National Housing Trust Fund (NHTF)Capital Magnet Fund (CMF)

CARH 2015 Annual Meeting & Legislative Conference

Offering Financial Advice and Solutions to Health Care, Senior Living, and Housing Providers.

June 15, 2015

Financing Progress2

National Housing Trust Fund

- Created as part of the Housing and Economic Recovery Act of 2008 (HERA)

- On 12/11/14 the Federal Housing Finance Agency (FHFA) directed Fannie Mae and Freddie Mac to begin allocating funds equal to 4.2bps of their business volume. 48.75% goes to NHTF and 26.25% to the Capital Magnet Fund. These are dedicated funds, not subject to appropriations

- States are expected to receive the NHTF allocations in the summer of 2016. Distributed as block grants by formula

- NHTF will use the HUD HOME regulations where the NHTF statute does not prescribe specific features

- Program targets ELI renters (greater of 30% AMI or the federal poverty level)

Financing Progress3

National Housing Trust Fund

- In years where < $1B states must use 80% of their allocation on ELI renters with no more than 10% going toward home ownership. Up to 10% may be used for a state’s administration and planning costs.

- In years where > $1B states must use at least 75% on ELI rental; no more than 25% VLI rental with no more than 10% ELI going toward home ownership.

- States must select a state agency that will receive and administer the funds. Each state must prepare a Consolidated Plan of which the NHTF Allocation Plan is a part of. “Subgrantees are allowed. 21 states have designated an administering agency

Financing Progress4

National Housing Trust Fund

- States to “commit” (expected to begin construction or rehab with one year) funds within 2 years. Uncommitted funds are recaptured by HUD and reallocated to other states. Funds must be spent in 5 years.

- Affordability is 30 years with the states having the option to extend that term

- States can use 1/3 of their annual allocation to be used for operating cost assistance. Allows for upfront funding for financial feasibility for the entire affordability period.

- Unofficially HUD has indicated NHTF does not trigger Davis-Bacon

- NHTF may be loans, grants, interest subsidy, equity investments, other

Financing Progress5

National Housing Trust Fund – Key Differences from HOME

- Income Targeting:- NHTF: 75% of funds must benefit ELI renters (30% AMI)- HOME: 90% of rental units must benefit at incomes at or below 60% AMI

- Eligible Activites:- NHTF: 90% of funds directed at rental housing; 10% to home ownership- HOME: wider range of uses and no limits on how much can be used for

home ownership versus rental

- Funding:- NHTF: dedicated source of funding on the mandatory side of the federal

budget and is not subject to annual appropriations- HOME: receives funding through annual appropriations

Financing Progress6

National Housing Trust Fund – What Can We Do

- Contact governors as to which state agency should administer

- Comment on the Allocation Plan before it is finalized- Make sure ELI and VLI people are aware of the Allocation

Plan process- Make sure rural areas are considered as well as those of

metro areas- Advocate at the national level for dedicated funding- www.nhtf.org

Financing Progress7

Capital Magnet Fund

- Created as part of the Housing and Economic Recovery Act of 2008 (HERA)

- On 12/11/14 the Federal Housing Finance Agency (FHFA) directed Fannie Mae and Freddie Mac to begin allocating funds equal to 4.2bps of their business volume. 48.75% goes to NHTF and 26.25% to the Capital Magnet Fund. These are dedicated funds, not subject to appropriations

- Administered by the Treasury Department’s Community Development Financial Institutions (CDFI) Fund as opposed to HUD

- Grants to CDFI’s and nonprofit housing organizations through a competitive process.

Financing Progress8

Capital Magnet Fund

- Used for affordable housing as well as related economic development and community service facilities (day care centers, workforce development center, health care clinics, etc

- Has only had one round of funding and that was in 2010 for $80M (legislation creating the CMF allowed it to be capitalized through regular appropriations)

- In that round there were 230 applicants. 13 non-profit housing developers, 9 CDFI’s and on tribal housing authority were awarded

- Each dollar of CMF attracted over $12 in other capital

Financing Progress9

Capital Magnet Fund

- 70% of CMF must be used for housing. If CMF finances rental housing then at least 20% of the units at or below 80% AMI with the rest at or below 120% AMI

- Affordability requirement is 10 years- Like HOME the CMF has a wider range of uses and has no

limits on how much can be used for home ownership versus rental

- www.cdfifund.com