Happy New Year everyone! I am excited to report that with the dawn of 2016, we have good news out of Washington: the long-awaited Housing Trust Fund (HTF) – our nation’s newest source of affordable housing funding, created by the Housing and Economic Recovery Act (HERA) of 2008 – is finally becoming a reality.

One important fact to know about HTF is that it is geared exclusively to those who qualify as Extremely Low Income, based on HUD’s revised definition of this classification in 2014. Most projects awarded this funding will also have additional federal funding sources in place in order for them to be financially viable. In fact, many of the compliance provisions for HTF are modeled around those of the HOME and Low-Income Housing Tax Credit (LIHTC) programs as a result. Since most of us working in the industry have experience with one or both of these programs, there should not be any big surprises awaiting us with this new program.

The governors of each state plus the District of Columbia and Puerto Rico are to designate the agency within their state to administer the HTF program. In most instances this will be the state housing finance agency, which is more good news since we won’t have to start over with new staff from a new organization to administer the program.

HTF implementation is slated to kick off this spring with formula allocations being published by HUD in the Federal Register in March or April. Each state is statutorily guaranteed at least $3 million in HFT funding (unless there are extenuating circumstances where alternative funding methodology must be created by HUD) that they will be able to award according to their state-specific HTF Allocation Plans. HUD anticipates that the first HTF awards will be made to qualifying recipients sometime over this summer, but practically speaking a lot of this funding will not materialize until 2017 since most states are already into their funding cycles for 2016. Since there is a 24-month commitment period after state-level appropriations have been made, HUD says this should not be a problematic issue.

More good news is that compliance monitoring requirements by the state agencies are going to be basically the same as those for the HOME program from the 2013 Final Rule, which are also very similar to the LIHTC requirements. It will be a risk-based model with an every-three-year minimum requirement for their review of both property compliance and financial performance for properties with HTF funding. Other similarities to HOME are that there will be a choice between the IRS definition used on Form 1040 and HUD’s Part 5, or Section 8 definition (which is most likely the one used) for defining income for qualification. Also, the HTF income limits will be published separately from those published by HUD for its multifamily programs and LIHTC. That becomes a blending issue similar to what happens when the HOME program is layered with LIHTC or HUD P/B, in that there is usually a couple of months of lag time between publications that will prevent new income limits from actually being used until both are effective.

As a long-time member of the affordable housing industry, I am excited by all of this! HTF provides another source of funding to those who wish to develop affordable housing in their communities and is a victory for those who are the most vulnerable in our society to have expanded opportunities for decent, safe, affordable dwellings. Trust that we at the National Center for Housing Management will stay on top of this issue as it develops by providing managers with all of the education and tools needed to effectively manage HTF properties. In the meantime, please feel free to contact me at jikelheimer@nchm.org with any questions.

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