FY 2019 Strategic and Program Plan

Transcription

1 FY 2019 Strategic and Program Plan July 2018

2 Page STRATEGIC PLAN Mission and Values... 2 Organizational Goals... 4 Strategic Policies... 5 Key Issues/Actions for FY FY 2019 PROGRAM PLAN Management and Development Division Homeownership Division Assisted Housing Division Executive Division: Policy, Planning and Communications FY 2019 Resource Allocation Plan

3 STRATEGIC PLAN 2

4 Mission and Values MISSION STATEMENT To promote, finance and support affordable housing and related services for the people of New Hampshire. VALUES Commitment and Leadership Achieve excellence by working together to proactively and effectively demonstrate leadership. Responsiveness and Collaboration Work with and be responsive to each other and our business partners in the pursuit of opportunities to achieve our goals. Stewardship and Integrity Exhibit prudent, ethical and transparent administration of limited public resources and be accountable and reliable in all matters. Respect and Honesty Treat everyone we encounter with dignity and mutual respect and be inclusive, candid and open in our communications and behavior. Creativity and Innovation Think objectively and listen with open minds, raise questions, challenge assumptions and promote an atmosphere that supports creativity and innovation. Alertness and Agility Embrace change, accept risk where necessary to adapt quickly and make difficult decisions to be prepared for future challenges and opportunities. Trust and Teamwork Establish, grow, extend, and embrace trust as an essential component of effective working relationships. Embrace teamwork as essential to achieving overall success. 3

5 Organizational Goals 1. Increase and preserve access to decent, safe, affordable housing for individuals and families. 2. Provide leadership in research, public education and advocacy activities that promote access to and understanding of the need for a balanced and adequate supply of housing and its relationship to the orderly economic development of the state and its communities. 3. Increase housing opportunities for individuals and families that are underserved by the private market. 4. Identify new resources and implement innovative approaches to increase affordable housing opportunities for eligible persons and families. 5. Ensure the long-term viability and stability of the Authority through prudent financial, human, and technological resource management policies and practices, creatively balancing risk mitigation with organizational and public policy goals. 6. Develop and maintain appropriate partnerships to further the public purposes of the Authority. 7. Contribute to the economic and social development of the state and its economy. 4

6 STRATEGIC POLICIES 5

7 GENERAL POLICIES By law, New Hampshire Housing is responsible for promoting access to affordable housing for low- and moderate-income households. In support of this role, New Hampshire Housing will: 1. Maintain a high level of fiduciary oversight as expected of a responsible public financial institution. 2. Establish and cultivate effective partnerships with government agencies, non-profit and for-profit organizations, lenders, real estate professionals, homebuilders and others with interests in housing. 3. Effectively communicate priorities and expectations while simultaneously considering and responding to partners concerns and needs. 4. Design programs, whenever possible, as an integral element of broader community development activities undertaken by local governments and for- and non-profit developers. 5. Engage in a comprehensive annual process of operations and program planning and budgeting. 6. Ensure that programs are conducted in an effective and efficient manner and in compliance with external requirements, and are designed to include measurable outcome indicators, performance goals and standards. 7. Recognize and actively implement human resource management and compensation strategies that encourage the recruitment, retention and professional development of high-performing employees. 8. Maximize the cost effective deployment of technology in support of strategic and operational goals, and to maintain or improve administrative and program efficiency. FINANCIAL RESOURCE MANAGEMENT POLICIES New Hampshire Housing is an independent public financial institution with access to and responsibility for a broad range of financial resources. As the steward of these public resources, the Authority will: 1. Generate and manage financial resources to ensure its ability to support ongoing operations and preserve the capacity to fund existing and new program initiatives. 2. Control costs and attempt to optimize the return on investment of financial resources while achieving a responsible balance between financial gain and public policy goals. 3. Make all unrestricted funds available through the Operating Fund and use such resources to support administrative operations, capitalize and maintain formal reserves established by the Board of

8 Directors, and fund program activities. The appropriate capitalization level of the reserves will be reviewed annually as part of the planning process. 4. Allocate Operating Fund resources for program activities based on the following priorities: Activities that will yield a financial return; Activities that will result in the return of principal expended if a financial return or yield is not possible; and Grant and other programmatic expenditures that contribute to achieving the mission of the Authority. 5. Seek the best execution for mortgage financing that balances current market conditions with the Authority s short- and long-term financial stability. Such executions may include retaining loans, selling loans, selling loan participations and issuing bonds or mortgage backed securities. 6. Work to identify and secure new funding sources to increase the Authority s (and partners ) capacity to support affordable housing initiatives. HOMEOWNERSHIP PROGRAM POLICIES New Hampshire Housing will ensure there are responsible homeownership opportunities for eligible households because successful homeownership helps borrowers, lenders, real estate professionals and the State s overall economy. In this context, New Hampshire Housing will: 1. Provide a range of homeownership programs, adjusting programs in response to available resources and to changes in the housing finance market. 2. Follow underwriting guidelines that serve qualified borrowers, support prudent lending and ensure compliance with regulatory requirements. 3. Offer a unique mortgage product that provides borrowers with cash assistance for down payment and closing costs. 4. Provide participating lenders and originators with an array of mortgage options that also enables New Hampshire Housing to have varied and effective secondary-market executions. 5. Maintain a constant and viable presence in the mortgage market. 6. Provide special mortgage programs to underserved borrowers, when appropriate, through the targeted use of subsidies and through partnerships with suitable organizations. 7. Use federal tax-exempt bond capacity to help low- and moderate-income borrowers achieve successful homeownership, including through mortgage credit certificates and/or loans funded by tax-exempt bonds. 8. Support education and counseling activities that help homebuyers attain and retain successful homeownership. This includes supporting foreclosure intervention strategies for at-risk homeowners.

