Virginia Housing Trust Fund and Financial Status of the Virginia Housing Partnership Revolving Fund
Summary
A December 2022 report from the Department of Housing and Community Development (DHCD) to the Governor, the Secretary of Commerce and Trade and the House Appropriations and Senate Finance and Appropriations Committees on the Virginia Housing Trust Fund and the Financial Status of the Virginia Housing Partnership Revolving Fund, with a Manufactured Home Park Addendum, under § 36-150 of the Code of Virginia. Part I 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. Part II updates the financial status of the Revolving Fund, administered by Virginia Housing, using materials from its independent auditor. The addendum addresses Budget Item E 3 on manufactured home parks.
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“Virginia Housing Trust Fund and Financial Status of the Virginia Housing Partnership Revolving Fund.”
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Report to the Governor, the Secretary of
Commerce and Trade, the House
Appropriations Committee, and the Senate
Finance and Appropriations Committee
The Virginia Housing Trust Fund
and the
Financial Status of the Virginia Housing Partnership Revolving
Fund
Included: Manufactured Home Park Addendum Pursuant to
Budget Item 114 E 3
____________________________________________________
Submitted by:
The Department of Housing and Community Development
December 2022
1
The Virginia Housing Trust Fund and the Financial Status of the Virginia Housing Partnership
Revolving Fund
Introduction
Section 36-150 of the Code of Virginia requires 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 and
Appropriations Committees.
In accordance with the requirement of § 36-150 of the Code of Virginia, DHCD presents the
following document, which includes two sections and an addendum.1 Part I reviews the current
allocation of funds for VHTF activities and the impacts of funds allocated in 2021-2022, as well
as changes to the VHTF Program Design for 2022-2023. Part II updates information concerning
the financial status of the Virginia Housing Partnership Revolving Fund, presently administered
by Virginia Housing. The latter section continues the format used during previous years in
accordance with the former statute and incorporates materials provided by Virginia Housing’s
independent auditor, Clifton Larson Allen. This year’s report includes also an addendum
related to Budget Item 114 E 3, which requires the following:
As 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…
The Manufactured Home Park addendum is included at the end of the report.
Part I: The Virginia Housing Trust Fund
Purpose and Background
The Biennium Budget for 2022-2024 (Special Session 1, 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 in the first year and $55,000,000 in the second year to support the activities of the
VHTF.
1
https://law.lis.virginia.gov/vacode/title36/chapter9/section36-150/
2
Per statute, 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 were 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 was adjusted to 60 percent by the Board of Housing and Community Development. The
remaining 40 percent of the VHTF was permitted to be used to provide grants for targeted
efforts to reduce homelessness. The Board returned the allocation to 80 percent loans and up
to 20 percent grants in 2021 because of the need to focus on the production of more affordable
housing.
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 VHTF
framework. Building on this foundation, input sessions were held in March 2022 to gather
feedback. Invitations were broadly extended to DHCD grantees, partners, and the public, as
well as posted on the department’s website. DHCD held virtual input sessions due to COVID-19
restrictions. Sessions were organized by region, but open to all. 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).
3
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
Permanent Supportive Housing –
$500,000
Predevelopment Grants
Administration $3,000,000
Total $75,000,000
At the time of this report (December 2022), applications for the 2022-2023 VHTF competitive
loan pool and homeless reduction grants are being evaluated. 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 (ASNH) program at DHCD.
4
Affordable Housing Loan Program
Per statute, 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. 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
as well as 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.
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
Per statute, 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.
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 $25,000. 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.
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
6
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.
Summary of 2021-22 Utilization
2021-2022 Virginia Housing Trust Fund Allocation
Loans
Competitive Loan Pool $44,000,000
Grants
Homeless Reduction Grant Pool $8,300,800
Permanent Supportive Housing – $500,000
Predevelopment Grants
Administration $2,200,000
Total $55,000,000
7
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 35 applications
o 35 awards
o 23 Rapid Rehousing (RRH)/Underserved Population Innovation (UPIP) 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
- 1,197 households were assisted through the homeless reduction RHH/UPI grants and PSH
assistance
o RRH/UPI – 719 households
o PSH – 478 households
8
Housing Trust Fund Snapshot 2022-2023 Allocation
Trust Fund Grants Loans Totals
Components
& Homelessness Competitive
Features Reduction Loan Pool
Purpose Provide competitive grants to Through a competitive process,
local/ regional partners providing provide local/ regional partners
temporary (<1 year) rental with low-interest loans that will
assistance; housing stabilization assist in financing housing
services in permanent supportive projects that meet critical state
housing; and pre-development housing policies.
for long-term housing Project underwriting will tailor
opportunities for the homeless. repayment rates and terms to
Require coordination with CoC. specific project needs. The
highest priority will go to those
demonstrating financial sustain-
ability and leveraging.
