Letter on 2020 Housing Trust Fund Affordable Housing Cost Data Report — Washington Department of Commerce

Summary

A letter dated November 19, 2020, from the State of Washington Department of Commerce to the Secretary of the Senate, Brad Hendrickson, and the Chief Clerk of the House of Representatives, Bernard Dean. It is headed as the 2020 Housing Trust Fund Affordable Housing Cost Data Report (due Dec. 1, 2020) and states that it is provided in place of a 2020 report. The letter says Commerce has not received final cost certifications from projects funded under the 2019-21 biennial budget and does not have relevant data to report. It says Commerce expects to begin receiving the certifications in 2021 and plans to provide the Legislature with a report in 2021. The signature block names Corina Grigoras, Managing Director, Housing Finance Unit.

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                                      STATE OF WASHINGTON
                            DEPARTMENT OF COMMERCE
          1011 Plum Street SE  PO Box 42525  Olympia, Washington 98504-2525  360-725-4000
                                        www.commerce.wa.gov

November 19, 2020


Mr. Brad Hendrickson, Secretary of the Senate
Legislative Building 312
PO Box 40600
Olympia, WA 98504-0600

Mr. Bernard Dean, Chief Clerk of the House of Representatives
Legislative Building 338B
PO Box 40600
Olympia, WA 98504-0600

RE:    2020 Housing Trust Fund Affordable Housing Cost Data Report (Due Dec. 1, 2020)

Dear Mr. Hendrickson and Mr. Dean:

This letter is provided in place of a 2020 report and serves as an update to the 2019 Affordable
Housing Cost Data Report by the Department of Commerce (“Commerce”). The Affordable
Housing Cost Data Report is due annually on Dec. 1, beginning in 2019.

The 2019-21 capital budget (Substitute House Bill 1102, Section 1029(4)) requires the
following:

   “(b) Beginning December 1, 2019, and continuing annually, the department must provide the
   legislature with a report of its final cost data for each project under this section. Such cost
   data must, at a minimum, include total development cost per unit for each project completed
   within the past year, descriptive statistics such as average and median per-unit costs,
   regional cost variation, and other costs that the department deems necessary to improve cost
   controls and enhance understanding of development costs. The department must coordinate
   with the housing finance commission to identify relevant development costs data and ensure
   that the measures are consistent across relevant agencies.”

Commerce and the Washington State Housing Finance Commission (Commission) administer
the two major programs that provide state resources to develop and preserve affordable housing
for low-income people in Washington. Commerce and the Commission collaborate on policies
and coordinate investments in affordable housing across the state. Many projects receive both a
Housing Trust Fund (HTF) monetary award and an allocation of tax credits from the
Commission’s Low-Income Tax Credit (LIHTC) program. The 2019 Affordable Housing Cost
Data Report was a collaborative joint report detailing the information required by the proviso and
recommended by the Joint Legislative Audit and Review Committee (JLARC) in their 2019
report “Analyzing Development Costs for Low-Income Housing.”

Commerce’s implementation process for the preparation of the annual reports includes:
   Coordinating with the Commission to ensure stakeholders are not asked for duplicative
     information
   Engaging stakeholders to determine how to define and implement the reporting
     requirements
   Publicizing the final requirement determinations to the Legislature, the public and
     affected stakeholders

More detail about the HTF implementation process is available in the inaugural 2019 Affordable
Housing Cost Data Report posted on Commerce’s website:
https://www.commerce.wa.gov/about-us/reports-publications/. Detailed guidance for HTF
recipients can be found here.

The proviso cited above (SHB 1102, Section 1029(4)) requires projects receiving funds from the
2019-21 biennial budget to report their certified final cost data to Commerce. Capital projects
take on average 12-24 months from the time they receive an award or direct appropriation to
construction completion. The certified final development costs are to be submitted to Commerce
within 90 days of a project’s construction completion and receipt of a certificate of occupancy.

As such, Commerce has not received final cost certifications from the projects funded under the
2019-21 biennial budget and does not have relevant data to report. Commerce expects to begin
receiving the required cost certification and data beginning in 2021 after the 2019-21 funded
projects complete their construction phase and are ready for occupancy. We plan to collect those
certified costs, analyze data, and provide the Legislature with an Affordable Housing Cost Data
Report in 2021.

Note that some projects that received LIHTC credits from the Commission and HTF funds in the
past (before the 2019-21 budget passage) may have provided cost data to meet LIHTC
requirements and may be included in the Commission’s 2020 report to the Legislature.

Please contact me by phone at (360) 725-4124 or email at corina.grigoras@commerce.wa.gov if
you have any questions regarding this report or need additional information.

Sincerely,




Corina Grigoras
Managing Director
Housing Finance Unit
Community Services and Housing Division


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