U.I.R. Annual Summit Affordable Housing Presentation October 18, 2007.

U.I.R. Annual Summit

Affordable HousingPresentation

October 18, 2007

Recent Headlines in Utah

“Report Shows Utah is on Verge of Housing Crisis”

“Affordable Housing Tough for Cops”

More Recent Headlines

“Want More than a Condo? Be prepared to Pay more than $200K”

“Housing Markets Pricing Out Middle Class”

… and More Recent Headlines

“Housing Affordability: Serious Disequilibrium”

“Housing Dilemma: Utah’s Economy Booming, but Affordable Homes are Hard to Find”

What is Utah Housing?

Created by State Legislature in 1975. Mission: Affordable Housing

Opportunities; Low- Moderate Income. DCED to Independent Public Corp. No $$$ support from the State. Use Entrepreneurial techniques. Largest provider of Afford Hsg

Finance.

UHC’s Major Programs Single Family finance:

Low Interest rates Down Payment and Closing Costs Financed with Bonds and UHC funds

Multi-Family finance Low Interest rates Provide affordable Equity and Debt Financed with Bonds and Tax Shelters

UHC Annual Budgets Lean staffing: 55 employees

Use private sector: lender, builders etc. Operating Budget $3.9M/ yr Capital Budgets = $363M/ yr

Single Family Bonds = $254M Housing Tax Credit = $ 44M Multi-Family bonds = $ 47M UHC Reserves = $ 18M

Who Needs Housing Help?

Low-Income households Elderly Single Moms w/ kids New Families Mentally Ill Physically handicapped Native Americans

Who Needs Housing Help (cont’d)

Homeless and near-homeless Teachers, Policemen, Fire Fighters,

etc Renters First Time Homebuyers

What is Area Median Income?

Wea

lthie

st

Poorest

½ above ½ below100% of AMI

“Lower-Income” is NOT Homogeneous? Degrees.

Moderate Income Low-Income Very-Low Income Poverty Near Homeless Homeless

Degrees of Lower Income

100% 50%80%

“Lo

w-I

nco

me” (

HU

D)

“Lo

w-I

nco

me” (

LIH

TC)

“Very

-Low

-Inco

me”

“M

odera

te Inco

me”

60% 32%Pove

rty

25%

Near

Hom

ele

ss“

Hom

ele

ss“

AMI

What is “Affordable” Housing Balance between “Cost” and “Income” Pay no more than 30% of Income for

Housing costs (incl utilities, etc) Many are paying <60%: Unaffordable Rents and Selling Prices risen much

faster (>18%) than Incomes (2-3%). Over time affordable housing becomes

out of reach.

Example of Affordable Rent S.L. County avg rent 2bdrm =

$766/mo Needed Income to be “Affordable” :

$2,553/mo or $30,640/yr. This is $14.73 / hour wage. Avg Hourly Wage for Renters in Utah

is $9.92 / hour. Average Renter must work 59.4 hrs /

wk to “afford”, or need 1½ workers, OR pays 45% of wages on housing!

How Make Housing More Affordable? Reducing Costs, generally Zoning: Increase density; reduce land

costs per Unit Reduce Fees; Ease regulatory

requirements Assist with Down Payment/ Closing

Cost Reduce Labor Costs in construction Reduce Debt / Interest Rates

Private Activity Bond Authority

Federal Gov’t grants each state amount of Tax-Exempt bonding authority, on population.

Single FamStudent LnsSmall Iss.Ex. Facility

Total for 2007 = $256.2 Million

33%

42%24%

Housing Tax Credits

Complex tax shelters to raise Equity. Use only for affordable Rental

projects. Created 1987 / per capita allocation. To date UHC has issued $750 M and

financed 17,000 units in 350 projects. Also created State Tax Credits to

work in tandem with Federal Credits.

Impact on Rents (2bdr)

FAIR MARKETRENTS

RENTS WITH FED’L

TAX CR.

RENTS WITH FED & STATE TAX

CR.

METRO:MO. RENTS $783 $570 $490

INCOME NEEDED

$31,320 $22,800 $19,600

RURAL:MO. RENTS $632 $445 $380

INCOME NEEDED

$25,280 $17,800 $15,200

UHCUHC Affordable Home Buying (Salt Lake County) Avg Price of homes in 2007= $153,500

Avg price Last Year = $134,500 (+14%) Avg price 10 years ago = $94,500 (+63%)

Avg Buyers’ Income in 2007=80% AMI Income Last Year = 73% AMI Income 10 years ago = 65% AMI

Taking More Income to Buy

0%

20%

40%

60%

80%

100%

200720062002

>80% AMI65-80% AMI<65% AMI

Burden Gets Heavier in Salt Lake County

-10

10

30

50

70

Per

cen

t In

crea

se

County Med. IncAvg Price

26%

63%

Burden Gets Heavier Across State of Utah

-10

10

30

50

70

Per

cen

t In

crea

se

Med. IncAvg Price

What are they Buying?

% of Homes were “New” in 2007=7% % “New” last year = 12% % “New” ten years ago = 25%

% of Homes were Condos in ’07= 44% % Condos last year = 39% % Condos ten years ago = 10%

Financial Stability Council

Housing Committee Recommendations: Resources: Increase Existing and Create

New; i.e. Dedicated Trust Funds Strengthen Local Gov’t Commitment:

HB295; Encourage development not obstruct Affordable Housing efforts.

Education Campaign: Put a Face on Afford Hsg; Your Parents, your children, important Citizens, Econ and Social Benefits, etc.

Challenging Existing (mis)Perceptions of Aff. Hsg.

It’s Attractive, well-built, and consistent with surrounding Architecture.

Does not Negatively impact Property Values.

Families are Responsible, hard-working and willing to maintain homes. Specify Income Ranges.

Auxiliary Benefits and Linkages Socio Economically Aff. Hsg links to Childhood and

Family Development. Aff. Hsg links to Economic

Development and Economic Impact Aff. Hsg links to Reduced

Transportation and Energy Costs. Aff. Hsg links to Attracting and

Retaining Entry – Mid level Employees