Prioritize projects serving special
needs populations—ID/DD,
Severe mental illness, Permanent
Supportive Housing
Funding $12,000,000 $60,000,0000,000 $75,000,000
Available ($3,000,000
(Includes $500,000 for PSH Pre-
Administration)
development Grants)
Project Caps None – based on need $700,000 per affordable
housing project/ $900,000
Predevelopment Grants for projects providing PSH
$100,000
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
9
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 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 September
30, 2022 (pages 11-13 attached below). This report addresses the net position, changes in net
position, revenues and expenses associated with the Virginia Housing Trust Fund. Virginia
Housing, 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 Virginia Housing financial
statements for the year ended June 30, 2022. The public accounting firm Clifton Larson Allen
audited these statements (pages 14-19 attached below). The Department of Housing and
Community Development has received and reviewed a copy of these financial statements and
concluded that they accurately reflect the status of the VHTF.
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
10
VIRGINIA HOUSING TRUST FUND
Statement of Net Position
As of September 30, 2022
Unaudited
Assets:
Cash $ 550.17
Investments - Net 1,774,600.00
Mortgage Loans Receivable 24,898,970.22
Interest Receivalbe - Investments 1,806.30
Interest Receivalbe - Mortgages 56,175.20
Total Assets $ 26,732,101.89
Liabilities and Net Position:
VHTF P&I Liabilities $ 87,673.90
Due to DHCD 1,646,202.00
Yearly Management Fee Due to VHDA 76,208.00
Total Liabilities 1,810,083.90
Net Position (previously held by VPRF) 11,230.00
Net Position (held by VHFT) 24,910,787.99
28010 - CPH/VPR Funds 12,064.83
28015 - VHT Funds/NHT Funds 24,906,645.79
28030 - Interest Income - Investments 3,307.37
Total Net Position 24,922,017.99
Total Liabilities and Net Position $ 26,732,101.89
11
VIRGINIA HOUSING TRUST FUND
Statement of Revenues, Expenses, and Changes in Net Position
For the Month Ended September 30, 2022 and Fiscal Year to Date
Unaudited
Revenues: Month Year To Date
MF Home Interest $ - $ -
Interest Income - Investments 2,394.96 3,307.37
Management Fee Contribution from VHDA - -
Total Revenues 2,394.96 3,307.37
Expenses
Fund Management Fee - -
Total Expenses - -
Excess of Revenues over Expenses $ 2,394.96 $ 3,307.37
Beginning Net Position (previously held by VPRF) - 11,230.00
Beginning Net Position - 24,301,644.56
VHT Fund Decrease 1 (4,725.24) (14,163.94)
Fund Contribution (Distribution) - 620,000.00
Ending Net Position $ 24,922,017.99
1
Note: The decrease in fund is due to Principal collected
on loans for September '22.
12
VIRGINIA HOUSING TRUST FUND
Change in Net Position
For the Month Ended September 30, 2022 and Fiscal Year to Date
Unaudited
Change in Net Position Month Year To Date
Beginning Balance $ - $ 11,230.00
Beginning Balance VHFT 24,301,644.56
Total Beginning Balance 24,312,874.56
Fund Increases:
Interest Income - Investments 2,394.96 3,307.37
Fund Contributions from VHDA - Management Fee - -
Fund Contributions - 620,000.00
Total Increase 2,394.96 623,307.37
Fund Decreases:
VHT Fund Decrease 1 4,725.24 14,163.94
Fund Distributions - -
Fund Management Fee - -
Total Decreases: 4,725.24 14,163.94
Net Change $ (2,330.28) 609,143.43
Ending Net Position $ 24,922,017.99
1
Note: The decrease in fund is due to Principal collected
on loans for September '22.
