Report - Virginia Housing Trust Fund Structure and Use Plan, FY 2021 Update
Summary
Virginia Housing Trust Fund Structure and Use Plan and Loan and Grant Fund Impacts, an FY 2021 update that states it complies with HB 29, Budget Item 105.E.2 and §36-142 E of the Code of Virginia. It states that the Biennium Budget for 2020-2022 allocated $55,000,000 for the first year and $30,000,000 for the second year to the Virginia Housing Trust Fund (VHTF), compared with $11,000,000 and $14,000,000 for the 2018-2020 Biennium Budget. It says the historic requirement that 80 percent of funds be used for loans was adjusted to 60 percent by the Board of Housing and Community Development, with the remaining 40 percent available for grants for targeted efforts to reduce homelessness. The Department of Housing and Community Development and Virginia Housing administer the fund.
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Virginia Housing Trust Fund
Structure and Use Plan and
Loan and Grant Fund Impacts
FY 2021 Update
The following report complies with the requirements as specified in: HB 29 (2020), Budget Item
105.E.2 and §36-142 E of the Code of Virginia.
As part of the plan required by § 36-142 E., Code of Virginia, the department shall also report
on the impact of the loans and grants awarded through the fund, including but not limited to:
(i) the number of affordable rental housing units repaired or newly constructed, (ii) the number
of individuals receiving down payments and/or closing assistance, (iii) the progress and
accomplishments in reducing homelessness achieved by the additional support provided
through the fund, and (iv) the progress in expanding permanent supportive housing options.
Purpose and Background
The Biennium Budget for 2020-2022 allocated $55,000,000 in the first year and $30,000,000 in
the second year to fund activities through the Virginia Housing Trust Fund (VHTF). This is an
increase from the 2018-2020 Biennium Budget, which allocated $11,000,000 for the first year
and $14,000,000 for the second year to support the activities of the VHTF.
Pursuant to provisions included in the Biennium Budget related to the COVID 19 pandemic,
certain prescribed budget allocation requirements are allowed to be temporarily adjusted to
meet the needs of the pandemic. As such, the historic requirement that 80 percent of funds be
used for short, medium, and long-term loans to reduce the cost of homeownership and rental
housing has been adjusted to 60 percent by the Board of Housing and Community
Development. The remaining 40 percent of the VHTF may be used to provide grants for
targeted efforts to reduce homelessness. This is an increase from 20 percent to address the
needs of the most vulnerable during the pandemic.
The entities charged with administering the VHTF—the Department of Housing and Community
Development (DHCD) and Virginia Housing (previously named Virginia Housing Development
Authority)—have extensive experience in implementing the activities needed to carry out the
provisions of the VHTF. Virginia Housing originates and services loans on a regular basis through
its bond and revenue programs. It also services loans made with HOME funds administered by
DHCD. Both agencies, which are overseen by boards subject to gubernatorial appointment,
have more than two decades of experience in developing housing policy and structuring and
implementing programmatic tools to operationalize those policies. DHCD and Virginia Housing
worked collaboratively to implement the provisions of the Virginia Housing Partnership
Revolving Fund, which was the predecessor to the VHTF. Both DHCD and Virginia Housing are
skilled at packaging affordable housing projects that include a range of funding sources in order
to leverage their resources. The budget language creating the VHTF identified leveraging as an
important component of its operation.
1
Structure of the Virginia Housing Trust Fund
Significant stakeholder input was gathered leading up to the development of the initial VHTF
framework. Building on this foundation, DHCD has met with representatives of the Virginia
Housing Alliance to discuss proposed changes for the VHTF and receives input from the
Alliance’s membership. Input sessions were held in January 2020 to gather feedback.
Invitations were broadly extended to DHCD grantees and partners as well as posted on the
department’s website.
Input Sessions
Where When
Roanoke January 6, 2020
Wytheville January 7, 2020
Richmond January 8, 2020
Prince William January 9, 2020
Hampton January 10, 2020
In addition, Virginia Homeless Services input sessions are held every other year and were last
held in October 2019. Attendees were asked for feedback specific to the Virginia Homeless
Reduction Grants (funded through the VHTF).
Virginia Homeless Services: Input Sessions
Where When
Newport News October 1, 2019
Richmond October 3, 2019
Roanoke October 7, 2019
Abingdon October 8, 2019
Manassas October 10, 2019
Parameters of the Housing Trust Fund
The 2012 Budget Bill (Special Session I) included language establishing the basic parameters for
the VHTF. These parameters included guidance on the allocation of funds for grants and loans,
a statement describing the types of activities eligible for grants or loans, and a list of the types
of organizations eligible to receive program funds. The budget direction also stressed the
importance of considering opportunities for leveraging and providing flexibility in loan
products.
