The National Housing Conference’s Housing Landscape 2015 reports that while housing affordability has improved slightly for low- and moderate-income households, one in four working renter households still spends more than half its income on housing each month. The housing cost burden is still greater for extremely low-income families and individuals, with 80% of those households paying more than half their income on housing. Working families who own their homes are also experiencing severe housing cost burdens. And the challenges of providing special needs populations with housing that is as supportive as it is affordable continue. For too many Americans, spending so much to keep a roof over their heads means that they have barely enough left for other essentials - food, transportation, and healthcare - much less for the consumer spending that feeds our economy.
The housing cost burdens placed on lower-income families are not new, of course. Theodore Roosevelt created the first President’s Housing Commission in 1908 to address the issue of providing decent housing for low-income Americans. Since then many solutions to this challenge have been explored and implemented, with varying degrees of success. For the last 25 years, the Federal Home Loan Bank System’s Affordable Housing Program (AHP) has proven to be among the more effective solutions for easing the burden of housing costs. It is now one of the largest private sources of grant funds for affordable housing in the country, with more than $4.4 billion provided to create or preserve more than 724,000 affordable housing units since 1990.
Since their inception, the Federal Home Loan Bank of San Francisco’s competitive AHP and homeownership set-aside programs have made $850 million available to deliver affordable housing solutions for lower-income families, seniors, persons with disabilities, veterans, young people transitioning out of the foster care system and other at-risk youth, people with disabilities, individuals struggling to overcome addiction, and homeless men, women, and children.
But now, 25 years on, the environment for affordable housing development is not the same as it was when the AHP was conceived. Development has grown more complicated year after year, as have the needs of the populations these AHP dollars are meant to serve. As we celebrate the 25th anniversary of the successful launch of the AHP, the Affordable Housing Advisory Council looks forward to working together with the Bank, its members, developers, community groups, and the Federal Housing Finance Agency to modernize and refresh the program in ways that will make it an ever more relevant part of efforts aimed at creating and preserving more affordable housing.
The Bank awarded $49.4 million in grants in the Bank’s 2014 AHP funding competition, through 22 Bank members, to 76 projects that will construct or rehabilitate 5,055 units of housing affordable to lower-income individuals and families in Arizona, California, Florida, Illinois, Nevada, Ohio, Pennsylvania, Texas, and Washington.
2014 Competitive Affordable Housing Program (AHP) Results
|(Dollars in millions, except subsidy per unit)||Rental||Ownership||Total||1990-2014|
|Number of Applications||165||11||176||5,699|
|Number of Applications||69||7||76||2,104|
|Number of Units||4,966||89||5,055||111,592|
|Average Subsidy per Unit||$9,616||$18,388||$9,770||$7,003|
In its 25th year, the AHP continues to be a flexible source of gap funding for projects that create an affordable place to call home for low- and moderate-income families and individuals. While AHP grants are generally a small part of the total development budget, the winning of AHP dollars, through a rigorous competitive application process, signals to other funders that a project’s ability to serve its targeted population has been well scrutinized.
Grants awarded in 2014, ranging from $25,000 to $1.5 million each, will support a wide range of targeted projects, including:
- New construction of rental housing for low-income families, seniors, veterans, or individuals and households with special needs
- Construction of owner-occupied homes using the self-help sweat equity model
- Sustainable developments that will be LEED Certified or GreenPoint Rated
- Transitional or permanent housing with supportive services for veterans, the chronically homeless, the developmentally disabled, and others
AHP Implementation Plan Changes
The Bank continually works with the Advisory Council to develop modifications to its programs in response to changing circumstances and shifting priorities. In 2014, the Bank made the following changes to its AHP Implementation Plan:
Definition of "Project"
The Bank added a definition of "project" to clarify that a project may consist of one or more structures as long as all of the residential units in the structure(s) are included in the total project units. Units may not be segregated within one or more structures and be designated as separate projects.
