HARVARD UNIVERSITY AFFORDABLE AND MIXED- INCOME HOUSING DEVELOPMENT, FINANCE AND MANAGEMENT Harvard Graduate School of Design (SES-05490-00) Harvard Kennedy School (SUP-666) Spring Term 2013 INSTRUCTOR Edward H. Marchant Lecturer, Department of Urban Planning and Design Gund Hall, Room 308 Telephone: 617-739-2543 edward_marchant@harvard.edu emarchant@msn.com MEETING PLACE AND CLASS TIME Gund Hall, Room 517 Tuesday, Thursday 8:30 a.m.-9:50 a.m. (Class begins promptly at 8:30 a.m.) Office Hours: By appointment COURSE OBJECTIVES 1. To introduce students to the practical elements and complexities of promoting, developing, financing, and managing affordable and mixed-income housing from community-based, public, and private perspectives; 2. To enable students to recognize and understand seven basic subsidy categories through which housing for low and moderate income individuals and families can be made affordable: development cost subsidies, debt service subsidies, rental assistance subsidies, operating subsidies, tax credit subsidies, entitlement subsidies, and project-generated cross income subsidies; 3. To have students demonstrate their understanding of the affordable housing development, financing and management process by participating in the Affordable Housing Development Competition (AHDC) or by completing an Alternative Final Project based upon a course-relevant topic in which a student has a particular interest; and 4. To establish a more comprehensive understanding of public housing policies and affordable and mixed-income housing projects through a comparative analysis and ranking of the proposed AHDC projects respective net public values.
COURSE DESCRIPTION GSD SES- 05490-00 / HKS SUP-666 is designed for students interested in understanding the fundamentals of affordable and mixed-income housing, including its sponsorship, permitting, financing, design, construction, and management. The course begins by defining the problem that exists in many communities: a lack of decent, well-managed housing affordable to individuals/families paying no more than 30% of their household income toward housing expenses. The "funding gap" that prevents the development of affordable housing is then defined and alternatives to "plug" the gap are investigated. Although numerous local, state, federal, and private subsidy programs will be discussed, the course focuses on several of the most significant federal, state and local housing programs used for rental and/or home ownership affordable housing, including but not limited to the following: HOME Investment Partnerships Program (HOME), Section 42/Low Income Housing Tax Credit Program (LIHTC), Section 202 Supportive Housing for the Elderly Program, Community Development Block Grant (CDBG), Choice Neighborhoods, Federal Home Loan Bank Affordable Housing Program (AHP), Section 8 Rental Assistance Payments (Section 8) --now officially referred to as the Housing Choice Voucher Program, Massachusetts Comprehensive Permit Program (aka Chapter 40B), and Local Inclusionary Zoning By-laws. Each of these programs is explored to review if and how it might be applied to create affordable housing. Normally, several federal, state or local programs and the subsidies previously described must be aggregated to create a financially feasible development. Regardless of program changes at the Department of Housing and Urban Development (HUD) (now headed by former GSD student Shaun Donovan) and other state and local funding agencies, the fundamentals learned in this course will be useful in working with future HUD, state, or local affordable housing programs. The financing principles and development fundamentals learned in this course should also be applicable to the development of affordable housing globally. Students gain practical experience and synthesize their understanding of affordable housing by participating in the Affordable Housing Development Competition (AHDC) or by completing a final project on a course-relevant topic in which they have a particular interest. Over the past twelve years a growing majority of the students have elected to participate in the AHDC. Former students have stated that participation in the AHCD was an extremely valuable learning experience not to mention a great addition to their resumes. However, either final project alternative is acceptable, subject to topic approval by the instructor. More detailed information on the AHDC is provided below. - 2 -