To implement the provisions of the Appropriations Act, DHCD and Virginia Housing encourage a
variety of responses from eligible applicants so funds are deployed in a timely and strategic
manner and propose to continue to allocate funds through the broad categories shown on the
following table.
2
2020-21 Virginia Housing Trust Fund Allocation
Loans
Competitive Loan Pool $16,680,000
Grants
Rent and Mortgage Relief Program
$25,000,000
(RMRP)*
Homelessness Reduction Competitive
Grant Pool (including Petersburg Pilot $10,620,000
- Student Housing Stabilization)
Permanent Supportive Housing –
$500,000
Predevelopment Grants
Administration $2,200,000
Total $55,000,000
*RMRP designated funds will revert to the loan pool if funds are not needed to continue RMRP.
At the time of this report (November 1, 2020), applications for the 2020-2021 VHTF competitive
loan pool and homeless reduction grants are being received and will be evaluated in December.
Affordable Housing Loan Program
At least 80 percent (temporarily adjusted to 60 percent for addressing COVID impacts) of the
funds allocated to the VHTF must be used to provide loans that reduce the costs of affordable
rental housing and homeownership. Building on previous experience with the VHTF and the
Virginia Housing Partnership Fund, the housing agencies have determined Virginia Housing will
assist in providing the underwriting services needed to implement the key provisions of loans
made through this program. DHCD, with the participation of Virginia Housing, will structure the
design of the loan component with sufficient flexibility to maximize the long-term affordability
and sustainability of the housing projects receiving assistance. They will also include provisions
that encourage opportunities to include project participation from other public and private
funding sources.
The loan program will have two distinct components. A majority of the loans will be offered
through a competitive loan pool open to a variety of eligible projects accomplishing the VHTF’s
purposes.
3
Competitive Loan Pool
While the competitive loan pool will accommodate a wide array of possible projects, it will
acknowledge the direction of a number of gubernatorial and General Assembly initiatives as
well as the limited availability of funds by giving priority to demonstration projects that address
articulated state housing policies. Such policies include permanent supportive housing options
for persons with disabilities (including housing for people with serious mental illness and
funding that could aid the state response to the U.S. Department of Justice settlement) and
expanding permanent housing opportunities for persons experiencing homelessness. DHCD
uses a consolidated application process, which allows applicants to apply for four sources of
funding with one application. The Affordable and Special Needs Housing Consolidated
Application combines VHTF monies with Federal HOME and Federal Housing Trust Fund
monies. DHCD conducted How-to-Apply workshops for the Consolidated Application in the fall
of 2020 and set proposal due dates for December 4, 2020 and March 31, 2021.
Most of the funds in the Competitive Loan Pool will be used to provide low-interest loans that
are structured to meet the financing needs of specific projects. DHCD and Virginia Housing
anticipate that a majority of the loan pool will provide financial assistance for specific projects
that address the affordable rental housing needs of very low-income (household income at or
below 50 percent area median income or AMI) citizens, while giving priority to projects that
address critical housing needs mentioned in the previous paragraph as well as other areas of
need such as returning veterans. To assure the long-term viability of affordable rental projects,
the agencies will give priority consideration to projects that have an identified strategy for
financial sustainability, such as providing rental assistance to income-qualified tenants. In
keeping with the direction that the loans provide flexible financing, the agencies will set
repayment rates and terms for each individual loan from the VHTF. In addition, provisions of
the loan program will encourage applicants to pursue leveraged funds from other sources such
as the Low Income Housing Tax Credit (LIHTC) program and other federal and local housing
programs such as HOME and the Community Development Block Grant (CDBG) program.
DHCD will use a competitive process to select projects for funding. The maximum VHTF amount
available to a single project is capped at $700,000 for affordable housing projects and $900,000
for projects providing permanent supportive housing units. The criteria used to evaluate
projects for funding will include the following: (1) direct impact on one or more high priority
state housing policies; (2) leveraging; (3) affordability; (4) financial sustainability; (5) impact on
local housing needs; (6) feasibility, (7) readiness, (8) coordination of services and (9) the
applicant’s administrative capacity. DHCD will rank competitive project applications using a
standardized review with a 100-point scale. No project will be funded that scores below sixty
percent. DHCD will make funding offers to the highest scoring projects in descending order until
available funds are exhausted or all projects scoring above sixty percent have been funded.
Applicants may be asked to provide additional information to finalize funding offers. Property
funded through a VHTF loan will be subject to a lien intended to ensure its continued use as
targeted, affordable housing during a specified period. The outstanding balance on the loan will
be due in the event the affordability period is not met.
