Brian A. Hudson Sr.
Executive director and CEO, Pennsylvania Housing Finance Agency
What’s the biggest change you’ve made to the 2015 qualified allocation plan (QAP), and why?
I think the biggest change is our emphasis on something I’d call smart site selection. Now more than ever, we’re looking for applications that build on existing community assets. By that I mean, in both urban and suburban locations, developments are encouraged that repurpose vacant buildings, are close to transit and job centers, or fill the “missing tooth” of a block, as examples. They need to maximize available housing services. Plus, they shouldn’t disrupt existing green space.
A second important emphasis for 2015 is the inclusion of more ambitious energy-efficiency goals. We do that in two ways: one, through points allocated for increased energy-efficiency beyond Energy Star and, two, through the use of Passive House standards that focus on the building envelope.
What trends are you seeing in your 9% and/or 4% credit low-income housing tax credit (LIHTC) programs?
Regarding our 9% projects, trends we’re seeing—and encouraging—are an emphasis on supportive housing that takes the importance of housing services more into consideration, plus more of a focus on the provision of special-needs housing intended to help groups like veterans, people with disabilities, and so on.
In the case of our 4% projects, trends we’re seeing are an emphasis on housing preservation in rural areas, and—interestingly—pooled projects whereby developers gain economies of scale and associated cost savings by applying for tax credits for combined projects (that formerly might have submitted separate LIHTC applications).
What strategies are you implementing to preserve existing affordable housing?
We are of the opinion that housing preservation has to be approached from a multidisciplinary perspective. In Pennsylvania, we have an extensive portfolio of older affordable housing stock and understand that new resources are scarce. There is no single best approach to ensure that affordable housing will continue to stay affordable and will be well maintained. As a result, our staff approaches each development on a case-by-case basis to identify factors that can help a development perform more efficiently and, thereby, remain affordable for both management and the residents.
What is your agency doing to address cost containment?
I think the main way in which we are addressing cost containment—and it is—is by arranging the QAP scoring criteria in such a way as to encourage competition among the applications, since projects with better cost efficiencies will gain scoring advantages. When projects are compared by project type (three-story, townhome, preservation, etc.), those projects that have costs 10% below the median cost are awarded five points. If a project is 15% below the median cost, it gets 10 points, and so forth. Those awarded points are the enticement—the carrot—we have to encourage and reward attention to cost efficiencies—and the process does make a positive difference in the outcome.
What advice do you have for developers applying for LIHTCs and/or other financing in your state? What’s a common mistake developers make when applying for funding?
I think there are some basic steps that developers can take that will dramatically improve the quality of their proposals. Most importantly, they need to take advantage of the opportunity to meet with PHFA staff and benefit from the technical assistance we can provide. Next—and this may be obvious, but it’s sometimes overlooked—they need to invest the time to get fully familiar with the QAP. Additionally, as they write their proposal, they need to make the effort to have their application reflect the true goals of their proposal. Another tip that may seem obvious but is valuable, nevertheless, is that applicants carefully run their numbers to be sure their project is financially viable.
