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Affordable/Workforce Housing Study
Chapter Five

Table of Contents

Executive Summary

Introduction: Defining Affordable and Workforce Housing

Chapter 1: Monterey County Housing "Least Affordable in U.S."   

Chapter 2: FORA’s Original Affordable Housing Goals

Chapter 3: Barriers, Opportunities and Strategies

Chapter 4: Models and Examples

Chapter 5: Federal, State, Local and Private Resources

Chapter 6: Findings and Recommendations


Chapter Five:

Federal, State, Local and Private Resources

U.S. Department of Housing and Urban Development (HUD)
Historically, HUD directly supported the development of housing that served many different types of households. Currently, HUD does not provide financing for family developments, but makes a limited amount of funding available for housing that serves seniors and people with disabilities. Some funds for the development of family housing are distributed through local public agencies.

Low Income Housing Tax Credits (LIHTC)

Increasingly, developers of affordable housing have turned to the LIHTC program for financing. Sponsors can compete to obtain allocations of federal and state low-income tax credits. Using tax credits, sponsors can partner with corporate investors who provide equity to the development in exchange for the tax benefits generated by the housing. Although using tax credit financing is complicated and adds administrative costs, it fills a substantial portion of the funding gap with no impact on the tenants' rents. With the reductions in financing from HUD, tax credits are very valuable. Tax credit equity typically covers 40% -50% of project costs.

Summary of Affordable/Workforce Housing Resources

Affordable Housing Financing--;Bank of America offers a large volume of traditional and special loan products, along with affordable housing expertise to make the most impact in communities it serves. For-profit and nonprofit developers and organizations, public housing agencies, first time homebuyers are eligible for various products. 90% loan to value ratio.

Affordable Housing Program--;Federal Home Loan Bank of San Francisco provides grants or subsidized interest rate loans for purchase, construction of owner-occupied housing by or for very low-, low-, and moderate-income households and/or to finance the purchase or construction of rental housing. $18 million available through member banks annually in competitive process. Counties, for-profits, nonprofits, public housing agencies are eligible. The amount of grant or interest rate subsidy depends on the amount of assistance required to make the project feasible. (415)616-2542.

Bridge Loan Program--;New York-based secondary mortgage market institution provides bridge loans for construction of new rental housing to provide flow of funding between project closing and equity pay-ins by tax credit investors. To be used with tax credit projects. Nonprofits are eligible. (212)455-9882

California Equity Fund--;Tax Credit Syndicate works primarily with nonprofit developers of affordable (new rental) housing, providing equity investment through purchase of tax credits. $50 million fund. $800,000 to $15 million minimum/maximum investment. (213)250-9550

CHFA Bridge Loan Program-- California Housing Finance Authority (CHFA) offers a 2nd loan program designed to provide tax-exempt funds necessary to meet the 50% Basis Test required for 4% Tax Credits in the construction of low income housing. (916)322-5123

CHFA Homeownership Program--;Offers single-family home loans requiring as little as 3% down at below-market interest rates (or layered with deferred payment silent second mortgages) to first-time low- and moderate- income buyers. CHFA Approved Lenders access program on behalf of eligible borrowers. Available annual funding $1 billion. (916)322-5123

CHFA Self-Help Builder Assistance Program-- Development loans to mutual self-help nonprofits for single family construction. Offers an opportunity for families and individuals with limited down payment resources to obtain homeownership. The borrower's labor represents the down payment. Permanent mortgage loans at 5% interest for single family homes built by owner-builders. $2,000,000 for development loans, continuous funding for loans to buyers. Below market interest rate. (916)322-5123

CalHome Program-- Grants to local public agencies and nonprofit developers to assist individual households through deferred-payment loans. Direct, forgivable loans to assist development projects involving multiple ownership units, including single-family subdivisions. Cities, counties, nonprofits are eligible. (818)550-9895

California Community Reinvestment Corp (CCRC)--;Private lender provides permanent financing for new construction of low-income housing through a revolving blind loan pool of $211 million. Loan rates are tied to T-bills of similar fixed terms. Forward commitments available up to 24 months. For-profit and nonprofit developers are eligible. (498)467-8805

CalPERS Housing Development Program--;Working with partners, CalPERS is investing $450 million in construction and equity investment in single family home developments of 60 – 250 “entry level” homes. For-profit builders are eligible. $3 – 30 million minimum/maximum award amount. (916)326-3630.

