Virginia Housing Trust Fund Structure and Use Plan and Loan and Grant Fund Impacts, FY 2024 Update
Summary
Virginia Housing Trust Fund Structure and Use Plan and Loan and Grant Fund Impacts, FY 2024 Update, submitted by the Department of Housing and Community Development (DHCD) under Item E.2 of the 2022 Acts of Assembly Special Session I and § 36-142 E of the Code of Virginia. It states that approximately $59.5 million was requested in FY2023 for the $60 million made available in the Competitive Loan Pool, and that over $16.8 million was requested for $12.9 million in Homeless Reduction Grants. It states that during the last full year of implementation 1,886 households experiencing homelessness were served. It also states that the Biennium Budget for 2022-2024 allocated $75,000,000 in the first year and $75,000,000 in the second year to the fund.
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“Virginia Housing Trust Fund Structure and Use Plan and Loan and Grant Fund Impacts, FY 2024 Update.”
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Virginia Housing Trust Fund
Structure and Use Plan and
Loan and Grant Fund Impacts
FY 2024 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.
Executive Summary
The Virginia Housing Trust Fund (VHTF) creates and preserves affordable housing and reduces
homelessness in the Commonwealth. The two components of the VHTF are administered
separately.
The Competitive Loan Pool for the production and preservation of affordable rental and
homebuyer housing is administered through the Affordable and Special Needs Housing (ASNH)
Program.
The Virginia Housing Trust Fund grants, used to reduce homelessness, are allocated through the
Homeless Reduction Grants (HRG) administered through the Homeless and Special Needs
Housing (HSNH) Program.
FY2023 Summary for Competitive Loan Pool
- In FY2023, approximately $59.5 million was requested for the $60 million VHTF made
available in the Competitive Loan Pool. ASNH overall had $212.8 million requested with
$163 million available across all sources.
- Through the Competitive Loan Pool, VHTF assisted in expanding affordable homeownership
with 16 of the 80 awarded projects, creating 195 for-sale units.
FY2023 Summary for Homeless Reduction Grant (HRG) Pool
1
- In FY2023, over $16.8 million was requested for $12.9 million in Homeless Reduction
Grants. Contracts follow the calendar year from January 1 – December 31. Final FY 2023
service numbers will be reported in next year’s report.
- During the last full year of implementation, a total of 1,886 households experiencing
homelessness were served.
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 Virginia Housing Trust Fund (VHTF) is administered by two entities: DHCD and Virginia
Housing (previously named Virginia Housing Development Authority). DHCD has the primary
responsibility and experience in implementing the activities needed to carry out the provisions
of the VHTF. Virginia Housing services loans made with both state and federal funds
administered by DHCD. Although Virginia Housing is not a state agency, its board, like DHCD’s,
is subject to gubernatorial appointments
Further, 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 lending that leverages sources administered
by each other as well as outside funds, supporting the budget language used to create VHTF
which emphasized the leverage of funds for its operation.
Structure of the Virginia Housing Trust Fund
Building on a foundation of over a decade of stakeholder input towards VHTF structure and
uses, statewide input sessions were held in January and February 2023 to gather feedback.
Invitations were broadly extended to DHCD grantees and partners as well as posted on the
department’s website and in statewide news publications. More than 140 individuals
participated in these sessions.
Virtual Public Input Sessions
Parameters of the
Focus When
Housing Trust Fund
Affordable Housing January 30, 2023
The 2012 Budget Bill
Homeless Services January 31, 2023
(Special Session I)
Community Development February 1, 2023
included language
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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.
2023-2024 Virginia Housing Trust Fund Allocation
Loans
Competitive Loan Pool $60,000,000
Grants
Homelessness Reduction
$12,900,000
Competitive Grant Pool
Administration $2,100,000
Total $75,000,000
Affordable Housing Loan Program (Competitive Loan Pool)
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. DHCD makes this portion of the VHTF funding available through the Affordable and
Special Needs Housing (ASNH) program which offers developers of rental housing and for-sale
homes the opportunity to apply for multiple sources of state and federal funding through a
single application round opened twice each year. In FY 2023, application deadlines were
October 31, 2022 and April 4, 2023, and How To Apply workshops were conducted for each
application cycle to provide guidance and technical assistance to prospective applicant teams.
The ASNH program accommodates a wide variety of possible projects, and the program design
is updated annually to reflect a changing real estate market and the Commonwealth’s housing
priorities and initiatives. One such priority is the needed increase in available housing options
for Virginians with serious mental illness (SMI) to support the state response to the U.S.