As the Bank has modified several scoring categories over the past five years-Empowerment and Stability in particular-there are now fewer categories that award fractions of points, thereby increasing the frequency of ties. Because the amount of funding committed to a project at the point of application is an objective and easily verifiable criterion, the Bank will now rank projects with identical scores in descending order by the highest percentage of committed sources of funds (measured in dollars) over total sources of funds.
Feasibility Benchmarks Changes
The following changes were made to provide the Bank with a means of evaluating cashflow outside of the debt coverage ratio:
- Maximum debt coverage ratio in year one has been increased from 1.3 to 1.45.
- Net cashflow may not exceed 10% of gross income in year one, unless cashflow is needed by the project to cover deficits throughout the retention period, or in order to meet minimum underwriting requirements for other lenders.
- Net cashflow for the first five years of operation may not exceed the AHP subsidy request.
A provision was added to the Bank’s AHP Compliance Monitoring Guidelines stating that the Bank, at its discretion, will conduct on-site monitoring of AHP projects, and the decision to conduct a site visit will be based on factors related to the project’s status, including:
- Compliance with AHP requirements,
- AHP subsidy amount,
- Material changes to the project since approval, and
- Information from other monitoring entities.
In 2014, the Bank set aside $9 million from its annual AHP contribution to fund matching grants for eligible homebuyers through the Workforce Initiative Subsidy for Homeownership (WISH) and Individual Development and Empowerment Account (IDEA) first-time homebuyer programs, which offer 3-to-1 matching grants of up to $15,000 for the purchase of a home.
Twenty-five members reserved a total of $7.4 million in WISH funds and $1.6 million in IDEA funds to help low- to moderate-income families and individuals buy a home in Arizona, California, Nevada, and other states where they do business. With these funds, the number of units that will be subsidized increased 30% from the prior year. Three members were new participants, and credit unions increased their participation in the set-aside programs.
The WISH program, targeted to families and individuals who are ready to make the transition from renting to owning, taps the desires of a hopeful workforce. The IDEA program, directed at homebuyers who have been saving for the purchase of their first home through an Individual Development Account or participating in their local housing authority’s Family Self-Sufficiency homeownership program or a lease-to-own program administered by a nonprofit or government entity, has been very successful at helping low-income people develop financial skills and build assets, and then to achieve the self-sufficiency that comes with homeownership.
Since 2000, the Bank has funded over $65 million in WISH and IDEA matching grants, helping more than 5,000 households achieve the goal of owning a home.
Credit Programs: Lending Support for Housing and Economic Development
The Bank’s Community Investment Cash Advance (CICA) programs offer Bank members a lower-cost source of funds they can lend for affordable housing, neighborhood revitalization, and economic development activities that benefit low- to moderate-income communities.
In 2014, as the Bank continued to encourage members to take advantage of these lower cost funds to support local economies and facilitate homeownership for lower-income households, member CICA activity continued to rise, as members used:
- Advances for Community Enterprise totaling $490 million to support the creation of nearly 2,000 jobs around the country, a 27% increase from 2013.
- Community Investment Program (CIP) advances totaling $433 million to support single-family home loans to families and individuals with incomes at or below 115% of area median income, an increase of more than 37% compared with the prior year.
- Lower-cost CIP Standby Letters of Credit totaling $182 million to support development of affordable housing projects. One member used an ACE Letter of Credit in the amount of $5 million to support a nonprofit organization providing direct treatment services in various facilities in California, a project that is expected to create or retain 18 jobs.
Since the inception of the AHEAD Program in 2004, the Bank has awarded over $7 million in AHEAD grants to support 267 projects that create or preserve jobs, facilitate improvements to public or private infrastructure, or deliver social services, training or educational programs, or other services and programs that benefit low- and moderate-income communities. Grant funds can be used to finance a variety of start-up costs that are often difficult for a nonprofit to finance, and demand for funding increases year after year. In 2014, the Bank reviewed 191 applications requesting nearly $9 million before selecting 36 AHEAD grant winners.
