New York Institutional Investors Conference

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Patterns for Progress Housing Conference Presente
d by Arlo Chase, SVP For Policy Initiatives at
nyhomes
Creating affordable homes for New York
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Goals of presentation

• Acknowledgments/Thanks
• Identification of Local Need
• Introduction to State Housing Programs
• Update on 2008-09 State Housing Budget
• Introduction to nyhomes
• State Workforce Housing Initiatives
• Going Forward
• Questions/Comments

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Hudson Valley Housing Needs

• Downstate NY State is experiencing a crisis of
  lack of affordable housing.
• The shortage is most acute for those at the
  bottom of the income scale (total SSI grant
  cannot pay for an apt), but also includes
  moderate and middle class.
• NLIC Report- Out of Reach, determines the hourly
  wages required to afford a market rate 2-bedroom
  apt.
• Westchester-29.21 4 full time jobs at minimum
  wage.
• Rockland Putnam over 25 3 full time jobs
• Orange Dutchess over 21 3 full time jobs
• Ulster, Greene, Columbia and Sullivan, 15 -
  182 full time jobs
• Many homeless are working full time.

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Hudson Valley Housing Needs

• Most folks are making more than minimum wage,
  however, per the handout, based on Bureau of
  Labor Statistics, all of the following
  professions are making significantly below median
  income in both Westchester and Poughkeepsie-Newbur
  gh-Middletown area.
• Elementary School Teacher, Registered Nurse
• Paralegal/Legal Assistant
• Firefighter, Police Officer
• Carpenter
• Thus 1 wage earner households headed by these
  professionals would be eligible for most state
  programs (60-80 of AMI).

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Hudson Valley Housing Needs

• Second Home Buyers Price out Local Residents
• Foreclosure Crisis Exacerbates the Overall
  Affordability Crisis.
• In Hudson Valley, data indicates that the problem
  is concentrated in the Poughkeepsie-Newburgh-Middl
  etown urban cores, in addition to Mt. Vernon and
  parts of Yonkers.

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Effects of the Hudson Valley Housing Crisis

• As discussed in earlier panels, the lack of
  affordable housing available to moderate income
  households negatively impacts the regions
  economic growth.
• From a land use perspective, results in Dumb
  Growth- longer commutes, thereby decreasing the
  quality of life and increasing carbon emissions.
  Higher gas prices make this more of an economic
  issue as well.

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Government Agencies involved in Housing Programs

• Federal- U.S. Department of Housing and Urban
  Development
• Historically the key funder but funding has been
  flat for 10 years- no funding for new programs.
  Still administer Section 8 vouchers, Public
  Housing programs. HUD budget 30 billion.
• Federal- Internal Revenue Code
• Tax Credits, Deductions and Depreciation key
  housing incentives
• Biggest expendituremortgage int .deduction
  (80-100 billion ann)
• State- Division of Housing Community Renewal
  (DHCR)
• Administers most grant programs.
• State- nyhomes (HFA, SONYMA, AHC)
• More like a dedicated lender for affordable
  housing
• County- Tax Abatements, in some places grant
  money
• Town/Village-zoning decisions- very important

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Housing Programs Generally/State Budget

• 3 Basic Categories of Government Housing Programs
  
• Construction or Rehabilitation of Multifamily
  Rental Housing
• Construction, Rehabilitation or Improvement of
  Homeowner Housing (1-4 family, condo).
• Mortgage and Downpayment Assistance for
  Homeowners, often restricted to first time
  homeowners or certain locations.
• Rental assistance.
• All have income restrictions, ranging from very
  low income (30 AMI) to truly middle class (150
  AMI).
• 2008-09 State Budget Increased Funding for
  Housing Capital Programs from 104 Million to
  304 million

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Main Affordable Housing Programs-Rental