Community Development Block Grant Allocation--;Enterprise Fund Component--;California HCD program reserves block grant funds for cities and counties, which in turn make loans to businesses or fund public infrastructure improvements. Competitive grants to $250,000. Counties and cities with population less than 50,000 are eligible. (916)327-3713

Community Development Block Grant – Economic Development Allocation--;Over the Counter Component--;California HCD provides matching grants to cities and counties for infrastructure required to assist business that creates or retains jobs for low-income persons. Typically grants are used to construct sewer, water and street improvements. Average grant amount $300,000. Counties and cities less than 50,000 population. (916)327-3713

Community Development Block Grant--;Planning/Technical Assistance--;California HCD provides matching grants averaging $30,000 for planning and feasibility studies for projects benefiting low-income persons. (916)327-3713

CHFA 100% Loan Program (CHAP)--;California Housing Finance Agency (CHFA) provides 100% of the financing needs for eligible first-time homebuyers by providing a below market interest rate first mortgage combined with a 3% “silent second” to purchase newly constructed or existing housing. (916)322-5123.

Community Development Finance Dept--;Private lender offers construction loans and long-term loans for low- and moderate-income housing developments. $1 billion per year, interest rate fluctuates. (925)947-2474

Community Reinvest Act Loan Program--;Wells Fargo Bank provides construction financing and predevelopment/interim financing for for-profits, nonprofits, cooperative corporations and owner-occupants of housing. &160 million fund. (415)396-3832

CRA Lending--;SAMCO, a private lender, provides long-term loans, technical assistance and equity investment in new rental housing, transitional housing and other activities. $300,000 - $10 million minimum/maximum loan grant amount. Maximum loan usually 80% LTV. Interest tied to the 10 T-bill. Cities with more and less than 50,000 population, counties, nonprofits, for-profits, public housing agencies are eligible.

EAH, Inc. (Ecumenical Association for Housing)--;Developer, property manager of quality affordable housing units (new rental. For-profits, nonprofits, cities and counties eligible to apply. (415)258-1800

Enterprise Mortgage Investments, Inc.-- Provides reasonably-priced, long-term mortgages, streamlined processing and 90% loan to value to for-profit and non-profit community organizations. EMI provides first-mortgage financing across the nation as a Fannie Mae delegated lender. They have teamed with the Ford Foundation and Fannie Mae to create a $150 million first mortgage financing program for affordable multifamily rental housing. Criteria: 10% of units must be under market rate, 15 units minimum. For-profits and nonprofits eligible. (410)964-0552

Family Housing Demonstration Program--;California HCD program offers construction loans and long-term loans for new rental affordable housing and services which may include on-site child care, job training and development. Below market (3%) interest rates.

Fannie Mae

  • Fannie Mae’s 2003 Low- and Moderate-Income Limits--;Borrowers in California may earn up to 140% of the area median income ($75,320 in 2002; HUD 2003 limits have not yet been announced).

  • Fannie Mae’s 2003 Mortgage Loan Limits (California):

    • Single family--$322,700

    • Two family--$413,100

    • Three family--$499,300

    • Four family--$620,500

  • Fannie 3/2--15- to 30-year, fixed-rate mortgage loans that allow 38 percent of the borrower's gross monthly income to be targeted for housing costs and other debts, such as credit cards or student loans, and allow up to 33 percent of the borrower's gross monthly income to be used for housing costs (principal, interest, taxes, and insurance). Fannie 3/2 requires a 5 percent down payment, but only 3 percent of it must come directly from the borrower's own funds. The remaining 2 percent can come from a relative; federal, state, or local government agency; employer; or nonprofit.

