Rising development costs are making it more difficult for housing finance agencies (HFAs) to maintain production levels even with increased funding.

Each state also is dealing with its own unique housing challenges.

The Florida Housing Finance Corp. and other HFAs, especially those along the East and West coasts, continue to cope with high housing costs. On the Gulf Coast, the HFAs still are dealing with the aftermath of the 2005 hurricanes. And Ohio is deep in a foreclosure crisis.

The housing needs of their states are different, but all HFAs are being asked to do more.

A combination of rising construction and operating expenses and flat rents are making it increasingly difficult to put together deals, explained Steve Auger, executive director of Florida Housing. “As a result of this cost environment, Florida Housing has been required to put more subsidies into rental transactions,” he said.

Unfortunately, increased subsidies have not meant more affordable housing units. Despite an overall increase in the amount of low-income housing tax credits (LIHTCs) available, there was a 5 percent drop in the number of affordable apartments produced compared to the year before, according to statistics from the National Council of State Housing Agencies.

That trend could continue this year.

“With lower prices for LIHTCs predicted this year, it will be a real challenge to fund as many projects and units as we have in the past,” said Doug Garver, executive director of the Ohio Housing Finance Agency (OHFA).

Overall demand for LIHTCs remains very high, and OHFA will likely be able to fund only half of the quality proposals that are under review, he said.

Garver and other HFA leaders said they have to be more focused in allocating their scarce resources. OHFA is looking at increasing its homeownership programs and improving overall efficiency with the latest technology. Florida Housing is working on improving its capacity to serve extremely low income families and developing new green building standards.

Across the country, the Washington State Housing Finance Commission has workforce housing on its radar screen as it looks for ways to serve this market, which is typically defined as families earning between 80 percent and 120 percent of the area median income. The Virginia Housing Development Authority (VHDA) is also tackling workforce housing by assisting local governments in the northern part of the state in providing loans and other programs for county and city employees. VHDA is also looking at increasing investments in revitalization areas. The Michigan State Housing Development Authority has a new initiative aimed at reducing poverty in the state’s struggling communities.

To better understand the nation’s housing problems and find out what’s happening at HFAs, Affordable Housing Finance asked leaders of seven very different HFAs to reveal the best moves they have made in the past year, their newest financing programs, and the trends they are seeing in their LIHTC programs.

HFAs by the Numbers

Housing finance agencies (HFAs) are critical in the development of affordable housing. Their activities include awarding low-income housing tax credits (LIHTCs) and issuing both multifamily and mortgage revenue bonds (MRBs).

Over the years, HFAs have financed 2.8 million low- and moderate-income apartments, including 1.9 million apartments through the LIHTC program. They also have provided affordable mortgages to 2.6 million families to buy their first homes through the MRB program, according to the National Council of State Housing Agencies.

Recent HFA activities include:

  • Allocating nearly $832 million in housing credits—$586 million from the annual state ceiling and another $246 million to bond-financed properties—in 2005. These credits will produce 132,449 low-income apartments. This is a 5 percent decline from the 140,000 apartments produced the year before.
  • Financing 235 multifamily bond issues in 2005, a 7 percent decrease from the 252 issues in 2004. Thirty-five HFAs issued bonds in 2005, totaling $5.6 billion in volume.
  • Issuing about $9.4 billion in MRBs to finance almost 87,000 home loans in 2005, compared to $9.6 billion in MRBs and fewer than 85,000 loans the year before.

Source: State Housing Finance Agencies Factbook: 2005 NCSHA Annual Survey Results. For more information about the National Council of State Housing Agencies.