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EDND Summer ConferenceLegislative Impacts

June 25, 2015

Overview of NDHFA

• Self-supporting state agency that operates under the Industrial Commission– Provides low-cost mortgages for low-to-moderate

income households (Homeownership Division);– Finances the construction and rehabilitation of

affordable multifamily and single family housing and provides technical assistance to rural communities; (Planning and Housing Development Division);and

– Monitors program compliance on low income housing projects (Property Management Division)

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Legislative Update

• Housing Incentive Fund reauthorized with – $30 million in state income tax credits– $5 million from the Bank of North Dakota profits immediately– An additional $5 million from BND if they reach a $130 million

profit level during 2015– Restricts the additional $5 million for use in communities with

populations under 12,500– Capped origination fees at 5%

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Other Legislative Action

• Legislature defeated NDHFA sponsored bill to include projects owned by 501(c)(4)s as being eligible for lower property taxes– Currently limited to projects owned or controlled by

501 (c)(3)s that meet other criteria• Must be subject to and in compliance with a land use

restriction agreement• If any for-profit ownership interest, property must transfer to

the non-profit without financial gain to the for-profit

– Info available on Agency website www.ndhfa.org • BND received funding for the Affordable Housing Flex

Pace program of $12 million

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Housing Incentive Fund

• Administered by the North Dakota Housing Finance Agency www.ndhfa.org or www.ndhousingincentivefund.org

• State funded program to encourage developers to set-aside some or all of their rental units for low to moderate income households.

• Initially created in 2011 by Legislature to allow a credit against state income and financial institution taxes equal to the contribution into the HIF.

• Available only for rental units• 30% of cost of project (limited to $3 million) in the form of a 0%

forgivable loan

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How does HIF work?(with state tax credits)

AffordableHousing

Developers

NDHFAHIF

Contributors

State Tax Credits

$ Contributions Low-Cost Financing

HIF Loan Repayment

HIF III Status Update

• $35 million fund for 2015-17– First funding round closed May 29th

– 33 applications requesting $52.4 million– Expectation is that there will be no further

funding rounds until additional $5 million becomes available in 2016

– 15 of 33 applications located in Oil and Gas Producing counties

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HIF III Pending Applications

• Projects located in Oil and Gas Producing Counties

– 1 in Beulah (24 units)– 4 in Dickinson (138 units of which 72 are retirement of

debt to convert to affordable)– 1 in Hazen (22 units)– 1 in Killdeer (4 units)– 4 in Minot (145 units)– 1 in Ray (47 units)– 1 in Williston (186 units)– 2 in Watford City (97 units)

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HIF III Pending Applications

• Other pending applications– 4 in Bismarck– 3 in Fargo– 1 each in Grand Forks, Gwinner, Harvey, New Rockford,

Valley City, Milnor– 2 in Jamestown– 3 in Mandan

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HIF III Process

• Decisions on approved projects anticipated around July 1st – score driven selections

• Awards will be majority credits-partial cash – 85.7% credits– 14.3% cash

• Successful applicants will be responsible, with NDHFA assistance, for soliciting contributions into the HIF III for their projects– NDHFA can begin accepting contributions into the

fund on July 1st

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Challenges for Housing

• Housing costs for consumers still are unaffordable for many

• Higher land, labor and material costs forcing the end price up for consumers

• Inadequate infrastructure is inhibiting housing development

• Creation of affordable housing requires subsidy

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Challenges for Housing

• Average cost per unit of HIF III applications exceeded $182,000

• Developer paid infrastructure and higher land costs increasing the final cost of a new single family – Often times said to cost $70-100,000 for a lot before any

construction starts

• Creation of truly affordable housing most often requires local as well as state financial support– Donation or reduced cost of land– Site infrastructure assistance

• Smaller lot size, narrower streets, relief from various city imposed fees

– Reduction in property taxes

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For More InformationGeneral Information on Agency Programs: www.ndhfa.org

Jolene Kline, Executive Directorjkline@nd.gov701/328-8072

Jennifer Henderson, Director of Planning and Housing Development

jhenderson@nd.gov701/328-8085