Virginia Housing Trust Fund and Financial Status of the Housing Partnership Revolving Fund (November 2024)
Summary
Report dated November 2024 from the Department of Housing and Community Development (DHCD) to the Governor, the Secretary of Commerce and Trade, the House Appropriations Committee, and the Senate Finance and Appropriations Committee, on the Virginia Housing Trust Fund and the financial status of the Virginia Housing Partnership Revolving Fund. It states that § 36-150 of the Code of Virginia requires DHCD to report annually, and that the report includes two sections. Part I reviews the current allocation of funds for VHTF activities and the impacts of funds allocated in 2023-2024, and Part II updates the financial status of the Revolving Fund, presently administered by Virginia Housing, using materials from its independent auditor, KPMG, LLP. It states that Item 108 G of the 2012 Appropriations Act established the Trust Fund with an initial allocation of $8 million.
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“Virginia Housing Trust Fund and Financial Status of the Housing Partnership Revolving Fund (November 2024).”
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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
____________________________________________________
Submitted by:
The Department of Housing and Community Development
November 2024
1
The Virginia Housing Trust Fund and the Financial Status of the Virginia Housing Partnership
Revolving Fund
Introduction
During its 2013 regular session, the General Assembly amended provisions of Chapter 9 of Title
36 of the Code of Virginia to provide statutory direction for the administration of the Virginia
Housing Trust Fund (VHTF). Item 108 G of the 2012 Appropriations Act established the Trust
Fund and provided an initial allocation of $8 million to become available in FY 2014. The 2013
statutory changes modified certain reporting requirements that originally applied to the former
Virginia Housing Partnership Revolving Fund. Effective July 1, 2013, § 36-150 of the Code of
Virginia required the Department of Housing and Community Development (DHCD) to report
annually on the Trust Fund and such other matters the Department may deem appropriate,
including the status of the former Housing Partnership Revolving Fund. Designated recipients of
the report include the Governor, Secretary of Commerce and Trade and the Chairs of the House
Appropriations and the Senate Finance 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.1 Part I reviews the current allocation of funds
for VHTF activities and the impacts of funds allocated in 2023-2024, as well as changes to the
VHTF Program Design from the previous program year. 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, KPMG, LLP.
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.
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.
1
https://law.lis.virginia.gov/vacode/title36/chapter9/section36-150/
2
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. For more than two decades,
Virginia Housing has originated and serviced loans on a regular basis through its bond and
revenue programs, developed its own internal housing and lending program policies, and
serviced loans made with federal funds administered by DHCD. While 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 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, DHCD held regional in-person input sessions during
November and December 2023 to collect feedback from stakeholders in affordable housing,
homeless services, and community development. Attendees were queried about the design and
structure of the Affordable and Special Needs Housing (ASNH) and Homeless and Special Needs
Housing (HSNH) programs, which administer the VHTF Competitive Loans and Homeless
Reduction Grants (HRG), respectively.
Regional Public Input Sessions
Location When
Roanoke, VA November 29, 2023
Abingdon, VA November 30, 2023
Glen Allen, VA December 4, 2023
Woodbridge, VA December 6, 2023
Hampton Roads, VA December 11, 2023
Additional input sessions were held during January and February 2024 to gather feedback on
potential changes to the ASNH Competitive Application for FY 2025. Invitations were broadly
extended to DHCD grantees, partners, and the public, as well as posted on the department’s
website and in statewide news publications. More than 140 individuals participated in these
sessions.
3
ASNH Public Input Sessions
Location When
Arlington, VA January 30, 2024
Newport News, VA January 31, 2024
Charlottesville, VA February 1, 2024
Virtual February 7, 2024
Moreover, DHCD sought input from homeless services stakeholders across Virginia. During the
Virginia Governor’s Housing Conference in November 2023, DHCD held consultations with
individuals representing each of the Commonwealth’s 16 Continua of Care. Attendees were
asked for feedback specific to the VHTF HRG. In addition to collecting feedback from
stakeholders, DHCD collaborates with peer organizations to assure strategic use of VHTF
resources. 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.
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 allocate
VHTF resources into the categories listed in the table below. For Fiscal Year 2024-2025, the
agencies propose to continue to allocate funds between these broad categories.
FY 2025 Virginia Housing Trust Fund Allocation
Loans
Competitive Loan Pool $70,000,000
Grants
4
Homelessness Reduction Competitive
$14,000,000
Grant Pool
Predevelopment Grants (Permanent
$500,000
Supportive Housing)
Administration $3,000,000
Total $87,500,000
At the time of this report (December 2024), applications for the 2024-2025 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 ASNH
program at DHCD.
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 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 2024, application deadlines were October 6, 2023, and April 24, 2024, and
How-to-Apply workshops were conducted for each application cycle to provide guidance and
technical assistance to prospective applicant teams.
DHCD uses a competitive process to select projects for funding. In addition to VHTF, DHCD
administers funding from the federal program HOME Investment Partnerships (HOME) and the
National Housing Trust Fund (NHTF). VHTF, HOME, and NHTF award requests are capped at
$700,000 for affordable housing projects without permanent supportive housing units and
$900,000 for projects with 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.
