housing Priority: we have a Statewide Housing Plan goal of funding 1,000 PSH units during the 5 year Statewide Housing Plan period. In launching our PSH Initiative we will ensure that we are prioritizing: • Investing in training and technical assistance • Including PSH units in projects where there is operational resources as well as supportive tenancy services • Providing corresponding training and technical assistance • Serving those experiencing chronic homelessness

12. SWHP Alignment and NOFA Principles • Affordable Rental Housing Priority: we have a Statewide Housing Plan goal of increasing our funded project pipeline to 25,000 during the 5-year Statewide Housing Plan period. In developing NOFAs we will ensure that we are: • Producing a funding calendar to allow developers to plan resource needs • Investing in capacity building opportunities • Including adequate subsidy to ensure project viability, while incentivizing leverage; • Including funding options for new unit production, service enriched production, and preservation; • Prioritizing unit creation in production strategies • Prioritizing resident service connections in service enriched housing • Prioritizing expiration and loss of subsidy for preservation

13. SWHP Alignment and NOFA Principles • Rural Priority: we have a Statewide Housing Plan goal of increasing our rural investments to fund 985 units in rural Oregon. In developing NOFAs we will work to ensure that we are: • Setting subsidy limits that are sufficient to develop in rural areas where there is less access to leveraged resources, and where rents are low • Allowing rural investments under all development strategies • Targeting appropriate resources to rural areas • Prioritizing rural investments in rural areas with access to appropriate services to ensure success

14. SWHP Alignment and NOFA Principles • Homeownership Priority: while these resources are dedicated to the development of affordable rental housing (aside from part of the LIFT resources), we can foster connections to the Homeownership efforts by: • Prioritizing investment in projects that include asset building relationships where appropriate, and • Allocating 20 percent of the LIFT resources to Affordable Homeownership Development.

16. Key Policy Question #1 • At this point, we have not identified specific OAHTC resources for fund offerings; instead they are listed as “to be determined”. Policy Question: • What guidance does Housing Stability Council have for OHCS regarding the use of OAHTC? • in New Construction or Acquisition/Rehabilitation projects where the OAHTC investment serves to reduce rents to serve those with lower incomes, OR • In Preservation which serves to lower the cost of borrowing money for the project.

17. Key Policy Question #2 • In response to feedback the Department is proposing to allow developers to request OAHTCs outside of funding cycles as an additional resource to be used for a 4% LIHTC-only application. Policy Question: • Is Housing Stability Council comfortable with expanding our availability of OAHTCs to include out-of-cycle 4% LIHTC projects?; • What guidance would Housing Stability Council have regarding this use of OAHTCs; are there any preferences for project type or location that should be included, or the amount of resources allocated?

18. Key Policy Question #3 • The AWHTC has traditionally been made available on a first-come, first-served basis outside of NOFAs. As such, projects receiving these resources have to secure complementary resources to complete their development budget in future offerings, which has served to delay development processes. Policy Question: • Should OHCS consider including the Agricultural Workforce Housing Tax Credit (AWHTC) in a NOFA, such as LIFT or the Small Project NOFA? If so, what guidance would HSC provide in developing a strategy for this change.

19. Next Steps • Staff will incorporate Housing Stability Council, and additional stakeholder comments, into a funding calendar strategy to bring to the November Housing Stability Council meeting for review and recommendation.

20. Funding Policy Frameworks Housing Stability Council October 4, 2019

21. Agenda • Elements to be included in NOFA policy frameworks • Draft Framework Elements; Housing Stability Council Feedback • LIFT Program Framework; Housing Stability Council Feedback • Next Steps

22. Elements in NOFA Policy Frameworks • Striving to increase the standardization across NOFA offerings, so where we can be consistent in what we are asking of applicants, we are able to do so • NOFA Policy Frameworks provide the policy frame for a fund offering; high level guidance to use in developing a NOFA application, to include: • Scoring Principles, • Eligible Project Type, • Geographic Targeting, • Equity, • Funding caps.

