Rural Housing Blog

Greystone Leads Effort to Upgrade Rural Housing

Greystone Leads Effort to Upgrade Rural Housing for the Poor Shortages of affordable, low-income housing are reaching crisis proportions in some parts of the U.S. Plantation Apartments in Richmond Hill, Ga. New York finance firm Greystone & Co. has teamed up with federal and state agencies in Georgia to preserve 1,310 low-income rental apartments built in the 1970s and 1980s by the Agriculture Department for rural households.   New York housing-finance firm Greystone & Co. has teamed up with federal and state agencies in a $168.6 million effort to preserve and recapitalize 1,310 low-income rental apartments in Georgia. The units, developed and managed by Atlanta-based Hallmark Cos., were built in the 1970s and 1980s through a U.S. Agriculture Department program targeting rural households. Tenants, who are required to meet income-eligibility requirements, pay about $400 to $500 a month in rent. The portfolio includes 26 properties in 17 counties. Like tens of thousands of other properties developed under federal housing programs, the Georgia homes are badly in need of repair. The deal, known as a recapitalization, provided funds for upgrades worth an average of $37,000 per unit, including such improvements as new appliances, counters, cabinets and electrical systems. The recapitalization also involved a sale of the properties and a refinancing of the debt on the portfolio. Through those actions, enough surplus capital is being raised to pay for the improvements. “Unless you do something creative, they really have no chance of being preserved,” said Tanya Eastwood, president of Greystone’s affordable-housing redevelopment unit. The sellers of the properties were the limited partners who decades ago provided equity financing to Hallmark for their development, mostly in exchange for tax credits. The new owner is a venture of Hallmark and new equity investors who also are getting returns primarily in the form of low-income-housing tax credits. The units are being preserved at a time when shortages of affordable and low-income housing are reaching crisis proportions in some parts of the country. According to a recent report by the National Low Income Housing Coalition, the U.S. has a shortage of more than 7.2 million units for “extremely low income” renter households. Hundreds of thousands of units are at risk of becoming unusable, housing advocates say. “There’s obviously a great need for more affordable housing, but we also can’t afford to lose any of the existing,” Ms. Eastwood said. The program in Georgia “allows us to prevent the crisis from getting worse.” Much of the financing for the Georgia effort is coming from a combination of government housing and low-income assistance programs including the sale of $54.3 million in “private activity” bonds. The tax exemption on those bonds wound up on the chopping block during the debate over tax overhaul last year, but housing advocates and others were able to save them. Meantime, about $28 million of debt financing is being provided through programs run by the Rural Housing Service, an arm of the Agriculture Department that dates back to the Farmers Home Administration, which has its roots in the Great Depression. The Georgia units now being recapitalized were developed under the Section 515 rural-housing program, which was launched in 1962 originally to create low-rent housing for people over 62 years old. Today, Section 515 properties are available for low-income families and individuals as well as people with disabilities, according to an Agriculture Department spokeswoman. Since the program launched, 18,426 properties with 563,936 units were created. As of March 31, there were 13,357 properties with 407,826 units in the department’s portfolio, the spokeswoman said. No new properties were created in 2017, and no new properties are scheduled to be created this year, she said. Founded in 1988, Greystone is a real-estate lending, investment and advisory firm that is involved with a wide range of housing. The company originated $9.5 billion in commercial real-estate loans in 2017 and has a loan-servicing portfolio of $30 billion. Greystone has done about 20 deals that have recapitalized and upgraded more than 12,000 low-income-housing units with the same basic structure as the Georgia deal. “We kind of built a factory,” said Ms. Eastwood. Hallmark is an owner and manager of about 11,000 affordable-housing units, mostly in the southeast U.S. Write to Peter Grant at peter.grant@wsj.com Appeared in the April 18, 2018, print edition as ‘Greystone to Finance Low-Income Housing.’
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Neighbors build each other’s homes in Wasco

ABOVE: Edgar and Naomi Bermudez shuffle rock that will be used for the foundation of their new home in Wasco.
Dozens of families in Wasco are building new homes for each other, taking part in a program funded through the U.S. Department of Agriculture and guided by the nonprofit, Self Help Enterprises. The new homeowners don’t need a dollar for a down payment. Instead, they are required to do 40 hours of work on the home every week. The development in Wasco consists of 33 homes, with 10-12 in each of three waves.
