To help address the nation’s affordable housing shortage, many loan and grant programs are available to facilitate building homes for lower-income families and the unhoused. Taking full advantage of these programs is key to bringing a project from conception to occupancy. Unfortunately, the competition for these grants is as fierce as the dollars involved are essential. That’s why it’s important for potential applicants to be thoughtful and employ a few best practices to give their project the best chance of success.
The Federal Home Loan Bank of San Francisco’s Affordable Housing Program (AHP) is one of these programs, providing gap funding to projects that address low-income housing needs in Arizona, California, Nevada, and other regions where its bank members do business. FHLBank San Francisco sets aside 10% of its net income annually to fund the program, with the majority of the dollars allocated to the AHP general fund and a portion set aside for our WISH down payment assistance program. AHP general fund grants, which can be as large as $1 million, are facilitated through member institutions that partner with nonprofit organizations and affordable housing developers to submit applications in an annual competition. In the 2022 program cycle, 39 affordable housing developments received $31.9 million in grants to preserve or create 2,712 housing units.
Like any competitive grant program, being selected for a FHLBank San Francisco AHP grant necessitates taking time to learn about the program and understand its requirements. For example, a project cannot already be complete by the application submission deadline. It must be feasible and demonstrate a need for a subsidy that will either be used or will help secure other financing within 12 months of grant approval. More specifically, a rental housing project must reserve 20% of its units for households that are at or below 50% of the Department of Housing and Urban Development area median income (AMI), while owner-occupied housing must serve households that are at or below 80% of the AMI.
Just because a project meets these qualifications doesn’t guarantee success by any means. Thankfully, most programs have guides to help better position an application for a grant. In the case of the AHP, full details, as well as a sample application and prerecorded application webinars, are available on the FHLBank San Francisco website. There is even a preliminary self-scoring feature in the application for users to score their project and compare that score with those of grant winners from the previous year. If a project scores higher, proceed, and if it scores significantly lower, reconsider if the application is worth the time and effort. It’s also worth noting that honesty truly is the best policy here; the time you might spend on a grant application with a low chance of success wastes important time and resources that could be spent applying to a different program.
To better understand the AHP application process, potential applicants should attend one of the webinars that the bank offers early in the grant program cycle. Another key action to take early is to find and connect with a financial institution that is a member of FHLBank San Francisco and can sponsor the affordable housing project. There is a list of members on the FHLBank San Francisco website that can be cross-referenced with a list of past grant awardees to see who has sponsored before and may be willing to help again. Members appreciate the work the bank does to help build affordable housing, and many are willing to support any related efforts, but building a relationship well before the application deadline will go a long way in assuring that support. Both the member and the developer should keep in mind that being awarded an AHP grant comes with a host of responsibilities that will require time and effort, in some cases for a 15-year commitment. Make sure the partner who will submit the application is prepared for the responsibility as well as the reward of receiving an AHP grant.
With confidence that a project fits within the scope of the grant requirements and a willing bank member partner on board, the next step is the application. The application is lengthy and detailed, and there are some common mistakes that can result in an application being rejected despite it being for a worthy project. The most common mistakes fall into the following buckets:
- Instructions: Applications have failed simply because an applicant failed to upload the required documents or put documentation into the wrong folders on the bank’s secure portal. Scoring categories each have their own folders. Make sure the correct information goes to the right folder. Similarly, 100% of the application has to be completed, and the online system will let users know what percent is complete. Don’t submit a form until it reads 100% complete;
- Financials: There is a financial workbook that must be completed along with the application. Review the instructions and notes within the workbook. An Application Comparison Worksheet is included and must be used to show that the figures from the workbook and application match. If they don’t, go back and make the appropriate adjustments and corrections. Submit the most current financial workbook information and back it up with documentation. For instance, third-party documentation is required from a construction manager and contractor to justify the cost per square foot;
- Overcommitment: What’s said on the application matters. If an applicant knows, for example, that a project can only house 30 homeless households, but thinks maybe it could go as high as 40, use 30. Applicants are held accountable for whatever is stated in the application, and if the project falls short, they could be on the hook to pay money back to the bank; and
- Competitiveness: Projects generally score higher if they are shovel-ready, rely on donated property, or address the needs of the unhoused. Overall, the projects that best show they can bring more stability to a community have a greater likelihood to succeed.
Like other affordable housing grant programs, FHLBank San Francisco’s AHP would love to be able to fund every project if it were possible. Unfortunately, resources are limited. That said, if your application does not receive a grant in an annual competition, don’t give up. Request technical assistance to identify any mistakes and areas that can be improved to make the application more competitive next time. You can certainly apply more than once to get your project funded, and we wish you the best of luck in assembling the funding needed to create more housing for those who need it most.