• Multifamily Rental Housing
• Low Income Housing Tax Credits (federal funds,
  DHCR/HFA)
• Tax exempt bonds (federal funds, HFA IDAs)
• Homeless Housing- HHAP-(State Funds, OTDA)
• 2008 Budget increase to 36 million
• Gap Money
• HOME (federal funds, DHCR/Counties)
• Housing Trust Fund/HWF (State funds, DHCR)
• 2008 Budget increase to 77 million
• HFA Subsidy Loan (State funds and internal
  resources, HFA)
• First Time budget allocation of 54 million
• State Public housing Modernization- (DHCR, 17.8
  million)

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Main Affordable Housing Programs-Homeownership

• Homeownership Production Rehabilitation
• Affordable Housing Corp. (State Funds)
• Budget Increased to 45 Million
• HOME/CDBG (Federal Funds, DHCR/Counties)
• Other State Programs For Rehabilitation
• Access to Home, HOPE/RESTORE, Weatherization
• All State funds and Administered by DHCR
• Budget increased to 8 million

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Main Affordable Housing Programs-Homeownership

• Homebuyer Assistance
• Below Market Mortgage Loans (federal funds,
  SONYMA)
• Downpayment Assistance
• HOME/CDBG (federal funds, DHCR/Counties)
• AHC (State funds)
• HELP (Matching funds for Employer Grants, only
  Long Island, 6 million 08-09, 25 million in
  2007-08 Budget)
• Foreclosure Counseling
• DHCR- 25 million in Budget

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nyhomes is the States Affordable Housing Bank

• nyhomes is the New York State Housing Finance
  Agency (HFA), State of NY Mortgage Agency
  (SONYMA) and Affordable housing Corporation
  (AHC).
• nyhomes makes Single Family loans through SONYMA,
  Multifamily loans through HFA, as well as
  recoverable grants through AHC.
• Due to nyhomes status as a tax-exempt bond
  issuer, our cost of funds is lower than that of
  conventional lenders.
• This lower financing costs allow us to lend at
  lower rates than available in the conventional
  market.

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nyhomes Goals for 2007

• Expand presence throughout the State
• From 2002 to 2006, 86 of HFAs financings were
  for projects in Manhattan
• Be more responsive to the marketplace
• Nimble user-friendly lender
• Better leverage scarce public resources
• Less 80-20, more all affordable and preservation
• Build strategic alliances with government,
  non-profits, private developers, and trade
  associations (Patterns for Progress)

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How did we do?-2007 Accomplishments

• HFA financed
• Almost 4,000 affordable rental housing units,
  more than 3x the units in 2006
• 28 projects compared to 14 in the prior year
• Projects in 15 counties, compared to seven
  counties in 2006
• SONYMA
• Streamlined first time homeowner mortgage product
• Launched Veterans Mortgage Product and
  Refinancing Product for subprime
• AHC
• 3 million program pilot Block by Block for the
  City of Buffalo
• Awarded 79 grants, totaling 47.8 million
• Strategic Gains Increased Accountability
• Joint applications with DHCR
• Strategic partnerships with MTA, OMH, NYSERDA,
  etc.
• Issued Housing Report Card detailing units
  assisted and dollars expended through all state
  programs and agencies

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nyhomes Goals for 2008

• Goals
• Continue to build on 2007s work expand
  statewide presence
• Facilitate recapitalization and renovation of
  Mitchell Lama portfolio
• Local example is the Admiral Hawlsey complex in
  Poughkeepsie, June 7 article.
• Continue to seek opportunities to house special
  needs populations
• Explore workforce/moderate income deals
• Use available sources to fund pilots such as
  foreclosure initiatives, transit oriented
  developments, greening, etc.
• DHCR- Regional Needs Study

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HFA- Lender Toolbox

• HFA Allocates resources for affordable rental
  housing
• Tax-exempt and taxable bonds
• State receives a limited allocation of tax exempt
  bonds annually from the federal
  government-divided.
• Open, year round allocation for all affordable
  transactions
• Currently, demand exceeds supply
• Second mortgage subsidy loans-
• Allocated only as needed to make a deal work
• 1 interest accruing, deferred payment schedule
• 4 Tax Credits
• As-of-right allocation with tax-exempt bonds

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Whats New With HFA

• HFA launched an Open Bond Resolution in November
  2007, which provides market access for small and
  medium sized projects by lowering costs of
  issuance and borrowing costs.
• To promote healthy environments for tenants and
  homeonwers as well as cost effective building,
  HFA recently adopted minimum design standards for
  all HFA financed projects. These are the same
  standards that DHCR recently adopted for its
  large capital projects.