With this year’s AHEAD grants, the Bank will be providing, though its members, a critical early boost to a diverse array of important initiatives, including projects aimed at:
- Creating or expanding job training and placement programs for at-risk youth, domestic violence survivors, returning veterans, and others
- Increasing financial literacy, facilitating saving, and increasing access to mainstream financial products in underserved communities
- Offering microlending and small business incubation services to low-income entrepreneurs
- Establishing a revolving loan fund for a community land trust
- Enabling nonprofits to build capacity that allows them to better serve their constituents and communities
- Providing academic support to disadvantaged children and teens and vocational education programs for adults
- Providing academic support to disadvantaged children and teens and vocational education programs for adults
By offering Bank members an opportunity to support innovative approaches to meeting specific needs in the communities they serve, the AHEAD Program also helps strengthen relationships between members and nonprofit groups that have special expertise in economic and community development. In 2014, for example:
- National Bank of Arizona is supporting the efforts of the Foundation for Senior Living (FSL) to enhance the quality of life for residents at 29 Palms, an independent living facility in Phoenix for seniors and young adults living with autism spectrum disorders. FSL will supply each apartment with customizable technology to streamline real-time interaction with family, medical providers, caregivers, friends, case managers, and service providers.
- Silicon Valley Bank is supporting Serve A Little (SAL)’s ambition to provide free or low-cost automotive repair and small home repair services to single mothers, using volunteer labor. The volunteer labor pool will come from a job training partnership with a local community college, and the enterprise’s market-rate services will help make SAL self-sufficient.
- Bank of George is helping Safe Nest, Nevada’s largest and most comprehensive program devoted solely to domestic violence issues, launch the Shelter Employment and Housing Program to help victims of domestic violence living in its main shelter in Las Vegas to progress to an independent, financially self-sufficient, violence-free life after leaving the shelter.
- Wells Fargo Financial National Bank is helping Centro Community Partners pilot a program that uses mobile applications as a tool to help underserved entrepreneurs generate business plans and access microloans.
- Hanmi Bank is helping Koreatown Youth & Community Center, in collaboration with Jewish Vocational Services, to launch a pilot program to provide veterans with job placement services, employment coaching, and financial education.
- Charles Schwab Bank is supporting the Nevada Public Health Foundation’s research into the social and economic factors that lead to health disparities in one Nevada community, which will be used to engage the broader community in developing initiatives to address those disparities.
Effective engagement with policymakers and public officials, government agencies, affordable housing advocates, and a variety of community and economic development organizations, is more critical than ever to furthering the Bank’s mission and meeting its Community Lending Plan goals.
In 2014, the Bank participated in a wide variety of public and industry events and affordable housing and community development conferences, forums, and meetings, including:
- 2014 Arizona Housing Forum, Tucson, Arizona
"Winning AHP: How to Submit a Successful Application with the Federal Home Loan Bank of San Francisco" was one of the workshops at this annual event.
- Affordable Housing Advisory Councils’ Leadership Conference, Washington, D.C.
The main focus of this year’s Leadership Conference, hosted by the Finance Agency to discuss issues common to all the FHLBanks and their community programs, was the prospect of refreshing and modernizing the AHP regulation in the year ahead.
- Arizona Healthy Communities Conference, Phoenix, Arizona
Sponsored by the Federal Reserve Bank of San Francisco and the Arizona Housing Alliance, this conference brought together community development and affordable housing practitioners, urban planning and health professionals, and government and elected officials to discuss ways of integrating health programs with housing.
- California Environmental Protection Agency/Air Resource Board Guidelines for Senate Bill (SB) 535 Workshop, Oakland, California
Hosted by the California Environmental Protection Agency/Air Resources Board, this workshop provided an opportunity to learn how new cap-and-trade funding, one of many emerging programmatic and funding resources, might be invested in disadvantaged communities.
- CCEDA’s 25th Annual Teaching & Learning Conference, Los Angeles, California
Representatives from financial institutions, local governments, and community organizations discussed funding for community development in California, including the Bank’s AHEAD program, at the California Community Economic Development Association’s annual conference.
- FHLBank San Francisco Affordable Housing Roundtable, Gardena, California
This roundtable engaged member financial institutions, Advisory Council members, housing developers, and other stakeholders in a discussion of affordable housing and economic development issues and ways to increase the supply of senior housing in the area. Congresswoman Maxine Waters attended as a special guest at the event.