Department of Justice Settlement Agreement and the Governor’s Right Help, Right Now
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initiative. In FY 2023, rental housing developments that included supportive housing, such as
those with units set-aside for individuals with SMI, received a scoring preference and were
eligible for a VHTF award increase of up to an additional $200,000, for a total award of
$900,000. Projects which did not elect to include qualified PSH units were eligible for awards of
up to $700,000 in VHTF.
The Competitive Loan Pool scores projects from 0 to 100 points in three primary categories:
- The proposed development’s ability to impact critical local housing needs (40 points),
- Proposed project readiness and feasibility (30 points), and
- The application team and developer’s capacity for completion and compliance (30
points).
Looking forward to FY 2024, DHCD anticipates that most of the funds in the Competitive Loan
Pool will continue to be used to provide low-interest loans that are structured to meet the
financing needs of rental housing development projects, and DHCD will continue to give scoring
preference to projects that address critical housing needs and policy priorities such as the
inclusion of permanent supportive housing first leasing preference units.
To assure the long-term viability of affordable rental projects, DHCD will continue to give
priority consideration to projects that have an identified strategy for financial sustainability,
such as providing project-based rental assistance to income-qualified tenants. In keeping with
the direction that the loans provide flexible financing, DHCD sets repayment rates and terms for
each individual loan from the VHTF, and for FY 2024 offers as low as 0% interest-only payments.
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 administered
by Virginia Housing and other federal and local housing programs such as HOME, National
Housing Trust Fund, HOME-ARP, and the Community Development Block Grant (CDBG)
program.
DHCD uses 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.
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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.
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.
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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
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 Changes
Since the completion of last year’s VHTF report, DHCD’s Office of Homeless and Special Needs
Housing (HSNH) has adjusted its application cycle to synchronize the program year with the
calendar year. As such, outcome data for HRG funding administered in FY 2023 is not presently
available and will be included in next year’s report. DHCD did not make any other substantive
changes to the VHTF program design during FY 2023.
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:
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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
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.
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Summary of FY 2023 Utilization
FY 2023 Virginia Housing Trust Fund Allocation
Loans
Competitive Loan Pool $60,000,000
Grants
Homeless Reduction Grant Pool $12,900,000
Administration $2,100,000
Total $75,000,000
FY 2023 Summary for Competitive Loan Pool
- Approximately $59.5 million was requested for the $60 million VHTF made available in the
Competitive Loan Pool; ASNH overall had $212.8 million requested with $163 million
available across all sources
o 88 applications requested VHTF
o 80 developments were awarded VHTF
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 $59.5 million invested to leverage $2.3 billion in other resources
o 5,780 affordable units will be created or preserved
o 42 projects with permanent supportive housing (PSH) units for a total of 608 PSH
units created
- VHTF assisted in expanding affordable homeownership with 16 of the 80 awarded projects,
creating 195 for-sale units
FY 2023 Summary for Homeless Reduction Grant (HRG) Pool
- Over $16.8 million requested for $12.9 million in Homeless Reduction Grants
o 86 applications
o 68 awards
- HRG contracts follow the calendar year from January 1 – December 31. Final FY 2023
service numbers will be reported in next year’s report
- FY 2022 is the last complete year of HRG implementation. During FY 2022, 46 projects
utilized $8.3 million to serve the following households:
o 14 Rapid Rehousing (RRH) Projects served 788 households
o 14 Underserved Population Innovation (UPI) projects served 393 households
o 18 PSH projects served 705 households
o A total of 1,886 households experiencing homelessness were served during FY 2022
with HRG funding
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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
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consultants, including, without limitation, attorneys, financial advisers, public accountants,
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 FY 2024 Allocation
Trust Fund Grants Loans Totals
Components &
Features Homelessness Competitive
Reduction Loan Pool
Purpose Provide competitive Through a competitive
grants to local/ regional process, provide local/
partners providing regional partners with low-
temporary (<1 year) interest loans that will assist
rental assistance; in financing housing projects
housing stabilization that meet critical state
services in permanent housing policies.
supportive housing; Project underwriting will
and pre-development tailor repayment rates and
for long-term housing terms to specific project
opportunities for the needs. The highest priority
homeless. Require will go to those
coordination with CoC. demonstrating financial
sustain-ability and
leveraging.
Prioritize projects serving
special needs populations—
ID/DD, Severe mental illness,
Permanent Supportive
Housing
Funding $12,900,000 $60,000,000 $75,000,000
Available ($2,100,000
Administration)
Project Caps None – based on need $700,000 per affordable
housing development/
$900,000 for developments
providing PSH
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