13
VIRGINIA HOUSING DEVELOPMENT AUTHORITY
(A Component Unit of the Commonwealth of Virginia)
Notes to Basic Financial Statements
June 30, 2022 and 2021
U.S. Department of Housing and Urban Development – Housing Counseling Assistance
Program
The Authority serves as an administrator for HUD-approved Housing Counseling Agencies in the
Commonwealth. The Housing Counseling Assistance Program provides counseling to consumers on
seeking, financing, maintaining, renting, or owning a home. The Authority did receive pass-through
grants of $643,458 and $1,124,309 during the years ended June 30, 2022 and 2021, respectively.
U.S. Department of the Treasury – Rent Relief Program
The Authority serves as a sub-recipient of U.S. Department of the Treasury funds from Virginia
Department of Housing and Community Development (DHCD) to support the Rental Relief Program.
The program provided financial assistance for up to 15 months of rental payments to property owners
for the benefit of their tenants. The program was funded by three funding sources, two federal and one
state: Coronavirus Relief Fund, Emergency Rental Assistance Program and the Housing Trust Fund.
During the year ended June 30, 2022, the Authority received and disbursed pass-through grants
totaling $49,404 and $137,447,069 for the Coronavirus Relief Fund and Emergency Rental Assistance
Program, respectively. The Authority also received and disbursed state pass-through grants from
Housing Trust Fund for $1,565,614. For its support of the program, the Authority earned $6,362,340
in administrative fees.
U.S. Department of the Treasury – Homeowner Assistance Fund
The Authority serves as recipient of U.S. Department of the Treasury funds to support the Homeowner
Assistance Fund. The program provided financial assistance to mitigate financial hardships associated
with the coronavirus pandemic by providing funds to eligible entities for the purpose of preventing
homeowner mortgage delinquencies, defaults, foreclosures, loss of utilities or home energy services,
and displacements of homeowners experiencing financial hardship after January 21, 2020.
During the year ended June 30, 2022, the Authority received and disbursed Homeowner Assistance
Fund grants of $31,634,971. For its support of the program, the Authority earned $8,894,118 in
administrative fees.
(t) Commonwealth Priority Housing Fund, Housing Trust Fund, & National Housing Trust Fund
The Commonwealth Priority Housing Fund (Fund), established by the 1988 Session of the Virginia
General Assembly, uses funds provided by the Commonwealth in that Session to make loans and
grants for a wide variety of housing initiatives. The Virginia Department of Housing and Community
Development (DHCD) develops the program guidelines and the Authority acts as administrator for the
Fund.
The Housing Trust Fund (Trust Fund), established by the 2013 Session of the Virginia General
Assembly, uses funds provided by the Commonwealth in that Session to make loans and grants for a
wide variety of housing initiatives. DHCD develops the program guidelines and the Authority acts as
administrator for the Trust Fund.
The National Housing Trust Fund (National Trust) is a federal fund established through the Housing
and Economic Recovery Act of 2008, it exclusively targets to help build, preserve, rehabilitate, and
operate housing that is affordable to people with the lowest incomes. DHCD administers the program
through the Affordable and Special Needs Housing application process.
In accordance with GASB Statement No. 84, Fiduciary Activities, the Commonwealth Priority
Housing Fund, Housing Trust Fund and National Housing Trust Fund are now accounted for as
14 (Continued)
VIRGINIA HOUSING DEVELOPMENT AUTHORITY
(A Component Unit of the Commonwealth of Virginia)
Notes to Basic Financial Statements
June 30, 2022 and 2021
fiduciary activities and disclosed on the Authority’s Statements of Fiduciary Net Position and
Statements of Changes in Fiduciary Net Position.
(u) Cash Equivalents
Cash equivalents consist of highly liquid short-term instruments with original maturities of three months
or less from the date of purchase and are recorded at amortized cost. Cash equivalents include
commercial paper, repurchase agreements, money-market securities, and other short-term
instruments.
(v) Rebatable Arbitrage
Rebatable arbitrage involves the investment of proceeds from the sale of tax-exempt debt in a taxable
investment that yields a higher rate than the rate of the debt. This results in investment income in
excess of interest costs. Federal law requires such income be rebated to the U.S. government if the
yield from these earnings exceeds the effective yield on the related tax-exempt debt issued. Arbitrage
must be calculated, reported and paid every five years or at maturity of the debt, whichever is earlier.
