BOARD WORK SESSION WEDNESDAY, FEBRUARY 3, 2016
5:30 – 7:00 PM COLUMBIA ROOM – 6TH FLOOR
AGENDA
1. Gladstone Square Re-syndication*
(Molly Rogers, Mike Andrews)
2. RAD Update*
(Mike Andrews, Molly Rogers, Rodger Moore)
3. Payment Standard Overview*
(Dena Ford-Avery, Ian Slingerland)
4. Executive Director Updates
*Attachment
MEMORANDUM
To: Board of Commissioners
From: Molly Rogers, Director of Asset
Management
503.802.8437
Mike Andrews, Director of
Development and Community
Revitalization
503.802.8507
Date: February 3, 2016
Subject: Gladstone Square Limited
Partnership
Asset Management and Development will seek approval in February for two actions: (1)
Home Forward Development Enterprises Corporation (“HFDE”) to acquire Key Investment
Fund Limited Partnership XVI’s (“KEY”) interest in Gladstone Square Limited Partnership
(“Gladstone Square”) for ten dollars ($10.00), and (2) Home Forward to enter into a Grant
Agreement with Gladstone Square LP. These two actions would be presented to the
Home Forward Board of Commissioners and the HFDE Board on February 16, 2016.
ISSUE
Gladstone Square Apartments include 48 units of affordable housing in the Powellhurst-
Gilbert neighborhood, primarily serving low-income Hispanic families with children.
Households earn between 30% and 60% of Area Median Income (AMI). The property
consists of 12 three-bedroom and 36 two-bedroom units. In 1997, Home Forward
entered into a Low Income Housing Tax Credit (LIHTC) partnership with Key Investment
Fund Limited Partnership XVI’s (KEY) to construct Gladstone Square. We utilized a
combination of tax credit equity, a loan from the Network of Oregon Affordable Housing
(NOAH), and funding from the City of Portland to finance the development. In exchange
for the tax credit equity, the partnership provided KEY with ten years of tax credits and tax
2
losses. At the end of the 15-year LIHTC compliance period, it was anticipated that KEY
would exit the partnership and Home Forward would take over ownership.
Built eighteen years ago, Gladstone Square has struggled for several years with water
intrusion caused by construction defects and insufficient rental revenue due to twenty-four
(24) of the forty-eight (48) units being restricted to 30% AMI. In 2014, RDH Building
Sciences, our forensic building envelope consultants, recommended immediate
replacement of siding, roof, gutters, downspouts, exterior doors, balconies, staircases,
concrete entries and storage units, based upon exploratory openings they performed.
Based upon the current anticipated scope of work, we are looking at a total construction
repair cost of approximately $3,100,000.
In 2015, Home Forward staff began working on a strategy to seek 4% tax credit equity
and debt through a joint syndication of Gladstone Square and Multnomah Manor (54
units). To offset the equity gap in this endeavor, Home Forward recently requested $1
million from the Portland Housing Bureau’s Notice of Funding Availability, to be leveraged
with $10.7 million in other development sources, to preserve these 102 affordable housing
units. If successful, both properties will obtain the funding for necessary repairs, and both
will be owned by a single tax credit entity, of which Home Forward will be the general
partner.
This proposed plan is the culmination of many strategies attempted and deployed across
the years to preserve this deeply affordable housing. In 2015, Home Forward’s Board of
Commissioners approved placing 24 project-based section 8 subsidies, or half the
property, due to the high needs and extremely low incomes of the current residents.
However, only half of these vouchers have been able to be turned on (see proposed action
below). To position the property to be an attractive investment for equity and debt
partners while also maintaining the 30% MFI affordability, the annual operating subsidy
must be fully utilized.
PROPOSED ACTON
HFDE Acquires KEY’s LP Interest
In 2014, the Board of Commissioners authorized Home Forward to acquire KEY’s limited
partnership interest in Gladstone Square. This step would require dissolving the
partnership (since there would only be one partner), opening new accounting books and
bank accounts, additional legal review, as well as executing new vendor and lender
contracts. This is an unnecessary step which can be avoided by having KEY assign its
3
interest to HFDE. KEY has already agreed to transfer its interest for a nominal fee, $10. If
HFDE acquires KEY’s interest, the partnership and accounting books can remain intact,
and the limited partner KEY will be precluded from claiming an interest in sales proceeds
when the property is acquired by the new tax credit entity.
