Commonwealth Housing Forum 2004 Presentation by Milton R. Pratt, Jr. HUD Regional Director Wednesday, December 15, 2004

Commonwealth Housing Forum 2004

Commonwealth Housing Forum 2004

Presentation by Milton R. Pratt, Jr.Presentation by Milton R. Pratt, Jr.

HUD Regional Director HUD Regional Director

Wednesday, December 15, 2004Wednesday, December 15, 2004

Sustaining Development & Building Communities

Sustaining Development & Building Communities

““This Administration is working This Administration is working specifically to promote the specifically to promote the

production of affordable homes.”production of affordable homes.”

HUD Secretary Alphonso JacksonHUD Secretary Alphonso Jackson

HUD’s Financial ResourcesHUD’s Financial Resources

Community Development Block Community Development Block Grant/HOME Grant/HOME

202/811 Programs202/811 Programs Capital Bond Fund FinancingCapital Bond Fund Financing FHA Multi-Family InsuranceFHA Multi-Family Insurance Housing Choice Voucher ProgramHousing Choice Voucher Program

Community Development Block Grant Programs (CDBG)Community Development Block Grant Programs (CDBG)

Community Development Block Grant Community Development Block Grant ProgramsPrograms

-The rehabilitation of affordable housing has -The rehabilitation of affordable housing has traditionally been the largest single use of traditionally been the largest single use of CDBG grants.CDBG grants.

-CDBG funds are distributed by formula around -CDBG funds are distributed by formula around the country based on population, income levels, the country based on population, income levels, poverty rates and age of housing stock.poverty rates and age of housing stock.

HOME Investment Partnerships ProgramHOME Investment Partnerships Program

CDBG is the largest Federal block grant to CDBG is the largest Federal block grant to State and local governments designed to State and local governments designed to create affordable housing for low-income create affordable housing for low-income households.households.

Since 1992, through the HOME program, Since 1992, through the HOME program, we have committed to produce nearly we have committed to produce nearly 130,000 affordable housing units in 130,000 affordable housing units in Pennsylvania. Pennsylvania.

CDBG Funds for PennsylvaniaCDBG Funds for Pennsylvania

CDBG Funds for FY’ 2004CDBG Funds for FY’ 2004

-$348.7 million -$348.7 million Eligible Uses for the FundsEligible Uses for the Funds

-70% must be used for activities that benefit low- -70% must be used for activities that benefit low- and moderate-income persons.and moderate-income persons.

-Funds can be used for rehabilitation, new -Funds can be used for rehabilitation, new construction and infrastructure improvements.construction and infrastructure improvements.

CDBG Funds for PennsylvaniaCDBG Funds for Pennsylvania

Innovative Uses of CDBG Funds in PennsylvaniaInnovative Uses of CDBG Funds in Pennsylvania-The McFarland Press Apartments: a 49-unit -The McFarland Press Apartments: a 49-unit affordable rental property in Harrisburg’s South affordable rental property in Harrisburg’s South Allison Hill neighborhood.Allison Hill neighborhood.-This adaptive reuse project included $450,000 of -This adaptive reuse project included $450,000 of city HOME funds.city HOME funds.-Completed in 1997, it has received multiple -Completed in 1997, it has received multiple accolades including a PAHRA award of accolades including a PAHRA award of excellence.excellence.

What does the future hold for CDBG?

What does the future hold for CDBG?

The trend over the past two years reflects The trend over the past two years reflects reductions in the program funds because of reductions in the program funds because of declining population in Pennsylvania and other declining population in Pennsylvania and other factors used to determine funding levels.factors used to determine funding levels.

Program continues to be very popular with Program continues to be very popular with Congress and local elected officials; however, Congress and local elected officials; however, CDBG experienced a 6% decrease in the budget CDBG experienced a 6% decrease in the budget this year.this year.

202/811 Programs 202/811 Programs

Funds for FY’ 2004Funds for FY’ 2004

-$38.5 million for Pennsylvania-$38.5 million for Pennsylvania Eligible Uses for 202 FundsEligible Uses for 202 Funds

-Finance construction, rehabilitation or acquisition -Finance construction, rehabilitation or acquisition with or without rehabilitation of structures that with or without rehabilitation of structures that will serve as supportive housing for very low-will serve as supportive housing for very low-income elderly and provide for rent subsidies to income elderly and provide for rent subsidies to make them affordable.make them affordable.


Eligible Uses for 811 FundsEligible Uses for 811 Funds

-Provide interest-free capital advances to non--Provide interest-free capital advances to non-profit sponsors to help finance the development of profit sponsors to help finance the development of independent living condominium units and small independent living condominium units and small group homes for persons with disabilities.group homes for persons with disabilities.

Both programs provide funding assistance to Both programs provide funding assistance to project owners to subsidize operating expenses.project owners to subsidize operating expenses.


Innovative Use of 202 ProgramInnovative Use of 202 Program

-South Philadelphia Presbyterian Apartments were -South Philadelphia Presbyterian Apartments were officially dedicated on October 8, 2004.officially dedicated on October 8, 2004.

