Report - Virginia Housing Trust Fund and Housing Partnership Revolving Fund Status (December 2020)
Summary
A report to the Governor, the Secretary of Commerce and Trade, the House Appropriations Committee and the Senate Finance Committee, submitted by the Department of Housing and Community Development (DHCD) in December 2020, on the Virginia Housing Trust Fund and the financial status of the Virginia Housing Partnership Revolving Fund. It states that § 36-150 of the Code of Virginia requires DHCD to report annually on the Trust Fund, and that the document includes two sections. Part II updates the financial status of the Revolving Fund and incorporates materials provided by an independent auditor, KPMG, LLP. 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, and that at least 80 percent of the Fund is to be used for loans.
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Report to the Governor, the Secretary of
Commerce and Trade, the House
Appropriations Committee, and the Senate
Finance Committee
The Virginia Housing Trust Fund
and the
Financial Status of the Virginia Housing Partnership Revolving
Fund
____________________________________________________
Submitted by:
The Department of Housing and Community Development
December 2020
1
The Virginia Housing Trust Fund and the Financial Status of the Virginia Housing Partnership
Revolving Fund
Introduction
During its 2013 regular session, the General Assembly amended provisions of Chapter 9 of Title
36 of the Code of Virginia to provide statutory direction for the administration of the Virginia
Housing Trust Fund (VHTF). Item 108 G of the 2012 Appropriations Act established the Trust
Fund and provided an initial allocation of $8 million to become available in FY 2014. The 2013
statutory changes modified certain reporting requirements that originally applied to the former
Virginia Housing Partnership Revolving Fund. Effective July 1, 2013, § 36-150 of the Code of
Virginia required the Department of Housing and Community Development (DHCD) to report
annually on the Trust Fund and such other matters the Department may deem appropriate,
including the status of the former Housing Partnership Revolving Fund. Designated recipients of
the report include the Governor, Secretary of Commerce and Trade and the Chairs of the House
Appropriations and the Senate Finance Committees.
In accordance with the requirement of § 36-150 of the Code of Virginia, DHCD presents the
following document, which includes two sections.1 Part I reviews recent activities associated
with the operation of the Housing Trust Fund during the period since the close of FY 2019 as
well as the impacts of funds allocated in 2018-2019. Part II updates information concerning the
financial status of the Virginia Housing Partnership Revolving Fund, presently administered by
the Virginia Housing Development Authority (VHDA). The latter section continues the format
used during previous years in accordance with the former statute and incorporates materials
provided by VHDA’s independent auditor, KPMG, LLP.
Part I: The Virginia Housing Trust Fund
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. This is an increase
from the 2018-2020 Biennium Budget, which allocated $11,000,000 in the first year and
$14,000,000 in the second year to support the activities of the VHTF.
At least 80 percent of the Fund is to be used for short, medium and long-term loans to reduce
the cost of homeownership and rental housing. Up to 20 percent of the Fund may be used to
provide grants for targeted efforts to reduce homelessness.
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
1
https://law.lis.virginia.gov/vacode/title36/chapter9/section36-150/
2
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.
Input Into the Structure of the Housing Trust Fund
Significant stakeholder input was gathered leading up to the development of the initial Virginia
Housing Trust Fund (VHTF) framework. Building on this foundation DHCD has met with
representatives of the Virginia Housing Alliance to discuss proposed changes for the VHTF and
received input from the Alliance’s membership. Input sessions were held in January 2020 to
gather feedback. Invitations were broadly extended to DHCD grantees, partners, and the
public, 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 were held in October 2019 where
attendees were asked for feedback specific to the Virginia Homeless Reduction Grants (funded
with Virginia Housing Trust Fund dollars).
3
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 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 proposed to
continue to allocate funds through the broad categories shown on the following table.
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 (December 2020), applications for the 2020-2021 VHTF competitive
loan pool and homeless reduction grants are being evaluated.
4
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.
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
5
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.
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
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
6
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.
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.
7
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.
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 supportive housing (PSH) units
o 140 PSH units
8
- 988 households were assisted through the homeless reduction and permanent supportive
housing assistance
o Rapid Re-Housing (RRH) – 417 households
o PSH – 571 households
9
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
10
Part II: Financial Status of the Virginia Housing Partnership Revolving Fund
The 1988 General Assembly established the Virginia Housing Partnership Revolving Fund to
expand the availability of affordable housing opportunities within the commonwealth. The
Virginia Housing Development Authority (VHDA) administered and managed the partnership
fund, subject to policies, procedures and programs established by the Department of Housing
and Community Development (DHCD). In accordance with a Memorandum of Understanding
between the two agencies, the Authority made underwriting recommendations and provided
legal and loan servicing assistance for loan and grant applications identified by the department.
Following 1989, the partnership fund provided grants and loans to a variety of housing
providers and to persons and families of low and moderate-income. While in active operation,
the partnership fund allocated over $163 million to housing proposals financing 17,626 units.
