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Frequently Asked Questions

Construction

No, AHFC will provide a  pre-approved contractor  from our departments master solicitation rotation list.

Some of the programs offered by the AHFC are grants, other programs require a deferred loan, which will be forgiven if you stay in the house for a certain number of years.

Applicants must reside within the City of Austin City limits.

Contractor/Subcontractor Activity Reports provide information on businesses employed to work on a particular project.  The types of information collected include the type of trade, whether it is a minority- or woman-owned business enterprise, the ethnicity of the contractor or subcontractor, the amount of the contract or subcontract, etc.

DBRA is a set of laws enacted to provide labor standards on certain federally-funded projects.  DBRA specifies the minimum wage a worker in a certain trade should receive, requires that workers be paid weekly, requires that they receive 1.5 times their hourly wage for any hours worked over 40 hours in a single week, and makes unauthorized payroll deductions or kickbacks to employers illegal.  Locally, a Labor Standards Officer (LSO) will be appointed to a particular project, and the LSO is responsible for reviewing weekly certified payrolls submitted by contractors and subcontractors.  The LSO ensures the requirements of DBRA described above are met.

“Section 3” refers to Section 3 of the Housing and Urban Development Act of 1968 which requires that recipients of certain HUD financial assistance, to the greatest extent possible, provide job training, employment, and contract opportunities for low- or very-low income residents in connection with projects and activities in their neighborhoods.

AHFC provides a number of construction programs:

  • ABR- To remove architectural barriers in the home
  • HRLP- To address code related deficiencies in the home
  • LeadSmart Program- To address lead based paint hazards in homes built before 1978

Depending on the type of project, reporting may be required monthly or may not be required until the job is completed.

The process of providing weekly certified payrolls begins when construction begins. HUD’s Website for DBRA: http://portal.hud.gov/hudportal/HUD?src=/program_offices/labor_relations...

On federally-funded projects, reporting is required if any contract or subcontract exceeds $10,000.  However, because the reporting form collects additional useful information, AHFC often requires it on non-federal contracts as well.

Generally, DBRA is applicable when 12 or more housing units will be assisted using federal funds.  Depending on the source of federal funds, there may be other situations where DBRA is applicable.

Section 3 is applicable for contracts in excess of $200,000 or in excess of $100,000 for a subcontractor.

Not in all situations, but AHFC reimburses up to $3,000 for approved relocation expenses for the HRLP program.

Homestead Preservation Districts

A Homestead Preservation District, or HPD, is an area that qualifies as a special district under state law first introduced by Texas State Representative Eddie Rodriguez in 2005. State law was amended in 2013 to allow more areas of Austin to be eligible for Homestead Preservation District designation. Find the law in Texas Local Government Code Chapter 373A.

Texas Local Government Code Chapter 373A, Homestead Preservation Districts and Reinvestment Zones, provides the legislative authority for Homestead Preservation Districts today.

Once an area is established as a Homestead Preservation District by City Ordinance, the Austin City Council may choose to re-invest in the area using dedicated revenue for the purpose of creating and preserving housing affordable to low and moderate-income homeowners and renters.

This law is different and separate from homestead tax exemptions (link to Texas Comptroller page on homestead tax exemptions here).

To be eligible for Homestead Preservation District designation, an area must meet very specific criteria set by state law. The City as a whole is much too large to meet the eligibility criteria, which calls for:

  • A district must have fewer than 75,000 residents;
  • The overall poverty rate of the potential district must be at least two times the entire poverty rate for the City; and,
  • Each Census tract in the district must have a median income that is less than 80% of the City of Austin overall median family income.

After an area is established as a Homestead Preservation District by the City Council, the City Council may choose to create dedicated revenue streams to fund affordable housing using a variety of funding mechanisms. For example, Council may create a Tax Increment Reinvestment Zone within the HPD. Revenue generated through this financing model is dedicated by state law for the development and preservation of affordable housing within the district, or zone. A Homestead Preservation District must be designated in order to create a Homestead Preservation Reinvestment Zone if established under Texas State Code chapter 373A.