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AHC

• Program Description
• AHC provides grants to promote homeownership for
  low and moderate income households.
• Eligible uses include new construction,
  acquisition/rehabilitation, and home improvement
• AHC grants must be leveraged with at least 40
  of other public or private sources.
• Eligible applicants
• Municipalities, and Not-for-profit organizations

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AHCs Recent Hudson Valley Partners

• Rural Ulster Preservation Co (new construction)
• Newburgh Community Action Committee (Aq/rehab)
• Housing Action Council (home improvement new
  construction)
• The Preservation Company (home improvement)

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AHC Grant Awards

• Per unit awards
• 40,000 per unit awards for households at or
  below 90 of AMI.
• 32,500 per unit awards for households between
  90 and 110 of AMI.
• 25,000 per unit awards for households between
  110 and 150 of AMI.

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Whats new with AHC

• 300,000 cap removed from Home Improvement Grants
• Joint Application with DHCR
• For home improvement projects seeking AHC and
  HOME funding
• Streamlined application Process
• Reduced time between award and contract.

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SONYMA

• Provide safe and affordable homeownership
  opportunities to low and moderate income
  households in New York State.
• Programs are intended primarily for first-time
  homebuyers, however this requirement is waived
  for buyers who purchase homes in federally
  designated Target Areas.
• First-time homebuyer requirement is also waived
  for military veterans (and spouse or
  co-borrower).
• Not a Direct Lender- SONYMA programs are
  available through a network of 69 participating
  lenders, found on our website.
• Household Income and Purchase Price Limits vary
  by county.
• Dutchess 3 person family, income limited
  to100,000
• 1 family house limited to 400,000, 2 family
  450,000

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SONYMA Biggest Best Program Features

• These look better and better as banks tighten
  credit.
• Closing Cost Assistance Loan (CCAL)
• Greater of 5000 or 5 of the Mortgage amount
• Below-market, fixed interest rates w/ 100 day
  rate lock
• Up to 97 financing for purchase of single family
  (including condos manufactured homes) and 2
  unit homes.
• Borrowers equity contribution reduced to 1
• What you see is what you get. No risk-based fees
  imposed by SONYMA for market conditions, credit
  profile, loan purpose, or property type
• No limit to the amount of qualified
  grants/subsidy funds used for down payment and/or
  closing costs.

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Workforce/Moderate income

• A threshold question is given the scarce
  resources dedicated to housing and the crisis
  facing the very low end of the income strata,
  should the state allocate meaningful resources to
  assist moderate income households with their
  housing needs? (81-130 AMI)
• The answer is yes and here is why
• As you heard from the earlier panels, the market
  in many of our downstate communities is simply
  not providing a sufficient supply of housing for
  moderate income households, neither rental nor
  homeownership.

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Workforce/Moderate income

• As discussed, the lack of housing available to
  moderate income households negatively impacts the
  regions economic growth and results in Dumb
  Growth.
• The state recognizes that note almost all of the
  federal housing resources, both rental and
  homeownership, are targeted at 60 AMI (LIHTC,
  tax exempt bonds) or 80 AMI (Section 8, HOME,
  CDBG) with preferences for those under 50 30.
• Want to promote income integration in these
  suburban communities, often lacking.

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Workforce/Moderate income

• Many of the impediments to developing affordable
  housing in the downstate suburbs are local
• Zoning,
• SEQRA
• property taxes
• nyhomes cannot address the local issues
• Home Rule State-localities control zoning.
• Downstate suburban Workforce Act- Hudson Valley
  cool.
• nyhomes DHCR can provide financing tools to
  encourage these projects.