5
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
initiative. Projects with qualified PSH units are eligible to apply for an additional l $200,000, for
a total request of $900,000 per source. In FY 2024, rental housing developments that included
supportive housing, such as those with a first leasing preference, or a percentage of units
offered first to individuals with intellectual or developmental disabilities and rental assistance
from the Department of Behavioral Health and Developmental Services (DBHDS), received a
scoring preference and were eligible for an increased VHTF award.
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 2025, 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 2025 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 Investment
Partnerships Program (HOME), the National Housing Trust Fund (NHTF), the Home Investment
Partnerships American Rescue Plan Program (HOME-ARP), and the Community Development
Block Grant (CDBG) program.
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
6
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 during the middle of Summer and applications are reviewed through early Fall. 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.
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 more than fifty years of experience in mortgage
7
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
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.
8
Summary of FY 2024 Utilization
FY 2024 Virginia Housing Trust Fund Allocation
Loans
Competitive Loan Pool $60,000,000
Grants
Homeless Reduction Grant Pool $12,900,000
Predevelopment Grants (Permanent
$500,000
Supportive Housing)
Administration $2,100,000
Total $75,000,000
FY 2024 Summary for Competitive Loan Pool
- Approximately $71.6 million was requested for the $60 million VHTF made available in the
Competitive Loan Pool; ASNH overall had $261.2 million requested with $170.4 million
available across all sources.
o 100 applications requested VHTF.
o 66 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
o $60 million invested to leverage more than $1.8 billion in other resources
o 4,634 affordable units will be created or preserved.
o 22 projects with Permanent Supportive Housing (PSH) units for a total of 159 PSH
units created.
- VHTF assisted in expanding affordable homeownership with 16 of the 80 awarded projects,
creating 86 for-sale units.
FY 2023 Summary for Homeless Reduction Grants (HRG)
- 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 2024
service numbers will be reported in next year’s report.
- FY 2023 is the last complete year of HRG implementation. During FY 2023, the following
households were served:
o 34 Rapid Rehousing (RRH) projects served 1,193 households.
9
o 9 Underserved Population Innovation (UPI) projects served 395 households.
o 25 PSH projects served 942 households.
o A total of 2,530 households experiencing homelessness were served during FY 2023
with HRG funding.
10
Housing Trust Fund Snapshot FY 2024 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 $12,900,000 $60,000,000 $75,000,000
Available ($2,100,000
Administration)
Project Caps None – based on need. $700,000 per affordable
housing project/ $900,000 for
projects providing PSH
11
Part II: Financial Status of the Virginia Housing Partnership Revolving Fund
The 1988 General Assembly established the Virginia Housing Partnership Revolving Fund to
expand the availability of affordable housing opportunities within the commonwealth. The
Virginia Housing Development Authority (VHDA) administered and managed the partnership
fund, subject to policies, procedures and programs established by the Department of Housing
and Community Development (DHCD). In accordance with a Memorandum of Understanding
between the two agencies, the Authority made underwriting recommendations and provided
legal and loan servicing assistance for loan and grant applications identified by the department.
Following 1989, the partnership fund provided grants and loans to a variety of housing
providers and to persons and families of low and moderate-income. While in active operation,
the partnership fund allocated over $163 million to housing proposals financing 17,626 units.
In 2003, as part of a series of actions taken to close a serious budget gap, Item 111 G of the
Appropriations Act directed the sale of the portfolio of outstanding loans and other assets of
the Partnership Fund to VHDA.2 A portion of the proceeds of the sale were paid to the General
Fund, while another portion was directed to the Commonwealth Priority Housing Fund (CPHF),
which in the near term provided a resource for addressing certain high priority housing needs.
Ultimately, following the enactment of additional legislation during 2005, the remaining
balance of the CPHF was transferred to a community development bank inaugurated by the
commonwealth where it continued to provide a source of mortgage loan funding. A remnant of
the Virginia Housing Partnership Revolving Fund remained on the books of VHDA where it was
subject to annual financial reporting.
With the passage of legislation establishing the Virginia Housing Trust Fund (VHTF) during the
2013 Session of the Virginia General Assembly, VHDA assumed the role of administrator for
VHTF, subject to program guidelines established by DHCD.3 For the purposes of the program
and VHDA’s financial reporting, the VHTF received the investments previously held in the
partnership fund. This effectively eliminated the partnership fund as a separate entry onto the
books of the Authority, where the VHTF replaced it.
Thus, this portion of the report, in accordance with the provisions of § 36-150 of the Code of
Virginia, addresses the 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 June 30,
2024 (pages 13-15 attached below). This report addresses the net position, changes in net
position, revenues and expenses associated with the Virginia Housing Trust Fund. 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, 2024. The public accounting firm KPMG audited these
statements (pages 16-20 attached below). The Department of Housing and Community
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
12
Development has received and reviewed a copy of these financial statements and concluded
that they accurately reflect the status of the VHTF.
13
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