9 9. Provide residential mortgage products that support the State s economic development and the overall housing market. 10. Vigorously reach out to borrowers, lenders, real estate professionals and non-profits about New Hampshire Housing s homeownership programs. HOMEOWNERSHIP SERVICING POLICIES The single family mortgage and servicing rights portfolios constitute the Authority s largest financial assets. Management and preservation of these portfolios is key to the agency s financial future and critical to the well-being of our borrowers. In administering these portfolios, the Authority will: 1. Service single family loans originated through Authority programs. 2. Manage the portfolios in a manner that minimizes the displacement of borrowers without jeopardizing the Authority s financial stability, bond rating or ability to meet obligations to creditors and investors. MULTI-FAMILY DEVELOPMENT POLICIES New Hampshire Housing is the principal source in the state for financing both new affordable rental housing and initiatives to preserve existing affordable housing. New Hampshire Housing will: 1. Finance housing that is constructed to provide high quality, environmentally safe living spaces that are energy efficient and designed to minimize maintenance and on-going replacement expenses. 2. Monitor short and long-term changes in housing market needs and demands and, in turn, implement and modify programs and practices in order to best allocate housing development finance resources. 3. Give priority to housing projects that: Have strong community, economic and neighborhood development outcomes. Are not age-restricted. Provide appropriate levels of tenant services. Target scarce public resources to the lowest income households as is reasonably feasible. Are located in municipalities that have historically been resistant to providing the opportunity for affordable housing. Leverage non-authority capital and operating subsidy funding sources. Provide for long-term rent and tenant income restriction periods. 4. Allocate scarce housing development resources using the following criteria: Use accepted subsidy layering practices to provide only the minimum amount of public subsidy necessary for the cost of development and long-term operating sustainability.

10 Use HOME and other federal capital subsidy sources to primarily support full utilization of Low Income Housing Tax Credits. Use 9% Low Income Housing Tax Credits primarily to create new affordable housing units through new construction, adaptive re-use of non-residential buildings, and conversion of existing market rate residential buildings into affordable units and, to a limited degree, for the preservation of existing rent- and income-restricted housing. Use tax-exempt construction and/or permanent debt financing in order to access 4% Low Income Housing Tax Credits for the preservation of existing rent- and income-restricted housing or new construction of mixed income projects. 5. Look for new financing tools and encourage the use of existing financing tools by doing the following: Take a proactive approach to identifying opportunities for taxable lending opportunities, including loan participation models, for housing preservation and new housing development. Identify ways to simplify and reduce the cost of using tax-exempt bond construction financing (and the 4% Low Income Housing Tax Credit) in order to induce developers to seek permanent financing options from New Hampshire Housing. Provide technical assistance to housing development partners. MULTI-FAMILY ASSET MANAGEMENT POLICIES New Hampshire Housing has asset management oversight responsibility for hundreds of assisted housing projects throughout the state. In managing this critical resource, the Authority will: 1. Oversee management of the multi-family portfolio to ensure compliance with all applicable regulations and agreements, to mitigate financial risk, and to provide a safe and healthy environment for tenants. 2. Maintain fully funded reserves in all projects to support long-term sustainability and viability. 3. Support efforts to preserve the existing stock of assisted housing. 4. Strive to maintain the strength of the Authority-financed portfolio of multi-family properties as an asset of the Authority. 5. Take a proactive approach to resolving issues within the portfolio to assure that, to the degree feasible, investments and assets are retained for public benefit. DIRECT TENANT ASSISTANCE POLICIES New Hampshire Housing administers a range of programs designed to provide direct assistance and services to low-income households. In administrating those programs, the Authority will:

11 1. Manage the Housing Choice Voucher Program (HCV) to serve the maximum number of eligible clients possible within the available federal resources. 2. Maintain an open waiting list for at least those applicants eligible for special programs or with a ranked preference in the HCV program. 3. Support counseling, education and other programs designed to assist HCV clients to become economically self-sufficient. 4. Support programs designed to improve and sustain the quality of life of HCV clients and other residents of assisted housing. 5. Make limited commitments of project based vouchers to support housing opportunities for seniors and special needs populations. PUBLIC LEADERSHIP POLICIES New Hampshire Housing is the State s principal housing entity, carrying out its mission for the benefit of the people of New Hampshire. To support its mission and business goals, New Hampshire Housing will: 1. Educate the public and public officials about the State s housing conditions, including the housing needs of low- and moderate-income households, the needs of middle income households and the need to house the labor force to support a strong economy. 2. Provide the public with access to high quality, reliable data on the State s housing needs, trends and conditions. 3. Participate in and take a leadership role in public education, advocacy and technical assistance activities designed to promote improved understanding of housing needs in the State. 4. Provide technical assistance in support of, and advocate for, legislative and regulatory policies that positively affect affordable housing opportunities. 5. Provide the public and public officials with information on the economic and social impacts of the Authority s programs.

12 PROPOSED KEY ISSUES / ACTIONS FY

13 MULTI-FAMILY MANAGEMENT AND DEVELOPMENT Substance Use and Mental Health Targeting: House Bill 1817 adopted this year allocated $2.5 million to the Affordable Housing Fund. The allocation is to be used to create transitional supportive housing for persons dealing with substance use disorder or mental illness. The legislation requires the Authority to form a working group of subject matter experts with knowledge and experience in addressing substance use disorder treatment and mental health needs as they relate to and impact transitional housing. The working group shall develop a data-driven process to award the funds, guidelines for accountability, and metrics for demonstrating results that maintain employability and sustained treatment effects as priorities. This initiative is clearly a priority for the state. To broaden the effect of the allocation, these funds may be combined with the FY 2019 Special Needs Housing Program. Action: Staff will establish the working group and solicit project proposals through the Special Needs Housing Program. Given the focus on this effort the goal would be to commit funds soon if possible, before the end of the calendar year. Continued Focus on Larger Scale Multi-Family Development: With nearly $60 million in closed bond financed activity and applications supporting another approximately $50 million received and in underwriting, it is fair to say the Authority s focus on generating multi-family pipeline has had some success. In part this lending activity reflects NHHFA s efforts on eliminating impediments to developers doing business with the agency (i.e., limitations on distribution, construction inspection processes, loan terms and conditions, etc.). It will continue to be important for the Authority to continue its discussion with the development community with regard to adapting loan products to changing markets. The commitment of staff resources to outreach and business development will also remain critical to this effort. Action: Staff will review longstanding requirements for performance bonding during construction as well as evaluate long-term affordability restrictions for unsubsidized projects. Equally as important, staff will focus on the identification and use of new lending tools to either replace or complement Federal Finance Bank (FFB) funds and other participation loan products. 12