Following the class presentations of the AHDC proposals, each student will rank the respective AHDC projects based upon general evaluation criteria formulated during the course. Each student will also define his/her personal net public value criteria and assess each project's net public value (public benefits less public costs). AFFORDABLE HOUSING DEVELOPMENT COMPETITION (AHDC) Several enterprising Harvard graduate students with an interest in affordable housing initiated the Affordable Housing Development Competition (AHDC) in 2001 and enlisted the organizational and financial support of the Federal Home Loan Bank of Boston (FHLB Boston) and Citizens' Housing and Planning Association (CHAPA). Sponsors of the 2013 AHDC also include Kevin P. Martin & Associates, P.C.; Boston Society of Architects/AIA; and ICON Architecture, Inc. The primary objective of this competition is to create opportunities for local graduate students "to work with both for-profit and nonprofit housing developers to find creative solutions to the challenge of developing affordable housing in the Boston metropolitan area and to introduce students to the issues related to affordable housing development and to the individuals and organizations active in the production of such housing." The instructor plans to support those students who elect to participate in the AHDC as their final course project and will be flexible in modifying assignments when appropriate to complement the requirements of the competition, as long as the primary course objectives can be achieved. The instructor will, of course, also assist students electing to do an Alternative Final Project. Students from this course were leaders of each of the three winning teams last spring and shared in the cash prizes ($10,000, $6,000, and $3,000) awarded to the top three proposals. These cash awards are shared equally by the project sponsor and the student team. More comprehensive AHDC information is available at the Federal Home Loan Bank of Boston website at www.fhlbboston.com/compete. Students may also want to contact the leaders of the AHDC Student Coordinating Committee: Susie Chung at (schung@gsd.harvard.edu), Tessa Perry at (tperry@gsd.harvard.edu), and Regina Yang at (ryyang@gsd.harvard.edu, all of whom were students in this course last Spring. A copy of the Preliminary Information Timeline that is included at the AHDC website is attached at the back of this syllabus. The instructor strongly encourages participation in the AHDC for any student who desires a practical hands-on team experience in developing affordable or mixed-income housing. COURSE AUDIENCE The course is designed to be useful to students with any of the following interests: affordable housing (development, permitting, financing, design, construction, and management); affordable housing preservation, mixed-income housing, special needs housing; housing-based supportive services; syndication of low income housing tax credits; local, state, or federal housing policy program design, implementation and/or - 3 -
evaluation; affordable housing "grantsmanship," public private partnerships, and/or community development corporation (CDC) and nonprofit sponsorship of affordable or mixed-income housing. COURSE COMMUNICATION Communication with the class regarding announcements, assignments and other matters will be done primarily through the Course isite and email. The Course isite can be accessed at: http://my.gsd.harvard.edu/course/gsd-05490/2013/spring. PREREQUISITES Students should have an interest in or curiosity about some facet of affordable housing. Although a basic real estate finance course similar to the instructor s Real Estate Finance and Development Fundamentals (SUP-665/GSD SES-05492-00) at Harvard Kennedy School would be helpful, a prior understanding of real estate development finance is not required. The course will include three simple financial exercises at the beginning or the course. These financial exercises have been designed to introduce students to fundamental affordable housing financing principles and practices. FORMAT The course will be a mix of lectures, case discussions, exercises, student presentations, and field visits. Active classroom participation by students is encouraged and expected throughout the course. Students are expected to attend all classes. The class will begin promptly at 8:30 a.m. and