-The apartments provide 66 affordable one -The apartments provide 66 affordable one bedroom units in a five story building.bedroom units in a five story building.

-HUD provided more than $5.7 million to fund the -HUD provided more than $5.7 million to fund the mortgage of the building and an additional $1.2 mortgage of the building and an additional $1.2 million to subsidize the rent for the units.million to subsidize the rent for the units.

What does the future hold for the 202/811 Programs ?What does the future hold for the 202/811 Programs ?

Pennsylvania continues to produce Pennsylvania continues to produce competitive projects; however, competitive projects; however, environmental issues have hampered environmental issues have hampered funding for some projects.funding for some projects.

Nationally, congressional support for these Nationally, congressional support for these programs is strong. The programs have programs is strong. The programs have faced some pressure regarding completion faced some pressure regarding completion of projects in a timely manner.of projects in a timely manner.

Capital Fund Bond FinancingCapital Fund Bond Financing

Pennsylvania’s leading the charge with the allocation of Pennsylvania’s leading the charge with the allocation of capital fund bonds.capital fund bonds.

Housing Authorities in the Commonwealth are trying to raise Housing Authorities in the Commonwealth are trying to raise $40 million to be used for infrastructure upgrades in public $40 million to be used for infrastructure upgrades in public housing and mixed finance projects.housing and mixed finance projects.

Housing Authorities can borrow private capital and pledge Housing Authorities can borrow private capital and pledge part as debt service.part as debt service.

Structured as a bond transaction which can be done on an Structured as a bond transaction which can be done on an individual or group basis.individual or group basis.


Funds for FY’2004Funds for FY’2004

-Congress appropriated approximately $2.7 -Congress appropriated approximately $2.7 billion in ‘04 for the Capital Fund Program.billion in ‘04 for the Capital Fund Program.

-Housing Authorities can use up to 33% of -Housing Authorities can use up to 33% of the annual capital fund for debt service.the annual capital fund for debt service.


Eligible Uses for the FundsEligible Uses for the Funds

-Mixed finance projects and improvements -Mixed finance projects and improvements to building systems such as HVAC, to building systems such as HVAC, windows, doors, deferred maintenance.windows, doors, deferred maintenance.


Innovative Use of Capital Fund Bond FinancingInnovative Use of Capital Fund Bond Financing Philadelphia Housing Authority has completed the Philadelphia Housing Authority has completed the

first bond pool transaction in Pennsylvania in the first bond pool transaction in Pennsylvania in the amount of $150 million. amount of $150 million.

Grays Ferry Estates in Philadelphia is a multi-Grays Ferry Estates in Philadelphia is a multi-phased mixed finance project undertaken by the phased mixed finance project undertaken by the Philadelphia Housing Authority.Philadelphia Housing Authority.

What does the future hold for Capital Fund Bond Financing?What does the future hold for Capital Fund Bond Financing?

The future is very promising for this The future is very promising for this program.program.

Currently, a second round pool of funding Currently, a second round pool of funding is is

underway thanks to PHFA’s leadership and underway thanks to PHFA’s leadership and PAHRA support; the leverage amount is PAHRA support; the leverage amount is greater than the first round.greater than the first round.

Multi-Family FHAMulti-Family FHA

FY’ 2004 FHA Initial Endorsements in Pennsylvania and FY’ 2004 FHA Initial Endorsements in Pennsylvania and Production/Refinanced UnitsProduction/Refinanced Units-$25.6 million-$25.6 million-1,403 Units-1,403 Units

Eligible Uses for FundsEligible Uses for Funds- HUD provides insurance for loans generated by private lenders - HUD provides insurance for loans generated by private lenders for development of multi-family projects.for development of multi-family projects.- These may not generate affordable units but they do keep - These may not generate affordable units but they do keep housing stock growing in areas where units are needed. housing stock growing in areas where units are needed.


Innovative Use of Multi-Family FHAInnovative Use of Multi-Family FHA- Heinz Factory in Pittsburgh, Pennsylvania- Heinz Factory in Pittsburgh, Pennsylvania- FHA insured mortgage amounts to $35 million which is - FHA insured mortgage amounts to $35 million which is approximately ½ of total development cost.approximately ½ of total development cost.-The development includes 267 loft units and is located -The development includes 267 loft units and is located along the Pittsburgh waterfront.along the Pittsburgh waterfront.- It is a source of pride and has stimulated additional - It is a source of pride and has stimulated additional development in the area. development in the area.


Innovative Use of Multi-Family FHAInnovative Use of Multi-Family FHA Heinz FactoryHeinz Factory

-This project helped to preserve historically -This project helped to preserve historically significant buildings.significant buildings.-Historic investment tax credits and a -Historic investment tax credits and a conservation easement helped this project conservation easement helped this project which is approximately 83% complete.which is approximately 83% complete.

What does the future hold for Multi-Family FHA?What does the future hold for Multi-Family FHA?

Congress looks favorably on this program.Congress looks favorably on this program. HUD will continue to refine it to remain HUD will continue to refine it to remain

competitive in the conventional market.competitive in the conventional market.