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Self-Help Homes groundbreaking in Provo, UT

Construction begins for seven families in Provo, Utah. Project supported by Self-Help Homes. https://www.youtube.com/watch?v=VbrirdMxOMA FULL STORY: Seven families in Southern Utah are anxious to get started on what will be their new homes. A groundbreaking ceremony in LaVerkin last Wednesday turned over shovels of dirt, that will soon become a foundation. Four of the new homes will be built in LaVerkin and the other three in Toquerville. The families are part of Self-Help Homes. They all received low interest loans from the government to build each others homes. The program is growing in Southern Utah as word continues to get out.
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Dear Colleague: Support Adequate Funding for USDA Rural Housing Service in the FY19 Budget

Congressmen Sean Duffy (R-WI) and Jim Costa (D-CA) are leading a Dear Colleague in support of USDA Rural Housing programs. Below, find the letter.
Support Adequate Funding for USDA Rural Housing Service in the FY19 Budget DEADLINE: March 12, 2018 Dear Colleague, Please join Representatives Sean Duffy and Jim Costa in sending the following letter to the House Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies to respectfully request adequate funding for United States Department of Agriculture (USDA) Rural Housing and water sewer programs. USDA Rural Housing programs provide a critical lifeline to low-income, rural families. Through low-cost loans, grants, and other assistance, USDA programs improve housing conditions and quality of life in rural America. For example Section 502 Direct Loan Program, which has helped more than 2.1 million families realize the American Dream and build their wealth by more than $40 billion, is the only federal homeownership program that exclusively targets low- and very-low income rural families. The program provides essential funding to fill in the gap in the private market, allowing families who would otherwise be unable to access affordable mortgage credit achieve homeownership. The Section 523 Mutual Self-Help Housing program is another critical component of USDA’s Rural Housing initiatives. Self-Help Housing, which celebrated its 50 year anniversary and 50,000th family served in 2015, is the only federal program that combines “sweat equity” homeownership opportunities with technical assistance and affordable loans for some of America’s neediest rural families. Rural water –sewer loans and grants are essential for building communities. Our rural communities are in dire need of affordable, livable housing. Please join us in supporting rural districts all over the country by signing this letter. Please contact Ryan McCormack in Rep. Duffy’s office (Ryan.McCormack@mail.house.gov) or Ben Goldeen in Rep. Costa’s office (Ben.Goldeen@mail.house.gov) if you would like to sign or have further questions. Support Adequate Funding for USDA Rural Housing Service in the FY19 Budget Sending Office: Honorable Sean P. Duffy Sent By: Ryan.McCormack@mail.house.gov Support Adequate Funding for USDA Rural Housing Service in the FY19 Budget DEADLINE: March 12, 2018 Dear Colleague, Please join Representatives Sean Duffy and Jim Costa in sending the following letter to the House Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies to respectfully request adequate funding for United States Department of Agriculture (USDA) Rural Housing and water sewer programs. USDA Rural Housing programs provide a critical lifeline to low-income, rural families. Through low-cost loans, grants, and other assistance, USDA programs improve housing conditions and quality of life in rural America. For example Section 502 Direct Loan Program, which has helped more than 2.1 million families realize the American Dream and build their wealth by more than $40 billion, is the only federal homeownership program that exclusively targets low- and very-low income rural families. The program provides essential funding to fill in the gap in the private market, allowing families who would otherwise be unable to access affordable mortgage credit achieve homeownership. The Section 523 Mutual Self-Help Housing program is another critical component of USDA’s Rural Housing initiatives. Self-Help Housing, which celebrated its 50 year anniversary and 50,000th family served in 2015, is the only federal program that combines “sweat equity” homeownership opportunities with technical assistance and affordable loans for some of America’s neediest rural families. Rural water –sewer loans and grants are essential for building communities. Our rural communities are in dire need of affordable, livable housing. Please join us in supporting rural districts all over the country by signing this letter. Please contact Ryan McCormack in Rep. Duffy’s office (Ryan.McCormack@mail.house.gov) or Ben Goldeen in Rep. Costa’s office (Ben.Goldeen@mail.house.gov) if you would like to sign or have further questions. _______________________________________________________________________ Dear Chairman Aderholt and Ranking Member Bishop: As the House Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies considers the Fiscal Year 2019 (FY 19) Appropriations Bill, we write to respectfully request adequate funding for United States Department of Agriculture (USDA) Rural Housing Programs and Rural Water-Sewer program. Access to safe, decent, and affordable housing can transform lives. Yet, due to lower incomes and higher poverty rates, far too many rural