  • Fannie 97--Fannie 97 requires a 3 percent down payment from the borrower's own funds; borrower only needs to have one month's mortgage payment in cash savings, or reserves, after closing.

  • FannieNeighborsa nationwide, neighborhood-based mortgage option designed to increase homeownership and revitalization in areas designated as underserved by HUD, in low- to moderate-income or minority census tracts, or in central cities. The FannieNeighbors option adds underwriting flexibility to Fannie Mae's Community Home Buyer's Program. SM mortgage product by removing the income limit if a property is located in one of these areas. (Former Fort Ord zip codes make them eligible in this program because they are designated as under-served by HUD).

  • Community Home Buyer’s Program--Fannie Mae's Community Home Buyer's Program offers underwriting flexibilities that include a 5 percent down payment and no cash reserves at closing. This mortgage can be combined with the FannieNeighbors ® mortgage option, which provides an exception to the maximum income limit for eligible properties in specially designated areas.

  • Loans for People with Disabilities--;HomeChoice--;Down payment as low as $500; greater flexibility in qualifying and underwriting standards; acceptance of non-traditional credit histories.

  • MyCommunityMortgage.--Community 97TM
    Community 97 is a low down payment mortgage with flexible credit guidelines. The core features, which can be customized, include a minimum contribution of 1 percent or $500, whichever is less (from the borrower's own funds), no monthly reserves, and a higher single qualifying ratio. Community 97 may be used with the Energy Efficient Mortgage option.

    Community 100TM
    Community 100 is a zero down payment mortgage, designed for borrowers with good credit. The core features, which can be customized, include flexibility for the 3 percent contribution to come from a range of acceptable sources and a higher single qualifying ratio.

    Community 100 Plus TM
    Community 100 Plus is a more aggressive zero down payment mortgage with flexible credit guidelines for borrowers with limited cash resources. The core features, which can be customized, include a minimum contribution of 1 percent or $500, whichever is less (from the borrower's own funds), no monthly reserves, and a higher single qualifying ratio. Community 100 Plus may be used with the Energy Efficient Mortgage option.

    Community 2-Family TM
    Community 2-Family provides a flexible, affordable mortgage option to owner-occupants of 2-unit homes. This mortgage allows for a down payment contribution of just 3 percent from the borrower's own funds and offers a higher single qualifying ratio.

    Community 3- to 4-Family TM
    Community 3- to 4-Family provides a flexible, affordable mortgage to owner-occupants of 3- to 4-unit homes. This option allows for a down payment contribution of as little as 5 percent from the borrower's own funds and offers a higher single qualifying ratio.

    Community SolutionsTM>
    Community Solutions is a suite of flexible mortgage options for low- and moderate-income borrowers. Community Solutions is for borrowers who are full-time teachers, police officers, firefighters, and healthcare workers whose employers offer an Employee Assisted Housing program.

    • Energy Efficient Mortgages (EEM, Fannie Mae)--;Allows borrowers to qualify for a larger mortgage as a result of energy savings.

    • Smart Commute Mortgage (Fannie Mae)--;May be available for development near public transit.

    Freddie Mac Affordable Gold Program--;Mortgage insurance for high loan to value loans at a lower premium. Provides 3% downpayment mortgages with down payment source flexibility for new for-sale housing. (800)424-5401

    Federal Home Loan Bank San Francisco Affordable Housing Program

    • The Bank awarded $50 million in Affordable Housing Program grants in 2002 to create housing for over 7,700 households in Arizona, California, Nevada, Florida, and Illinois.

    • Since 1990, the Bank's Affordable Housing Program (AHP) has awarded $279 million in subsidies to create over 55,000 units of housing for households earning up to 80% of the area median income.

    • Each year, the Bank sets aside approximately 10% of its net income to fund the AHP.

    • The AHP emphasizes creative partnerships between financial institutions and community-based housing developers or government housing agencies, strategies that empower very low- and low-income households, and effective use of the subsidies to create long-term affordable housing opportunities for those most in need of assistance.