students are expected to arrive on time. A bus tour has been scheduled for Saturday, March 2, from 8:00 a.m. to Noon. The sites for each of the proposed AHDC projects on which class members are working will be inspected to the degree practical within this four hour time period. If time permits, representative local affordable housing developments will also be visited. READING ASSIGNMENTS Detailed reading assignments will be posted on the Course isite and/or emailed to enrolled students. Postings will be made to the GSD isite only. The Internet is the best source for information on affordable housing and students will be asked to utilize it throughout the course. An annotated list of useful affordable housing and community development Internet resources will be distributed early in the course and most of the assigned reading will be available on the Internet. Materials not available on the Internet or the Course isite will be distributed in class. There will be a charge assessed to students for such class materials. No textbook will be required. The instructor will be happy to recommend textbook-like resources for interested students. - 4 -
WRITTEN ASSIGNMENTS Course requirements include three written exercises/assignments and either an AHDC Submission or an Alternative Project Final Project. There is no final exam. The written assignments are: 1. Mixed-Income Housing Subdivision Development Team Exercise (February 28) 2. "Net Public Value" Ranking of AHDC projects and Definition of Net Public Value (April 30/Final Class) 3. Final Team Project (AHDC Submission/Supplementary Report or Alternative Final Project) (May 7) In addition to the three assignments listed above there are three additional short written assignments that are interim components of the AHDC Submission. The following interim submissions will not be graded but brief comments will be provided by the instructor: 1. Statement of Development Program, Site Planning Design Objectives, and Building Design Objectives for AHDC Projects (March 26) 2. Critical Property Management Tasks and Proposed Operating Budget for AHDC Projects (March 28) 3. Sources and Uses of Funds Analysis and Subsidy Analysis for AHDC Projects (April 2) Relevant interim assignments will be created for students electing to complete an Alternative Final Project as the final course project. The Final Project will be a team effort requiring a formal classroom presentation and the submission of an AHDC project proposal or an Alternative Final Project Report. The Affordable Housing Development Competition proposal (including, if required, a brief Supplemental Memo addressing questions raised by the instructor following the classroom presentations of the proposed AHDC projects) will be due May 7 th as will any Alternative Final Project Reports. Alternative Final Project proposals are due no later than February 5 th ; earlier submissions are strongly encouraged and the instructor encourages students with a particular interest to discuss the proposed topic with the instructor at the beginning of the course. AHDC proposals should be submitted as soon as possible after the AHDC teams are announced. - 5 -
CLASSROOM PRESENTATIONS The Affordable Housing Development Competition/Alternative Final Project classroom presentations have been scheduled for April 18, April 23, and April 25. These three classes may begin at 8:00 a.m. if it is necessary to provide additional time for the presentations. GRADING Grades will generally conform to the GSD recommended grading distribution policy and will be determined based upon the following inputs: Classroom Participation Quality (25%), Written Assignments (assignments due February 28 and April 24) (25%), and Final Project: Project Proposal (if applicable), Interim Reports, Classroom Presentation, and Final Report or AHDC Submission/Supplementary Report) (50%). - 6 -
