Transcript Slide 1

Affordable Housing 101
Vermont Housing Conference
November 18, 2008
What is Affordable Housing?

Defined as monthly housing costs not exceeding 30% of gross monthly
income for rent & utilities (for homeownership it’s mortgage, taxes &
insurance)

Many housing professionals consider this standard to be too high
when considering the rising cost of health care, fuel, childcare

Affordability is determined by:

The cost of housing

The ability of people to pay that cost

Over the past decade, rents and home prices have risen faster than
many Vermonters’ ability to pay, and that trend continues.

A large portion of Vermont’s workforce is employed in jobs that
are necessary to the economy (retail clerks, food services, day
care, social service aides) but pay only modest wages. Of the 10
fastest-growing jobs in Vermont, only one pays enough to afford a
modest two-bedroom apartment.
Cost Burdened in Vermont


47% of renter households were paying > 30% of their incomes for
rent & utilities in 2006
20% of renter households were paying > 50% of their incomes for
rent & utilities in 2006
Fair Market Rent (FMR) for a modest 2-BR apartment in 2008 = $836
 A household must earn $16.07/hour or $33,342 annually
 Nearly 66 percent of Vermont’s non-farm employees, or more than
178,868 people, are employed in jobs whose median wages are
below that figure
Most Vulnerable Vermonters the Most Cost-Burdened
 13,401 Vermonters live on SSI ($689/month in 2008);
 the average FMR (fair market rent) in 2008 for a 1-Br apartment is
$682 (99% of SSI monthly check)
 A 2007 OEO census showed 516 homeless families, and 888
children under 18; homeless providers report the largest increases
in the homeless population are families with children
Perpetual Affordability

A goal of housing funders in Vermont and of Community Land
Trusts in Vermont for decades
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This preserves the public investment, as well as ensures there
will be housing available for low-to-moderate-income Vermonters
in perpetuity

Perpetual Affordability does not preclude housing from needing
re-capitalization over time, as it ages, yet the initial public
investment is still preserved and serves the community’s needs

Much of the public funding in Vermont requires housing to be
perpetually affordable (rather than short term)
Housing Delivery System in Vermont

A network of community-based nonprofit organizations
recognized as a model for the nation, including Champlain
Housing Trust, Cathedral Square Corporation, Windham Housing
Trust, Gilman Housing Trust, Central Vermont Community Land
Trust, Regional Affordable Housing Corporation, and others
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Housing Vermont – a statewide non-profit which partners with
local community organizations and provides development,
project management and tax credit syndication expertise
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For-profit developers
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Public Housing Authorities (local and state)
Cost of Housing Development
Development Costs & Sources of Income:
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Cost to Develop Affordable Housing in VT on average exceeds
$220,000/ unit

The $220,000 + per unit to develop housing comes from many
sources…
 Debt (VHFA, RD, HUD, Banks)
 Equity (Tax Credits)
 Soft Money (VHCB, VCDP, AHP, HOME, etc)
grants or structured as deferred loans for tax credit projects.
Cost of Housing Development
Operating Costs & Sources of Income:
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The operating cost of housing (average >$450 month) covers:
administration, utilities, maintenance, taxes, insurance; not including
replacement reserves & debt service. Affordable housing operating
costs are typically higher than market rate housing.

Tenants pay their rent from: their income, and sometimes rental
assistance: Section 8, or HUD 202, or RD
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In order to serve households at 50-60% of AMI with affordable rents,
housing developments cannot support much debt, requiring both
development subsidy (grants, equity) and operating subsidy
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It is critical to have operating subsidy to serve households < 30% of
AMI, and funding for services for residents with special needs
Funding Priorities for Affordable Housing
Guiding Documents which outline Vermont Priorities
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Consolidated Plan
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Allocation Plan (for housing credits)
Some priorities and considerations
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Location - village center & downtown development (non-sprawl)
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Mixed Income
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Family Housing (a higher relative documented need in most of VT)
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Rehabilitation & historic preservation
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Housing with units affordable to <30% of median income
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Special Needs Housing
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Resources well-leveraged
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Strong/Experienced Developer and Manager
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Market Study supports concept/size
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Financially Feasible
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Green Building, Energy Efficient
Resources
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Between a Rock and a Hard Place, Housing
& Wages in Vermont (2008 Update)
www.housingawareness.org/facts.htm
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Directory of Affordable Housing
http://www.housingdata.org/doarh
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Consolidated Plan
http://www.dhca.state.vt.us/Housing/ConPlan/index.htm
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Qualified Allocation Plan
http://www.vhfa.org/documents/developers/qap.pdf