The City of Austin uses the federal definition of affordable housing, which means a household spends no more than 30% of income on housing costs (rent/mortgage + utilities).

 Follow link to the HUD glossary

The HPD legislation, Texas State Code chapter 373A, however specifies that all revenue from an HPD TIRZ must be reinvested to support households at 70% MFI – 25% of funds can go to 70% MFI, 25% can go to 30% MFI, and 50% can go to 50% MFI. (See question #11 to learn more about the HPD TIRZ)

You can view the Austin area income limit chart on the Neighborhood Housing and Community Development website. 

There is currently four established Homestead Preservation Districts (District A, B, C, and D).  Click here to see the Homestead Preservation District Profiles.  

The Austin City Council in 2007 established a Homestead Preservation District in central east Austin, now referred to as District A. In 2015, the City Council directed the City Manager to establish three additional Homestead Preservation Districts, and to explore the possibility of creating a Tax Increment Reinvestment Zone in the existing Homestead Preservation District (District A). A Homestead Preservation District, in and of itself, cannot create or preserve affordable housing; it is a step toward creating a Tax Increment Reinvestment Zone that can fund the development and preservation of affordable units within the District.

For more information on City Council actions please go to question #13

There are three proposed areas in Austin. Each area meets the state law’s eligibility criteria to become a Homestead Preservation District. The areas cover multiple City Council Districts. Click here to see the Homestead Preservation District Profiles.  

Draft Ordinances will likely be brought before City Council in late 2016 to establish new Homestead Preservation Districts.

Living in an area that has been designated a Homestead Preservation District will have no direct immediate impact on you as a resident.  

However, in the future if City Council chooses to establish a Tax Increment Reinvestment Zone under Chapter 373A in a designated Homestead Preservation District, a Tax Increment Financing (TIF) would provide a dedicated revenue source to create and/or preserve affordable housing in a designated HPD.  

TIF stands for Tax Increment Financing.  A tax increment is the difference between the amount of property tax revenue generated before TIF district designation and the amount of property tax revenue generated after TIF designation. The TIF takes a portion of all taxes being paid with in a TIF District or Tax Increment Reinvestment Zone and redirects them for the purpose of affordable housing back into the area. The TIF is not a new tax. 

A Tax Increment Reinvestment Zone or TIRZ is a Tax Increment Financing tool that takes a portion of the increased assessed tax value for a designated district for reinvestment in that district with the intent of creating and preserving affordable housing.  This tool is established and described by Texas Sate Tax Code Title 3, Subtitle B, Chapter 311.

Find additional information on the Texas Tax Increment Financing Act here.

 

The Homestead Preservation District law and the City of Austin Homestead Tax Exemption are two unrelated policies. The Homestead Preservation District legislation does not speak to tax abatement as a tool to support affordable housing and establishing a district does not trigger any sort of tax exemption or tax abatement program form residents within the district. Learn more about homestead tax exemptions on the Texas Comptroller website.

Permanent Supportive Housing Initiative

Supportive housing can help people with psychiatric disabilities, people with histories of addiction, formerly homeless people, frail seniors, families, young people aging out of foster care, individuals leaving correctional facilities, and people living with HIV/AIDS to live independently with dignity in the community. Tenants of supportive housing often face two or more of these categories of challenges. For these populations, permanent supportive housing is a highly effective intervention. Research indicates that • More than 80% of residents stay housed for at least one year • Incarceration rates are reduced by 50% • Emergency room visits decrease by 50% • Emergency detoxification services decrease by 85%, and • There is a 50% increase in earned income.

Although permanent supportive housing is a resource-intensive intervention, the high public costs of homelessness mean that it costs essentially the same amount of money to house someone in stable, supportive housing as it does to leave that person homeless and stuck in the revolving door of high-cost crisis care and emergency housing. Cost studies demonstrate that we can either waste money prolonging people’s homelessness or spend those dollars on a long-term solution that produces positive results for people and their communities.