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Workforce/Moderate income

• Existing State Resources for Moderate Income
  Housing
• One important tool that exists is SLIHC, aimed at
  60-90 AMI. Historically underused but now
  oversubscribed, despite increasing allocation in
  2007 and 2008. This is very encouraging news.
• Also SONYMA Mortgage Insurance Fund (MIF) offers
  credit enhancement for projects serving
  households to 150 AMI (rental or condo/coop)
• AHC (homeownership) also goes to 150 AMI.

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Workforce/Moderate income

• Acknowledging existing programs, nyhomes is
  actively pursuing 3 new initiatives to assist the
  moderate income-1 rental, 2 homeownership.
• 1. We Are Seeking to fund Moderate Income Rental
  Housing deals for Downstate Suburbs
• Challenges
• Counterintuitively, the moderate income units are
  actually more expensive than the low income units
  resulting from the loss of equity from the tax
  credits
• State has to offer significant subsidies to get
  the moderate income units built- (City offers
  65,000/unit if between 80-100)
• Where to get the money?
• 2008 Budget- no- (housing did very well)
• Internal resources- will limit number of deals
• Would love to combine moderate income with TOD-
  Beacon.

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Workforce/Moderate income

• Preventing Foreclosure
• Subprime Mortgage/Foreclosure crisis resulted in
  great deal of hardship for moderate income
  homebuyers.
• Last year SONYMA launched Keep the Dream
  refinancing program, which enables borrowers in
  subprime mortgages to refinance to a fixed rate.
• KTD has not been as effective as planned, limited
  to 60 days delinquent.
• SONYMA continues to investigate more aggressive
  responses, such as rescue loan.

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Workforce/Moderate income

• Preventing Foreclosure (contd)
• Foreclosure Mitigation Counseling
• DHCR 25 million, initial RFP out by 6/18
• Banking Department, 2 million, RFP concluded
• SONYMA, together with federal funds 1 million
• Governor Initiatives
• HALT Task Force for Interagency
• Bill pending in Albany that seeks to prevent many
  of the most egregious predatory subprime lending
  practices
• One issue is that some state regulations are
  preempted for federally chartered financial
  institutions

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Workforce/Moderate income

• Neighborhood Stabilization Initiative
• A pilot recently begun in New York City in which
  AHC agreed to fund a non-profit with 2 million
  to assist in the acquisition, rehabilitation and
  sale of foreclosed homes to responsible moderate
  income homebuyers.
• 50 homes anticipated
• nyhomes has initiated conversations in
  Westchester and Long Island.
• As name suggests, this is aimed at neighborhood
  stabilization, so we are looking for targeted
  efforts- cannot deal with every REO

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Workforce/Moderate income

• Moderate Income Housing vs. True Workforce
  Housing A note on definitions.
• HELP Long Island Match 3-1 employer
  contributions for down payments, up to 10,000
  (so 40,00 max). Also up to 20,000 in repairs.
  The program is eligible to homebuyers up to 130
  AMI (126,000)
• Maryland HFA offers a similar model- matching
  state funds for employer assistance-increased in
  smart growth areas.
• Federal Home Loan Bank, through participating non
  profits, has a 3-1 match for homeowner savings.

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Challenges 2008-09

• Continued increase in foreclosures REO
• Corollary may be a continued tightening of
  credit for low- and -moderate income borrowers.
• Though opportunity for SONYMA, best year
• Higher construction costs.
• Continued excess demand for tax-exempt bonds and
  federal tax credits.
• Lower tax credit prices paid by investors.
• Gloomy state fiscal picture.

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For more information

• www.nyhomes.org
• Multifamily Projects- Dave Walsh -212-688-4000
  ext. 307 or Dwalsh_at_nyhomes.org
• SONYMA Single Family George Leocata, 212
  688-4000, ext 392, George_at_nyhomes.org
• AHC Dominic Martello, 212 688-4000, ext 553,
  dmartello_at_nyhomes.org