Delaware's Housing Development Fund and Housing Preservation Fund, 2017

In Delaware State Housing Authority’s 2017 Housing Development Fund Supplement provides information on the allocation of the state Housing Preservation Fund. 

(A) Housing Development Fund

Delaware State Housing Authority’s 2017 Housing Development Fund Supplement is described below and can be found alongside the current QAP on destatehousing.com.

PURPOSE:

The purpose of the Housing Development Fund (HDF) is to provide affordable decent, safe and sanitary housing to responsible very low-, low- and moderate-income households.

PROGRAM DESCRIPTION:

This program is designed to primarily provide multi-family rental financing. Types of developments that will be considered include, but are not limited to, the acquisition and/or rehabilitation of existing housing, the adaptive reuse of non-residential buildings, and new construction.

The Project and Neighborhood Standards (attached) provides guidance as to the level of detail required to demonstrate to the State that the proposed development meets the purpose of the HDF.

Because the HDF has limited funds, the developer must demonstrate that other potential sources of funding have been explored to ensure that the HDF is used only to the extent necessary.

ASSISTANCE AVAILABLE:

Funds will be available for construction loans at 3% interest and permanent loans at 1% interest. Permanent loan interest may be deferred depending on the development's cash flow. Interest rates and repayment schedules of loans will be influenced by the income mix of the persons to be served, as well as the financial viability of the development.

DSHA Set Asides

The set asides for Delaware’s 2017 HDF can be found in the 2017 guidance document. The HDF is funded by document recording fees and general appropriations.

9% Tax Credit Properties:

  • A set-aside of approximately $8,250,000 will be available for applications receiving a preliminary ranking in the 9% competitive application cycle. (This amount is unchanged since 2015.) DSHA's determination that a property satisfies the requirements of the QAP will be based on the property meeting all of the threshold and all other requirements described in the QAP to DSHA’s satisfaction.
  • DSHA will limit its total deferred permanent financing to $3 million or $50,000 per unit, whichever is less. 
  • HDF funds may also be used for construction financing and requests may exceed permanent financing limits. 

4% Tax-Exempt Bond Properties with DSHA Financing:

  • Developments proposed to be financed with tax-exempt bond financing and requesting funding from the Housing Development Fund or DSHA, must apply to DSHA on the same deadline as DSHA requires for its annual Tax Credit application round for 9% Tax Credits. NOTE: Developments applying for 4% tax-exempt bond financing and DSHA financing are not required to compete with the 9% Tax Credit applications. 
  • DSHA will consider providing HDF funding under the following, but not limited to, conditions: 
    • A set-aside minimum of $6,000,000 of HDF funds will be made available for 4% tax exempt bond applications seeking HDF funding. (This amount is unchanged from 2017 and $1,500,000 less than the set aside in 2015). 
    • DSHA will limit its total deferred permanent financing to $3 million or $50,000 per unit, whichever is less. 
    • In addition, subject to HOME funds availability, up to $2 million of DSHA HOME funds may be available for developments with a substantial financing gap that cannot be met by a deferral of 25% of the developer’s fee, DSHA may determine that the project is eligible for DSHA supplemental financing in the form of HOME funds. 

Housing Development Fund Performance

The 2016 Council on Housing’s Annual Report, published in September, reviews the HDF performance for that year:

One of the primary state investments in the development of affordable housing is the Housing Development Fund (HDF). Significant funding for affordable purchase and rental housing continues under the HDF. In fiscal year 2016 alone the Council approved resolutions recommending approximately $7.63 million in loans and grants from the Housing Development Fund resulting in the creation or preservation of 1,605 units of affordable housing. These funds also supported homeless services, affordable rentals, homeownership, foreclosure prevention, housing rehabilitation, housing counseling and nonprofit administration services. Housing initiatives launched this year have created and sustained jobs in the building industry through the creation and rehabilitation of affordable rental housing sites and through the subsidizing of mortgages for first-time homebuyers purchasing new-construction single-family homes.

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