Olene Walker Housing Loan Fund

OLENE WALKER HOUSING LOAN FUND

ELECTRONIC BOARD MEETING

Housing and Community Development Division

Salt Lake City, Utah

MINUTES

November 3, 2016

Board Members - Called In Representing

Gloria Froerer Rental Housing

Garret Bangerter Home Builder

Mark Lundgren Manufactured Housing

Mike Glenn General Public

Cass Butler General Public

Dan Adams Mortgage Lender

Kip Paul Real Estate Interest

Mike Akerlow Local Government

Staff – In House

Shelli Glines HCD

Daniel Herbert-Voss HCD

Lora Rees HCD

Katherine Smith HCD

Mike Green Attorney General’s Office

Welcome - The Olene Walker Housing Loan Fund (OWHLF) Electronic Board Meeting was held at 1385 South State Street – Conference Room 470 - Salt Lake City, Utah. The meeting was called to order at 10:00 am by Gloria Froerer, Chair.

Public Comment: None

Item 1: Olene Walker Housing Loan Fund Subsidy Limits – Executive Summary – Exhibit K

Back on September 20, 2005, the OWHLF Board approved the use of AMI-based subsidy limits to determine the amount of OWHLF funds that an applicant’s project can qualify for, primarily to maintain compliance with HUD’s per-unit subsidy requirements for the HOME Program, as well as to provide OWHLF staff a guideline in setting the size and term of an OWHLF loan appropriate for each project and application. When the HOME Program was initiated in 1992, the HUD-regulated grant program used the HUD 221(d)(3) mortgage insurance program limits based on unit size and whether the building contains an elevator, multiplied by the high-cost multiplier in effect when the limits were updated each year.

The 221(d)(3) program was discontinued by HUD during 2012, but as of November 18, 2015 all participating jurisdictions for the HOME Program were directed to use the HUD Section 234-Condominium loan subsidy limits multiplied by the high-cost multiplier in force, which is no more than 240% presently for all of Utah, until further notice by HUD. This change was implemented about a year ago and has been used for all OWHLF projects approved during 2016.

The subsidy limits presently in force using the 2015 Section 234-Condominium limits are as follows:

234-C 50% 40% 25% 15%

Limits Subsidy Subsidy Subsidy Subsidy

Non-Elev/ AMI AMI AMI AMI

Elevator Unit Size <35% <40% <45% <50% Calculation

$ 55,474 SRO/Studio $27,737 $22,190 $13,868 $ 8,321 # Units * Limits
$ 58,378 $29,189 $23,351 $14,594 $ 8,757 # Units * Limits
$ 63,962 1 Bedroom $31,981 $25,585 $15,990 $ 9,594 # Units * Limits
$ 66,923 $33,461 $26,769 $16,731 $10,038 # Units * Limits
$ 77,140 2 Bedrooms $38,570 $30,856 $19.285 $11,571 # Units * Limits
$ 81,377 $40,688 $32,551 $20,344 $12,207 # Units * Limits
$ 98,742 3 Bedrooms $49,371 $39,497 $24,687 $14,811 # Units * Limits
$106,276 $52,638 $42,110 $26,319 $15,791 # Units * Limits
$110,002 4+Bedroom $55,001 $44,001 $27,500 $16,500 # Units * Limits
$115,560 $57,780 $46,224 $28.890 $23,334 # Units * Limits

With the present limits, any project with all units at an AMI at or above 50% would not technically be eligible for OWHLF loan assistance. This previously excluded most projects using tax-exempt bonding and 4% LIHTC from applying for OWHLF funds. Over the past several years due to changing financial demographics and targeted populations served, a number of tax-exempt bond projects have applied to OWHLF and received OWHLF-Board approved funding, which the Board can approve but OWHLF staff do not have the present authority to approve such funding.

The 9% LIHTC awards have focused on a fairly narrow AMI band of 40-44% AMI over the past several years, and projects with units above that band have a competitive disadvantage in the current scoring process. Also, due to higher construction costs and tighter bond-financing requirements, there has become a need for higher-AMI projects to apply for OWHLF funds, but simultaneously it is important to OWHLF staff to maintain some control on how much per low-income unit a project can be eligible for based on its type, since different construction types – acquisition only, acquisition/rehabilitation, new construction, and rehabilitation only – have different requirements.

Because of this, it is proposed that a two-part calculation be used to determine how much funding a project is eligible for: 1) funding based on the current HUD-required subsidy limits and a percentage of those limits based on project AMI; and 2) funding based on per-unit construction costs by construction type. OWHLF staff have maintained a database tracking costs of these four different types of projects, and a running 5-year average would be used and updated each year. The current absolute maximum loan amount of $1 million per project would also remain in place.

The new subsidy limits by AMI and by project construction type proposed are listed below:

1)  LOAN SUBSIDY LIMITS:

234-C 50% 40% 30% 20% 10%

Limits Subsidy Subsidy Subsidy Subsidy Subsidy

Non-Elev/ AMI AMI AMI AMI AMI

Elevator Unit Size <35% <40% <45% <50% >60% Calculation

$ 55,474 SRO/Studio $27,737 $22,190 $16,642 $11,095 $ 5,547 # Units * Limits * 240%
$ 58,378 $29,189 $23,351 $17,513 $11,676 $ 5,838 # Units * Limits * 240%
$ 63,962 1 BR $31.982 $25,585 $19,189 $12,792 $ 6,396 # Units * Limits * 240%
$ 66,923 $33,461 $26,769 $20,077 $13,385 $ 6,692 # Units * Limits * 240%
$ 77,140 2 BR $38,570 $30,856 $23,142 $15,428 $ 7,714 # Units * Limits * 240%
$ 81,377 $40,688 $32,551 $24,413 $16,276 $ 8,138 # Units * Limits * 240%
$ 98,742 3 BR $49,371 $39,497 $29,623 $19,748 $ 9,874 # Units * Limits * 240%
$105,276 $52,638 $42,110 $31,583 $21,055 $10,528 # Units * Limits * 240%
$110,002 4+ BR $55,001 $44.001 $33,001 $22,000 $11,000 # Units * Limits * 240%
$115,560 $57,780 $46,224 $34,668 $23,112 $11,556 # Units * Limits * 240%

2)  MAXIMUM LOAN AMOUNTS PER LOW-INCOME UNIT

Acquisition/Rehabilitation $22,732 maximum per low-income unit/S1 million total maximum loan

New Construction $15,445 maximum per low-income unit/$1 million total maximum loan

Rehabilitation Only $45,467 maximum per low-income unit/$1 million total maximum loan

Acquisition Only $27,795 maximum per low-income unit/$1 million total maximum loan

With these new limits, projects with all low-income units at or above 50% AMI will be eligible for a small subsidy amount, which will vary based on the project type and the unit structure, which OWHLF staff can make proper recommendations on all low-income projects applying for OWHLF funds. Upon approval this will become a part of Exhibit K in the OWHLF 2016-2017 Program Guidance and Rules (revised version attached).

Staff’s recommendation is to amend the OWHLF loan subsidy limits as listed above to allow OWHLF staff to make appropriate recommendations on projects serving low-income populations above 50% AMI but remaining at or below 50% AMI.

Motion by Garret Bangerter and second by Kip Paul to accept staff’s recommendation. The motion carried unanimously.

No actions items for Staff.

The next Olene Walker Housing Loan Fund Quarterly Board Meeting: January 26, 2017.

Adjourn: The meeting adjourned at 10:30 am

Submitted by:

Lora Rees

Olene Walker Housing Loan Fund

Housing and Community Development Division

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