Reaping Rewards: Florida Housing Sees Positive Results from New Resource Award System

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As he oversees Florida Housing Finance Corporation’s bold transition in the way it awards low-income housing tax credits and gap funds for new affordable rental housing developments, executive director Steve Auger is recognizing some initial dividends. These include continued heavy demand for available resources, an interesting and very diverse range of projects, and strong tax credit pricing for projects receiving awards.

Under the new regimen, begun around mid-2013, Florida Housing has moved away from its traditional annual “universal application cycle” for awarding – in a single competitive round – 9% federal housing credits, federal HOME dollars, and (when available) State Apartment Incentive Loan (SAIL) program monies for soft second mortgages. Instead, the corporation is spreading the availability of these resources over nearly a year by holding multiple competitive application cycles targeting different geographies and types of projects.

Auger says the new system has been “really helpful. It’s enabled us to do some unique targeting and craft the scoring around measures that are a little more targeted toward the geographic or demographic population that we’re serving.”

The process changes, Auger indicated, are also designed to create greater efficiency and predictability for Florida Housing, developers, and tax credit investors, and assure better credit pricing by not dumping all of the corporation’s awarded 9% housing credits into the market at one time.

Mix of Resources, Multiple RFAs

            For its 2014 program, Florida Housing has had about $40 million in remaining 9% housing credits, federal HOME dollars, more than $35 million in SAIL monies, $20 million in grant dollars from the state legislature, and some state funds to subsidize the cost of rental units for extremely low-income (ELI) households.

So far it has issued three separate geographic Requests for Applications (RFAs) for 9% credits for projects in: small and medium size counties; the three large counties in Southeast Florida (Broward, Miami-Dade, Palm Beach); and the four large counties outside South Florida (Duval, Hillsborough, Orange, Pinellas).

In December, Florida Housing’s board awarded about $22.5 million in housing credits to two projects selected from 14 small county applications; nine projects picked from 82 medium county applications; and six projects selected from 34 applications from the four large counties outside South Florida. Auger expected the board to make five or six awards at the end of January 2014 in the three large South Florida counties competition, which drew 119 applications for $10 million in available credits.

“We’ve been substantially oversubscribed in demand,” says Auger.

He said about $7.5 million in remaining 2014 credits will probably be awarded in April, for developments selected in two separate RFAs for preservation projects and high priority homeless projects.

In early January, Florida Housing issued a new RFA offering $35 million in SAIL funds for elderly housing projects and for family developments in which at least 10% of the units are for residents with developmental disabilities. Auger expected a few million dollars of ELI funds to be awarded as well in this round.

A Couple ‘Neat’ Developments

Florida Housing has completed two special needs RFA competitions. One awarded $10 million in state grant funds for affordable rental projects of 15 units or less serving homeless persons and families. The second awarded $10 million in state grant funds, $2.2 million in housing credits, and some SAIL and ELI funds for housing projects targeted to persons with development disabilities. Auger described as “neat” two of the projects selected for awards in the latter competition, located in Jacksonville and Polk County.

“Eighty percent of the units in those developments will be set aside for persons with development disabilities,” Auger says, “and at least a quarter of the units in each development will be for persons with extremely low incomes.”

“They both have some really unique partnerships. The one in Jacksonville is partnering with the University of North Florida. So the residents with developmental disabilities who are 18 years or older and high school graduates will be able to audit classes at the university and participate in college life…Similarly, the development in Polk County will have kind of a buddy system with one of the universities in that area. There’s some really neat stuff going on with community integration.”

Pricing, Housing Need

According to Auger, proposed projects have been receiving favorable tax credit pricing in offers from equity providers. He said current pricing is generally in the 90s and up (in cents per dollar) for projects in Florida’s urban areas (“well over a dollar” in some very strong metro markets) and at least in the 80s elsewhere.

Auger says the bulk of the need for additional affordable rental units is in the state’s large counties. A 2013 statewide housing study commissioned by the Shimberg Center for Housing Studies at the University of Florida found that 59% of Florida’s cost-burdened renter households live in large counties, 36.7% in medium size counties, and 4.3% in small counties.    Auger said Florida Housing’s 2014 qualified allocation plan (QAP) reflects some significant differences from the prior QAP. One is that the current QAP earmarks 85% of the tax credits and other resources for new construction or redevelopment projects and just 15% for preservation projects; the prior QAP’s split was 65% new construction and 35% preservation. “We’ve been looking for more new construction deals,” says Auger.

Auger expected Florida Housing to begin the process of developing its program for awarding 2015 housing credits and gap funds this spring. He anticipated that the corporation will stick with a system of multiple RFAs rather than return to a single annual competitive round.

“There may be some opportunities for consolidating some of these RFAs,” he says. “But I don’t expect us to go back to a one-size-fits-all application.”