Title
Affordable Housing Funding Options
Description
This report provides the Economic Development and Equity Subcommittee with information about the funding options available for affordable housing. These programs are federally funded with no impact to the General Fund.
THIS ITEM IS FOR INFORMATION AND DISCUSSION.
Report
Summary
The City of Phoenix has access to a variety of federally funded programs to assist in the development of affordable housing. These programs are administered through the Housing and Neighborhood Services departments.
Housing Department
The HOME Investment Partnerships Program (HOME) provides annual grants to states and local communities to help fund the building, buying and/or rehabilitation of affordable housing for rent or homeownership or providing direct rental assistance to low-income residents. HOME is the largest federal block grant designed to create affordable housing for low-income households. HOME funds are awarded annually as formula grants and allows for flexibility in how the funds are administered.
Annually, the City of Phoenix Housing Department publicly calls for affordable housing proposals through a Call for Interest (CFI) for the purpose of identifying housing development projects which meet the City Council-approved Community Priorities that require additional funds to cover a gap in the financing of the project. Funds are made available as loans to for-profit and non-profit partners who develop affordable housing units. Loans are made according to City Council approved Underwriting Guidelines.
The Housing Department's 2021-22 CFI Community Priorities, which were approved by City Council on Nov. 17, 2021, are as follows:
Acquisition, rehabilitation, and/or new construction of properties that focus on homeless or special needs populations and provide appropriate services to assist and sustain these populations; and
Acquisition, rehabilitation, and/or new construction of properties where the developer qualifies as a Community Housing Development Organization (CHDO) as defined by the HOME Program.
The total allocation available for the 2021-22 CFI is approximately $6 million in HOME funding, of which $883,814 must be awarded to CHDOs. The funds will allow for an estimated five to six affordable housing project awards with a maximum award of $1 million. The CFI was made available through the City's website on Nov. 22, 2021. Formal recommendations for the CFI award(s) will be presented to the Economic Development and Equity Subcommittee and City Council for approval.
In April 2021, the City of Phoenix was notified of an allocation of HOME funds through the American Rescue Plan Act (ARPA) in the amount of $21,354,777. HOME-ARPA funds are specifically to assist individuals or households who are homeless, at risk of homelessness, and other vulnerable populations, by providing housing, rental assistance, supportive services, and non-congregate shelter, to reduce homelessness and increase housing stability. These funds are available to be spent until September 2030. Requirements of the program include having an approved allocation plan, public participation, and conducting a needs assessment and gap analysis.
Listening sessions were held in October and November 2021 to hear from the community on some of the highest areas of need. Those areas include:
Production or Preservation of Affordable Housing;
Tenant-Based Rental Assistance (TBRA);
Supportive Services (examples: homeless prevention services, and housing counseling);
Purchase and development of Non-Congregate Shelter; and
Operating Costs for CHDOs, other non-profit organizations, and homeless providers.
Staff will continue to collect input through a public participation process. A dedicated email has been set up to collect feedback: home-arp@phoenix.gov.
Neighborhood Services Department
As part of the Housing and Economic Recovery Act, the American Recovery and Reinvestment Act, and the Wall Street Reform and Consumer Protection Act passed by Congress in 2008, 2009, and 2010 respectively, Neighborhood Stabilization Program (NSP) funding went to communities hardest hit by residential foreclosures and mortgage delinquencies. The City of Phoenix received more than $115.5 million in NSP funds to help eligible families purchase foreclosed homes (at a discount), which in turn helps to stabilize Phoenix neighborhoods. Financing Mechanisms, Purchase and Rehabilitation of Abandoned or Foreclosed Homes, Land Bank, Demolition of Blighted Structures, and Redevelopment of Demolished or Vacant Properties are the five general eligible use categories of the NSP grants. Additionally, the program required that at least 25 percent of funds must be allocated to serve households at or below 50 percent of the Area Median Income (LH25 requirement).
One of the uses of these funds was to provide loans to low- and medium- income home buyers to help with down payment-assistance. While most loans were forgivable, any funds repaid prior to meeting the affordability period replenish the NSP coffers as Program Income (PI). To date, more than $180 million of original NSP entitlement and PI have been invested in the community.
Additionally, NSP funds were used to purchase blighted foreclosed properties. In total, 467 foreclosed or blighted properties were acquired with these funds. Many of the acquired properties have been redeveloped through partnerships with nonprofit developers to provide homeownership opportunities for low- to medium-income buyers. Currently, 27 City-owned vacant parcels remain--many of which are included in the Housing Phoenix Plan. NSD works in partnership with the Housing Department to plan, program and complete these housing projects.
NSD also funds multiple affordable housing programs and services with annual Community Development Block Grant (CDBG) entitlement funds. The primary objective of CDBG programs is to develop viable urban communities and provide resources to address housing and community development needs that benefit low- and moderate-Income individuals or households. As part of the 2021-22 Annual Action Plan, $5,657,220, or 34 percent of the approximately $16.8 million total CDBG entitlement, is allocated to provide or improve permanent residential structures for low- and moderate-income households. These programs include NSD’s Housing Development operations, Owner Occupied Housing Rehabilitation, Hardship Assistance, and Residential Rental Rehabilitation programs, as well as services for the Housing Department’s public housing sites, including the Family Self Sufficiency program that supports residents of public housing with programming to help them become economically independent, further their education, establish or repair their credit, find better employment, start a savings account or purchase a home and on-site counseling and wrap-around public services for youth experiencing difficulty adjusting to their new living conditions and housing environment at Aeroterra.
Department
Responsible Department
This item is submitted by Deputy City Manager Gina Montes and the Housing and Neighborhood Services departments.