families live in housing that is too expensive, in substandard condition, or both. According to U.S. Census data, approximately, 1.5 million rural homes—or about 5.9 percent—are in substandard condition. The poverty rate for rural areas, estimated at 18.1 percent according to the Economic Research Service, is both higher and more concentrated than the urban (15.1 percent) and national (15.5 percent) poverty rates. Overall, 82 percent of high-poverty counties—or 571 of the 703 counties with at least a 20 percent poverty rate—are rural. And, 86 percent of the nation’s “persistently poor” counties are rural, as well. Additionally, 30 percent of rural families (more than 8 million) spend more than 30 percent of their monthly gross income on housing. These households are considered “cost burdened,” and are likely to struggle to pay for other basic needs, such as health care and child care. USDA Rural Housing homeownership and rental housing programs have a proven track record of overcoming these barriers to affordable housing in rural America. By providing low-cost loans, grants, and other related assistance, these key programs have not only helped millions of rural families improve their quality of life, but have created thousands of jobs in rural America. In 2017, RHS assisted over 130,000 rural families in improving their housing conditions through home ownership loans, home repair loans and grants and rental and farmworker housing programs and provided over 468,000 units of affordable, safe rental housing. The 2013 Drinking Water Needs Assessment indicated a national need of $64.5 billion for small systems[3] (systems that serve 3,300 or fewer persons) in the 50 states, Puerto Rico and other U.S. Territories. This represents 17.4 percent of total national need and comprises some 41,000 systems (82.8 percent of all systems) and 24 percent of the population. The need of water systems in American Indians and Alaska Native villages totals $3.3 billion. USDA’s Water and Sewer loan and grant financing program is a key component of economic development in rural America. Every water and wastewater construction dollar generates nearly $15 of private investment and adds $14 to the local property tax base. The agency boasts a portfolio of more than 18,000 active water/sewer loans, more than 19 million rural residents served, and a delinquency rate of just 0.18 percent.[1] Fiscal Year 2017, USDA funded 736 projects serving 2.3 million people in small rural communities of 10,000 people or less. We urge the Subcommittee to support the Mutual Self-Help Program, Section 502 Direct Loans homeownership loans, rental assistance, new multi-family construction and preservation, farmworker housing as well as water sewer financing. All provide critical support to rural populations, improve rural communities and create jobs. Sincerely, Sean Duffy and Jim Costa.
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NRHC Meetings Feature Insights from the Administration and the Hill

On November 28 and 29, the National Rural Housing Coalition (NRHC) convened for its Board of Directors Meeting and Annual Business Meeting in Washington, D.C. As a part of these meetings, NRHC invited officials from the U.S. Department of Agriculture (USDA) Rural Development (RD) Rural Housing Service (RHS), staff from the Federal Housing Finance Agency (FHFA), and facilitated a panel on issues facing the rural rental housing market. Attendees received a legislative update from NRHC Executive Secretary Bob Rapoza. In addition, the Coalition hosted a reception on Capitol Hill, where rural housing champion Representative Jim Costa (D-CA) spoke about the importance of USDA’s housing programs for rural Americans. USDA Presentation Assistant to the Secretary for Rural Development Anne Hazlett joined the NRHC Board for its meeting on November 28, along with several staff members from the RHS, including Acting Administrator of RHS Rich Davis; Acting Deputy Administrator for Single Family Housing Programs Cathy Glover; Direct Loan Division Director Barry Ramsey; Deputy Administrator for Multifamily Housing Joyce Allen; Finance and Loan Analyst for Multifamily Housing Preservation and Direct Loan Division Mirna Reyes-Bible. Ms. Hazlett shared her vision for RD and the rural housing programs going forward. Although she has only been in the Assistant to the Secretary role for six months, she is familiar with USDA from her time on the Senate Committee on Agriculture, Nutrition and Forestry. However, she stated that she is still coming up to speed on rural housing programs, but emphasized her view that “housing is not just a roof over someone’s head, it can be an anchor that brings stability.” Priorities for the Administration include infrastructure, building partnerships, and identifying innovative solutions to the challenges facing rural America. Each member of the RHS team also presented on their particular areas of work. Ms. Glover and the Single Family Housing staff members discussed the status of the Section 502 Direct Intermediary packaging program, Mutual Self-Help rehab for both acquisition rehab and owner-occupied rehab; and updates to their electronic filing system. November 28 was Joyce Allen’s fist day as the Deputy Administrator of Multifamily Housing programs (she had previously been the Deputy Administrator of Single-Family Housing programs). The USDA presenters also left time at the end of their session for questions and answers from the audience. This gave NRHC Board members the opportunity to seek additional