14 Long Term Affordability Policies: In the course of the annual Qualified Allocation Plan discussion, NHHFA received feedback that the current 99-year affordability restriction on projects financed with 9% Low Income Housing Tax Credits (LIHTC) was unrealistic and limited developer (nonprofit and for-profit) flexibility. The minimum longterm affordability requirement under LIHTC program regulations is 30 years and the HOME requirement is 20 years. NHHFA imposed a 99-year requirement as a matter of policy seeking to establish permanent affordability. Given the potential implication of changing such a long held policy, staff and the Multi- Family Housing Committee elected to hold consideration of the issue until the next QAP development cycle, allowing time for necessary policy deliberations internally. Action: Staff will research the approaches taken by other jurisdictions and the programmatic affects seen in those jurisdictions. Committee level discussions will begin in the early fall of 2018, well in advance of the next QAP development process. Multi-Family Property Management: The Authority s multi-family property portfolio performs well and continues to grow with very little erosion. However, there appears to be significant staff turnover within property management firms which leads to some concern with the capacity of those firms to manage projects consistent with the Authority s expectations. The risk of noncompliance is increased and there is an increased burden on Authority asset management staff when less experienced property managers must deal with complex program regulations. Action: The development of quality property management options will be a focus of effort in FY Staff will build on the existing partnership with the Granite State Manager s Association to increase the number and diversity of their trainings and also engage other parties in this effort, including investors/syndicators. Staff will explore new partnerships and consider incentives for property managers who choose to participate in compliance training to reduce risk of non-compliance. HOMEOWNERSHIP Homeownership Business Model: For more than five years the authority has used a mortgage lending model that relies on a mix of Ginnie Mae securitization and loan sales to Fannie Mae. Until recent months this model has generated sufficient current revenue to not only support direct program operations but provide funding for other program activities. However, changes in interest rates and the capital markets have impacted the financial dynamics of the Ginnie Mae model reducing up-front income for such loans and requiring that, in some cases, the Authority invest cash in order to acquire and securitize loans at competitive rates. While this investment may return a yield from servicing activity in the future, this shift from up-front revenue to future revenue will have a significant impact on cash flows and current income. Overall, the Authority s objectives remain to maintain a strong presence in the mortgage market for borrowers eligible for New Hampshire Housing loan programs and to achieve loan volume and financial goals. 13

15 Action: During the year, staff will: implement a change in the structure of the Authority s downpayment assistance product designed to reduce prepayments and improve the marketability of such loans; examine alternative ways to mitigate these issues including efforts to more directly influence the mix of the loans between Ginnie Mae and Fannie Mae; and assess the financial and program issues associated with issuing Mortgage Revenue Bonds to support all or a portion of the lending program. Business Development New Hampshire Housing dedicates significant resources to business development for the Homeownership programs. This commitment includes outreach to lenders, real estate professionals, housing counselors and borrowers, the provision of program material and training to lenders and consumers, and direct advertising to borrowers. In addition to making sure the target borrowers are served, this business development effort is intended to support the long term viability of the lending program. One issue of concern here is the fact that a significant portion of the Authority s mortgage business is concentrated with three large lenders. Consequently, the loss of any one of the three (acquisition by a nonparticipating lender or a policy change that limits their participation) could have a significant effect on the volume of loan activity. This concentration suggests a continuing need to focus not only on the needs of existing high volume lenders but to look at ways of expanding the base of loan activity. Action: Staff will reassess how to best use the available business development resources to ensure a continued strong market presence for New Hampshire Housing. A revised business development plan will be created and resources will be allocated in accordance with the plan. The plan will also create a strategy to respond to the increasing presence of national mortgage lenders that use an online platform. Staff will also continue to promote and grow the Participating Originator channel of the business model and look at alternative outreach and marketing strategies for the program. ASSISTED HOUSING Administration: With the reduction in fees paid to the Authority for the administration the Housing Choice Voucher (HCV) program, the Assisted Housing Division has been reducing administrative expenditures while also attempting to maintain high quality service to beneficiaries and manage risk to the Authority. While administrative fee reserves have been available to cover shortfalls thus far, these reserves are being depleted. In FY 2018 a consultant was retained to review the organizational structure and program administration of the HCV program and to identify streamlining recommendations and strategies to close the gap between administration fee revenue and expenses. As a result, the following cost changes have been implemented: revised interim income reporting, biennial inspections, streamlined annual recertifications for fixed sources of income, and asset self-certifications for clients with net assets at or below $5,000. In addition, some HCV clients and tasks have been assigned to Family Self Sufficiency case workers. 14

16 At this time, staff is preparing to apply for several hundred additional Housing Choice Vouchers under HUD s Mainstream and Family Unification Programs. The Mainstream Program provides vouchers to enable non-elderly persons with disabilities to access affordable private housing of their choice. The purpose of the Family Unification Program (FUP) is to promote family unification by providing Housing Choice Vouchers (HCVs) to families for whom the lack of adequate housing is the primary factor in separation, or the threat of imminent separation, of children from their families and to youths 18 to 21 years old who left foster care at age 16 or older and lack adequate housing. With each release of highly targeted vouchers (veterans, disabled, mentally ill, FUPs) the HCV program has become more complex and costly to administer. While meeting HUD s performance standards, cost cutting actions potentially risk non-compliance, audit findings and poor customer service, and could damage the Authority s reputation and relationships. Action: Staff will pursue the Moving to Work option, which allows more administrative flexibility and potential cost savings if HUD makes it available to the state. Staff will also evaluate additional streamlining steps in HCV administration such as: closing the Waiting List, reducing or modifying preferences, increasing Project Based Voucher commitments, revising quality control procedures, and automating the customer interface to reduce phone calls. Beyond these measures, staff will review with the Board the advisability of re-allocating unrestricted resources to support some aspects of program operations; especially critical client service functions. EXECUTIVE Inventory Challenge: New Hampshire continues to have a housing inventory challenge that in many ways is caused by the lack of new construction of homes costing less than $300,000. This challenge has three effects: impinges on borrower s ability to buy a home; impacts New Hampshire Housing s mortgage volume; and inhibits economic growth in New Hampshire. In FY 19, New Hampshire Housing will be taking limited steps to address this challenge. Actions: Staff will complete a study on the actual cost to develop moderately priced homes as a means of better understanding the real potential for the Authority to impact this problem. In addition, staff will explore the role, if any, New Hampshire Housing can play in catalyzing the development of new moderately priced homes. This role could include creating a predevelopment fund and establishing programs that invest in such efforts. The Homeownership Division will assist condominium associations that may seek re-approval for expired FHA insurance, enhancing purchase-rehab loan programs (which might include adding the full FHA 203k), and working with the New Hampshire Community Loan Fund on manufactured housing options. 15