For financial reporting purposes the potential liability is calculated annually.
(w) Statements of Net Position
The assets presented in the Statements of Net Position represent the total of similar accounts of the
Authority’s various groups (see Note 2). Since the assets of certain of the groups are restricted by the
related debt resolutions, the total does not indicate that the combined assets are available in any
manner other than that provided for in the resolutions for the separate groups. When both restricted
and unrestricted resources are available for use, the Authority’s policy is to use restricted resources
first and thereafter, unrestricted resources as needed.
(x) Operating and Nonoperating Revenues and Expenses
The Authority’s Statements of Revenues, Expenses, and Changes in Net Position distinguish
operating revenues and expenses from nonoperating items. Operating revenues and expenses
generally arise from financing the acquisition, construction, rehabilitation, and ownership of housing
intended for occupancy and ownership, by families of low or moderate income. All revenues and
expenses not meeting this definition are reported as nonoperating revenues and expenses.
(y) Deferred Outflows of Resources and Deferred Inflows of Resources
The Authority reports deferred outflows of resources and deferred inflows of resources on its
Statements of Net Position. Deferred outflows of resources represent a consumption of net position
that applies to a future period(s) and is not recognized as an outflow of resources (expense) until the
applicable period. Deferred inflows of resources represent an acquisition of net position that applies to
a future period(s) and so will not be recognized as an inflow of resources (revenue) until a future
period. See Note 15 for further discussion regarding deferred outflows of resources and deferred
inflows of resources associated with the Authority’s other postemployment benefits plan.
(z) Deferred Fees and Points on Multifamily Loans
During the rental housing origination process, fees are collected during the loan closing process.
Origination type fees are reported as income in the current year collected however, the fees related to
loan pricing are treated as points and deferred over the life of the loan.
15 (Continued)
Schedule 5
VIRGINIA HOUSING DEVELOPMENT AUTHORITY
(A Component Unit of the Commonwealth of Virginia)
Combining Schedule of Fiduciary Net Position
Fiduciary Funds – Custodial Funds
June 30, 2022
Escrow Funds Commonwealth National
(GNMA, FNMA, Priority Housing Virginia Housing Housing Trust Total Custodial
FHLMC, Habitat) Fund Trust Fund Fund Funds
ASSETS
Current assets:
Cash and cash equivalents $ 93,736,163 3,642,444 754,128 817,025 98,949,760
Interest receivable - investments - 2,952 1,279 633 4,864
Interest receivable - mortgage and other loans - 1,046 53,593 7,469 62,108
Other assets - 65,149 - - 65,149
Total current assets 93,736,163 3,711,591 809,000 825,126 99,081,881
Noncurrent assets:
Mortgage and other loans receivable - 2,702,870 24,293,135 9,000,847 35,996,852
Investments - - - -
Total noncurrent assets - 2,702,870 24,293,135 9,000,847 35,996,852
Total assets 93,736,163 6,414,461 25,102,135 9,825,973 135,078,732
LIABILITIES
Other liabilities - 1,078,596 789,260 845,447 2,713,304
Total liabilities - 1,078,596 789,260 845,447 2,713,304
NET POSITION
Restricted for:
Other postemployment benefit plan other than pension
Funds held in escrow 93,736,163 - - - 93,736,163
Other governmental agency - 5,335,865 24,312,875 8,980,526 38,629,266
Total Net Position $ 93,736,163 5,335,865 24,312,875 8,980,526 132,365,429
See accompanying independent auditors' report.
