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Rental Housing Funds

Purpose

The Department's Rental Housing Funds are composed of a number of programs all of which aim to rehabilitate or create rental housing. Although there are specific programs for housing rehabilitation, nonprofit sponsors and elderly housing, the Department allocates these funds collectively to best provide for rental housing in the State. A portion of the federal HOME moneys administered by the State also are included in Rental Housing Funds. The programs are generally designed to be compatible with tax-exempt or taxable bond financing, low-income housing tax credits, and other private or public funds.

Competitive Funding Process

The Department allocates its Rental Housing Funds through a competitive process. Applications are accepted at designated times during the year and are evaluated against criteria established by the Department.

In general, priority is given to projects which:

• Restrict units to tenants with incomes below 60% of median income
• Restrict units to low-income tenants for more than 40 years
• Provide tenant service packages
• Use non-State funds in addition to State funds
• Provide quality housing in a good location
• Are sponsored by teams with demonstrated development and management ability

Eligible Types of Housing

Newly constructed or rehabilitated rental housing including congregate housing, single-room occupancy (SRO), emergency shelters and shared living facilities are eligible for Rental Housing Funds. Projects may be restricted to elderly residents. In some cases, small commercial rehabilitation projects may be considered. All projects must be located in Priority Funding Areas.

Eligible Loan Applicants

For-profit, limited profit, or nonprofit developers, nonprofit organizations, county governments, municipalities, or local housing authorities are eligible to apply for Rental Housing Funds.

Eligible Residents

In general, eligible residents must have incomes of no more than 60 percent of the area median income, and the owner must reserve the same proportion of units for these tenants as the Rental Housing Funds are to the total financing. For example, if Rental Housing Funds account for 45 percent of the total project financing, a minimum of 45% of the units must be reserved for tenants with 60 percent or less of median income. Other restrictions may apply when federal programs such as the Low-Income Housing Tax Credit are involved. The units must be restricted to eligible residents for a minimum of 15 years or as long as the loan is outstanding, whichever is longer.

Loan Terms

Most Rental Housing Fund loans will amortize over a term of up to 40 years and bear interest at a rate of 4 percent per annum. Under special circumstances, loans may be repayable from cash flow. The maximum loan amount should not exceed $2 million.

Loans may be used for acquisition, construction, rehabilitation, and development costs. Development costs include lender fees, architectural and engineering fees, market studies, appraisals, legal fees, and other costs directly related to the development of the housing.

Local Government Involvement

The local government in which a housing development financed through the program is located must generally approve the development and make a contribution which materially reduces the project's development or operating costs, or otherwise significantly supports the development.

More Information pertaining to the Rental Housing Fund

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