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Cincinnati's Affordable Housing Trust Fund is ready for use four years after being established

Mark Heyne

Four years after Cincinnati Council established an Affordable Housing Trust Fund, the money is finally ready to be used. City officials signed a contract with the Cincinnati Development Fund on Friday, outlining how much subsidy can go to each project based on how affordable the units are.

Less than $3 million is available right now, because the new agreement covers only some of what’s being called a “fund of funds” to subsidize affordable housing production or preservation.

“We want to create a one stop shop for developers to come to — and a one stop shop for funders to come to, who want to promote and create affordable housing — that CDF is the go-to organization,” said CDF President and CEO Joe Huber. “So we blend all these sources of capital through what we're calling the Affordable Housing Leverage Fund.”

The fund will get another deposit soon, during the city budget closeout process. According to policies put in place earlier this year, the fund will get up to $5 million from what’s left over from last year’s city budget.

Other sources in the “fund of funds” include $12 million from private donors and $34 million in a federally funded loan program. Each funding source will have its own requirements for eligibility and spending.

Huber says several developments are already working with CDF on potential funding, including one expected to be the first award from the city’s trust fund: permanent supportive housing for very low-income tenants. That project could close in about a month.

Some projects are in development and could be “stuck” without some kind of subsidy through CDF.

“Last year, I think construction costs went up 11%. Next year, they're projected to go up like 14%,” Huber said. “That's what has gotten some of these projects stuck, is you literally have, in some cases, a multimillion-dollar gap that's created overnight just by having to rebid the general contractor’s contract.”

The parameters in the agreement were approved by the Housing Advisory Board, a volunteer group of experts appointed by the mayor and approved by Council.

The most recent meeting of the board was Friday, Aug. 26. You can listen a full audio recording of the meeting below.

8-26-2022 Housing Advisory Board Meeting for web.mp3

How much is in the Affordable Housing Trust Fund?

What most people call the Affordable Housing Trust Fund is actually a “fund of funds” with several sources, which are kept distinct because of different legal requirements and oversight. Council Member Reggie Harris' office helped WVXU sort out each source and add it all up.

The agreement with CDF signed Friday covers only funding that comes directly from the city budget: a total $2,728,300 as of Aug. 26. Of that, $250,000 will be used for administrative costs, with the rest going to development awards.

Up to $5 million will be deposited in the fund by the end of the year, coming from the city’s closeout budget. This is an annual source of revenue for the fund and is expected to put between $1 million and $2 million dollars into the fund each year.

The other annual source is revenue from the city’s short-term rental tax (a.k.a. the “Airbnb” tax), which generates about $600,000 annually.

Parameters for city’s Affordable Housing Trust Fund

Awards can be in the form of a forgivable loan or a low-interest repayable loan.

CDF will be able to issue repayable loans to projects without city approval; any forgivable loan granted by CDF will need approval in writing from the city’s Department of Community and Economic Development, or other staff designated by the city manager.

Developers can use the money for acquisition or hard construction costs, and “reasonable soft costs.”

Developers can get between $50,000 and $60,000 per unit for housing affordable to households making 60% or less of the area median income. In other words, the unit must be affordable to a household of four making about $57,000 a year.

Smaller subsidies are available for projects with units for higher-income households, up to 100% area median income.

Here’s a breakdown of the forgivable loan maximums:

Area Median Income for unitMax forgivable loan per 1-2 bedroom unitMax forgivable loan per unit with 3+ bedrooms
Up to 60% AMI$50,000 per unit$60,000 per unit
Up to 80% AMI$25,000 per unit$30,000 per unit
Up to 100% AMI$10,000 per unit$20,000 per unit

Repayable loans can be offered at even higher levels, as long as the additional money is needed to make the project financially feasible.

The term of each award will generally be 15 years, but a shorter term could be offered with written permission from the city under certain conditions (but no shorter than 10 years). The affordable units receiving subsidy must remain affordable for the entire term of the agreement.

All units funded under this agreement have to be rented to households that meet the income limits, with income verification at the time of lease. No annual verification will be required, meaning if a household’s income increases beyond the income limit while living there, they wouldn’t have to move out.

The agreement establishes a maximum monthly rent, which will be “pre-determined based on a formulaic calculation used by both the Ohio Housing Financing Agency and HUD.” These rent limits will be updated every year based on updated income levels from HUD.

2022 Income Limits: 60% AMI

  • 1 person: $40,140
  • 2 people: $45,840
  • 3 people: $51,600
  • 4 people: $57,300
  • 5 people: $61,290
  • 6 people: $66,480
  • 7 people: $59,100
  • 8 people: $75,660

2022 Rent Limits: 60% AMI

  • Studio: $1,003
  • 1 BR: $1,074
  • 2 BR: $1,290
  • 3 BR: $1,490
  • 4 BR: $1,662
  • 5 BR: $1,834

2022 Income Limits: 80% AMI

  • 1 person: $53,500
  • 2 people: $61,150
  • 3 people: $68,800
  • 4 people: $76,400
  • 5 people: $82,550
  • 6 people: $88,650
  • 7 people: $94,750
  • 8 people: $100,850

2022 Rent Limits: 80% AMI

  • Studio: $1,338
  • 1 BR: $1,432
  • 2 BR: $1,720
  • 3 BR: $1,986
  • 4 BR: $2,216
  • 5 BR: $2,445

CDF will collect annual reports from all owners who received a subsidy from the city’s trust fund. CDF will also report to the city quarterly with information about applications received.

See the full agreement below (story continues after):

HUD Section 108 — $34 million

Housing and Urban Development recently approved the city’s application for a HUD 108 loan fund, which was first announced over a year ago.

It’s a total of $34 million that will be distributed as low-interest loans to developers. As the loans are paid back, the money can be loaned out again for new projects. The maximum loan from Section 108 funding is 20 years.

Section 108 regulations require at least 51% of the "beneficiaries" of the funding be low- or moderate-income persons; in other words, residents making between 50% and 80% of Area Median Income (AMI).

HUD will have to approve each individual project award.

The city is still preparing an agreement for CDF to manage the Section 108 fund.

Private donations — $12 million

  • $5 million from the Greater Cincinnati Foundation
  • $5 million from Western and Southern
  • $500k from Health Path
  • $1.5 million from the Haile Foundation

As previously noted, each source will have its own requirements for eligibility and spending.

What about federal stimulus from ARPA?

On two occasions, Cincinnati Council voted to allocate money from the American Rescue Plan Act (ARPA) to the Affordable Housing Trust Fund:

Neither amount is in the fund that CDF is now working to disburse.
The $6.4 million from 2021 came from a sub-set of ARPA (HOME-ARP) that is ineligible for the CDF-managed trust. It was later combined with a few other sources into a fund worth $9.9 million that will be allocated to developers through a request for proposals process run by the city's Department of Community and Economic Development (DCED). That's contingent on HUD approval.

The $5 million from 2022 will be managed by CDF through a separate agreement with the city, because it requires different contract language. Otherwise, the funds will follow the same basic framework as the agreement described above. The new agreement will be finalized next month, according to DCED officials.

Updated: August 29, 2022 at 9:53 AM EDT
Local Government Reporter with a particular focus on Cincinnati; experienced journalist in public radio and television throughout the Midwest. Enthusiastic about: civic engagement, public libraries, and urban planning.