26. Funding Policy Frameworks • Housing Stability Council feedback: • Specific feedback on the above framework elements, • What additional information Housing Stability Council would like to see in assessing the focus of each of these NOFA frameworks? General 2020-2021 Next Steps: • Following the October Housing Stability Council meeting, staff will incorporate Council and stakeholder input to develop funding frameworks for Housing Stability Council review and possible approval in November.

27. LIFT 3.0 Framework-DRAFT

28. LIFT Background • The primary goals of the LIFT Rental program are to create a large number of new affordable housing units to serve low income Oregonian families and to serve historically underserved communities, such as rural communities and communities of color. • LIFT 1.0: $40 million in 2015 • LIFT 2.0: $80 million in 2017 • LIFT 3.0: $150 million • $120 million set aside for rental development • $ 30 million set aside for homeownership development • Set-Asides: • Rural Communities, 50% of the $150 million • Urban Communities, 50% of the $150 million

29. Framework • High-level policy document that guides development of NOFAs; HSC oversight prescribed in LIFT statute • HSC approval of framework before NOFAs are developed and released allows program to be adaptable and responsive to policy priorities, programmatic changes and stakeholder needs • October 2019: first review of draft LIFT 3.0 framework, • November 2019: final draft for approval

30. Proposed Changes for LIFT 3.0 Rental • Minimum score required for serving communities of color in rural areas • Removal of the scattered site preference • Preference for family-sized units and the higher subsidies that support larger unit sizes • Continued scoring that gives substantial preference to those projects that require lesser subsidy per unit; scaled higher in rural areas than in urban areas.

31. LIFT Subsidy Increase • Per Unit Subsidy Cap: • Previously: • Urban; $75,000 / unit • Rural: $125,000 / unit • Draft Proposed: • Urban • Less than 2 bedrooms/unit: $75,000/unit • Two bedrooms/unit or more: $150,000/unit • Rural • Less than 2 bedrooms/unit: $125,000/unit • Two bedrooms/unit or more: $200,000/unit

32. LIFT Subsidy Increase • Larger bedroom size units have been disadvantaged in scoring because they require more subsidy so lose up to 20 points because they need higher subsidy than those with fewer bedrooms • Desire to incentivize larger family sized units with the LIFT program • Recommendation informed by stakeholder feedback on approach to increase larger units; evens the outcomes • Sample project data indicates units can increase by 200+ square feet with each additional bedroom; based on Key Performance Measure construction cost data that could mean an additional $80,000 in construction costs to get from a one bedroom to 3-bedroom unit • Draft Subsidy Caps remain below other gap funding efforts • Continued significant point preference for subsidy requests below the funding cap

33. Proposed Changes for LIFT 3.0 Homeownership • Minimum score required for serving communities of color in rural areas • Increased subsidy levels to mirror LIFT Rental changes • Continued scoring that gives substantial preference to those projects that require lesser subsidy per unit; scaled higher in rural areas than in urban areas. • Subsidy cap continued to be limited to the value of the land. • Required property valuation at application • Clarification of land ownership requirements

34. LIFT Homeownership Valuation / Land • Challenges using LIFT’s Article XI-Q bond funding for homeownership • Associated with the need to secure (100% Loan to Value) the LIFT Loan against the land; • Existing Homeownership Projects with fund reservations have had trouble getting land valuations (appraised, real market, or assessed value) that are as high as their request / need for subsidy; has resulted in projects needing to return their reservation • Given this need to secure the loan against the land, does not allow for project structures where the land is leased to the project owner who is accessing the LIFT resources.

35. Next Steps • Incorporation of HSC and stakeholder feedback into draft framework • Return to HSC November meeting for framework approval • Staff draft Homeownership and Rental NOFAs • NOFAs released in January 2020 with applications received in advance of late spring 2020 bond sale

36. Questions / Comments?