This article was originally featured in a weekly newsletter of the Virginia Housing Coalition.
What is it? During the last session of the Virginia General Assembly (2012), the Virginia Housing Trust Fund was created, and an initial allocation of $7 million was made to the fund. The HTF will become operational during the 2nd year of the biennium – beginning July 1, 2013. The funding for the HTF came from a one-time payment that Virginia received as a part of the National Mortgage Settlement Agreement. No long-term funding source has yet been identified for the HTF.
How can the funds be used? The HTF will be administered by the Virginia Department of Housing and Community Development and the Virginia Housing Development Authority. The budget bill provided a basic description of how the funds are to be used. The funds are divided into two classes – grants and flexible loans. Up to 20 percent of the funds may be used for grants – with a special focus on reducing homelessness, including foreclosure and mortgage counseling. The rest of the funds are designated for loans that will need to be repaid to the fund. These loans will be low interest and can be designed to be as flexible as possible – for example, deferred payment or interest only would be possible under the program.
Eligible applicants to the HTF include a wide range of organizations, including local governments, housing authorities, non-profit developers and service providers, and LLCs that are developing affordable housing. Both ownership and rental housing will be eligible for funding.
What is DHCD’s plan for the HTF? DHCD submitted a plan to the General Assembly money committees on November 1 that laid out a general plan for the HTF. The funds are divided as follows:
Proposed Virginia Housing Trust Fund Allocation
|Competitive Loan Pool||
|Foreclosure Rehabilitation Loans||
|Competitive Grant Pool||
The “Competitive Loan Pool” would allow for applicants to submit requests that address a wide range of housing needs. The HTF encourages projects that will demonstrate the ability of the HTF to meet needs that are not currently being addressed. The VHC hopes that many of these projects will be useful in making the case to the governor and General Assembly members that funding for the HTF should be continued after 2013.
DHCD proposes to use the following criteria in their selection process:
- Direct impact on one or more high priority state housing policies;
- Financial sustainability;
- Impact on local housing needs;
- Coordination of services; and
- Applicant’s administrative capacity.
The “Foreclosure Rehabilitation Loans” will combine flexible loans to purchasers of foreclosed properties with a special set-aside of VHDA permanent mortgage financing. The program will offer deferred loans averaging $15,000 to cover costs of rehabilitation and other expenses. These demonstration programs will be assessed using the following criteria:
- Demonstrated understanding of the local housing market;
- Strategic use of Community Improvement Home Loan Program resources;
- Maximization of community impact; and
- Establishment of partnerships to maximize capacity and resources.
The “Competitive Grant Pool” will allow requests for up to $100,000 and may be used for projects that reduce homelessness, including:
- Temporary rental assistance, not to exceed one year;
- Housing stabilization services in supportive housing for homeless individuals & families;
- Predevelopment assistance to support long-term housing opportunities for the homeless.
The “Foreclosure Counseling Grant” will be set aside for foreclosure counseling in areas of the commonwealth with the highest incidence of foreclosure. Where possible, these grants will be allocated in conjunction with VHDA’s housing and foreclosure counseling activities.
When can I apply for funding? DHCD anticipates opening the application cycle for both loans and grants on April 15, 2013 – with at least several “rounds” of funding during the summer and fall.