Virginia Housing Trust Fund Structure and Use Plan and Loan and Grant Fund Impacts, FY 2023 Update
Summary
The Virginia Housing Trust Fund Structure and Use Plan and Loan and Grant Fund Impacts, FY 2023 Update, from the Department of Housing and Community Development (DHCD), prepared under § 36-142 E of the Code of Virginia. It states that the 2022-2024 Biennium Budget allocated $75,000,000 in the first year and $75,000,000 in the second year to the Virginia Housing Trust Fund. The 2022-23 allocation table lists a $60,000,000 Competitive Loan Pool, an $11,500,000 Homelessness Reduction Competitive Grant Pool, $500,000 for Permanent Supportive Housing predevelopment grants and $3,000,000 for administration, a total of $75,000,000. At the time of the report in October 2022, applications for the competitive loan pool and homeless reduction grants were being received.
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Virginia Housing Trust Fund
Structure and Use Plan and
Loan and Grant Fund Impacts
FY 2023 Update
The following report complies with the requirements as specified in Item 114 E.2 of Chapter 2
of the 2022 Acts of Assembly Special Session I and §36-142 E of the Code of Virginia.
The Department of Housing and Community Development (DHCD) must submit a plan outlining
the proposed uses of funds appropriated to the Virginia Housing Trust Fund (VHTF) required by
§ 36-142 E., Code of Virginia. DHCD must 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 per Item 114 E.2 of Chapter 2 of
the 2022 Acts of Assembly Special Session I.
Purpose and Background
The Biennium Budget for 2022-2024 (Special Session I, 2022) allocated $75,000,000 in the first
year and $75,000,000 in the second year to fund activities through the Virginia Housing Trust
Fund (VHTF). This is an increase from the 2020-2022 Biennium Budget, which allocated
$70,700,000 for the first year and $55,000,000 for the second year to support the activities of
the VHTF.
The entities charged with administering the VHTF—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.
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, input sessions were held in March 2022 to gather
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feedback. Invitations were broadly extended to DHCD grantees and partners as well as posted
on the department’s website. More than 200 individuals participated in these sessions.
In addition, Virginia Homeless Services input sessions are held every other year and were held
in October 2021. Attendees were asked for feedback specific to the Virginia Homeless
Reduction Grants (funded through the VHTF).
Virginia Homeless Services: Input Sessions
Where When
Eastern/Hampton Roads October 13, 2021
Northern/Valley October 14, 2021
Central/Southside October 19, 2021
Southwest/West Central October 20, 2021
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.
2022-23 Virginia Housing Trust Fund Allocation
Loans
Competitive Loan Pool $60,000,000
Grants
Homelessness Reduction Competitive
$11,500,000
Grant Pool
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Permanent Supportive Housing –
$500,000
Predevelopment Grants
Administration $3,000,000
Total $75,000,000
At the time of this report (October 2022), applications for the 2022-2023 VHTF competitive loan
pool and homeless reduction grants are being received and will be evaluated in November.
Please note that any funding not utilized under the Permanent Supportive Housing –
Predevelopment and the Homeless Reduction Grants will be allocated to the Competitive Loan
Pool administered the Affordable and Special Needs Housing program at DHCD.
Affordable Housing Loan Program
At least 80 percent of the funds allocated to the VHTF must be used to provide loans that
reduce the costs of affordable rental housing and homeownership per § 36-142 Code of
Virginia. 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 projects that reflect input from state agencies, the public and past
General Assembly and Gubernatorial initiatives. 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. 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 five sources of funding with one
application. The Affordable and Special Needs Housing Consolidated Application combines
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VHTF monies with Federal HOME and Federal Housing Trust Fund monies along with Housing
Innovations in Energy Efficiency investments. DHCD conducted How-to-Apply workshops for the
Consolidated Application in the fall of 2022 and set proposal due dates for October 31, 2022
and March 31, 2023 for Fiscal Year 2023.
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.
Homeless Reduction Grant Program
Up to 20 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.
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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.
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.
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.
Virginia Housing Trust Fund Administration and Management
Funding for the VHTF is included in DHCD’s budget. DHCD works 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
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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.
Evaluation and Analysis of Outcomes
The 2020-2022 Biennium Budget incorporated the requirement for reporting on the
performance of the Virginia Housing Trust Fund. Section 114.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, (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.
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
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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.
Summary of 2021-22 Utilization
2021-2022 Virginia Housing Trust Fund Allocation
Loans
Competitive Loan Pool $44,000,000
Grants
Homeless Reduction Grant Pool $8,300,000
Permanent Supportive Housing –Predevelopment $500,000
Grant
Administration $2,200,000
Total $55,000,000
2021-2022 Demand Summary
- Approximately $65.1 million requested for the $44 million in the Competitive Loan Pool
funds
o 93 applications
o 63 awarded
- Over $6.2 million requested for $8.3 million in Homeless Reduction Grants
o Balance to be awarded through the Competitive Loan Pool
o 36 applications
o 36 awards
o 24 Rapid Rehousing(RRH)/Underserved Population Innovation (UPI) projects and 12
Permanent Supporting Housing (PSH)
Summary Points for FY 2021-22
- More than $44 million in VHTF resources invested in creating or preserving affordable
housing (this included some unused homeless reduction grant funds)
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 $43.4 million invested (includes additional Homeless Reduction Grant unobligated
funds) to leverage $1.1 billion in other resources
o 3,874 affordable units will be created or preserved
o 32 projects with permanent supportive housing (PSH) units
o 243 PSH units
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- 1,197 households were assisted through the homeless reduction RHH/UPI grants and PSH
assistance
o RRH/UPI – 719 households
o PSH – 478 household
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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,
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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 30, Budget Item 114, Housing Assistance Services
E.1. Out of the amounts in this Item, $75,000,000 the first year and $75,000,000 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 and to expand permanent supportive
housing.
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, (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.
3. As a part of its plan for 2022 required by § 36-150, Code of Virginia, the department
shall include an assessment on the feasibility of using Virginia Housing Trust Fund
resources to acquire, stabilize and improve manufactured home parks as a source of
affordable housing for Virginians.
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Appendix B: Housing Trust Fund Snapshot 2022-2023 Allocation
Trust Fund Grants Loans Totals
Components &
Features Homelessness Competitive
Reduction Loan Pool
Purpose Provide competitive Through a competitive process,
grants to local/ regional provide local/ regional partners
partners providing with low-interest loans that will
temporary (<1 year) assist in financing housing
rental assistance; housing projects that meet critical state
stabilization services in housing policies.
permanent supportive Project underwriting will tailor
housing; and pre- repayment rates and terms to
development for long- specific project needs. The
term housing highest priority will go to those
opportunities for the demonstrating financial sustain-
homeless. Require ability and leveraging.
coordination with CoC. Prioritize projects serving
special needs populations—
ID/DD, Severe mental illness,
Permanent Supportive Housing
Funding Available $12,000,000 $75,000,000
($3,000,000
Includes $500,000 for $60,000,000 Administration)
PSH Pre-development
Grants
Project Caps None – based on need $700,000 per affordable
housing project/ $900,000 for
Predevelopment Grants projects providing PSH
$100,000
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