4
Homeless Reduction Grant Program
Up to 20 percent (temporarily adjusted for COVID to 40 percent) of the funds allocated to the
VHTF are permitted for the reduction of homelessness. The Homeless Reduction Grant funds
may be used for temporary rental assistance, not to exceed one year, housing stabilization
services in permanent supportive housing for the chronically homeless, and predevelopment
assistance for permanent supportive housing for the chronically homeless. In accordance with
budget language, priority consideration will be given to efforts to reduce the number of
homeless youth and families. The restriction on the amount of the VHTF available for grants
(and the one-year assistance limitation) suggests the VHTF could not serve as a significant, long-
term source of rental assistance. However, it could be used to close temporary gaps for
individuals, serving as a bridge for individuals transitioning into rental arrangements with
documented commitments of future rental assistance from other federal, state or local sources.
DHCD will select projects based on need, approach, local coordination, and capacity. As with
the loan program, projects will be selected for funding through a competitive application
process. Applicants may apply for the amount needed to administer the project, DHCD does not
anticipate entering into grant agreements for less than $50,000. The application period occurs
in annually in the Fall and this year in December. As with the loan program, DHCD will rank
competitive project applications using a standardized review. DHCD will make funding offers to
the highest scoring projects in descending order until available funds are exhausted or all
projects scoring above sixty percent have been funded. Applicants may be asked to provide
additional information to finalize funding offers.
Approximately $100,000 will be used to continue the Petersburg pilot project that was started
in 2016. The Petersburg Pilot Project works with high school students who are designated as
homeless and chronically absent to provide housing assistance and stability services. The goal is
to improve overall attendance and, as a result, educational outcomes.
Organizations Eligible for Virginia Housing Trust Fund Allocations
Several types of organizations are specified in the Code and guidelines as being eligible to
receive funding through the VHTF; local governments, local housing and redevelopment
authorities, regional or statewide organizations providing affordable housing and homeless
assistance/services to Virginia residents, and holding companies expressly created for owning
and operating affordable housing are deemed eligible to apply for VHTF monies. This would not
preclude eligible organizations from contracting with a variety of other parties to assist in
providing the housing and other resources required to satisfy the conditions of the grant or
loan product.
5
Collaboration across State Agencies
Over the past several years, DHCD has partnered with Virginia Housing and state agencies
within the Health and Human Resources Secretariat; including the Department of Behavioral
Health and Developmental Services, Department of Medical Assistance Services, Department
for Aging and Rehabilitative Services, Virginia Department of Health, Department of Social
Services and the Department of Veterans Services to coordinate efforts and leverage resources
to increase housing options for people with serious mental illness, people with intellectual and
other developmental disabilities, and people who are chronically homeless. These efforts focus
primarily on the development of additional permanent supportive housing (PSH) units. The
VHTF has been used to construct new or rehabilitate existing housing into PSH units. In
addition, the VHTF provides funding for pre-development activities of PSH units and to provide
supportive services for those experiencing homelessness. These efforts have been bolstered by
Governor Northam’s issuance of Executive Order 25, which calls for the creation of additional
PSH units.
Virginia Housing Trust Fund Administration and Management
Funding for the VHTF is included in DHCD’s budget. DHCD is to work in collaboration with
Virginia Housing to carry out the provisions of the VHTF. DHCD and Virginia Housing have a
proven record of accomplishment in jointly administering statewide housing initiatives. In the
late 1980s, the General Assembly passed legislation creating the Virginia Housing Partnership
Fund. It was created to improve the quality and affordability of housing throughout the
Commonwealth and was jointly administered by DHCD and Virginia Housing. DHCD set policy,
provided technical assistance to its housing development partners in responding to funding
opportunities, and selected projects for funding through a competitive application process.
Virginia Housing provided underwriting services and originated and serviced loans.
Based on the model of the Partnership Fund, DHCD and Virginia Housing jointly determine the
policy parameters of the Housing Trust Fund. Specific aspects of the VHTF implementation are
handled by the individual agencies in accordance with their designated areas of expertise and
responsibility.
With respect to the loan offerings, DHCD provides technical assistance during project
development. Virginia Housing, drawing on its forty-year experience in mortgage lending as the
state’s housing finance agency, provides project underwriting for the Affordable Housing Loan
Program and performs loan origination, servicing and monitoring for all program loans. DHCD,
which has more than thirty years’ experience in managing federal and state grant and loan
programs for housing and community development, as well as extensive involvement in
homeless programs, administers the process to solicit applications for both the Competitive
Loan Program and the Homeless Reduction Grant Program. Overall responsibility for the
ongoing administration and monitoring of grants made through the Homeless Reduction Grant
Program falls to DHCD.