Housing Choice Voucher Program Housing Choice Voucher Program

Funds for FY’ 2004 for PennsylvaniaFunds for FY’ 2004 for Pennsylvania-$885 million (Section 8, Public Housing Operating Funds, -$885 million (Section 8, Public Housing Operating Funds, Capital Fund Program, Section 8 Moderate Rehab/SRO, Capital Fund Program, Section 8 Moderate Rehab/SRO, Resident Opportunity and Self Sufficiency Grants)Resident Opportunity and Self Sufficiency Grants)

Eligible Uses for the FundsEligible Uses for the Funds-Rental Assistance.-Rental Assistance.-Spur development because developers can rely on subsidies -Spur development because developers can rely on subsidies from low-income tenants.from low-income tenants.-Majority are administered through Housing Authorities, PHFA -Majority are administered through Housing Authorities, PHFA and HUD directly.and HUD directly.

Housing Choice Voucher Program Housing Choice Voucher Program

Innovative Use of FundsInnovative Use of Funds-Upland Terrace Development and Pusey Estates -Upland Terrace Development and Pusey Estates Mixed Finance Project: 51 project based units Mixed Finance Project: 51 project based units consisting of 2, 3 and 4 bedroom units are currently consisting of 2, 3 and 4 bedroom units are currently under construction and could be complete by 2005.under construction and could be complete by 2005.-Funding secured from PHFA, HUD Capital Funds -Funding secured from PHFA, HUD Capital Funds and Low-Income Housing Tax Credit Equity and Low-Income Housing Tax Credit Equity among other sources.among other sources.-Delaware County HA partnered with Pennrose -Delaware County HA partnered with Pennrose Properties for this project.Properties for this project.

What does the future hold for the Voucher Program? What does the future hold for the Voucher Program?

The program must be reformed as it continues to The program must be reformed as it continues to put pressure on all other programs.put pressure on all other programs.

Program was funded in the 2005 Budget at an Program was funded in the 2005 Budget at an increase of $300 million for tenant-based vouchers increase of $300 million for tenant-based vouchers and $800 million across the board.and $800 million across the board.

HUD will now provide each housing agency with HUD will now provide each housing agency with a specific budget amount rather than a fixed a specific budget amount rather than a fixed number of vouchers.number of vouchers.

Technical ResourcesTechnical Resources

Regulatory Barrier ReformsRegulatory Barrier Reforms Energy Star Program Energy Star Program Economic Market AnalysisEconomic Market Analysis HUD’s Regional and Local Staff HUD’s Regional and Local Staff


Regulatory Barrier ReformsRegulatory Barrier Reforms

-Regulatory Barriers Clearinghouse, a -Regulatory Barriers Clearinghouse, a national Web-based forum that provides national Web-based forum that provides state and local governments with state and local governments with opportunities to share ideas and develop opportunities to share ideas and develop solutions to address unique housing solutions to address unique housing challenges. challenges.


Energy StarEnergy Star-Voluntary government-supported labeling -Voluntary government-supported labeling program that identifies appliances and program that identifies appliances and products that are more efficient.products that are more efficient.-Energy Star labels can be applied to new -Energy Star labels can be applied to new homes or substantially rehabilitated homes homes or substantially rehabilitated homes under CDBG and HOME Program that are under CDBG and HOME Program that are 30% more efficient than a standard house.30% more efficient than a standard house.


Energy Star ApplicationsEnergy Star Applications-Energy savings by public housing agencies-Energy savings by public housing agenciesthrough replacing appliances with Energy through replacing appliances with Energy Star appliances.Star appliances.-Energy savings attained in HOPE VI new -Energy savings attained in HOPE VI new construction.construction.-Energy savings through the use of -Energy savings through the use of combined heat and power or cogeneration.combined heat and power or cogeneration.


Economic Market AnalysisEconomic Market Analysis

- HUD has published Comprehensive Housing - HUD has published Comprehensive Housing Market Analyses for the Allentown-Bethlehem-Market Analyses for the Allentown-Bethlehem-Easton, Erie, Lancaster, Reading and York Easton, Erie, Lancaster, Reading and York Housing Market areas.Housing Market areas.

- We’re working on completing analysis for State - We’re working on completing analysis for State College and plan to do one for Harrisburg College and plan to do one for Harrisburg Housing Market in 2005.Housing Market in 2005.

HUD’s Financial/Technical ResourcesHUD’s Financial/Technical Resources

More information on HUD’s programs More information on HUD’s programs

is available on the HUD website:is available on the HUD website:

www.hud.govwww.hud.gov

HUD’s Financial/Technical ResourcesHUD’s Financial/Technical Resources

Today’s presentation is available on:Today’s presentation is available on:http://www.hud.gov/local/index.cfm?state=pahttp://www.hud.gov/local/index.cfm?state=pa&topic=news&topic=news

under the Highlights section under the Highlights section

Documents

Commonwealth Housing Forum 2004 Presentation by Milton R. Pratt, Jr. HUD Regional Director Wednesday, December 15, 2004