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Schedule 6
VIRGINIA HOUSING DEVELOPMENT AUTHORITY
(A Component Unit of the Commonwealth of Virginia)
Combining Schedule of Changes in Fiduciary Net Position
Fiduciary Funds – Custodial Funds
Year Ended June 30, 2022
Escrow Funds Commonwealth
(GNMA, FNMA, Priority Housing Virgina Housing National Housing Total Custodial
FHLMC, Habitat) Fund Trust Fund Trust Fund Funds
ADDITIONS
Contribution:
Borrower payments $ 2,716,640,483 - - - 2,716,640,483
Employers - 22,091 86,619 32,859 141,569
Other governmental agency minus Employers - - 5,656,152 3,800,000 9,456,152
Total Contributions 2,716,640,483 22,091 5,742,771 3,832,859 2,726,238,204
Investment earnings:
Interest, dividends, and other - 19,308 3,139 1,604 24,051
Total investment earnings - 19,308 3,139 1,604 24,051
Total additions 2,716,640,483 41,399 5,745,910 3,834,463 2,726,262,255
DEDUCTIONS
Other governmental agency - 110,000 56,303 - 166,303
Disbursement of escrow funds 2,763,517,863 - - - 2,763,517,863
Administrative expense - 24,882 76,208 30,687 131,777
Total deductions 2,763,517,863 134,882 132,511 30,687 2,763,815,943
Net increase in fiduciary net position (46,877,380) (93,483) 5,613,399 3,803,776 (37,553,688)
Net position - beginning 140,613,543 5,429,348 18,699,476 5,176,750 169,919,117
Net position - ending $ 93,736,163 5,335,865 24,312,875 8,980,526 132,365,429
See accompanying independent auditors' report.
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Schedule 9
VIRGINIA HOUSING DEVELOPMENT AUTHORITY
(A Component Unit of the Commonwealth of Virginia)
Combining Schedule of Fiduciary Net Position
Fiduciary Funds – Custodial Funds
June 30, 2021
Escrow Funds Commonwealth
(GNMA, FNMA, Priority Housing Virginia Housing National Housing Total Custodial
FHLMC, Habitat) Fund Trust Fund Trust Fund Funds
ASSETS
Current assets:
Cash and cash equivalents $ 140,613,543 6,111,059 2,000,179 721,496 149,446,277
Interest receivable - investments - 124 54 16 194
Interest receivable - mortgage and other loans - 1,046 44,303 6,375 51,724
Other assets - 65,267 - - 65,267
Total current assets 140,613,543 6,177,496 2,044,536 727,887 149,563,462
Noncurrent assets:
Mortgage and other loans receivable - 2,254,370 18,693,285 5,200,847 26,148,502
Total noncurrent assets - 2,254,370 18,693,285 5,200,847 26,148,502
Total assets 140,613,543 8,431,866 20,737,821 5,928,734 175,711,964
LIABILITIES
Other liabilities - 3,002,518 2,038,345 751,984 5,792,847
Total liabilities - 3,002,518 2,038,345 751,984 5,792,847
NET POSITION
Restricted for:
Funds held in escrow 140,613,543 - - - 140,613,543
Other governmental agency - 5,429,348 18,699,476 5,176,750 29,305,574
Total Net Position $ 140,613,543 5,429,348 18,699,476 5,176,750 169,919,117
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Schedule 10
VIRGINIA HOUSING DEVELOPMENT AUTHORITY
(A Component Unit of the Commonwealth of Virginia)
Combining Schedule of Changes in Fiduciary Net Position
Fiduciary Funds – Custodial Funds
Year Ended June 30, 2021
Escrow Funds Commonwealth
(GNMA, FNMA, Priority Housing Virgina Housing National Housing Total Custodial
FHLMC, Habitat) Fund Trust Fund Trust Fund Funds
ADDITIONS
Contribution:
Borrower payments $ 3,634,520,105 - - - 3,634,520,105
Employers - 22,320 58,398 18,320 99,038
Other governmental agency - - 4,759,150 2,775,000 7,534,150
Total Contributions 3,634,520,105 22,320 4,817,548 2,793,320 3,642,153,293
Investment earnings:
Interest, dividends, and other - 16,702 2,160 381 19,243
Total investment earnings - 16,702 2,160 381 19,243
Total additions 3,634,520,105 39,022 4,819,708 2,793,701 3,642,172,536
DEDUCTIONS
Other governmental agency - 1,262,488 55,743 - 1,318,231
Disbursement of escrow funds 3,635,579,901 - - - 3,635,579,901
Administrative expense - 22,091 86,619 32,859 141,569
Total deductions 3,635,579,901 1,284,579 142,362 32,859 3,637,039,701
Net increase in fiduciary net position (1,059,796) (1,245,557) 4,677,346 2,760,842 5,132,835
Net position - beginning 141,673,339 6,674,905 14,022,130 2,415,908 164,786,282
Net position - ending $ 140,613,543 5,429,348 18,699,476 5,176,750 169,919,117
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Feasibility Assessment – Use of the Virginia Housing Trust to support
activities related to Manufactured Home Parks
Submitted pursuant to Budget Item 114 E 3
Executive Summary
Manufactured home parks have increasingly been identified as a naturally occurring form of
affordable and workforce housing. The current enabling legislation for the Virginia Housing
Trust Fund permits the use of the Fund to support activities related to acquiring, stabilizing and
improving manufactured home parks. While such activities are permitted in the legislation,
associated federal funding sources, current program guidelines, and the unique
ownership/rental structures of manufactured home parks create an environment where the
feasibility of using the Fund for these purposes may be constrained.