Diminishing Grant Agreement
In 2014, the Board of Commissioners also authorized the shifting of twenty-four (24)
Project Based Vouchers (“PBV’s”) from Rockwood Station and Ashcreek to Gladstone
Square. The property has struggled to place all PBVs with existing residents. Currently,
only twelve (12) PBVs have been placed. The delay of the PBV subsidy diminishes the
property value, tax credit and debt leverage necessary to support the capital
improvements.
The reasons for the delay vary. Of the thirty-two (32) current residents who applied,
twenty-eight (28) households either would receive an increase in their rent portion (are
economically harmed) or don’t qualify for Section 8. The rate of move outs is low at three
(3) units per year. The financing programs prohibit eviction without cause, so once a tenant
qualifies upon move-in there is no disincentive (such as rent increases tied to increases in
income or changes in household size) to encourage households to move out. We
estimate it would take at least four (4) years to execute the remaining twelve (12) PBV
leases based upon attrition.
The initial estimate of the grant would be $150,000, which is budget neutral to Home
Forward because of the Board’s previous authorization to place twenty-four (24) project-
based section 8 subsidies at Gladstone in 2015. The grant agreement would be renewable
until all twenty-four (24) units of project-based vouchers are placed to provide necessary
security for tax credit investors and lenders. The amount of the grant would diminish as
new Section 8 leases are executed. Grant documents would be based upon mixed
finance Regulatory and Operating Agreements to provide investor and lender assurances
of subsidy continuation after potential foreclosure. The initial grant document would be
executed between Home Forward and Gladstone Square Limited Partnership and would
be assignable upon property sale to the new tax credit partnership. The grant will
terminate when the annual subsidy has diminished to zero.
MEMORANDUM
To: Board of Commissioners
From: Mike Andrews, Director,
Development and Community
Revitalization
503-802-8507
Date: February 3, 2016
Subject: Rental Assistance Demonstration
Update
The purpose of this memorandum is to provide background information and an update
relating to our efforts to convert public housing operating subsidy to Section 8 using the
Rental Assistance Demonstration (RAD) program.
ISSUE
By way of background, the attached PowerPoint presentation provides a context and
rational for Home Forward’s decision to pursue this conversion. It also provides an
explanation of the RAD program. The presentation was originally presented to the board
in February 2015 as justification for submitting our RAD applications. Information in the
presentation is still valid today.
Also attached by way of background is an overview of Home Forward’s existing public
housing portfolio delineated by the strategy we are using to convert to Section 8.
In July 2015, Home Forward submitted RAD applications for the RAD 2 properties.
UPDATE
In Sept 2015, Home Forward received Commitment for Housing Assistance Payment
(CHAP) awards from the U.S. Department of Housing and Urban Development (HUD) for
the six properties in RAD 1. We are actively pursuing these conversions.
There are two key issues at hand relating to RAD 1. First, is the RAD Rent that will be
contracted for these properties. HUD’s proposed RAD Rent contained in the Commitment
2
to Enter Housing Assistance Payments (CHAP) is based on incorrect information. Home
Forward staff were able to identify and explain the error to HUD. HUD has acknowledged
the error and we are currently working on a proposed alternate methodology that will result
in a correct RAD Rent.
Second is the transfer of operating subsidy from Rockwood and Fairview to Sequoia and
Schiller. Home Forward has elected to transfer this assistance because it will benefit from
the financial performance of Sequoia and Schiller and decrease the rent burden for
residents in these units. It will also result in increased positive cash flow to Home Forward.
In addition to working on these primary issues, staff are working on scheduling and
communication tools for residents. The transfer of assistance for RAD 1 must be
completed by September 2016 (one year from receiving our CHAP).
It is also worth noting Home Forward’s RAD 2 application was received by HUD. The
timing of our submission positioned us above the current 185,000 unit limit on the RAD
program. We anticipate some units ahead of us will fall out and the cap will be raised or
removed. Timing for either of these is impossible to predict.