6
Summary of Changes
The 2020-2021 Program Design has some features, which have evolved since the initial
framework. Notably, the Competitive Loan Pool, beginning with the 2016–17 program year, is
now a part of the previously described Affordable and Special Needs Housing Consolidated
Application Process. This has streamlined the overall application process making four funding
sources available through a single application. Additionally, as previously noted, overall
allocation amounts between grants and loans has been temporarily adjusted to address the
most urgent housing needs associated with the COVID 19 pandemic.
Evaluation and Analysis of Outcomes
The 2018-2020 Biennium Budget incorporated the requirement for reporting on the
performance of the Virginia Housing Trust Fund. Section 105.E.2 of the Budget requires that the
following outcomes are reported:
As part of the plan required by § 36-142 E., Code of Virginia, the department shall also report on
the impact of the loans and grants awarded through the fund, including but not limited to: (i) the
number of affordable rental housing units repaired or newly constructed, (ii) the number of
individuals receiving down payments and/or closing assistance, and (iii) the progress and
accomplishments in reducing homelessness achieved by the additional support provided through
the fund.
The number of individuals receiving down payment and/or closing assistance is not included in
the reporting as it has not been included in the program design for the VHTF. This is consistent
with the creation of the VHTF as the enabling legislation states the VHTF may provide funds to
be used for down payment and closing cost assistance for homebuyers. The agencies anticipate
that additional outcome measures will include housing units provided, with a special focus on
units provided to hard-to-serve target populations; services provided to support reducing
homelessness; and the degree to which other financial resources can be leveraged for housing.
Both public input and the perspectives of state agencies with concerns about housing for a
number of special needs categories expressed the desire to see resources directed toward
areas of need addressed through crosscutting state policies. Improved interagency
collaboration and communication has clearly indicated a pervasive lack of affordable housing
impedes progress on a range of state policies. The evaluation will examine the extent to which
the Trust Fund is able to facilitate progress in addressing areas of priority need.
7
Summary of 2019-20 Utilization
2019-2020 Virginia Housing Trust Fund Allocation
Loans
Competitive Loan Pool $11,200,000
Grants
Homeless Reduction Grant Pool $2,520,000
Administration $280,000
Total $14,000,000
2019-2020 Demand Summary
- Approximately $27,660,000 million requested for the $11.2 million in the Competitive Loan
Pool funds
o 37 applications
o 16 awarded
- Over $3.1 million requested for $2.34 million in Homeless Reduction Grants
o 37 applicants
o 28 awards offered
o $180,000 used to continue the Petersburg pilot project (not included in the $3.1
million requested)
Summary Points for FY 2019-20
- More than $11 million in VHTF resources invested in creating or preserving affordable
housing
o Many projects serving very low and extremely low income populations that are very
hard to serve, such as chronically homeless and persons with intellectual and
developmental disabilities
- Creation and Preservation of Affordable Housing units (Competitive Loan pool)
o $11.4 million invested to leverage $297 million in other resources
o 1,308 affordable units will be created or preserved
o Eight projects with permanent support housing (PSH) units
o 140 PSH units
- 988 households were assisted through the homeless reduction and permanent supportive
housing assistance
o RRH – 417 households
o PSH – 571 households
8
Appendix A: Code of Virginia – Creation and Management of the Fund & Budget Reporting
Requirements
§ 36-142. Creation and management of Fund.
A. There is hereby established in the state treasury a special permanent, non-reverting fund, to
be known as the "Virginia Housing Trust Fund." The Fund shall be established on the books of
the Comptroller and consist of sums appropriated to the Fund by the General Assembly, all
receipts by the Fund from loans made by it to housing sponsors and persons and families of low
and moderate income, all income from the investment of moneys held in the Fund, and any
other sums designated for deposit to the Fund from any source, public or private. The Fund
shall also consist of such other sums as may be made available to it and shall include federal
grants solicited and received for the specific purposes of the Fund and all interest and income
from investment of the Fund. Any sums remaining in the Fund, including interest thereon, at
the end of each fiscal year shall not revert to the general fund but shall remain in the Fund. All
moneys designated for the Fund shall be paid into the state treasury and credited to the Fund.
B. The Department shall:
1. Work in collaboration with the HDA to provide loan origination and servicing activities as
needed to carry out the purposes of the Fund. The costs of such services shall be considered an
eligible use of the Fund; and
2. Use, through HDA, at least 80 percent of the moneys from the Fund to provide flexible
financing for low-interest loans through eligible organizations. Such loans shall be structured to
maximize leveraging opportunities. All such funds shall be repaid to the credit of the Fund.