17 Extraterritorial Bonding Authority: SB 537, adopted this year, provides New Hampshire Housing with the capacity to: XXVI-c. Issue bonds, without regard to any other requirements of this chapter, for housing, housing projects, or any other facility located outside of the state that could be financed by the authority if it were located within the state, if the authority finds that such financing would result in a public benefit to the state or its citizens, provided that no such bonds shall be considered an obligation or pledge of the faith and credit of the state; Since the Authority's enabling legislation provides broad power to finance not just housing but also virtually any non-profit owned "community provider facility" this legislation means that the agency could engage in financing of a broad range of projects in other states, including for instance "... health facilities, recreational facilities, cultural facilities, educational facilities, and welfare facilities." This new power could be used to generate fee income for the Authority--especially as a source of income for the Affordable Housing Fund. This type of financing activity would, however, require that the Authority establish policy and protocols for this type of work and, probably, require the engagement of a consultant or partner entity to assist in marketing this new initiative and in identifying and evaluating potential projects. Based on preliminary analysis of the fees charged by other existing extraterritorial financing entities in other states, a significant amount of bonding activity would be required to generate meaningful fee income. Also, this type of work might lead to potential conflicts with public financing agencies in other jurisdictions. However, there may also be mission related opportunities for financing in other jurisdictions. Action: During FY 19 staff will work with the Board and established external advisors to determine if and how this new capacity should best be used. This will include development of specific policies to evaluate potential financing opportunities in other states. 16

18 FY 2019 PROGRAM PLAN 17

19 Multi-Family New Production Programs This section summarizes NHHFA s multi-family production programs and funding sources. Program outcomes include all new projects ranging from wholly targeted to mixed-income projects including Special Needs Program outcomes. The projection of subsidy and bond resources for multi-family projects is based on projections of anticipated project pipeline and the nature of those potential projects (i.e., new production versus recapitalization and preservation proposals). Some movement of funding resources to accommodate actual project applications should be anticipated. Staff will review actual distribution of funding resources over the course of the program year and in connection specific project recommendations. Multi-Family Production Programs RESOURCES ($ In Thousands): Long-Term Debt Low Income Housing Tax Credit (LIHTC) Capital Subsidies PROGRAM MEASURES: Targeting Occupancy Performance 2019 Plan Private Activity Bonds $50,000 Operating Fund $750 4% Credits Allocated TBD 4% Equity Raised TBD 9% Credits Allocated $3,600 9% Equity Raised $31,680 HOME $5,000 Operating Fund $2,000 Affordable Housing Fund $4,500 Housing Trust Fund $2,250 Financing Adjustment Factor $750 Units 640 Projects Units at <60% AMI 70% General Occupancy Units 75% % of Projects >95% Occupied 95% % of Projects on Watch List <10% % of Projects on Critical Watch List <2% Management and Development Division 18

20 FY 2019 Program Narrative NHHFA s production efforts cover a wide variety of programs, ranging from the highly competitive Rental Production Program involving 9% federal tax credits, subsidies and other resources, to the Special Needs Programs (HTF, AHF, SUDS, etc.) and increasingly, larger conventional multi-family projects. In FY 2019 NHHFA will receive and deploy a new state commitment of $2.5 million aimed at households dealing with either substance use issues or mental illness. Staff are proposing to combine those new funds with funds generally targeted to the Special Needs Program in order to create a more substantive programmatic impact and to allow for staffing efficiencies. This would have the effect of limiting the eligibility for Special Needs Funds to projects providing transitional housing for persons dealing with either substance use disorders or mental illness (or perhaps dual diagnosis situations). Consequently for FY 2019, sponsors of projects not targeting those issues would be ineligible for funding. There is a substantial volume of FY 2019 bond financed new construction projects already in the application process, accounting for the $60 million in projected lending volume. It is possible the actual pipeline could be significantly larger. Management and Development Division 19

21 Multi-Family Recapitalization and Preservation Programs This section covers a wide array of multi-family affordable housing production programs including bond and Federal Financing Bank initiatives as well as the core Rental Production Program. Program outcomes include both new construction and preservation. Multi-Family Recapitalization and Preservation Program 2019 Plan RESOURCES ($ In Thousands): Long-Term Debt Private Activity Bonds $10,000 Federal Financing Bank (FFB) $30,000 Low Income Housing Tax Credit (LIHTC) 4% Credits Allocated TBD 4% Equity Raised TBD 9% Credits Allocated $450 9% Equity Raised $4,000 PROGRAM MEASURES: Targeting Occupancy Performance Units 550 Projects 6-8 Units at <60% AMI 70% General Occupancy Units 75% % of Projects >95% Occupied 95% % of Projects on Watch List <10% % of Projects on Critical Watch List <2% FY 2019 Program Narrative While NHHFA priorities continue to focus on production of new housing units, there continues to be a pipeline of preservation and recapitalization projects. The suspension of the Federal Financing Bank (FFB) by HUD/FHA did significantly curtail what had become an active and productive lending model for NHHFA, resulting in the sudden drop off of new FFB transactions in Staff have been reassured that an additional $30 million in FFB authority will be forthcoming in the near future, enabling staff to process a backlog of projects during FY As an alternative to FFB for certain types of projects, NHHFA continues to offer developers the option of using tax-exempt bonds and 4% tax credits. Staff expect to see $10-20 million in tax-exempt bond preservation transactions during FY 2019, depending on the availability of the FFB authority. Management and Development Division 20

22 Construction/Bridge Lending Program This program provides construction financing for Authority-financed multi-family projects. In addition, funds may be used for equity bridge loans to encourage and maximize the impact of investment in Low Income Housing Tax Credit projects. Construction / Bridge Lending RESOURCES ($ In Thousands): PROGRAM MEASURES: 2019 Plan Line-of-Credit and FHLB-Boston $25,000 Units Financed 250 FY 2019 Program Narrative NHHFA staff project another strong year with respect to the Construction Loan Program in part due to heightened project volume generally, improved focus on marketing our construction loan capacity and finally, due to the anticipated availability of Helping House New England funding from the Federal Home Loan Bank of Boston. Management and Development Division 21