ATTACHMENTS
Power Point Presentation
Public Housing Portfolio
Board of Commissioners
Retreat 2015
February 7, 2015
HUD and the Federal Landscape
Presentation
Purpose of presentation Quickly provide history and background
Traditional public housing
Changing landscape
HUD and the Federal Landscape
Traditional Public Housing
Traditional Public Housing
Housing Act of 1937
Jobs program aimed the Great Depression
Elimination of slums
Housing for vets and working families
Traditional Public Housing
Focus on mitigating
“slums” from urban areas
Traditional Public Housing
Focus on mitigating
“slums” from urban areas
Result was public housing
being sited in poor locations
Traditional Public Housing
Focus on
construction and
manufacturing jobs
Housing was a
secondary
consideration
Traditional Public Housing
Defense workers (Columbia
Villa)
Veterans (starter family
units)
Traditional Public Housing
HUD
Home Forward
Operating
Subsidy
Capital
Grant
Size (Number of Agency PH
Units)
# of agencies
% of agencies with PH
units
# of PH units
% of all PH units
# of agencies
also having vouchers
% of agencies with both PH units
and vouchers
# of vouchers
% of all vouchers
administered by agencies
with PH units
15000+ 4 0.13% 259,667 21.56% 3 0.20% 163,211 10.51%7501-15000 8 0.25% 79,995 6.64% 8 0.54% 97,457 6.28%5001-7501 12 0.38% 71,350 5.93% 11 0.74% 119,016 7.67%1501-3000 86 2.72% 218,021 18.10% 84 5.62% 339,672 21.88%1001-1500 69 2.19% 83,235 6.91% 66 4.41% 122,125 7.87%501-1000 202 6.41% 137,903 11.45% 173 11.57% 233,171 15.02%100-500 1279 40.57% 281,401 23.37% 741 49.57% 370,122 23.85%
<100 1,493 47.35% 72,564 6.03% 409 27.36% 107,597 6.93%TOTAL 3,153 1,204,136 1,495 1,552,371
Traditional 6.41% 1,304Mixed Finance 791
TOTAL 2,095 0.17% 8,447
Home Forward
Source: Council of Large Public Housing Authoriteis
Traditional Public Housing
National Perspective:
1.Housing serves very low
income people
Traditional Public Housing
National Perspective:
1.Housing serves very low
income people
2.Reduced federal fund
Traditional Public Housing
National Perspective:
1.Housing serves very low
income people
2.Reduced federal fund
3.Mounting capital needs20 year estimate of capital needs:
National (all public housing)
$89,139,505,122
Home Forward (85 Stories)
$81,059,158
Traditional Public Housing
National Perspective:
1.Housing serves very low
income people
2.Reduced federal fund
3.Mounting capital needs
4.Loss of units
Source: Congressional Research Service, Introduction to Public Housing,
January 2014
Traditional Public Housing
Changing Landscape
Changing Landscape
National Perspective:
1.Housing Act of 1937
2.HOPE VI
3.Moving to Work (1996)
4.Quality Housing & Work Responsibility Act (1998)
5.Rental Assistance Demonstration Program (2012)
Changing Landscape
Current Federal Focus on Public Housing:
1.Choice Neighborhoods
2.Section 18 Disposition
3.Rental Assistance Demonstration Program
Changing Landscape
Choice Neighborhoods:
No eligible & competitive projects
Changing Landscape
Section 18 Disposition:
Approval from HUD to remove the traditional public
housing regulations and subsidy
Comes with new Section 8 Vouchers
Approval based on two tests: 1) Obsolescence, 2)
Efficient & Effective
Most ideal process for a PHA
Changing Landscape
Section 18 Disposition:
Traditional Subsidy Conversion
Changing Landscape
Rental Assistance Demonstration Program:
HUD’s preferred program today
Currently limited to 185,000 units
Not widely accepted. Generally opposed by labor
and advocates
Uses Section 18 financial structure, economics not
as beneficial
Changing Landscape
Changing Landscape
Changing Landscape
Conclusions
Traditional Housing is slowing ending
The need for affordable housing is remains strong
Federal focus is shifting public / private model
Home Forward is an experienced developer, owner
and manager of housing using a public / private
model
HUD has signaled a clear change. Home Forward
should keep up with the changing landscape
Name PH UnitsTotal Units Name PH Units
Total Units Name PH Units
Total Units Name PH Units
Total Units
Rockwood Station 25 195 Northwest Tower 173 174 Humboldt Gardens 100 130 Peaceful Villa 70 70
The Jeffrey 20 80 Gallagher Plaza 85 85 Stephens Creek Crossing North 64 75 Dekum Court 39 40
Martha Washington 25 108 Sellwood Center 110 110 Stephens Creek Crossing South 45 47 Tamarack 118 120
Bud Clark Commons 130 130 Hollywood East 286 286 Fir Acres 31 32 Schrunk Riverview Tower 118 118
Madrona 45 45 Townhouse Terrace 31 32 Williams Plaza 101 101
Fairview Oaks & Woods 40 328 Stark Manor 29 30 Dalhke Manor 114 115
Lexington Court 20 20 Holgate House 80 80
Eastwood Court 31 32 Medallion Apartments 89 90
Carlton Court 24 24 Ruth Haefner Plaza 73 73
Slavin Court 23 24
Demar Downs 18 18
Eliot Square 30 30
Celilo Court 28 28
Tillicum South 12 12