Background
In 2022, the Virginia General Assembly passed HB30 Chapter 2 Item 114 E 3 which states:
As 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.
The Virginia Housing Trust Fund is a nonreverting state general fund resource created under
Title 36 of the Code of Virginia to support the creation and preservation of affordable and
attainable housing in Virginia. Three key definitions within Title 36 are relevant to determining
the feasibility of the Fund to acquire, stabilize, and improve manufactured home parks. These
definitions are included below:
"Housing development" or "housing project" means any work or undertaking, whether new
construction or rehabilitation, which is designed and financed pursuant to the provisions of
this chapter for the primary purpose of providing affordable sanitary, decent and safe
dwelling accommodations for persons and families of low or moderate income in need of
housing; such work or undertaking may include any buildings, land, equipment, facilities, or
other real or personal properties which are necessary, convenient, or desirable
appurtenances, including but not limited to streets, sewers, utilities, parks, site preparation,
landscaping, and such offices, and other nonhousing facilities incidental to such development
or project such as administrative, community, health, educational and recreational facilities
as the Department of Housing and Community Development determines to be necessary.
"Low and moderate income" shall be defined in the program guidelines developed by the
Department of Housing and Community Development.
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"Housing sponsor" means individuals, joint ventures, partnerships, limited partnerships,
public bodies, trusts, firms, associations, or other legal entities or any combination thereof,
corporations, cooperatives and condominiums, approved by the Department of Housing and
Community Development as qualified either to own, construct, acquire, rehabilitate, operate,
manage or maintain a housing development, whether nonprofit or organized for limited
profit subject to the regulatory powers of the Department of Housing and Community
Development and other terms and conditions set forth in this chapter.
"Residential housing" means a specific work or improvement within this Commonwealth,
whether multi-family residential housing or single-family residential housing undertaken
primarily to provide dwelling accommodations, including the acquisition, construction,
rehabilitation, preservation or improvement of land, buildings and improvements thereto, for
residential housing, and such other nonhousing facilities as may be incidental, related, or
appurtenant thereto.
Pursuant to Title 36 Section 146, of the Code, the Department of Housing and Community
Development is authorized to make low interest loans to housing sponsors to support the
development of “residential housing” via defined “housing projects.” Collectively, it appears the
Code permits using Virginia Housing Trust Fund resources to acquire, stabilize and improve
manufactured home parks as a source of affordable housing for Virginians.
Since its creation, the Fund has grown each year from appropriations as low as $4 million to $75
million for the current biennium budget (2022-2024). In its initial iterations, the Fund supported
foreclosure prevention, low interest loans for affordable single and multifamily housing, and
grants to support various homeless reduction efforts. Currently, the Fund is used for low
interest loans for single and multifamily housing and grants to support homeless reduction
efforts.
The Fund has been utilized according to guidelines developed by the Department. Currently,
competitive loans from the Fund are awarded through the Department’s Affordable and Special
Needs (ASNH) Consolidated Application process. This process assesses projects applying for
funding and considers their viability for a number of different funding opportunities. Homeless
reductions grants are distributed through guidelines for the Virginia Homeless Solutions
Program.
As of the time of this report, the Fund has not provided resources specifically to acquire,
stabilize, and improve manufactured home parks, however, the Fund has supported larger
projects that include manufactured home park components. Current ASNH program guidelines
do not permit acquisition-only as an eligible use of any funds administered through the
program. The substantial rehabilitation of a newly acquired property is allowed when all units
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are under common ownership and the investment of funds can be guaranteed by a restrictive
covenant or deed of trust recorded on the property for a required period of affordability.
