QAP-Best-Practices-Workshop

Report
BEST PRACTICES IN LIHTC
POLICY
Brian Peters
Housing Policy Advocate, IndependenceFirst
ABOUT THE PRESENTER



Housing Policy Advocate
at IndependenceFirst, a
non-profit Center for
Independent Living
serving people with
disabilities in 4-county
Milwaukee metro area
Chair of National
Council on Independent
Living’s Housing subcommittee
An expert on LIHTC
issues…NOT!
WHO AM I TO
SAY WHAT
“BEST
PRACTICES”
IS?
I want YOUR thoughts!
AUDIENCE QUESTIONS
How many are familiar with Low Income Housing Tax
Credit Program (Section 42)?
 How many know what Qualified Allocation Plans are?

THE BASICS:
LIHTC: Low Income
Housing Tax Credit
Program
 Federal tax credits
allocated to states through
IRS
 LIHTC allocations vary
annually
In 2014, allocations were
calculated at $2.30 per
capita (per person)
– Small states received a
minimum of $2,635,000
– California received $88
million!
– Wisconsin received
$12,884,395
–
QAP: Qualified Allocation
Plans
 How states say they will
use the LIHTC funding
 Public hearings required
as part of process
 Typically written with
developers as audience



Can be confusing to
newbies
Important information
often are in appendices
Outlines the criteria by
which proposals will be
judged
LOW INCOME HOUSING TAX
CREDIT
“Section 42” of the
Internal Revenue
Code
 Two types:

9% (new construction/
substantial rehab)
 4% (acquisition/new
construction/rehab)


Can be combined
LIHTC REQUIREMENTS

Section 42 mandates a preference for:
Projects that serve the lowest income tenants
 Projects that are obligated to serve qualified tenants
for the longest period of time
 Projects that are located in a qualified census tract
(as defined in subsection 42(d)(5)(C)) and the
development of which contributes to a concentrated
community revitalization plan

LIHTC CONSIDERATIONS
STATE HOUSING FINANCE AGENCIES HAVE TO GIVE
CONSIDERATION TO:




Housing Needs
Characteristics
Sponsor Characteristics
Project Characteristics,
including whether the
project includes the use of
existing housing as part of
a community revitalization
plan
Tenant populations of
households with children






Targeting of individuals on
Public Housing Waiting
Lists
Targeting of Populations
with Special Housing
Needs
Project Location
Projects intended for
eventual tenant ownership
The energy efficiency of the
project
The historic character of
the project
Some states add their own requirements and preferences
STATE HFA
Low Income Housing
Tax Credits are
administered by a
State Housing
Finance Agency
 Wisconsin’s HFA is
Wisconsin Housing
and Economic
Development
Authority (New logo!)

STATES AND QAPS

Some states view
LIHTC program as
purely a financial
transaction
They do the bare
minimum
 Very short QAP &
application
 Not necessarily a blue
state/red state thing!


Other states view
LIHTC as an
opportunity to do
some “social good”
Typically have more
in-depth QAPs and
applications
 Many goals involve
homelessness and
other “special needs”
populations as well as
energy and
sustainability

“SOCIAL ENGINEERING”
Trying to do some
“social good” has been
called “social
engineering”
 But the absence of
those actions IS a
form of social
engineeringparticularly if there
are countervailing
incentives or
pressures in
community


Example:
Pleasantsville enacts
zoning ordinances
designed to drive up
property values. This
makes housing
unaffordable to lowincome families

Is this not social
engineering?
STATE TOOLS
How do states use LIHTC as a tool for in
communities?
 Mandates
“You must do this if you want money”
 “You must do this if you want to qualify”
 Sometimes developers have options- “You must do
something on this list”
 Example: Wisconsin has design requirements for
buildings on accessibility and sustainability

MORE TOOLS

Incentives
A popular way to encourage a goal
 “If you do this, you’ll get x number of points”
 Sometimes additional financing is offered as incentive
 Examples: Income targeting, increased accessibility,
transportation linkages, family size


Set-asides
Done when state wants to guarantee a type of development
WILL happen even if it scores low
 “We’ll set aside this pot of money just for developers doing a
specific kind of project”
 Examples: Rural set-aside, supportive housing set-aside

WISCONSIN QAP
Wisconsin’s QAPs and
other information can
be found at
www.wheda.com.
 Discussing 2013-2014
QAP, available on
website
 Note that nitty gritty
details are in
appendices
 2015-2016 QAP
finalized last week