23 . Lead Hazard Abatement Program On a statewide basis, this program provides lead hazard abatement funds and healthy homes intervention funds to single family and multi-family owners through the Management and Development Division. Priority is given to units with a documented case of a child having elevated blood lead levels. Lead Hazard Abatement Program RESOURCES ($ In Thousands): PROGRAM MEASURES: 2019 Plan Operating Fund $20 Federal Funds $1,139 Inspections / Risk Assessments 105 Units Completed 71 Community Outreach Events 50 Skills Training 35 FY 2019 Program Narrative The new grant cycle began on January 2, 2018 and will continue through FY 19, ending in FY 21. We were successfully awarded $2.5 million in funding to remediate lead-based paint in at least 190 units and an additional $400,000 to provide Healthy Homes intervention to address health and safety issues in those same units. The resources and program measures above reflect increased of production over the coming year. Management and Development Division 22

24 Performance Based Contract Administration (PBCA) As the HUD-designated Contract Administrator for New Hampshire, the Authority is directly responsible to HUD for all PBCA program functions and reporting requirements, providing general program oversight and administration, and performing a quality assurance function for all assigned tasks. Day-to-day functions involved in this program include conducting management and occupancy reviews, adjusting contract rents, processing monthly Housing Assistance Payment (HAP) vouchers for project owners, processing HAP contract renewals, terminations and/or opt-outs and responding to health and safety issues. There are currently 143 projects under the PBCA contract with a total of 5,431 units. Performance Based Contract Administration (PBCA) 2019 Plan RESOURCES ($ In Thousands): Federal Funds Rent Assistance $50,388 PROGRAM MEASURES: Complete Management Occupancy Review 95% Review and Pay Monthly Vouchers 95% HAP Contract Renewals, Terminations, and Expirations 95% FY 2019 Program Narrative HUD has recently decided to cancel both the national and regional draft Request for Proposals to replace the current Performance-Based Contract Administration program. As a result, NHHFA would anticipate retaining the contract for two years, if not longer. Management and Development Division 23

25 Section 811 Project Rental Assistance (PRA) The Section 811 Supportive Housing for Persons with Disabilities Project Rental Assistance (PRA) Program is a partnership between New Hampshire Housing and the New Hampshire Department of Health and Human Services (DHHS). The program will provide project based rental assistance to property owners and developers that provide rental opportunities for persons with a disability who are transitioning from institutional settings into housing with community-based services through the Housing Bridge Subsidy Program. Section 811 Project Rental Assistance (PRA) RESOURCES ($ In Thousands): PROGRAM MEASURES: 2019 Plan Federal Funds Rent Assistance $384 Complete Management Occupancy Review 7 Number of Units Assisted 37 FY 2019 Program Narrative The 811 PRA program is permanent rental assistance that is placed in units that are committed to the program by our developer partners. This program is administered through a partnership between New Hampshire Housing Finance Authority and DHHS to assist persons with severe mental illness in affordable, supportive housing. NHHFA works with developers and property owners to commit units to the program and administers the voucher payments on leased units; and DHHS refers eligible applicants to vacant units throughout the state. In FY 19 the 811 PRA program will continue to expand. There are currently 69 existing units under RAC for the program and in the coming year we anticipate adding another 6 existing units, and 12 more units in new construction projects for a total of at least 87 committed units. Also, there are now 21 households in units through this program. Thirty-seven households in leased units will benefit from the program in the coming year. Management and Development Division 24

26 Home Flex (Ginnie Mae MBS) & Home Preferred (Fannie Mae) Programs Home mortgages are purchased from participating lenders and originators and processed through one of two business channels. Ginnie Mae: Government-backed mortgages, with and without cash assistance, purchased from participating lenders and pooled into taxable Ginnie Mae Mortgage Backed Securities (MBS). The MBS are sold to generate funds to buy loans and provide cash assistance to borrowers. Fannie Mae: Conventional loans, with and without mortgage insurance, under Fannie Mae s HFA Preferred Mortgage Program, purchased from participating lenders and sold on a loan-by-loan basis to Fannie Mae. No cash assistance is available for these loans. Home Flex GNMA MBS Program RESOURCES ($ In Thousands): Actual Plan Mortgage Purchases $165,000 $163,000 PROGRAM MEASURES: Loan Purchases Average Beneficiary Income 80% SMI 80% SMI Average Loan Amount $187 $202 Home Preferred FNMA Program RESOURCES ($ In Thousands): Actual Plan Mortgage Purchases $113,300 $110,000 PROGRAM MEASURES: Loan Purchases Average Beneficiary Income 85% SMI 100% SMI Average Loan Amount $199 $204 FY 2019 Program Narrative In setting the FY 2019 loan volume goals, staff looked at various sources of data to provide the best projection possible. For example, staff reviewed market data for sales under $300,000 and New Hampshire Housing s share of that market. Additionally, staff looked at the expected volume by loan program and loan channel. Staff also asked lenders about their projections. Homeownership Division 25

27 Based on this analysis, the FY 2019 Program Plan shows relatively stable volume for FY 2018 to FY Several factors could impact the actual volume. Positive Factors: New Hampshire Housing s approach to interest-rate setting that places more value on long-term servicing, which could permit New Hampshire Housing to offer more attractive mortgage rates. Expansion of programs where New Hampshire Housing has a product advantage such as purchase rehab program. Negative Factors: Beginning in FY 2019, borrowers will be required to repay cash assistance under certain conditions. While lenders have been part of structuring this approach, the reinstatement of the repayment obligation could negatively impact volume. Market factors, including scarcity of homes, increasing sales prices and rising mortgage rates, negatively impacts the ability of low- and moderate-income borrowers to compete in the market. Fannie Mae could change its income requirements to meet its housing goals. Further, staff predicts the current balance between Fannie Mae loans and Ginnie Mae loans, which started in FY 2018, will continue in FY In terms of market interest rates, Mortgage Bankers Association predicts mortgage rates will rise from 4.8% (4th Q of FY 2018) to 5.4% (4th Q of FY 2019). New Hampshire Housing is agile and prepared to be informed and proactive to continue to serve borrowers and lenders in this dynamic market. Homeownership Division 26