    • Bank members work with local community groups, nonprofit and for-profit housing developers, public housing agencies and other entities to create housing that meets compelling local needs. Funds may be used to create affordable rental housing or homeownership units.

    • AHP subsidies are used to fill a gap in available financing or reduce the interest rate on project or homeowner financing, provide down payment or closing cost assistance, or cover the cost of homebuyer pre- or post-purchase counseling.
    • The Bank conducts AHP competitions twice a year. To assist applicants, the Bank sponsors a series of workshops in February and August

    Government-Assisted Project Loans--;Bank of America program provides funding for refinance/rehab/construction of low- and moderate-income multifamily projects using HUD-insured programs 223(a)(7), 223(f), 221 (d)(4) and 232. 6.5% for tax-exempt financing; 8% for taxable financing (subject to market conditions). For- profits and nonprofits are eligible. $500,000 to $2 million minimum/maximum. $70 million loan fund. (415)622-5093

    Home Investment Partnerships Program (HOME)--;HUD/HCD program assists cities, counties and nonprofit community housing development organizations (CHDOs) to create and retain affordable housing. Grants to eligible cities and counties, loans to certified CHDOs. New for sale, rental and self help housing. Grants, construction loans, predevelopment/interim finance, long-term loans, loan guarantees, down payment assistance. $1000 - $1 million minimum/maximum. Total fund varies $43-45 million per year. (916)327-3713

    House America--;Private lender providing affordable residential long term loans for low and moderate income households. $538 million fund. (626)535-3229

    John Heinz Neighborhood Development Program (within HUD)-- Provides grants to non-profit community development organizations to leverage funds from local sources to implement neighborhood development projects, including development of new housing $4.75 million fund, $75,000 maximum grant. (202)708-1577

    Low-Income Housing Tax Credit Program (LIHTC)-- offering a federal and State income tax credit based on the cost of acquiring, rehabilitating or constructing low-income housing. Federally-subsidized units receive a lower tax credit rate than non-federally subsidized units. California portion $39 million annually. Cities, counties, nonprofits, for-profits, public housing agencies are eligible. (916)654-6340

    Loan Packaging Program--;Low Income Housing Fund--Designed to increase access to capital for financing housing at affordable rates and terms. Construction/rehab loans, long-term loans, predevelopment/interim finance, and technical assistance. New for-sale, new rental and self-help housing. $12 million fund. Cities, counties, nonprofits, public housing agencies eligible. (510)893-3811

    LIHF Mortgage Banking Pools-- Increases access to capital for low-income households. Provides bridge loans for tax credit purposes. Also offers construction loans, predevelopment financing. Current maximum loan $1.8 million. New for-sale, self-help and rental housing. $60 million fund. Nonprofits, for-profits and cooperatives are eligible. (510)893-3811

    McAuley Institute--;Revolving loan fund and technical assistance to build or rehab housing. Loans to $400,000 at 5.5% interest. City cooperatives and nonprofits eligible. (301)588-8110

    Mercy Loan Fund--;Makes loans to nonprofit housing developers for projects in which conventional financing is not available or not affordable and promotes innovative and effective financing arrangements. New rental and new for-sale housing. Technical assistance, predevelopment/interim finance, construction, long-term loans. Interest rates 5-7%. Fund also sells loans on secondary market, allowing larger loan sizes of $250,000 to $8 million. (303)830-3386

    Multifamily Affordable Financing Program--;Originates construction and bridge loans to finance qualified multifamily projects and subdivisions that serve households earning 80% or less of AMI.