COURSE OUTLINE (GSD SES-05490-00 / HKS SUP-666) (SPRING 2013) AFFORDABLE AND MIXED-INCOME HOUSING DEVELOPMENT, FINANCE AND MANAGEMENT NOTE: Detailed assignments and readings for the following classes will be posted on the Course isite at http://my.gsd.harvard.edu/course/gsd-05490/2013/spring and/or emailed to enrolled students throughout the course. NOTE: Not all Guest Speakers have been confirmed for the listed class dates. Modifications may need to be made to accommodate Guest Speakers schedules. CLASS DATE DAY TOPIC COMMENTS 1 JAN 29 TUES Course Overview 2 JAN 31 Affordable Housing Development Process Interrelationships and Relative Importance of Respective Components in the Affordable or Mixed-Income Housing Development Process THUR Fundamentals of Affordable Housing Finance (Gap Financing) Defining and Plugging the Affordable Housing Funding Gap Understanding the Basic Gap Financing Subsidy Vehicles Exercise to be prepared for discussion. Available on Course isite Exercise to be prepared for discussion. Available on Course isite 3 FEB 5 4 FEB 7 TUES Understanding the Basic Gap Financing Subsidy Vehicles (Continued) Requirements for Final Project: Affordable Housing Development Competition (AHDC) or Alternative Final Project THUR Critical Affordable Housing Information Resources Available on the Internet Students not planning to participate in the AHDC must submit proposals for their proposed Alternative Final Project Bring Laptop to Class - 7 -
CLASS DATE DAY TOPIC COMMENTS 5 FEB 12 TUES Fundamentals of Affordable Housing Finance (Rental Housing) Exercise to be prepared for 6 FEB 14 THUR Fundamentals of Affordable Housing Finance (For Sale Housing) discussion. Exercise to be prepared for discussion. 7 FEB 19 TUES The Development Project Manager s Role Massachusetts One-Stop Application 8 FEB 21 9 FEB 26 10 FEB 28 The One-Stop Application is a comprehensive debt, equity and subsidy application for publiclyassisted affordable housing projects in Massachusetts. THUR Low Income Housing Tax Credit (LIHTC) Program and the Qualified Allocation Plan (QAP): Policy Objectives and Basic Program Characteristics TUES The Syndication Process: How Syndicators Source, Value and Sell Low Income Housing Tax Credits Guest Speaker (Confirmed): Bernard P. Husser Executive Vice President Charlie Adams Vice President The Richman Group Affordable Housing Corporation Boston THUR YIMBY: Developing Affordable Housing in an Affluent Suburban Community The Massachusetts Comprehensive Permit Law and the Local Initiative Program: Combining Creative Legislation and an Innovative Housing Program to Expand the Supply of Affordable Housing in Massachusetts (Class I) - 8 - Exercise to be prepared for discussion Case study to be prepared
CLASS DATE DAY TOPIC COMMENTS 11 MARCH SAT 2 AHDC Site Visits (wherever practical) and Tour of Representative Affordable Rental and Home Ownership Developments Bus Tour will be held Rain or Shine. Bus leaves promptly at 8:00 a.m. from Gund Hall. Returns to Gund Hall at noon. 12 MARCH 5 13 MARCH 7 14 MARCH 12 15 MARCH 14 TUES The Massachusetts Comprehensive Permit Law and the Local Initiative Program: Innovative Legislation to Expand the Supply of Affordable Housing (Class II) Mixed-Income Housing Subdivision Development Exercise THUR Effective and Sustainable Site Design, Building Design and Unit Design for Affordable Housing: Lessons Learned Guest Speaker (Confirmed): Clifford J. Boehmer, AIA Co-Founder and Principal Davis Square Architects Somerville, MA TUES Charlesview Residences Charlesview Residences is a 340-unit mixed-income, mixed-tenure, and mixed -use community under construction in Boston s Allston neighborhood. There will be 240 rental units and 100 home ownership units. Guest Speaker (TBA): Project Manager The Community Builders, Inc. Boston THUR AHDC Project Team Meetings Instructor will meet with each AHDC team individually to review project status and project schedule. - 9 - Written Assignment and Presentation (Team) This class may be held at the Charlesview Residences construction site. (370-400 Western Avenue, Allston, MA) If so, the class will begin at 8:00 a.m.
CLASS DATE DAY TOPIC COMMENTS MARCH TUES Spring Recess 19 MARCH 21 THUR Spring Recess 16 MARCH 26 17 MARCH 28 18 APRIL 2 19 APRIL 4 APRIL 9 21 APRIL 11 TUES Statement of Development Program, Site Planning Design Objectives and Building Design Objectives for Proposed AHDC Projects THUR Property Management and Asset Management Tasks Critical Property Management Issues for Proposed AHDC Projects Preparation of Operating Budget for AHDC Projects TUES Understanding the Subsidies Required to Make Your Projects Affordable and Quantifying Each Subsidy s Financial Impact to Determine its Contribution to Affordability THUR Topic: TBA Guest Speaker (Invited): Willie M. Jones Senior Vice President The Community Builders, Inc. (TCB) Boston, MA Sources and Uses of Funds Statement TUES No Class/AHDCSiteTour Substituted for this Class THUR Housing for Special Needs Targeted Populations: What Are the Special Development Team, Site, Design, Funding, Property Management and Supportive Service Requirements for Special Needs Housing? AHDC Written Assignment (Team) AHDC Written Assignment (Team) AHDC Written Assignment (Team) AHDC Proposals Due Tomorrow at Federal Home Loan Bank of Boston - 10 -