28 Homebuyer Tax Credit The Home Start Homebuyer Tax Credit Program (HBTC) makes homeownership more affordable for first-time homebuyers. An eligible homebuyer receives a Mortgage Credit Certificate (MCC) from New Hampshire Housing for an annual credit of up to $2,000 each year for the life of the original mortgage, as long as the homebuyer uses the home as their primary residence. The HBTC can decrease the income taxes owed by the homebuyer, increasing take-home pay that can be used to help pay the mortgage. Homebuyer Tax Credit RESOURCES ($ In Thousands): PROGRAM MEASURES: Actual Plan Tax-Exempt Bond Capacity $49,200 $51,000 MCCs Issued FY 2019 Program Narrative The MCC program remains a core mission program that helps eligible low- and moderate-income homebuyers. The MCC Program also provides two other benefits: creates another connection between lenders and New Hampshire Housing; and generates MCC fees that cover the MCC administrative costs. In FY 2018 New Hampshire Housing surveyed existing MCC Holders to learn more about the use and benefit of the program to those households that received an MCC. Based on survey finding, New Hampshire Housing learned: 96% of survey responders have been using their MCCs: The average tax benefit was $1,700; Some responders said they use the tax savings for house-related costs; and As of the date of the survey, the total taxes saved since 2012 is estimated at $5,000,000. With the MCC program surviving tax reform and with the potential for rising interest rates, the MCC program may become a more helpful program when it comes to homeownership affordability. To that end, New Hampshire Housing will continue to look for new ways to inform homebuyers about the longterm benefits of having an MCC. Staff estimates approximately 850 MCCs will be issued in FY Additionally, staff will monitor when a new MCC allocation by the Board should be requested. Depending on program use, staff will evaluate: when the existing MCC capacity is estimated to be fully committed to MCC applicants: and/or when the end of the calendar year is approaching and New Hampshire Housing has tax-exempt bond authority not allocated to other purposes that could lapse if not allocated to MCCs by the end of the calendar year. Homeownership Division 27

29 Special Homeownership Programs The Homeownership Division s charge is to be a trusted and productive source for programs that make successful homeownership a reality for New Hampshire s individuals and families. The core loan and MCC programs reach many potential homeowners. The Special Homeownership Programs complement the core programs by providing funds for eligible borrowers based on their needs and circumstances. Additionally, these programs provide flexibility to create special initiatives and to address new issues and opportunities that directly relate to the overall homeownership mission. Home Flex GNMA MBS Program RESOURCES ($ In Thousands): Actual Plan Housing Loan Trust (HLT) Habitat Loans $45 $75 Housing Loan Trust Initiatives - $250 Operating Fund Emergency Home Repair Loans (EHRL) $67 $100 Special Initiatives $107 $105 HOPE 3 $0 $45 Program Marketing and Promotion $300 $300 Accessibility Pilot Program $0 $125 Single Family Development $0 $75 PROGRAM MEASURES: Habitat Loans Closed 3 5 Average Beneficiary Income 60% SMI 60% SMI EHRL Loans Closed 8 10 Average Beneficiary Income 110% SMI 80% SMI Homeownership Fellowship - # of Fellows FY 2019 Program Narrative Habitat Loans New Hampshire Housing will continue to provide $15,000 loans (using HLT funds) to homebuyers who are working with New Hampshire chapters of Habitat for Humanity. In setting the FY 2019 HLT allocation, staff reviewed the past five years of Habitat loan volume. Homeownership Division 28

30 Housing Loan Trust (HLT) Initiatives As approved by the Board, there are three nonprofits that have existing HLT allocations. Those existing allocations are not reflected in the FY 2019 Program Plan. In terms of the FY 2019 HLT funds, the following are potential uses for the stated HLT funds: The New Hampshire Community Loan Fund, which already has an HLT allocation, will likely seek an addition allocation for use with manufactured housing loans; New Hampshire Housing could offer some downpayment assistance to borrowers who use New Hampshire Housing loan programs; and Some nonprofits are working on new single family developments, and the HLT funds could be used for downpayment assistance in those developments. Emergency Home Repair Loans (EHRL) Emergency Home Repair Loans, a valuable program, will continue to provide loans to New Hampshire Housing borrowers to perform emergency repairs to their homes. In setting the FY 2019 EHRL amount, staff reviewed the past five years of EHRL volume. Special Initiatives - Homeownership Fellowship New Hampshire Housing will again offer the Homeownership Fellowship for FY This program has educated lenders about New Hampshire Housing and the broader housing finance system. Note: Since its inception 38 people have completed the fellowship program. 23 were loans originators from Participating Lenders, 4 loan originators from Participating Originators, 5 were management/ loan originator people, 2 mortgage underwriters and 4 non-profit people. Loan totals over the 4 year period from the loan originators: 867 loans for $155 million of loan volume. Special Initiative - Inventory Challenge Given the property inventory challenge, New Hampshire Housing will continue to research and then implement ways that it might assist low- and moderate-income to access homeownership. Staff anticipates continuing to work with the Community Loan Fund on its in-fill of manufactured homes into existing resident-owned communities (ROCs) and for its work on getting ROCs approved by Fannie Mae. Additionally, funds have been included for a potential loan/grant program for predevelopment funds similar to what is offered already for multi-family developments. Hope 3 Launched by HUD in 1992, the HOPE for Homeownership of Single Family Homes Program (HOPE 3) to aid nonprofit and public agencies in acquiring, rehabilitating, and reselling single family homes to lowincome families. New Hampshire Housing has about $65,000 remaining HOPE 3 funds. New Hampshire Housing is required to hold $20,000 in reserve for HOPE 3 homeowners who might require additional assistance with items such as emergency repairs. The FY 2019 Program Plan shows the $45,000 HOPE 3 balance that can be used to help low-income, first-time homebuyer households access homeownership. Staff will explore options to deploy these funds for uses such for assistance for downpayment or closing costs. Homeownership Division 29