    Predevelopment Construction Loan Program--;CFHA Program provides 3% interest only predevelopment loans for projects with five or more units of new construction new rental housing to non-profit sponsors. Loan proceeds may be used to pay for direct costs such as architectural or engineering costs, permits and related fees, land purchase or land holding costs, bonding fees and costs associated with debt financing. $250,000 maximum. (310)342-1250

    Predevelopment/Construction Loan Program-- Rural Community Assistance Corporation offers Counties, nonprofits, cooperative corporations and cities under 50,000 population loans at below market rates to finance a multitude of activities related to general housing and community facility projects, including new for-sale and new rental housing, infrastructure development, public works, communities facilities, self-help housing. Construction loans, predevelopment finance, technical assistance. $50,000 - $750,000. (916)447-9832

    Public Works Grants--;Economic Development Agency provides grants to assist communities in funding public works, infrastructure and facilities that contribute to the creation or retention of private sector jobs. $160 million annually. $100,000 to several million minimum/maximum. Cities, counties, nonprofits, public housing agencies. (510)637-2988

    Revolving Loan Fund-- Low-Income Housing Fund--LIHF's goal is to increase access to capital for low-income communities, primarily by providing financing for low-income housing and non-residential facilities. Also mini-perms, refinancing loans, lines of credit and working capital loans. New for sale and rental housing, community facilities, self help housing. 5% for loan amounts of $1 million and above, lower than $1 million 4.75%. $5 million maximum. Counties, nonprofits, cooperative corporations, public housing agencies eligible. (510)893-3811

    Self-Help Construction Financing –Bank of America Community Development Bank program originates construction loans to finance qualified self-help projects that serve individuals earning 80% or less of AMI. Funds new for-sale housing and self-help housing. Nonprofits only. Loan to value ratio 85%

    Tax-Exempt Affordable Mortgage Program--;CHFA program provides bond-financed fixed-rate mortgages for 30-40 years to developers of new rental housing that has at least 20% of units affordable to households making no more than 50% of county median income. Approx. $64 million available annually. For-profit, nonprofit developers and public housing agencies are eligible. (310) 342-1250

    Taxable Affordable Mortgage Program (Insured)--;CHFA program provides taxable bond financed mortgages for new rental housing of which 20% is occupied by and affordable to very low-income households. Used with FHA insurance, the program can finance affordable rental housing under tax credits.

    For-profit, nonprofit developers and public housing agencies are eligible. Loan to value ratio of 80%; cash equity requirement.

    Vision Forward--;Nonprofit Women With Vision provide affordable housing to low-income residents through the U.S., including construction loans, grants and down payment assistance. Activities funded include new rental housing, community facilities, public works, planning and feasibility studies. Tribes, public housing agencies, owner-occupants of housing, nonprofits and first time homebuyers are eligible for various funds.

    Wells Fargo Affordable Housing Investments

    California Equity Fund (CEF) --; Since 1990, Wells Fargo has committed $90 million to the California Equity Fund. The CEF provides equity investment capital to nonprofit-sponsored low-income housing developments, primarily rental housing, throughout California. Wells Fargo and other corporate participants in the fund provide these equity investments as limited partners in exchange for state and federal low-income tax credits. The CEF works with neighborhood Community Development Corporations to acquire, construct and manage affordable housing. CEF provides technical assistance, loans, and grants through these programs.

    From 1998 to 2001, Wells Fargo's investments helped CEF build 34 affordable housing developments that total 1,853 living units in California.

    • Housing Trust Fund of Santa Clara County --; In 2001, Wells Fargo invested $500,000 in the Housing Trust Fund of Santa Clara County. This investment will take the form of an Equity Equivalent (EQ2) Investment.

    • The Vernal Fund --; Neighborhood Housing Services Silicon Valley (NHSSV) --; In 2001, Wells Fargo invested $500,000 in the Vernal Fund. NHSSV was established in 1995 with the mission of supporting home ownership in the City of San Jose. NHSSV established the Vernal Fund in 2001 to make purchase money second trust deed loans to qualified borrowers in the City of San Jose.

    • Fresno Villa Del Mar Apartments--In 2001, Wells Fargo invested $500,000 to help finance the construction of a 47-unit multifamily housing complex for low- to moderate-income families in the city of Fresno. Sacramento Neighborhood Housing Services (NHS) Family Fund--In 1996, Wells Fargo invested $150,000 in the Sacramento NHS Family Fund.

