Community Investment Department supporting member mission for housing and economic development

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1 Community Investment Department supporting member mission for housing and economic development Competitive Affordable Housing Program

2 FHLBank System A government sponsored enterprise authorized by Congress in regional independent Federal Home Loan Banks Mission: Provide financial products and services to over 7,000 member financial institutions to assist and enhance the financing of housing and improve the local business environment. The FHLB Des Moines district includes 13 states in the Midwest, West, Alaska and Hawaii, and the Pacific territories. FHLB DES MOINES 2

3 Affordable Housing Program FHLBanks reserve 10 percent of net income each year for the Affordable Housing Program, a subsidy program for affordable housing projects, making the FHLBanks one of the nation s largest funders of affordable housing. Competitive Affordable Housing Program (AHP) FHLB Des Moines has made $458.8 million in lifetime subsidy awards Over 77,000 units of affordable housing constructed or rehabilitated with program assistance In 2017 a record 78 applications from the FHLBDM s 13-state district were awarded $44.5 million in subsidies FHLB DES MOINES 3

4 Competitive AHP Overview Competitive subsidy award program, subject to scoring criteria and eligibility and feasibility requirements Funds available for the purchase, construction or rehabilitation of affordable housing units Funds available for affordable rental and homeownership projects o Assists households below 80% of area median income In 2018 maximum subsidy award is $750,000 for a project and up to $40,000 per unit of housing Program guidelines published annually in AHP Implementation Plan. See the 2018 AHP Implementation Plan on our website. FHLB DES MOINES 4

5 Member Support for Sponsor Organizations All applications require the support of an FHLB Des Moines member financial institution the member applicant. Members support a sponsor applicant typically a non-profit, government entity, Native American tribe, or a housing authority that is conducting an affordable housing project. o For-profits may apply but are not awarded points in competitive scoring Member provides service to their community in support of FHLB housing mission. Member benefits: o o o o o Fosters community relationships Expands customer base Provides opportunity for targeted service and lending opportunities Community Reinvestment Act compliance benefit Housing programs also provide for economic development Leverages local dollars FHLB DES MOINES 5

6 AHP Project Types Rental New construction Acquisition-Rehabilitation Rehabilitation Rental preservation Homeownership Consumer Driven Owner occupied rehabilitation Down payment/closing cost assistance Sponsor Driven New construction for resale Acquisition rehabilitation for resale FHLB DES MOINES 6

7 Project Profile: Rental Housing Project: 759 Bluff Street Sponsor: Step by Step Member: Dubuque Bank & Trust With nine offices, Dubuque Bank & Trust serves thousands of customers in the Tri-State area. It is one of Iowa s 10 largest banking institutions. Step by Step, an advocacy agency incorporated in 2005, was seeking assistance for funding critical housing for people with disabilities in downtown Dubuque. They turned to DB&T for funding. The housing development, known as 759 Bluff Street, allows persons with disabilities to live in an ideal location with accommodations to make life at home more enjoyable. The project received a $149,750 AHP grant as well assistance from a variety of other sources, including federal historic tax credits, state and city funding, HUD money and private donations. In total the project cost $1.2 million. FHLB DES MOINES 7

8 Project Profile: Homeownership Project: Thunder Valley Self Help-Work Force Sponsor: Thunder Valley CDC Member: First National Bank, Fort Pierre, SD First National Bank is part of a family owned bank holding company with offices throughout South Dakota. This was the member s first AHP project. The member is participating as a community service and to develop new relationships. Thunder Valley CDC is a non-profit serving the Pine Ridge Lakota Indian Reservation. They are the first entity developing homes for sale to homebuyers on the reservation. AHP awards of $310,500 were to provide subsidies of $20,700 per unit to assist in construction of 15 homes. Total development costs were $2.6 million, or $176,000 per unit. AHP and other subsidies would help lower the acquisition cost to a homebuyer. FHLB DES MOINES 8

9 2018 AHP Round Schedule Pre-Application Start February 1, 2018 Pre-Application End February 28, 2018 Application Start May 1, 2018 Application End May 31, 2018, 4:30 PM CT AHP Awards Announced December 2018 A pre-application is available to receive technical assistance prior to application. Forms will be available on our website on February 1, A sponsor does not need member support to make submit a pre-application. Application is made through an automated system, AHP Online. Member support is required to initiate an application. System access and manuals are always available on our website. Awards are announced in December. Projects that are substantially complete - and in some cases begun prior to - the award date are not eligible. FHLB DES MOINES 9

10 2018 AHP Scoring Summary Points Priority 1 Donated or Discounted Property Priority 2 Non-Profit or Government Sponsorship Priority 3 Income Targeting Priority 4 Homeless Households Priority 5 Promotion of Economic Empowerment Priority 6 First District Priority (Special Needs Households) Priority 7 Second District Priority (District Location, Project Specific) Priority 8 AHP Subsidy Per Unit Priority 9 Community Stability (Project Specific) 100 maximum points AHP is a competitive application. See the 2018 AHP Implementation Plan for scoring details. Scoring priorities change from year-to-year. FHLB DES MOINES 10

11 AHP Eligibility and Feasibility Requirements Eligibility Uses of Funds: purchase, construction, rehabilitation of affordable housing Timing of Subsidy Use: After subsidy award 36 months for rental projects; 24 months for homeownership projects. Retention of Affordability (Deed Restrictions) Compliance with Fair Housing, Anti-predatory and Accessibility Regulation Not be used for any refinance or revolving loan funds Feasibility Projects must conform to the Bank s feasibility guidelines (costs, revenue and expenses, and affordability). Costs or other project features that do not conform to guidelines may disqualify application. Feasibility Workbooks and other application exhibits are provided to collect data and determine feasibility. Sponsors must justify costs or project features that do not conform to guidelines. Incomplete or inconsistent applications could disqualify an application. FHLB DES MOINES 11

12 Project Administration Sponsor and Member Roles Member and sponsor awarded subsidy enter into Subsidy Agreement with FHLBDM which describes application commitments and program requirements. Sponsor conducts project and submits request for funds to member and FHLBDM in AHP Online a disbursement request. Member approves request to FHLBDM. FHLBDM reviews monitoring documentation from sponsor to approve the request. FHLBDM disburses funds to member. Member provides funds to sponsor. Rental projects may be provided disbursements during construction or rehabilitation. Homeownership projects disburse funds on a reimbursement basis after units are completed or sold. Member and sponsor have fiduciary responsibility to ensure the project is completed as described in the AHP application. Member ensures AHP Deed Restriction in place for assisted units, and serviced throughout term. Sponsor may serve as designee on homeownership projects. Sponsor has 12 months to begin request for disbursement of funds or obtain funding commitments to proceed, and months to complete the project depending on project type. FHLB DES MOINES 12

13 Contact Information Please call with questions Competitive Affordable Housing Program/Homeownership Rick Bloxham, Mary Jo Vogl, Evelyn Bengtson, Competitive Affordable Housing Program/Rental Tony Montgomery, Renee Marrs, Thuy Gruner, John Plaisance, Nicole Croghan FHLB DES MOINES 13

14 THANKS!