For more information please see the full City of Austin Permanent Supportive Housing Strategy.

Are you literally homeless, living outside, in your car, or in an emergency shelter? If so, complete a housing assessment, called Coordinated Assessment, at Front Steps, Salvation Army, or by phone. If you are eligible for a housing program in the community, such as Permanent Supportive Housing or another type of housing program, you will be contacted by the appropriate agency once they have an opening. A case manager at the agency will work with you to help you find housing.

To complete the Coordinated Assessment:

Visit Front Steps at 500 E. 7th Street, Austin TX 78701, or
Salvation Army at 501 E. 8th Street, Austin TX 78701
Monday, Wednesday, Thursday, Friday from 9 am - 4 pm

Or call 512-234-3630
Monday - Friday from 9 am - 4 pm
 

To find out more information about Housing Choice Vouchers (Section 8), visit the Housing Authority of the City of Austin's webpage or call the office at 512-477-1314.

HHSD Budget On July 28, 2010, City Manager Marc Ott outlined the proposed budget for the 2011 Fiscal Year, which maintains core services and includes additional funding for a number of key initiatives. The budget for the Health and Human Services Department includes $100,000 for the Homeless Services Continuum to address the support services needed for prevention, rapid re-housing, and permanent supportive housing. NHCD Budget

In FY 2010-11, the City Council approved $7.2 million in General Obligation (G.O.) Bond funding for the creation and retention of affordable rental housing, of which  $1.775 million was  allocated to fund permanent supportive housing. Of those proposed, the following applicants have identified serving PSH sub-populations in the City’s Strategy presented to Council on September 30, 2010.

  • Foundation Communities, Arbor Terrace (Suburban Lodge SRO), 25 PSH units
  • Green Doors, Treaty Oaks Apartments, 25 PSH units
  • Summit Housing Partners, Marshall Apartments, 20 PSH units

FY2011-12 applications for funding opened on October 1, 2011 and will be awarded during the first quarter of 2012. NHCD has also created a staff position dedicated to supporting the Permanent Supportive Housing initiative.

Supportive housing is built to blend seamlessly with buildings around it. Not-for-profit organizations typically develop supportive housing to be either the nicest building on the block or ‘invisible’ to enhance desirability for neighbors and tenants.  In some areas, it might be a few units within an existing apartment complex, and in other areas it might be an entire building.

Permanent supportive housing is permanent, deeply affordable housing where services are offered to help homeless, disabled and low-income people live independently in the community. Tenants have leases or lease-like agreements; apartments are affordable; rent cannot exceed a third of tenants’ income; and property management and services are provided by not-for-profit organizations.  The concept behind supportive housing is simple: Tenants rent attractive, safe, affordable apartments and have access from on-site or off-site professionals to whatever support they need to stay housed and healthy.

Permanent supportive housing is a combination of extremely affordable housing and support services tailored to each individual or family. Just like their neighbors, people who live in supportive housing sign leases, have keys, and pay rent.

The range of services offered is flexible and depends on the needs of the residents. They can include medical and mental healthcare, vocational and employment services, child care, substance-abuse counseling, and independent living skills training.

Residents will primarily include Austin's most vulnerable chronically homeless population, many of whom are frequent users of public services like 911, courts and hospitals. Tenants can include people with psychiatric disabilities, people with histories of addiction, seniors, families, people living with HIV and AIDS, and young adults transitioning out of foster care. In most cases the service provider organization selects tenants from its own waitlist or pool of clients, and lets other agencies know when they have an opening. They then screen the client based on their particular program or tenant screening guidelines.

Supportive housing is not a shelter with an open-door policy. It has a set number of apartments allotted for homeless people with special needs.  These apartments are offered on a permanent basis and by referral only.  Further, all residents are referred by local agencies with a preference given to local residents. Most importantly, once a resident is housed in PSH, they are no longer homeless.