    • invested $4.9 million to help finance the construction of a 185-unit multifamily housing complex for low- to moderate-income families in the city of Fair Oaks.
  • World/BRIDGE Initiative--;BRIDGE Housing Corp. provides lower-interest construction financing (half point above prime) for affordable or mixed-income rental housing or affordable home ownership through a consortium of World Saving, CalPers, Wells Fargo and the Bank of America. Must be joint development with BRIDGE. Typical project size 50-100 units. For-profit, nonprofit, public housing agencies, Counties, cities with less than and more than 50,000 population. (415)989-1111

    Additional programs for developing housing for special groups include: Sec. 202 Supportive Housing for the Elderly, Sec 811 Supportive Housing for the Disabled, Special Needs Affordable Housing Lending Program.

    Sources of Private Funding for Housing Nonprofits--California

    S.H. Cowell Foundation

    • Grants with focus on children, families, housing, economically disadvantaged

    • Invests in community-based nonprofit organizations

    • Funds for building, capital campaigns, land acquisition, matching funds, seed money

    • Average awards amount unknown. Annual giving $9.3 million.

    • Susan Vandiver, 415-397-0285

    • www.shcowell.org

    Nordson Corporation Foundation

    • Grants up to $25,000 with focus on aging, children, community development, housing, disabled, youth on the Monterey Peninsula.

    • Building, capital campaigns, general or operating support, matching funds, seed money, technical assistance

    • Constance Haqq, 440-892-1580

    • www.nordson.com/corporate/grants.html

    Ralph W. Parsons Foundation

    • Grants up to $100,000 with focus on community development, housing, youth, economically disadvantaged, aging, technology.

    • Building, capital campaigns, general or operating support, program development, seed money.

    Christine Sisley, 213-482-3185

    Ludwick Family Foundation

    • Grants up to $50,000 with focus on children, community development, environment, housing, neighborhood development, youth.

    • Building or renovation, equipment

    • Patrick Bushman, 626-852-0092

    • www.ludwick.org/

    Fannie Mae Foundation

    • Grants up to $50,000 for nonprofits working to increase the supply of affordable housing

    • 202-274-8000

    Enterprise Foundation

Enterprise Social Investment Corporation (ESIC) is a subsidiary of The Enterprise Foundation who works with partners to finance, develop and acquire affordable housing in the U.S.

    • Largest developers in the U.S. of for-sale housing for low-income first time homebuyers.

    • Permanent long-term mortgage financing on a forward commitment basis to developers of affordable multifamily housing, minimizing charges. Their portfolio includes over $90 million for 45 developments totaling over 3,800 units.

    • ESIC has raised over $3.7 billion in equity through the LIHTC program for investment in over 70,000 affordable homes nationwide.

    • The Enterprise Foundation and Fannie Mae are currently partnering in a five-year project to provide $1.5 billion for low- and moderate-income affordable housing development.

    Enterprise Homes, Inc. (EHI)

    • A subsidiary of The Enterprise Foundation, EHI uses innovative design, construction management and financing techniques to create affordable homes and monthly mortgages for low- and moderate-income households.

    • Obtain subsidies and low-cost first mortgages to reduce the purchase price and monthly payment burden.

    Bank of America Affordable Housing Programs

    • Works with nonprofit, for-profit, single-family, multifamily and public purpose developers

    • Construction financing, access to permanent financing, tax-exempt financing, Fannie Mae low- and moderate income multifamily projects, self-help housing financing, FHLB Affordable Housing Program financing for affordable housing developers.

    • San Diego--$125.8 million in loans and investments for construction of affordable housing in San Diego. $827.8 million in mortgage loans to low- and moderate-income homebuyers.

    • San Francisco --$48.9 million in loans and investments for the construction and rehab of single-family and multifamily affordable housing; $2 billion mortgage loans to low- and moderate-income homebuyers, $5.2 million below-market loan and $215,000 grant for 55 unit multifamily development in the Mission district. $6.8 million below-market loan and $50,000 grant for Chinatown 72 unit apartment complex.

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