QAP BEST PRACTICES

During this Workshop, we shall:
Look at some of the issues with LIHTC units
 Look at specific sections of WHEDA’s QAP and
compare with other QAPs
 Discuss what we like/dislike
 Discuss what we think
Best Practices should be

INCOME TARGETING
LIHTC Units generally are aimed at 50% or 60%
of Area Median Income (AMI)
 LIHTC has two income targeting options:

At least 40% of units must be targeted at people at or
below 60% AMI (40/60 test) OR
 At least 20% of units must be targeted at people at or
below 50% AMI (20/50 test)
 But typically because of fixed costs, developers will do
100% (or close to it) of units being LIHTC

LIHTC RENTS
Rent usually is set at 30% of chosen AMI level
 Rent is “fixed” and does not change with household’s
income
 Unit income limitation calculated as:

Studio=1 person
 Each bedroom=1.5 individuals

WAUKESHA RENT LIMITS AT 50% AMI
Bdrm #
Efficiency:
One
Two
Three
Four
Five
Six
Rent
616
660
791
914
1,020
1,125
1,231
Source: Wisconsin Standard
Multifamily Tax Subsidy Project
- Estimated Maximum Income
and Rent Limits, Effective
December 18, 2013
Extremely Low Income
Household
 Wisconsin SSI (2013)

Combined Federal & State SSI
payments:


Individual: $793.78
Couple: $1,198.05
A couple receiving SSI renting
an efficiency would be paying
51% of their income-far beyond
the 30% rule of thumb.
 Many properties require
certain threshold of income (3x
rent)
Source:

http://www.dhs.wisconsin.gov/ssi/benefits.h
tm
THE ISSUE: UNAFFORDABLE TO ELI
LIHTC developments
at standard AMI
targets are not
affordable to ELI
households
 How can state HFAs
reach this population?
 What is needed to
make it work?

AFFORDABILITY OPTIONS
30% AMI is extremely difficult to reach without
rental subsidies; would it be better to have more
units at 40%?
 Some states offer additional financing to assist
with deeper income targeting. But WI cannot use
state funds for this. No state tax credits or tax
revenue available.
 What programs could be used with LIHTC for
additional subsidies?

2014 WHEDA QAP-ELI TARGETING

80 (out of 465) for
serving Lowest
Income Residents
70 Points on sliding
scale
 10 bonus points if 6 or
more units
 Units with projectbased subsidies not
eligible unless
supportive housing
 HOME funds OK

SAMPLE ELI TARGETING: 58.50 POINTS
Total Units
for
Development
44
CMI Set-Aside Number of
Percentage
Units @ CMI
50%
40%
30% or Lower
9
3
6
B. 10 Bonus Points
Check
Points
Box
10
Percentage of
Multiply
Total, (Must
Total Points
Percent by
equal or exceed
Factor
5%)
20.45
X 1.00=
20.45
6.07%
X 1.25=
7.59
13.64
X 1.50=
20.46
Description
The application
includes 6 or
more 30% CMI
Units.
ELI TARGETING IN ALASKA

Alaska requires at least 5% of any projects with
20 or more units to serve populations with
“special needs” (of which ELI is a category)


Cannot be targeted by other funding (i.e. 811)
Offers discretionary basis boost (additional
funding) for developers meeting certain
conditions for ELI targeting
ELI TARGETING IN MASSACHUSETTS
ELI is one of 4 housing priorities developers must
choose to qualify. 20% of units must be for ELI.
 One of 13 mandatory thresholds

9% tax credit must have 10% of units for 30% AMI
 4% tax credit and “primarily” affordable must have
10% of units for 30% AMI. IF mixed-income with
50% or more market-rate units, 15% of units must be
for 30% AMI.

ELI IN ILLINOIS

Developers score points (up to 10 out of 100
possible points) for units at 30% AMI as
percentage of total projects. Example is for
projects with 41 or more units.






1 pts for 1%-4.99%
2 pts for 5.0%-9.99%
4 pts for 10%-14.99%
7 pts for 15%-19.99
10 pts for 20% or more
Projects 40 units or less starts at 4% minimum
up to 25% or more, similar to above
ELI IN CONNECTICUT

107 possible points in application;
Targeting units at 25% AMI earns up to 7 pts for 25%
or more units (sliding scale)
 6 pts for targeting units above 25% AMI to 50% AMI
(40% or more units needed for full number of points
on a sliding scale)

ELI IN DELAWARE
Delaware takes a balanced approach,
encouraging developers to mix income target
levels (30%, 40%, 50%, 60%) with higher points
for targeting lower income levels
 Interesting that the chart for 2014 is much less
complicated than the one for 2013 (next 2 pages)

