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City Club of Central Oregon Presentation
- 1. City Club Forum JOHN GILBERT PACIFIC CREST AFFORDABLE HOUSING February 2017
- 2. Part 1 DEFINING AFFORDABLE HOUSING Pacific Crest Affordable Housing
- 3. What is Affordable Housing? Subsidized housing for low or moderate income households Pacific Crest Affordable Housing
- 4. So, What is Affordable? Housing costs should not exceed 30% of income Cost-burdened: 30% or more of income spent on housing Severely cost-burdened: 50% or more of income spent on housing Pacific Crest Affordable Housing
- 5. How Many Are Cost Burdened? Deschutes County renters are worse off than the national average Nationwide 48% Nationwide 74% Deschutes County 52% Deschutes County 81% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Renters Cost Burdened Low Income Renters Cost Burdened Pacific Crest Affordable Housing *Data from 2015 American Community Survey
- 6. Who Qualifies for Affordable Housing? ◦ Area Median Income (AMI) ◦ Low Income: 60% (or less) of AMI ◦ Moderate Income: 60% - 120% of AMI Affordable projects generally serve 30% - 60% of AMI Pacific Crest Affordable Housing
- 7. Deschutes County 2016 AMI INCOME LIMITS BY NUMBER OF PEOPLE IN HOUSEHOLD % AMI 1 2 3 4 5 6 30% $12,540 $14,340 $16,140 $17,910 $19,350 $20,790 40% $16,720 $19,120 $21,520 $23,880 $25,800 $27,720 50% $20,900 $23,900 $26,900 $29,850 $32,250 $34,650 60% $25,080 $28,680 $32,280 $35,820 $38,700 $41,580 Pacific Crest Affordable Housing *Data from Novogradac & Company LLP
- 8. Who Are We Talking About? $15k - $25k Jobs Home health aides Childcare workers Fast food workers Cashiers Restaurant and hotel staff $25k - $35k Jobs Preschool teachers and teaching assistants Bank tellers Nursing/physical therapy/vet assistants Administrative assistants Construction workers/laborers Working households contributing to society Pacific Crest Affordable Housing
- 9. 2016 Deschutes Co. Max Allowable Rents 30% AMI 40% AMI 50% AMI 60% AMI Market Rate Studio $313 $418 $522 $627 n/a 1 bedroom $336 $448 $560 $672 $1,100 2 bedroom $403 $538 $672 $807 $1,200 3 bedroom $465 $621 $776 $931 n/a *Data from Novogradac & Company LLP Affordable rents = roughly 45% of market rents Pacific Crest Affordable Housing
- 10. The Funding Gap $- $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 Cost Value Gap Development costs = roughly $250,000/unit Subsidies are needed to cover the funding gap Pacific Crest Affordable Housing
- 11. The Funding Puzzle Sources of Funds LIHTCs $6,292,000 Constr. Loan $5,300,000 Perm. Loan $2,597,000 OAHTCs $2,597,000 HOME Loan $ 895,000 City of Bend $ 275,000 Developer Equity $ 250,000 State Trust Fund $ 100,000 Weatherization $ 60,000 Discovery Park Lodge Funding drives project size – most are between 25 and 50 units Pacific Crest Affordable Housing
- 12. Low Income Housing Tax Credits (LIHTC) LIHTCs typically fund about ¾ of a project Tax credits offset federal corporate income taxes on a $ for $ basis for 10 years Developers compete for the credits Developers exchange the credits with investors for cash The cash greatly reduces the amount of debt used Federal government funds affordable housing today by foregoing taxes in the future Pacific Crest Affordable Housing
- 13. Allocation of OHCS Funds Highly competitive Disarray in tax credit market New emphasis on preservation Pacific Crest Affordable Housing
- 14. Part 2 LOCAL FOCUS THE NEXT FRONTIER Pacific Crest Affordable Housing
- 15. LIHTC Projects in Bend Pacific Crest Affordable Housing
- 16. Historic Funding ImbalancesBentonCounty LakeCounty ShermanCounty KlamathCounty JosephineCounty PolkCounty CrookCounty LaneCounty BakerCounty DeschutesCounty LinnCounty MarionCounty CoosCounty ClackamasCounty ClatsopCounty JacksonCounty WashingtonCounty ColumbiaCounty DouglasCounty YamhillCounty MalheurCounty JeffersonCounty GrantCounty UnionCounty CurryCounty WheelerCounty TillamookCounty GilliamCounty LincolnCounty WallowaCounty MultnomahCounty UmatillaCounty WascoCounty HarneyCounty MorrowCounty HoodRiverCounty 1 +50% ------ +100% ---- +150% ---- -50% ------ -100% ----- Equitable Allocation *Data from OHCS website Pacific Crest Affordable Housing
- 17. City of Bend Bend Affordable Housing Fund $1MM in SDC credits Possible SDC exemptions coming Low Income Rental Housing Property Tax Exemption Surplus land available Height & density bonuses Expedited review & permitting Pacific Crest Affordable Housing
- 18. Other Local Funds and Assistance Deschutes County Property Tax Exemptions Document Recording Fees Private Land Owners Private Foundations Local Lenders Pacific Crest Affordable Housing
- 19. Recent Trends Incorporating sustainability measures into housing design Combining health and housing Life cycle cost analysis Little Deschutes Lodge Pacific Crest Affordable Housing
- 20. The Next Frontier Need to develop affordable housing without federal funds Employer funding Municipal land Social investing Crowd funding New designs Pacific Crest Affordable Housing
Notas del editor
- Survey the room. Who thinks there is an affordable housing crisis in C.O.? Who’s thinking about a house that’s too expensive to buy? Who’s thinking about an apartment that’s too expensive to rent?