Because supportive housing features support staff that are focused on protecting vulnerable tenants, crime rates usually decrease as a result of supportive housing development.  Management often works closely with local police to root out illegal activity in the neighborhood.

No, in fact the opposite is true.  There is no evidence that property values diminish at all as a result of supportive housing development while there is both statistical and anecdotal evidence that property values increase.  A 2008 study quantifying the impact of development on neighborhoods shows surrounding property values substantially increased in eight of nine neighborhoods surveyed.  Common sense supports this notion since sponsors either turn blighted buildings into attractive new housing or build on abandoned empty lots that are frequently magnets for illegal activity. Furthermore, historically supportive housing has served as a catalyst for economic development.  Because supportive housing either rehabilitates a decrepit building or builds on an empty lot, it improves a block’s look and feel.

Real Estate & Development

For either rental housing projects or ownership projects applications are located at our Application Center.

There are a number of requirements an organization must meet to become certified as a CHDO.  The NHCD CHDO Certification Application spells out the requirements.

View the certification application.

The bonds are sold to institutional investors to create a pool of money that will fund mortgages for first-time homebuyers at below-market interest rates.  As a homebuyer makes mortgage payments over time, the bondholders will be repaid the principal they invested plus periodic interest.

The cash generated from the sale of the bonds is deposited with a Trustee to help finance the multi-family development.  The bonds are repayable only from the rents.  The AHFC is a “conduit” bond issuer and does not assume any liability for the bond issue.

Count on 3 to 6 months.  Each project is different, and there are many factors that can affect the length of time needed to move an application through the approval and loan closing process:  environmental review, deal structuring, lead time needed to get an item on the Council agenda if necessary, preparation and review of loan documents, other lenders’ requirements, etc.

The funding provided is always a loan.  However, in the case of projects that serve extremely low-income persons, the loan can be forgiven after successful completion of the affordability period.

All affordable housing programs have income eligibility requirements.  For ownership housing programs, a household’s total income cannot exceed 80% of the Austin Median Family Income (MFI). The income of all adult members of the household is included when calculating the total household income.  Certain items are included when calculating income and other items can be excluded from the income calculation.

Sources of Income Included in Calculating Household Income:  Some examples include wages from employment, net income from self-employment, monthly Social Security or Disability checks, food stamps, and child support.

Sources of Income Not Included in Calculating Household Income:  Income of children under age 18, college financial aid, income tax refunds, lump sum payments from such things as insurance claims, inheritance, and settlement payments arising from litigation.

Income from Assets Included in Calculating Household Income:  Income from assets is calculated if the value of the assets exceeds $5,000.  Examples of income from assets include interest, dividends, profit from royalties, and income from payments from an estate or trust fund.  [NOTE:  The value of the asset is not what is counted.  It is the income the asset produces that is counted toward total household income.]

Mortgage Revenue Bonds are tax-exempt negotiable instruments that provide funding for mortgages.  The bonds are repayable from the mortgages, however the full faith and credit of the City or the AHFC is not pledged to repay them.

CHDO stands for Community Housing Development Organization, a special federal designation for non-profit affordable housing organizations that meet certain qualifications.  Certain amounts of funding are reserved for CHDOs only, such as 15% of the City’s annual HOME allocation, eligibility for pre-development loans, and eligibility for operating expenses grants.

CHDO Toolbox:  http://www.hud.gov/offices/cpd/affordablehousing/library/modelguides/200...

It’s the length of time that a project is required to be affordable to low- and moderate-income persons.  Typically, it is based on the amount of City/AHFC funds invested per housing unit.  Typical affordability periods are 5, 10, 15, 20, 40 or 99 years.

Contractor/Subcontractor Activity Reports provide information on businesses employed to work on a particular project.  The types of information collected include the type of trade, whether it is a minority- or woman-owned business enterprise, the ethnicity of the contractor or subcontractor, the amount of the contract or subcontract, etc.