2013 BALANCED INCOME TARGETING
Area Median Income Rents
Percent of
Units
30%
40%
50%
60%
Market
50.0 or more 1
1
2
2
0
42.5 to
49.99
1
2
2
2
0
35.0 to 42.4
2
2
3
2
0
30.0 to
34.99
3
4
4
3
0
25.0 to
29.99
5
5
5
5
0
20.0 to
24.99
5
5
5
5
0
15.0 to
19.99
4
4
4
4
5
10.0 to
14.99
3
3
2
2
4
5.0 to 9.99
2
2
2
1
3
2014 BALANCED INCOME TARGETING
ELI IN IOWA
Category 1. Serves Lowest Income Residents 0 to 20 points
 Projects that provide Units that are set aside and occupied
by tenants with incomes at or below forty percent (40%)
AMGI and are rent restricted.

1 point for each full one percent (1%) of the total Project Units
(20 points maximum)
Category 2. Mixed Income Incentive 0 to 25 points
 Projects that provide market rate Units (not eligible for
Tax Credits). On-site staff Units cannot be counted for
points.


1 point for each full one percent (1%) of the Units (20 points
maximum)
And Serve 30% AMGI qualified tenants.

1 point for each full one percent (1%) of the Units at 30%
AMGI (5 points maximum)
*Units assisted with vouchers cannot qualify for any of
scoring points in this category.
ELI IN NORTH CAROLINA
State law classifies counties as high, moderate,
or low income.
 If high income county:
5 pts if at least 25% targeted at 30% AMI OR;
 2 pts if at least 50% targeted at 40%


If moderate income county:
5 pts for at least 25% targeted at 40% AMI OR;
 2 pts if at least 50% targeted at 50% AMI

ELI IN NORTH CAROLINA

If in a low income county;


5 pts for at least 40% of units at 50% AMI
This scoring encourages ELI units in high-income
counties, and does not incentivize them in lowincome counties
ELI BEST PRACTICES

How do we serve the ELI population?
….without using other federal subsidies?
Should ELI units be discouraged in high-poverty
areas? Is that not where the “need” or demand
is?
 Some (14) states have a state tax LIHTC.
Wisconsin doesn’t. Does this hurt WI efforts?
 You could use market-rate units to subsidize ELI
units. What are pros/cons of this?
 What did you like/dislike?

ACCESSIBILITY

Section 42 is not considered federal funding,
so…Section 504 of the Rehabilitation Act of 1973
does not apply.


In other words, no requirement for increased
accessibility
Only Fair Housing Act would apply nation-wide.
Wisconsin also has Open Housing Law.

Similar to Fair Housing Act, but lowers unit
threshold to 3 or above (FHA is 4 or above), and
includes accessibility triggers for rehabs.
FAIR HOUSING IS…NOT SO FAIR
Fair Housing Act’s construction standards have
accessibility requirements
 But they are the minimum requirements
 ….

Minimum

Is not very accessible for many
Scooters
 Bariatric wheelchairs
 Non-mobility/non-sensory disabilities

ACCESSIBILITY STANDARDS/GUIDELINES

Common standards or guidelines used






Section 504
Building code requirements (ICC/ANSI)
Universal Design
Visitability
Aging in Place
Don’t forget features for non-mobility disabilities like
environmental sensitivities
WISCONSIN QAP ACCESSIBILITY
WHEDA has two categories; New Construction/Adaptive
Reuse of non-housing structure (NC) and Rehab of
existing housing (R)
 Design Requirements are listed for both NC & R
 WHEDA requires increased accessibility using
ICC/ANSI A117.1 and part of ADA Accessibility
Guidelines
 But only 20% of single-family/duplex/ townhomes
required to be Visitable
 Offers points for increased accessibility features

MANDATE EXAMPLES
New Mexico-Mandatory Visitability for at least
50% of new multi-family housing units
 Colorado has “Healthy Living Environment” with
safe biodegradable materials, mold reduction,
adequate ventilation, and isolation of garages
 Missouri requires all 12+ units to have 5%
wheelchair accessibility and 2% sensory
accessibility

DELAWARE ACCESSIBILITY INCENTIVES

Awards additional points for developments that
exceed 5% of total unit count being fully
accessible units
10% = 3 extra points
 15% = 4 pts
 20% = 5 pts


Also requires marketing & renting to households
that need features. If household has no
disability, lease addendum allows management
to transfer them if someone else needs
accessibility features
ILLINOIS ACCESSIBILITY

Offers points for increased accessibility under
ICC/ANSI 117.1-2003
1 pt for 10% or more of units for mobility disability,
AND 2% for sensory disabilities
 2 pts for 10% mobility, 2% sensory, AND Universal
Design score of at least 50
 3 pts for 10% mobility, 2% sensory, and Universal
Design score of at least 75

INDIANA ACCESSIBILITY
Aging in Place is a housing priority, and points
are given for Aging-in-Place related services
 Indiana minimum of Section 504 units or similar
fully accessible units is 5% for rehab and 6% for
new units.
 Additional percentages are assigned additional
points on sliding scale up to 9% to 11%
(depending on type of project)
 Also offers incentives for Universal Designs on a
sliding scale.