- Mayoral Housing, Transportation and Jobs Summit, Los Angeles, California
This year’s theme was "Innovation and Investment in L.A.’s Economy," and discussion topics included investing in sustainable communities, innovation as a core competency, and promoting creativity, technology, and a skilled workforce. Lawrence Parks, Senior Vice President of External and Legislative Affairs at FHLBank San Francisco, was a featured speaker, and FHLBank Bank San Francisco Director Kevin Murray participated in the event.
- Resilience in a Time of Recovery, Grant Writing and Capacity Building Workshop, North Las Vegas, Nevada
Representatives from the State of Nevada, the U.S. Department of Health and Human Services, the U.S. Department of Agriculture, the U.S. Department of Labor, local governments, and financial institutions attended this event sponsored by the HUD North Las Vegas office, which focused on how to access many different sources of funding.
- Solutions 2014 Conference - National Housing Conference (NHC), Oakland, California
Workshop topics at this Bank-sponsored event included shared equity homeownership; the financial benefits of energy and water retrofits; housing models for hard-to-serve populations; marketing for affordable housing; generating local revenues for affordable housing; initiatives for fair housing; equitable transit-oriented development finance; rural innovations in housing; and building healthy communities.
- Stewards for Affordable Housing for the Future (SAHF) Meeting, Washington D.C.
This meeting, with a national organization representing large nonprofit affordable housing developers, provided an opportunity to share perspectives on the AHP and the Finance Agency’s upcoming refresh and modernization of the AHP regulation.
To help Bank members and their partners understand and use the Bank’s community programs, in 2014 Community Investment staff conducted:
- Six AHP webinars on the competitive application process, two for owner-occupied projects and four for rental projects
- Eight AHP compliance webinars, four for owner-occupied projects and four for rental projects
- Seven WISH and IDEA workshops: one in Arizona, one in Nevada, two in California, and three webinars
On behalf of the Advisory Council, I would like to thank the Bank’s management and staff, the Bank’s members and community partners, and especially the Bank’s Board of Directors, for their exceptionally active and extremely valuable engagement with us over the past year.
In closing out 2014, the Advisory Council bids farewell to four long-serving and valued members. We thank Forescee Hogan-Rowles, President and Chief Executive Officer, RISE Financial Pathways; John M. Ramirez, Vice President, Chicanos Por La Causa, Inc. (CPLC); Dianne J. Spaulding, Executive Director, Non-Profit Housing Association of Northern California; and especially our Chair for the past two years, James Feltham, President, Neighborhood Housing Solutions in Phoenix, Arizona, for their service. Each provided invaluable counsel during their tenures, and their presence will be missed at our Advisory Council table.
We warmly welcome to the table four new members: Stephen L. Hastings, Director of Real Estate Services, Foundation for Senior Living; Martin Quintana, Chief Economic Development Officer, Chicanos Por La Causa, Inc.; Douglas Shoemaker, President, Mercy Housing California; and Tunua Thrash-Ntuk, Executive Director, West Angeles Community Development Corporation. Their wealth of collective experience and individual perspectives will help us ensure that the Bank’s AHP and other community programs continue to have a vital role in the success and effectiveness of affordable housing and community development efforts across the district and across the country.
Finally, I am pleased to report the Bank has allocated $44 million in funding for the competitive AHP and $9 million for the WISH and IDEA programs for 2015, funds that will help make the cost of having a home a little less burdensome for many hard-working families, and some of the most vulnerable among us.
Affordable Housing Advisory Council
Federal Home Loan Bank of San Francisco
The Federal Home Loan Bank of San Francisco delivers low-cost funding and other services that help member financial institutions make home mortgage loans to people of all income levels and provide credit that supports neighborhoods and communities. The Bank also funds community programs that help members create affordable housing and promote community economic development. The Bank’s members are headquartered in Arizona, California, and Nevada and include commercial banks, credit unions, industrial loan companies, savings institutions, insurance companies, and community development financial institutions.