information or clarification. Specifically, Ms. Hazlett was asked to address the hiring freeze, which remains in effect. She took this opportunity to emphasize the importance of innovating and evaluating. She said that they are looking at their programs to identify potential partners, like with the Section 502 Direct program. They are also evaluating how USDA RD staff in the field spend their time. On the Rural Economic Infrastructure Grant proposal, which the Coalition has expressed opposition to, Board members had the opportunity to tell Ms. Hazlett why grouping Section 504 Grants and Housing Preservation Grants is short sighted because it will reduce the availability of predictable resources for rural housing rehabilitation and preservation. NRHC was also able to recommend increasing Section 504 grants to $15,000 per grant (double the current limit). Reception on the Hill  On the evening of November 28, NRHC hosted a reception on the Hill in recognition of the importance of rural housing programs. This event, which was sponsored by Senator Brian Schatz (D-HI), who led the Senate appropriations sign-on letter earlier in the year, gave NRHC members a chance to engage Hill staffers about these important programs. In addition, NRHC welcomed Representative Costa, who co-led the House Appropriations sign-on letter with Representative Sean Duffy (R-WI) in the spring. Rep. Costa, who is a champion for rural issues and rural housing programs on the Hill, discussed his appreciation for the work that NRHC member organizations do to ensure that rural families have access to safe and affordable housing. FHFA Presentation Shiv Rawal, a Policy Analyst with the Office of Housing and Community Investment at the FHFA, gave an update on the Duty to Serve Rule and the 2017 plan development process and status. Under the Housing and Economic Recovery Act of 2008, Fannie Mae and Freddie Mac have a Duty to Serve three underserved markets – manufactured housing, affordable housing preservation, and rural housing – in a safe and sound manner for residential properties that serve very low-, low-, and moderate-income families. NRHC has commented on the Duty to Serve rule several times, including the proposed rule, which was issued in December 2015 and Fannie and Freddie’s proposed Underserved market plans this summer. Mr. Rawal informed attendees that FHFA has be working with the Enterprises to update their Underserved Markets Plan incorporating both public input and FHFA feedback. The plans, which should be released any day, go in to effect on January 1, 2018. Rental Housing Panel On November 29, NRHC hosted a panel featuring Tanya Eastwood, the President of Greystone Affordable Development, Richard Price, a Partner at NixonPeabody, and David Lipsetz, the Executive Director of the Housing Assistance Council (HAC) (click here for the presentations). The panel also featured a review of the Coalition’s findings in the 2017 Review of Federal Rural Rental Housing Programs, Policies, and Practices. USDA rental housing is frequently the only affordable rental housing available in rural communities. The average income for tenants is $12,729 annually, many (around 44 percent) are elderly or persons with disabilities and 70.9 percent are female headed households. USDA estimates that $5.596 billion in additional funding is needed over the next 20 years to preserve USDA’s rental housing portfolio. Renovation of these developments is particularly important because USDA no longer provides loans for the financing of new rental housing developments in rural America. Richard Price presented first, and discussed where things stand currently on the Hill and with the Administration on addressing the maturing mortgage issue. He identified several challenges facing the portfolio, including the state of Rural Development under the new Administration, and addressing issues related to processing times and the complexity of transfer applications. Tanya Eastwood presented on Greystone’s success in preservation of Section 515 properties. In total, Greystone has purchased 269 Section 515 properties, totaling 10,500 units. The total cost of these preservation projects was $1.3 billion. Greystone’s model is a portfolio approach, where projects across a state are grouped together. This allows a developer to take the fixed cost of preservation deals and spread them across multiple projects, making the cost of a 4 percent Low-Income Housing Tax Credit (LIHTC) deal less expensive than a 9 percent deal. Greystone recently completed a portfolio renovation deal in Florida, which involves 24 properties. This was completed with deferral of Section 515 payments. Sixty-two percent of the units receive rental assistance. After the project was completed, the rent-per-unit decreased an average of $23 a month. Ms. Eastwood emphasized that the portfolio approach not only benefits the tenants by keeping rents affordable, but also spurs economic growth and investment in rural communities, in the form of jobs as well as infrastructure advances (such as new sidewalks or bus stops). David Lipsetz provided insight from both his experience as the Associate Administrator for Rural Housing and Community Facilities at USDA and as the new Executive Director of HAC. In particular, he highlighted the data improvements at USDA. Other Business If you are interested in joining NRHC or learning more about the work that we do, please review our membership page and contact audrey@rapoza.org with any questions.
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