- Intro Me Rob Part 1 – Defining Affordable Housing Part 2 – Local Focus and the Next Frontier Survey the room. Who thinks there is an affordable housing crisis in C.O.? Who’s thinking about a house that’s too expensive to buy? Who’s thinking about an apartment that’s too expensive to rent?
- WHAT IS AFFIORDABLE HOUSING? Subsidized: Federal, State and Local Rental or for sale This talk: subsidized, rental housing for low-income households.
- Consensus is that housing costs should not exceed 30% of income You’re cost burdened if you spend more than 30% of income on housing You’re severely cost burdened if you spend more than 50% of income on housing
- Roughly half of renters are Cost Burdened. Our renters are worse off than the national average. Our low income renters in particular are spending a lot of their income on rent.
- Affordable housing is indexed to: Area Median Income (AMI) Updated annually by Housing and Urban Development (HUD) Based on County Based on household size Low Income: 60% (or less) of AMI Moderate income: 60% - 120% of AMI Affordable projects generally serve 20% - 60% of AMI
- Describe chart Use Example The range of incomes is roughly $10,000 - $40,000 per year.
- We are talking about the people who make your life comfortable: the wait staff serving you now the people who cooked your lunch the people who washed your dishes the people who take care of your preschoolers the people who built your homes We are talking about people like you and me people who are trying to get ahead people who want their kids to have healthy and happy lives These are people who are working and contributing to society
- Explain Chart Summarize with the range of rents: $300 - $800 / month
- This example: 50 apartments Affordable to HH’s earning 30% - 50% AMI Affordable rents: $510/month Market rate rents: $1,275/month
- Piecing together Federal, State, and Local & private funds. It takes a village. Federal and State funds are allocated by Oregon Housing & Community Services (“OHCS”). Walk through example. These funds drive project sizes to range from 25 to 50 units. Projects with more or fewer units are less efficient financially.
- LIHTCs typically fund ¾ of a project. Tax credits offset Federal corporate income taxes on a $ for $ basis for 10 years. Affordable housing developers compete for the credits. Credits require affordable rents low income families for 30 years (most projects agree to 60 years). Developers exchange the credits with investors for cash. That cash results in using much less debt, which is important, because these projects cannot carry nearly as much debt as a market rate project. Tax credit investors benefit from the tax credits, and from the project’s taxable losses (depreciation creates substantial taxable losses). In essence, the federal government funds affordable housing today by foregoing taxes in the future.
- Highly competitive application process: Only 1 out of 4 applications funded each year In 2016 - 11 projects funded statewide. Geographic allocation results in only 1 new project funded in: Medford, Bend, Redmond, McMinnville, Woodburn, Grants Pass 1 project for 290,000 people It’s getting even harder to get funds. Disarray in the tax credit market over proposed corporate tax cuts. Investors are sitting on the sidelines. Prices expected to drop. 2017 funds likely to fund only 7 projects throughout the state – for both new construction and preservation. New emphasis on preserving existing affordable housing.
- Local housing market update
- Map showing 27 out of 34 projects Total of 1,357 units Most units are built east of third street and north of Wilson/bear creek
- We have data showing the relative need for affordable housing units by county and the total number of affordable units by county. If a county has 10% of the need, but 15% of the supply, they are a winner. If a county has 10% of the need, but 5% of the supply, they are a loser. Crook & Deschutes Counties are losers and Jefferson County is a winner. No corrective measures being considered. Imbalance likely to continue with new emphasis on preservation. Total of 70,548 units built.
- Affordable Housing Fund Started in 2006 Fee added to building permits goes into fund. .33% of construction cost. Since then: $7.0MM has been raised $13.5MM has been loaned out helping to fund 770 units. SDC credits - $1MM in 2015/2016. Will the City do more? 20 year property tax exemption for qualified affordable rental projects. Making surplus land available for affordable housing. Height and density bonuses for affordable housing. Expedited review and permitting process.
- Other Central Oregon Cities –have different programs. Deschutes County – making surplus land available . Deschutes County – low interest rate loans. Deschutes County – infrastructure improvements. Many taxing districts exempt property taxes for 20 years for projects developed by for profit developers. City of Bend Bend – La Pine School District Deschutes County Bend Metro Parks & Rec City of Prineville Crook County Crook County School District Crook County Parks & Rec COCC Private land sold at less than market value. Private foundations: Meyer Memorial Trust Notable absence – Bend Parks & Rec SDC credits.
- Energy efficiency and energy production couple nicely with affordable housing. Reduces energy costs, which are growing faster than inflation. Since rent growth is limited, this keeps projects financially viable longer. Our projects use 80% less energy than OR Code Minimum complexes. New focus on combining health and housing. Providing health related services in conjunction with housing leads to significantly improved health outcomes.
- Need to figure out how to develop affordable housing without federal funds. No federal funds = fewer restrictions = more flexibility. Will continue to require combining funds from several sources. New ideas: Employer funding with preference given to their employees. For example, a company contributes 10% of the equity and gets right of first refusal for 10% of the units for their employees. Would help employers recruit and retain employees. Use municipal land (School District, City, Parks & Rec, COCC, etc.), and give preference to their employees. Same concept as above. Local social investing. For example, a multifamily investment and/or development fund could charges market rate rents until certain investment returns have been achieved. Rent increases are limited thereafter. Investors make an acceptable return and help the community. New designs – smaller, better designed floor plans reign in construction costs. Crowd funding.