This difference between what the Fund permits and what is feasible, i.e. what is a reasonable
and practical way to administer funding and guarantee the investment of funds, is detailed
further in the report. The unique nature of many manufactured home parks where land and
infrastructure such as septic systems and roadways are owned by a single entity but individual
homes are owned by independent households create a situation where ensuring long-term
affordability is more difficult to execute because enforcement mechanisms are designed for
either single-family homeownership or single-owner rental buildings, not a combination of the
two under the same housing project. Further, the current maximum investment of Virginia
Housing Trust Fund per project is $700,000, which is relatively low in comparison to the full cost
of acquisition of a manufactured home park and substantial renovation of all units of housing
therein.
Framework in Virginia
Since the 1970’s, manufactured homes have been built as an affordable housing option for
many households. The American Housing Survey reports that an average purchase price for a
manufactured home in the Central Virginia region is $26,000, although in the last few years
manufactured home park sales have experienced high and varied increases. Although
manufactured homes make up more than five percent of the housing stock in Virginia and are
located in urban, rural, and suburban areas across the state (there are 66 manufactured home
parks solely in Central Virginia), manufactured home parks in urban areas have been in decline
for decades. According to a 2016 report “An Assessment of Central Virginia’s Manufactured
Housing Communities”, the median monthly housing cost for manufactured homes is $602
compared to the average housing cost in the region of $1,003. Additionally, many
manufactured homeowners pay a monthly lot rent (anywhere from $50-$400 per month), and
the cost of utilities may or may not be included in that rent.
Due to rising land costs, construction costs, and other local factors, new manufactured home
parks are not being constructed, and older parks are being replaced. Many of Virginia’s park
owners are selling because of increased maintenance costs due to aging infrastructure, rising
land costs, high sale prices, and generational park owners who are unable to maintain their
parks. In 2022, the selling price of manufactured home parks went anywhere from $100,000 to
upwards of $17 million. The purpose of this study is to assess the existing landscape of
manufactured housing and to determine the extent to which it is feasible to use the Virginia
Housing Trust to support manufactured home parks as affordable housing in Virginia.
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In the past ten years, several manufactured home parks have been acquired and/or maintained
by a public or nonprofit entity, rather than the traditional single manufactured home park
owner structure. In 2020, project:HOMES, a central Virginia non-profit organization, purchased
the Bermuda Estates Manufactured Home Community located in North Chesterfield, which was
made possible through several foundational grants. As the owner and operator of the
community, project:HOMES has made infrastructure improvements, added amenities, and
created more homeownership opportunities. Southwood Mobile Home Park is a 341-unit
planned development in Albemarle County; with 1,500 residents, the goal for this development
is to provide additional affordable housing units without displacing residents. Southwood’s
partners include Habitat for Greater Charlottesville, Virginia Housing, and DHCD. Catholics for
Housing, Inc. (CFH), a 501c3 non-profit organization, purchased the East End Mobile Home Park
in 2018 with the support of Virginia Housing to undergo improvements and establish
permanent financing. Increasingly, interested localities have inquired about the state-wide
Community Development Block Grant (CDBG) funding available to construct new manufactured
homes or renovate aged homes.
Although the US Department of Housing and Urban Development (HUD) regulates safety and
construction standards for newly constructed manufactured homes, there is limited federal
financing assistance available to homeowners when purchasing manufactured homes.
Additionally, land use regulations, property assessments, and taxation structure are generally
left up to individual localities, which can cause local variation in the use and feasibility of
manufactured home construction.
Challenges and Opportunities
A consensus from assessing the roles of state agencies, non-profit organizations, and private
developers operating in the manufactured housing arena is that there is a definite need for the
preservation of existing manufactured home parks, and an increase in homeownership
opportunities for manufactured homes. Through this study, several avenues were identified as
potential opportunities to support and expand affordable housing through manufactured home
parks. The need for capital was identified as a high priority need: capital for acquisition,
construction and renovation, and financing.
Acquisition
The greatest hindrance to acquisition is the need for capital; funding through private sources is
highly competitive and often creates millions of dollars in funding gaps. As recently as 2020 a
state authority assisted with acquisition of a manufactured home community in central Virginia.