Harold Lee Village 10 10
Floresta 20 20
Maple Mallory 48 48
Bel Park 10 10
Winchell Court 10 10
Powellhurst 34 34
Tillicum North 18 18
Hunters Run 10 10
Haven Limited Partnership 29 44
Cecelia Limited Partnership 72 131
Trouton Limited Partnership 125 248
Woolsey Limited Partnership 71 131
Camelia Court 14 14
Cora Park 10 10
Alderwood 20 20
Chateau Apt. 10 10
Scattered East A 7 7
Sub‐total Sub‐total Sub‐total Sub‐totalUnits 285 886 Units 654 655 Units 1,004 1,309 Units 802 807# of Properties 6 # of Properties 4 # of Properties 31 # of Properties 9
TotalUnits 2,745 3,657 # of Properties 50
RAD 1 Section 18 (1st application) RAD 2 Section 18 (2nd application)
M E M O R A N D U M
To: Board of Commissioners
From: Dena Ford-Avery, Director of
Housing Choice Vouchers
503.802.8568
Ian Slingerland, Director of
Homeless Initiatives
503.802.8370
Date: February 3, 2016
Subject: Payment Standard Overview
This memo is for informational purposes only. No formal action is being requested of the
board at this time.
ISSUE
The Housing Choice Voucher program was designed to provide an opportunity for very
low income people to live in the neighborhood of their choice. Voucher recipients have the
option to use their voucher to select housing based on proximity to good schools, public
transportation, job opportunities or other factors they consider important to their family.
Home Forward is authorized to assist 9,043 low income households on the Section 8
Housing Choice Voucher program. As you know, we made the decision to project base
1,900 of those vouchers over the past 15+ years and we have committed another 500 for
the A Home for Everyone collaborative, leaving 6,643 tenant based vouchers available for
use in the private rental market today. While the Housing Choice Voucher program has
potential to offer great opportunity, it is a market driven program that cannot function
without landlords willing to accept the voucher, available rental units in the private market,
and adequate federal funding levels.
2
An important aspect of a successful Housing Choice Voucher program is the adoption of
payment standards that are comparable to the local rental market, enabling voucher
holders to access rental units of their choice. The payment standard is the maximum level
of rent assistance that can be provided to the voucher recipient. Adequate payment
standards provide the shopping dollars necessary for families to compete for available
units in the private market. HUD regulations require that payment standards be
established at ranges between 90% and 110% of HUD’s established Fair Market Rents
(FMR) for the area, which HUD reviews and establishes annually.
Home Forward has used Moving to Work flexibility to establish payment standards in a
broader range - between 80% to 120% of HUD’s established Fair Market Rents. This
flexibility enables us to be more in line with the actual rental market throughout the county,
which varies dramatically from one neighborhood to the next. The expanded range for
payment standards was approved by HUD in our FY2015 MTW plan and became effective
on April 1, 2014.
The rental market has been increasing annually at an average rate of 7%. In recent
months, Home Forward began analysis to determine when and how much to increase our
existing payment standards to keep pace with the rising private market rents. We know
the current amounts are no longer sufficient for our housing choice voucher households
searching for units in this tight rental market or those in place who are experiencing rent
increases. As noted in recent communications, the current rental market for Portland and
the surrounding area is one of the hottest rental markets in the country. We continue to
see rents increase in many neighborhoods by over 10%. HUD issued new Fair Market
Rents in January 2016, and while they increased by an average of 10% for our region, they
continue to lag behind actual rental rates in many neighborhoods and will not allow access
to low income voucher participants.
Home Forward made the decision in partnership with the three neighboring public housing
authorities (Clackamas County, Washington County and Clark County in Vancouver, WA)
and with support of the Portland Housing Bureau to invest in a market study that meets
HUD requirements to challenge the HUD established FMR’s. The FMR for our region
includes seven counties identified as the Greater Portland Metropolitan area. (The U.S.
Office of Management and Budget (OMB) identifies it as the Portland-Vancouver-Hillsboro,
OR-WA Metropolitan Statistical Area, a metropolitan statistical areas used by the United
States Census Bureau and other entities. The OMB defines the area as comprising
Clackamas, Columbia, Multnomah, Washington, and Yamhill Counties in Oregon, and
Clark and Skamania counties in Washington.)