31 Program Marketing and Promotion In consultation with a marketing consultant, a comprehensive outreach and promotion plan is created each fiscal year. This plan maps out the types and timing of outreach/marketing. The funds are used for various types of advertising, including internet ads, partner sponsorships and homebuyer fairs. Outreach/marketing included: borrowers; lenders (both Participating Lenders and Participating Originators); real estate professionals; housing counselors; and employers. In FY 2019, staff will be reexamining the allocation of outreach/marketing resources. For example, staff will decide if resources should be allocated to borrower outreach/marketing or to lender outreach/marketing. Homeownership staff will work the Executive Director, Finance staff and the Homeownership Committee in determining the best use of the outreach/marketing resources. Homeownership Division 30

32 Homebuyer/Homeowner Education and Counseling This program provides resources to non-profits so they can provide homebuyers and homeowners with pre- and post-purchase education and counseling services. This work is coordinated with New Hampshire Housing s role as intermediary of the HUD counseling funds covered under the Assisted Housing section of this Program Plan. Homebuyer/Homeowner Education and Counseling RESOURCES ($ In Thousands): PROGRAM MEASURES: Actual Plan Operating Funds $350 $340 Number of Counseling Related Positions 5 5 Homebuyers/Homeowners Counseled 1, FY 2019 Program Narrative The FY 2019 Homebuyer/Homeowner Education and Counseling (HBEC) plan facilitates the closing of the loop during the counseling cycle between borrowers and our lenders, real estate partners, employers and New Hampshire Housing s homeownership programs and our servicing department. The FY19 program counseling goals continue to: Provide statewide comprehensive counseling based on the client s needs. This includes providing both pre-purchase and post-purchase counseling services, including foreclosure counseling. Encourage and enhance the counselors relationships with lenders, real estate partners, and employers to educate those partners about the value of counseling and about the value of New Hampshire Housing s homeownership programs. Provide outreach to the public about the value of counseling and New Hampshire Housing s homeownership programs by providing direct education to pre-purchase households, encouraging participation in regional homebuyer fairs and being part of other targeted marketing efforts. Funds through this priority also supported NH, which provides counseling intake and referral services and provides general support to Granite Staters who have housing challenges. The HBEC effort are coordinated with New Hampshire Housing s role as intermediary of the HUD counseling program grant funds. Homeownership Division 31

33 Housing Choice Voucher (HCV) Program This program enables very low-income households to obtain safe, decent, affordable housing. The qualified household pays a portion of their adjusted income towards rent and utilities, and New Hampshire Housing pays the rest directly to the landlord. The HCV program is operated on a calendar year basis. Housing Choice Voucher Program CY 2018 Actual Plan RESOURCES ($ In Thousands): HUD Calendar Year Funding (CY) $30,306 $29,923 PROGRAM MEASURES: Total Vouchers Administered 3,546 3,555 Administer Program within per unit Cost (PUC) (CY) $710 $710 % Leased within HUD Budget (CY) 100% 95% Section 8 Management Assessment Program (SEMAP) Score (FY) 97% 90% Multi-Tenant Characteristics System (MTCS) - % for HUD Electronic Submissions 100% 95% CY 2018 Program Narrative One of the Housing Choice Voucher Program challenges continues to be how to maximize the number of households on the program while operating the program within the HUD budget, as well as any available reserves. The HUD CY 2018 budget is sufficient to serve existing participants and maintain a 99.5% lease up and utilization rate. We will continue to make project-based vouchers available for homeless individuals and other targeted populations in coordination with the National Housing Trust Fund. The other challenge involves the HUD administrative fees. The administrative fee formula has been consistently underfunded. The prorated appropriations for 2017 was only 76% of the target amount and we do not expect it to increase. In 2018, as administrative costs increase, these fees may not cover the full cost of operating the program, although there are administrative fee reserves available to cover any shortfall for CY To address the growing gap in administrative costs and revenue, a consultant was hired to review and assess HCV policies, staffing levels and organizational structure. The consultant found the program administration to be high quality and staffing levels to be lean. We have implemented several streamlining and cost saving measures, and will continue to update the Board on future program and policy decisions. Assisted Housing Division 32

34 Emergency Housing Program (EHP) This program is designed to assist eligible households with short-term rent payments. Participants must be homeless or in imminent danger of eviction due to financial difficulty. Emergency Housing Program RESOURCES ($ In Thousands): PROGRAM MEASURES: Actual Plan Operating Funds $209 $209 Households Assisted FY 2019 Program Narrative The CAPs administration of the Emergency Housing Program continues to effectively assist eligible households with rental assistance and case management. Their ability to rapidly re-house homeless families or prevent families from becoming homeless provides a much needed resource in keeping families housed. The CAPs continue to report their appreciation for this program and its continued funding. Assisted Housing Division 33

35 FSS Loan and Grant Program This program provides small loans and grants for transportation and/or other items or services which enhance employability and increase earned income of participants in the Family Self Sufficiency program. FSS Loan and Grant Program RESOURCES ($ In Thousands): Actual Plan Operating Funds $50 $50 PROGRAM MEASURES: % of Loans Currently in Payback 100% 85% % of FSS Recipients Maintaining or Increasing Earned Income 83% 70% % of Overall Earned Income Increase for FSS Loan/Grant Recipients 26% 15% % of FSS Recipients Who Complete Related Goals 100% 90% % of Funds Directly Related to Obtaining/Maintaining Employment or Becoming a Homeowner (for FSS clients only) 100% 98% FY 2019 Program Narrative The FSS Loan and Grant program effectively assists HCV clients in reducing barriers to increasing their earned income and moving toward self-sufficiency. It is expected that HUD funding for FSS Coordinators and program outcomes will continue to be level. In FY 2019, four matching grants will be requested for home repair for Housing Choice Voucher (HCV) Homeowners. The funds will be prioritized to: 1) alleviate health and safety hazards; 2) make necessary structural and system repairs, and; 3) for repairs and upgrades for energy efficiency. Assisted Housing Division 34