DBRA is a set of laws enacted to provide labor standards on certain federally-funded projects.  DBRA specifies the minimum wage a worker in a certain trade should receive, requires that workers be paid weekly, requires that they receive 1.5 times their hourly wage for any hours worked over 40 hours in a single week, and makes unauthorized payroll deductions or kickbacks to employers illegal.  Locally, a Labor Standards Officer (LSO) will be appointed to a particular project, and the LSO is responsible for reviewing weekly certified payrolls submitted by contractors and subcontractors.  The LSO ensures the requirements of DBRA described above are met.

Any project or activity assisted with federal funds must undergo an environmental review to ensure the project or activity “will not have a significant adverse environmental impact and to encourage the modification of projects to enhance environmental quality and minimize environmental harm.”  [24 CFR 50 § 50.3] 

Following the procedures established by HUD to perform an environmental review constitutes Environmental Compliance.

“Section 3” refers to Section 3 of the Housing and Urban Development Act of 1968 which requires that recipients of certain HUD financial assistance, to the greatest extent possible, provide job training, employment, and contract opportunities for low- or very-low income residents in connection with projects and activities in their neighborhoods.

Many different types of projects can be funded with CDBG.  The City of Austin has elected to use its CDBG funds for the benefit of low- to moderate-income households.  CDBG projects funded through the City include emergency home repair, home modifications for disabled persons, and acquisition of land for affordable housing to name a few.  In addition the City uses CDBG to fund child care, services to elderly persons, tenant counseling services, and small business development.

The use of HOME funds is limited to housing activities for households at or below 80% of the Austin Median Family Income

Projects can be for acquisition, new construction, and/or rehabilitation of affordable housing. 

HOME funds can also be used to provide direct assistance to first-time homebuyers in the form of down payment and closing costs.  In addition, HOME funds can provide rental assistance for a period of time to very low-income persons who have exited a shelter and are working toward self-sufficiency with a case manager.

HOME funds have certain restrictions and in some cases, the City imposes more stringent requirements.  For example, housing assisted with HOME funds must remain affordable for a certain period of time based on the amount of HOME funds invested.  This is called the “affordability period” which can last anywhere from 5 years to 20 years.  The City sometimes imposes longer affordability periods on certain projects, in some cases up to 99 years.  Some other restrictions include income limits, property standards, and limits on home sales prices.

Loans to develop affordable ownership or rental projects can be provided to projects that meet eligibility requirements.  Loans are made to non-profit and for-profit organizations.

New construction, acquisition, and/or rehabilitation of rental and ownership housing.

Depending on the type of project, reporting may be required monthly or may not be required until the job is completed.

You should begin the process at the earliest possible time if you believe federal funds may be used in the project.  The first thing to do is determine what level of review is necessary and follow the established procedures to achieve Environmental Compliance.

The process of providing weekly certified payrolls begins when construction begins. HUD’s Website for DBRA: http://portal.hud.gov/hudportal/HUD?src=/program_offices/labor_relations...

On federally-funded projects, reporting is required if any contract or subcontract exceeds $10,000.  However, because the reporting form collects additional useful information, AHFC often requires it on non-federal contracts as well.

Generally, DBRA is applicable when 12 or more housing units will be assisted using federal funds.  Depending on the source of federal funds, there may be other situations where DBRA is applicable.

If federal funds are to be used, Environmental Compliance is always applicable.  However, the level of review required depends on the activity or project.  Certain activities are considered “Exempt” because by their very nature, they will have no impact on the environment (Example:  administrative activities using federal funds).  Other activities require more in-depth review because of the work to be done, such as development and construction of a new subdivision.

Section 3 is applicable for contracts in excess of $200,000 or in excess of $100,000 for a subcontractor.

Developers benefit because they are able to secure financing for their projects at below-market interest rates, thereby having the ability to charge lower monthly rents.  Renters benefit by having more units available to rent at affordable prices.

Bonds are issued as one way to finance the development of affordable rental and ownership housing.