In 2003, as part of a series of actions taken to close a serious budget gap, Item 111 G of the
Appropriations Act directed the sale of the portfolio of outstanding loans and other assets of
the Partnership Fund to VHDA.2 A portion of the proceeds of the sale were paid to the General
Fund, while another portion was directed to the Commonwealth Priority Housing Fund (CPHF),
which in the near term provided a resource for addressing certain high priority housing needs.
Ultimately, following the enactment of additional legislation during 2005, the remaining
balance of the CPHF was transferred to a community development bank inaugurated by the
commonwealth where it continued to provide a source of mortgage loan funding. A remnant of
the Virginia Housing Partnership Revolving Fund remained on the books of VHDA where it was
subject to annual financial reporting.
With the passage of legislation establishing the Virginia Housing Trust Fund (VHTF) during the
2013 Session of the Virginia General Assembly, VHDA assumed the role of administrator for
VHTF, subject to program guidelines established by DHCD.3 For the purposes of the program
and VHDA’s financial reporting, the VHTF received the investments previously held in the
partnership fund. This effectively eliminated the partnership fund as a separate entry onto the
books of the Authority, where the VHTF replaced it.
Thus, this portion of the report, in accordance with the provisions of § 36-150 of the Code of
Virginia, addresses the 2019 financial status of the Virginia Housing Trust Fund and the former
Virginia Housing Partnership Revolving Fund. The unaudited status of the Virginia Housing Trust
Fund and the former Virginia Housing Partnership Revolving Fund is reflected as of August 31,
2020 (pages 13-15 attached below). This report addresses the net position, changes in net
position, revenues and expenses associated with the Virginia Housing Trust Fund. VHDA, as
administrator of a portion of the VHTF, provided the material included in this report. The
financial status report on the VHTF was included in the VHDA financial statements for the year
ended June 30, 2020. The public accounting firm KPMG audited these statements (pages 16-20
attached below). The Department of Housing and Community Development has received and
2
https://leg1.state.va.us/cgi-bin/legp504.exe?031+bud+21-111
3
Chapter 754, 2013 Acts of Assembly: https://lis.virginia.gov/cgi-bin/legp604.exe?131+ful+CHAP0754+pdf
11
reviewed a copy of these financial statements and concluded that they accurately reflect the
status of the VHTF.
12
VIRGINIA HOUSING TRUST FUND
Statement of Net Position
As of August 31, 2020
Unaudited
Assets:
Cash $ 80.73
Investments - Net 2,229,800.00
Mortgage Loans Receivable 14,580,626.51
Interest Receivalbe - Investments 161.29
Interest Receivalbe - Mortgages 27,894.87
Total Assets $ 16,838,563.40
Liabilities and Net Position:
VHTF P&I Liabilities $ 42,398.80
Due to DHCD 2,124,452.00
Yearly Management Fee Due to VHDA -
Total Liabilities 2,166,850.80
Net Position (previously held by VPRF 11,230.00
Net Position (held by VHFT) 14,660,482.60
Total Net Position 14,671,712.60
Total Liabilities and Net Position $ 16,838,563.40
VIRGINIA HOUSING TRUST FUND
Statement of Revenues, Expenses, and Changes in Net Position
For the Month Ended August 31, 2020 and Fiscal Year to Date
Unaudited
Revenues: Month Year To Date
MF Home Interest $ - $ -
Interest Income - Investments 196.60 435.98
Management Fee Contribution from VHDA 58,398.00 58,398.00
Total Revenues 58,594.60 58,833.98
Expenses
Fund Management Fee - -
Total Expenses - -
Excess of Revenues over Expenses $ 58,594.60 $ 58,833.98
Beginning Net Position (previously held by VPRF) - 11,230.00
Beginning Net Position - 14,010,900.50
VHT Fund Decrease 1 (4,627.88) (9,251.88)
Fund Contribution (Distribution) - 600,000.00
Ending Net Position $ 14,671,712.60
1 Note: The decrease in fund is due to Principal collected
on loans for August '20.
VIRGINIA HOUSING TRUST FUND
Change in Net Position
For the Month Ended August 31, 2020 and Fiscal Year to Date
Unaudited
Change in Net Position Month Year To Date
Beginning Balance $ - $ 11,230.00
Beginning Balance VHFT 14,010,900.50
Total Beginning Balance 14,022,130.50
Fund Increases:
Interest Income - Investments 196.60 435.98
Fund Contributions from VHDA - Management Fee 58,398.00 58,398.00
Fund Contributions - 600,000.00
Total Increase 58,594.60 658,833.98
Fund Decreases:
VHT Fund Decrease 4,627.88 9,251.88
Fund Distributions - -
Fund Management Fee - -
Total Decreases: 4,627.88 9,251.88
Net Change $ 53,966.72 649,582.10
Ending Net Position $ 14,671,712.60
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