36 HUD Housing Counseling Program New Hampshire Housing administers HUD s Comprehensive Housing Counseling Program Grant for Local Housing Counseling Agencies. The grant supports pre- and post-purchase counseling activities for homeownership as well as targeted homeownership counseling for Housing Choice Voucher participants. The program is conducted through non-profit housing counseling agencies and the Authority. Housing Counseling Program Actual Plan RESOURCES ($ In Thousands): HUD Housing Counseling Grant $170 $170 PROGRAM MEASURES: Number of Participating Housing Counseling Agencies and Branches 8 8 Number of Households Receiving Homeownership Education and/or Counseling 908 1,000 Number of Households Receiving Rental Counseling and/or Financial Education Number of Households Receiving Post Purchase and/or Foreclosure Counseling % of Households Below 50% of AMI 60% 60% % of Households Purchasing Homes 9% 10% FY 2019 Program Narrative FY 2019 projected outcomes and funding for the HUD Comprehensive Housing Counseling Program will be consistent with the previous year. Changes in the federal budget or in the funding formula used for allocating these grant funds would affect this projection. Home purchases by program participants have been decreasing over the past 18 months possibly due to the decrease in inventory of lower priced homes and rising home prices and interest rates, which does not favor low-income buyers. More low-income households are seeking financial literacy education, which may lead to homeownership in the future. HUD funds are now being used for foreclosure counseling so were added to the report this year. Assisted Housing Division 35

37 This program supports an array of critical education tools designed to improve public understanding of our state's housing challenges and encourage actions at the local, regional, and state levels to help expand the supply of housing available to all of our state's citizens. FY 2019 Program Narrative Compact Design Grant The funds totaling $10,000 to PlanNH continues a partnership which is helpful in promoting smart growth. From the Authority s perspective, having some influence in this area keeps housing, and affordable housing specifically, prominent in the message. Mini Conferences The funding under the Mini Conferences program ($10,000) will provide a forum for our business partners and others to hear about and react to housing policy issues and other topics of interest. They are intended to improve communications and will be offered as half-day events. Possible topics for FY 18 include: Fair Housing (i.e. reasonable accommodations, support/assistive animals, Limited English Proficiency) presented by NH Legal Assistance and the economics of housing construction. Housing Solutions Handbook With the changes in state statutes concerning Accessory Dwelling Units and renewed activity in the housing markets, there is a need to update the Housing Solutions Handbook ($5,000). Executive Division 36

38 Housing Related Studies The opportunity to conduct various Housing Related Studies ($50,000) throughout the year allows the Authority to be a leader in providing information on housing related issues. Topics that could be explored include; an update to the 2014 housing needs study, a study of the municipal reaction to the state s Workforce Housing Law, and an update to the municipal fair housing guide. Municipal Technical Assistance Grants The use of Municipal Technical Assistance Grants ($100,000) will provide funding through PlanNH, a non-profit sub-recipient entity, to applicant municipalities to develop or adjust local regulatory mechanisms to make them more housing friendly. Staff will seek additional funds from partners such as the Community Development Finance Authority (CDFA) and the New Hampshire Charitable Foundation and make them available through the program to address attendant housing related issues. New Hampshire PBS Affordable Housing Feature The production of a New Hampshire PBS Affordable Housing Feature ($30,000) would be the community outreach component of a larger project involving a 30-minute documentary television program (completed by others) about affordable and workforce housing issues in New Hampshire. New Hampshire Public Broadcasting System (NHPBS) would serve as consulting producer and program distributor, provide project coordination to track deliverables, create and maintain independent, project-specific website for three years, and create publicity tools for the project. NHPBS would also broadcast program on NHPBS and NHPBS EXPLORE, connect with PBS network and other stations for possible distribution and distribute the program to the state s community access stations. Housing Partnership Grants The use of Housing Partnership Grants ($260,000) will focus the advocacy activities that are carried out by our partners as well as to create opportunities for new partners. This program supports new or existing organizations, or programs within established non-profit organizations, that wish to focus efforts on housing education and advocacy. The grants provide flexible funding that meets the needs of a potentially diverse mix of providers. For-profit organizations, housing development organizations, municipal government and regional planning commissions are not eligible for funding. The Partnership Grant Program has three components of funding: Mini Grants up to $5,000 available to support the efforts of local business groups, local economic development groups, regional economic development groups, local and regional ad hoc groups, business and community leaders, local governments, local service organizations, business owners and non-profit organizations for housing education and advocacy efforts. Eligible activities include funding technical assistance to explore housing friendly land use regulations and may also be used for groups to research the feasibility of starting a local or regional housing advocacy initiative, which may include strategic planning efforts. Executive Division 37

39 Housing Advocacy Incubator Grants up to $50,000 but limited to $20,000 for start-up organizations available to non-profit economic development or community development organizations that propose to establish a workforce housing education and advocacy program, or start-up organizations whose primary mission is workforce housing education and advocacy. These are one-time-only grants with no matching funds required. To be eligible for up to $50,000 organizations must have been established for more than three years and must commit to maintaining the program for at least three additional years. They will be eligible for annual Education and Advocacy Impact Grants after the first year of operation. Grants of up to $20,000 are available to help fund the start-up of a new housing education and advocacy organizations. Primary activities must include efforts to promote an adequate and balanced housing supply at the local and/or regional level and educate the general public and public officials about the relationship between housing and the regional economy. Education and Advocacy Impact Grants up to $40,000 available to non-profit economic development or community development organizations that have workforce housing education and advocacy programs, or non-profit organizations whose primary mission is workforce housing education and advocacy. Organizations must be established for at least one year and 50% matching funds are required. These organizations will be eligible for additional funding based on annual reviews. Funds would be distributed across the components as needed, allowing for some flexibility during the program year. Staff proposes to seek Finance and Administration Committee approvals for awards of $20,000 and above, and full Board approval of awards of $40,000 and above. Executive Division 38

40 This allocation funds various small grants in support of general affordable housing activities that the Board of Directors may choose to approve during the fiscal year. FY 2019 Program Narrative The Emerging Opportunities Program has supported a variety of innovative programs by non-profit organizations engaged in affordable housing activities. Funding is competitive and award amounts are based on an analysis of the proposals. This initiative has been in place for a number of years and staff believes an analysis of program outcomes and consideration of changes in focus may be appropriate. For example, the program could be used in a more focused way, possibly with other funders, to address the specific lack of housing development and property management capacity in special needs providers. This issue has become more important as there has been more focus on this type of housing development from public officials. The Community Development Finance Authority has expressed some interest in partnering to provide technical assistance to non-profit organizations. In FY 2019 the staff will explore the options to target the Emerging Opportunities Program to special needs providers and/or other specific uses and develop a proposal for the Board of Directors to review. Executive Division 39

41 FY 2019 RESOURCE ALLOCATION PLAN/NEW COMMITMENTS ONLY 40