Loans may be provided for (i) affordable rental housing to include new construction,
rehabilitation, repair, or acquisition of housing to assist low or moderate income citizens,
including land and land improvements; (ii) down payment and closing cost assistance for
homebuyers; and (iii) short-term, medium-term, and long-term loans to reduce the cost of
homeownership and rental housing. Moneys required by the HDA to fund such loans and
perform loan closing and disbursement services shall be transferred from the Fund to the HDA.
The Department may use up to 20 percent of the moneys from the Fund to provide grants
through eligible organizations for targeted efforts to reduce homelessness, including (a)
temporary rental assistance, not to exceed one year; (b) housing stabilization services in
permanent supportive housing for homeless individuals and homeless families; (c) mortgage
foreclosure counseling targeted at localities with the highest incidence of foreclosure activity;
and (d) predevelopment assistance for permanent supportive housing and other long-term
housing options for the homeless.
C. The Fund shall be administered and managed by the Department as prescribed in this
chapter. In order to carry out the administration and management of the Fund, the Department
is granted the power to contract with or employ officers, employees, agents, advisers and
consultants, including, without limitation, attorneys, financial advisers, public accountants,
9
engineers and other technical advisers and, the provisions of any other law to the contrary
notwithstanding, to determine their duties and compensation without the approval of any
other agency or instrumentality. The Department may disburse from the Fund its reasonable
costs and expenses incurred in the administration and management of the Fund, including
reasonable fees and costs of the HDA.
D. For the purposes of this section, eligible organizations include (i) localities, (ii) local
government housing authorities, (iii) regional and statewide housing assistance organizations
that provide assistance to low and moderate income or low income citizens of Virginia, and (iv)
limited liability companies expressly created for the purpose of owning and operating
affordable housing.
E. In any year prior to the expenditure of any general funds appropriated for the Fund for the
next succeeding fiscal year, the Department, in conjunction with HDA, shall submit a plan
outlining the proposed uses of such funds to the General Assembly. The plan shall be provided
to the Chairmen of the House Committee on Appropriations and the Senate Committee on
Finance no later than November 1 of each year.
HB 29, Budget Item 105, Housing Assistance Services (Chapter 1283 of the 2020 Appropriation
Act).
E.1. Out of the amounts in this Item, $11,000,000 the first year and $14,000,000 the second
year from the general fund shall be deposited to the Virginia Housing Trust Fund, established
pursuant to § 36-142 et seq., Code of Virginia. Notwithstanding § 36-142, Code of Virginia,
when awarding grants through eligible organizations for targeted efforts to reduce
homelessness, priority consideration shall be given to efforts to reduce the number of homeless
youth and families.
2. As part of the plan required by § 36-142 E., Code of Virginia, the department shall also report
on the impact of the loans and grants awarded through the fund, including but not limited to:
(i) the number of affordable rental housing units repaired or newly constructed, (ii) the number
of individuals receiving down payments and/or closing assistance, and (iii) the progress and
accomplishments in reducing homelessness achieved by the additional support provided
through the fund.
10
Appendix B: Housing Trust Fund Snapshot 2020-2021 Allocation
Trust Fund Grants Loan Totals
Components
& Homelessness Rent and Competitive
Features Reduction Mortgage Relief Loan Pool
Program
Purpose Provide competitive The budget Through a competitive
grants to local/ language process, provide local/
regional partners mandates a set regional partners with
providing aside from the low-interest loans that
temporary (<1 year) Housing Trust Fund will assist in financing
rental assistance; of $12.5 million for housing projects that
housing the Rent and meet critical state
stabilization Mortgage Relief housing policies.
services in Program (RMRP) to Project underwriting will
permanent be used if needed tailor repayment rates
supportive housing; to continue the and terms to specific
and pre- program and for project needs. The
development for additional funds to highest priority will go to
long-term housing be available if those demonstrating
opportunities for needed. Therefore, financial sustain-ability
the homeless. $25 million in total and leveraging.
Require of the current Prioritize projects serving
coordination with fiscal year special needs
CoC. allocation to the populations—ID/DD,
Housing Trust Fund Severe mental illness,
is being reserved Permanent Supportive
to continue the Housing
RMRP if needed
with unused
balanced to be
reallocated to the
loan pool.
Funding $11,120,000 $25,000,000 $16,680,000 $55,000,000
Available ($2,200,000
(Includes Administration)
Petersburg Pilot)
Project Caps None – based on NA $700,000 per affordable
need housing project/
$900,000 for projects
Predevelopment providing PSH
Grants $100,000
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