ACCESSIBILITY APPROACHES
Do you think having accessibility mandates is a
good idea? How much should be mandated?
 What about incentives? Should we incentivize
additional units using existing standards like
ADAAG, ICC/ANSI, or use newer approaches like
Universal Design?
 What should best practices be?

INTEGRATION
Integration means many things to different
people
 To fair housing & social justice advocates, it’s
inclusion of minorities/economically
disadvantaged groups, and access to
opportunities
 To advocates on disability issues, integration is
inclusion of people with disabilities into
community in a non-segregated way

INTEGRATION EXAMPLES

Examples we discussed already includes:
North Carolina’s scoring requiring higher % of ELI
units in high-income counties, but none in lowincome counties
 Balanced Income approaches encouraging mixes of
units (i.e. Delaware offering points for 20%-50% of
units being market-rate)


Affirmatively Furthering Fair Housing, desegregation, etc. to avoid concentration of
developments
ALASKA INTEGRATION

Alaska has an unusual scoring system that
encourages high # of LI units in high-income
tracts, but does the reverse in census tracts with
low income, giving scoring incentives for high
number of market-rate units.
ALASKA PROJECT MIX
COLORADO SCORING INCENTIVE
Colorado provides scoring incentives for mixedincome projects that have no more than 80%
market-rate units (the max allowed under 20/50
Rule).
INDIANA
INDIANA MATRIX (REALLY!)
Encourages a mix of units from 30%, 40%, 50%,
60%+ Market Rate (Similar to Delaware’s 2013
Balanced Scoring that we previously discussed)
 Scoring incentive based on % of units in each
category, ranging from 55% of units down to 3%
of units.
 Highest scoring opportunities is at range of 22%
to 29.99% of units for each.

NEW HAMPSHIRE

Points for projects in towns with no other
previously approved affordable family housing.
At least 20% of units must be affordable to low
income households with no age designations.
INTEGRATION BEST PRACTICES
Thoughts on best way to achieve integration of
LIHTC and tenants into communities?
 Should we encourage mixed-income buildings in
low-income areas, and higher % of LI units in
high-income areas?
 Should there be a limit on how many LIHTC
developments there can be in an area? If so,
what? How?

Urban density is different than rural or suburban
density if using geographic distances
 Wouldn’t this be a barrier for neighborhood
revitalization efforts?

COMMUNITY SUPPORT EXAMPLE

Many states require community support letters
Pro: Community support can smooth the way for
development (zoning changes, variances, etc.). This
way, the SHFA is assured development will happen.
 Con: Isn’t this rewarding NIMBYism?

WHEDA provides 2 points for Local Notification,
and 2 points for each support letter, up to 6
points. Letter must be from local big-wigs (my
words, not theirs)
 Other states have similar requirements
 How much should support in the community
impact the development?

SUPPORTIVE HOUSING
Many states use LIHTC as principal funding for
developments with supportive housing, with
some other additional funding for services and
rental subsidies
 Maryland offers incentives for developers that
accept Section 811 Project Rental Assistance
Demonstration Program for non-elderly persons
with disabilities

MORE SUPPORTIVE HOUSING

Wisconsin offers two types of Supportive Housing
scoring for new cycle
Integrated model with no more than 25% of units
targeted at persons with disabilities
 “Segregated” model with 50% or more units targeted
at homelessness


Iowa has section in QAP that supports goals of
Olmstead (community living)
Scoring incentives for visitable or fully accessible
units
 Scoring incentives for management training on
disability issues

SUPPORTIVE HOUSING BEST PRACTICES

Case managers like convenience of everyone in
same location

But advocates believe scattered is best practices
Disability advocates don’t like housing and
services being linked in anyway
 Does the type of supportive services (i.e. for
people with disabilities, elderly as opposed to
homeless) make a difference?
 Should services be on-site or off-site?
 Your thoughts?

FINAL THOUGHTS

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