This pilot project allowed the agency to provide technical assistance to the community owner,
the manufacturer, and broker a predevelopment loan to the community owner, created
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homeownership opportunities for new homeowners, and financed the construction of 17 new
units. It was noted that future acquisition of parks by nonprofits or public entities may be
extremely challenging due to high costs of park acquisition in the private market.
Construction
The average cost of constructing a new manufactured home is $55-75 per square foot. The
construction of any new manufactured home will need to meet the current housing design
standards. In addition to predevelopment project planning and financing, the rising cost of
supplies and contractors creates the need for more capital.
One Virginia non-profit is currently in the process of receiving their certification to construct
their own manufactured homes. This opportunity could allow the construction and sale of
manufactured homes to be more streamlined and efficient.
Manufactured Home and Park Repairs
Another challenge to the preservation of manufactured homes as affordable housing is the lack
of financial assistance available to repair or renovate manufactured homes. Most manufactured
homes built in the 60’s and 70’s are creating the need for significant repairs that may be
burdensome to park owners. The renovation of an older manufactured home can be anywhere
from $10,000 to $30,000; bringing new water, sewer, or road improvements to a park can be
$20,000 to $40,000.
Additional resources may be needed to bring upgrades to an existing home, such as energy-
efficient lighting, new heating/cooling systems, better insulation, and replacing failing septic
systems with public water and sewer. Resources for repairs would be beneficial to homeowners
as well as the community park owners.
Feasibility of Preserving Manufactured Home Parks as Affordable Housing Using the Virginia
Housing Trust Fund
While resources from the Virginia Housing Trust Fund may be used to acquire, stabilize, or
improve manufactured home parks, the program’s current guidelines and structure may create
some difficulties when implementing these processes. Funds used solely for the purpose of
acquisition are outside of the purview of DHCD’s programs and would likely consume a large
portion of funds available, and that is before any construction, renovation, or preservation of
affordable housing is provided as a viable option. Additionally, the Virginia Housing Trust Fund
allows for a variety of leverage options (including a mix of local and private sources) to be used
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in a project; the federal resources included in the ASNH application process may not allow for
such flexibility.
One important area of consideration in DHCD’s existing program structure is the requirement of
an affordability period (the Affordable and Special Needs Housing Program is up to 15 years for
single family homes and a minimum of 30 years for rental properties, CDBG is 10 years).
However, the needs of manufactured home parks vary greatly as well as the ownership
structure vary by park, so it would be difficult to measure affordability and to ensure those
homes remain affordable. The ASNH program also requires a minimum of three major systems
to be repaired or renovated in order to qualify for any funding, but the ASNH program
guidelines do not currently differentiate the components of a manufactured home park (i.e.
infrastructure needs of the park, HVAC, roof repairs, windows, doors, lot rents, etc.). It is
important to keep in mind that although the ASNH program provides the most flexibility for the
use of funds to support the acquisition, stabilization, and improvement of manufactured home
parks, there are limitations to what the Fund can support within each of these categories.
Conclusion
Manufactured home parks have become increasingly discussed as an affordable housing option
in Virginia and nationwide, particularly, as an existing option that should be preserved.
Manufactured home parks have seen significant interest from investors and many aging parks
are encountering significant challenges in raising capital to maintain their existing facilities.
With all this in mind discussions are ongoing regarding different ways to maintain existing parks
as a safe and affordable option for their residents. In examining 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”, the following conclusions can be made:
- The enabling legislation for the Virginia Housing Trust Fund permits the use of the Fund
to support acquisitions, stabilization, and improvement of manufactured home parks
- The Virginia Housing Trust Fund is a flexible financing option which provides unique
leveraging benefits for other federal and state resources when constructing single and
multifamily housing
- The ASNH program could support the stabilization and improvement of manufactured
home parks; only certain acquisition activities can be supported through ASNH
- Current state and federal guidelines and program rules associated with ASNH funding,
as well as mechanisms utilized to ensure long-term affordability require a site to have
either rental or owner-occupied housing. Most manufactured home parks include both a
rental (lot lease) and ownership (home) structure.
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- When examining the feasibility of preserving manufactured home parks as affordable
housing, defining the scope of “acquiring, stabilizing, and improving” is necessary in
order to determine the best use of resources within DHCD’s programs
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