CLASS DATE DAY TOPIC COMMENTS 22 APRIL 16 TUES Affordable Housing: A Global Perspective Guest Speaker (Confirmed): David A. Smith Founder and CEO Affordable Housing Institute Boston, MA 23 APRIL 18 24 APRIL 23 25 APRIL 25 26 APRIL 30 FINAL CLASS MAY 7 The Affordable Housing Institute designs programs that lever available government and social capital to deliver better housing that the poor can actually afford. THUR Final Project Presentations (Affordable Housing Development Competition Projects and/or Alternative Final Projects TUES Final Project Presentations (Affordable Housing Development Competition Projects and/or Alternative Final Projects THUR Final Project Presentations (Affordable Housing Development Competition Projects and/or Alternative Final Projects TUES Comparative Analysis and Discussion of AHDC Projects TUES AHDC Submission for Course (including Supplementary Report, if required) or Alternative Final Project Report Due Class may begin earlier at 8:00 a.m. Class may begin earlier at 8:00 a.m. Class may begin earlier at 8:00 a.m. Written Assignment (Individual) Written Assignment (Team) - 11 -
AFFORDABLE HOUSING DEVELOPMENT COMPETITION TIMELINE ( from www.fhlbboston.com/compete ) Preliminary information for the 2013 competition follows. Please check back often. COMPETITION TIMELINE Event Date & Time Location Invitations mailed to development organizations January 2013 Not applicable Applications due from development organizations Mid-January Not applicable First Introductory Sessions: Students learn more about the competition and other students. Please complete the online student registration if you are interested. This will help identify you and your skill set to help the student coordinating committee in the formation of teams. Tuesday, February 5, 6 to 8 p.m. Thursday, February 7, 6 to 8 p.m. Harvard Graduate School of Design 48 Quincy Street Room #TBA Cambridge, MA 02138 Directions MIT 105 Massachusetts Ave. 4th floor, Room 9-450B Cambridge, MA 02140 Directions Students form teams and meet the developers Individual registration deadline Please complete the online student registration if you are interested. Monday, February 11, 2013 6:00 to 8:00 p.m. Friday, February 15, 2013, 5:00 p.m. Old South Church 645 Boylston Street Boston, MA 02116 Directions Not applicable Team registration deadline Monday, February 18, 2013, by e-mail to student coordinating committee contacts: Not applicable Regina Yang (ryyang@gsd.harvard.edu) Susie Chung (schung@gsd.harvard.edu) Tessa Perry (tperry@gsd.harvard.edu) - 12 -
Team leaders submit developer preferences via e-mail to student coordinating committee Tuesday, February 19, 2013, by e-mail to the student coordinating committee contacts listed above. Not applicable Competition begins! Wednesday, February 20, 2013 Not applicable Mentor Meeting: Student teams meet with finance and design mentors. Developers are welcome. Wednesday, February 27, 2013 6:00 to 8:00 p.m. Old South Church 645 Boylston Street Boston, MA 02116 Directions Competition Workshop Wednesday, March 6, 2013 6:00 to 8:00 p.m. Old South Church 645 Boylston Street Boston, MA 02116 Directions Second Mentor Meeting Mid- to late-march To be scheduled by team. Proposals due Wednesday, April 10, 2013 by noon Federal Home Loan Bank of Boston, 800 Boylston St., Boston, MA. Directions Note: When delivering your proposals to the Federal Home Loan Bank of Boston, please call Tobi Goldberg at 617-292-9653, or the Housing and Community Investment Department at 617-292-9600 in advance of your arrival so that we may register you as a guest to enter the building. Awards and reception, including presentation of final proposals. Registration Deadline: TBA. Please Note:All participants in the competition are already pre-registered. This includes student teams, developers, finance and design mentors, faculty advisors, seminar speakers, and competition sponsors. If you are a participant, please do not complete registration. TBA Boston Society of Architects, 290 Congress Street, Suite 200, Boston, MA 02110 Directions - 13 -