3
Generally, the goal of the market study is to conduct a survey, that will demonstrate to
HUD that the current FMR levels should be increased based on a minimum of 200 survey
results of recent movers (moved within 15 months), that demonstrate market rents in our
region are significantly higher than current FMR levels would indicate and thus an increase
in the FMR’s is warranted. Home Forward contracted with Washington State University to
conduct this work as they had successfully conducted the same market study within HUD
requirements for King County Housing Authority in Washington State.
NEXT STEPS
As we stand today, the work on the FMR study has been completed and the results were
submitted to HUD in December 2015. We are waiting for this process to conclude and
anxiously await newly published amended FMR’s for our region. Should we be successful
in this approach and gain increased FMR’s for this region, we will conclude our payment
standard analysis work and present recommendations to the board for approval. While
the market demands we take this step to provide housing access and stability for current
voucher participants, we understand and are mindful that additional funding does not
accompany increased FMR’s. Over time, Home Forward and other public housing
authorities administering the Housing Choice Voucher program in markets experiencing
rapid rent increases will serve fewer families as a result of HUD’s funding formula. Home
Forward intends to seek reform to the voucher funding formula because without it, public
housing authorities are unable to respond adequately as a housing crisis impacts our most
vulnerable citizens.
ATTACHMENTS
Home Forward Current Payment Standards
Payment Standard Neighborhood Designations Map
Housing Choice Voucher Demographics Report
Multnomah
Clark
Clackamas
Washington
98607
97220
97080
97230
97217
97219
97203
97229
97211
97236
97030
97086
98683
97218
97210
97060
97202
97089
97206 97266
97222
97225
97223
97233
97221
9721397024
97239
98664
97214
98661
97212
972169721597201
97232
98684
97231
97227
97209
97005
97205
97008
97035
97009
97204
97034
98660
98671
97208
97238
97280
97294
97283
97269
9729297258
97240
97293
97296
97290
97298 97242
97256
98687
97286
97282
I84
I5
I205
MARINE
82ND
POWELL
STARK
SR-14
122N
D
DIVISION
BURNSIDE
LOMBARD
SANDY
FOSTER
HOGA
N
BARBUR
SUNSET
ST HELENS
I405
CORNELL
SR-50
0
HALL
KANE
AIRPORT
HWY 217
181S
T
NAITO
6TH
YEON
INTER
STAT
E
MACADAM
257T
H
BROADWAY
182N
DCANYON
BARNES
242N
D
MART
IN LU
THER
KING
JR
COLUMBIA
18TH
19TH
BEAVERTON HILLSDALE
ORIENT
PACIFIC HWY 224
MCLO
UGHL
IN
PORTLAND
238T
H
HWY 26
LOVEJOY
TACOMA
CLAY
BRIDGE
I-205
RIVERSIDE
DENV
ER
CESA
R E C
HAVE
Z
GRAN
D
BOON
ES FE
RRY
LLOYD
CAPITOL
TERWILLIGER
HWY 30
COUCH
HOOD
KILLINGSWORTH
ROSS ISLAND
VAUGHN
BURGARD
244T
HFREMONT
3RD
BALTI
C
I84-181ST
I205 F
WY-P
OWEL
L BLV
D
SELLWOOD
I5 FWY-BAR
BUR BLVD
I84 FW
Y-I20
5 FWY
I84-257TH
MARQUAM
WOODSTOCK
LARRABEE
TENINO
I84
3RD
SR-14
I405
SR-14
I5
HWY 217
242N
D
GRAN
D
BURNSIDE
82ND
I205
I5
PORTLAND
I84-181ST
FOSTER
SUNSET
HWY 26
SR-500
I5 SR-14
21
15
20
Home ForwardSection 8 Payment Standard Areas
June 19, 2014
Downtown NW Portland Inner-Central NE Inner-Central SE N Portland/St.Johns Outer NE Outer SE SW Portland Gresham/Fairview/Troutdale Zip Code Boundary97229
Demographic Clackamas Downtown East CountyInner & Cent
NEInner & Cent
SELake O & W
LinnN Pdx & St Johns NW Pdx Outer NE Outer SE SW Pdx Gr& Total
Senior/PWD 85 254 486 752 583 7 421 660 589 1361 470 5668Average Income $11,149 $7,865 $12,051 $10,297 $10,167 $8,043 $11,380 $9,175 $12,166 $11,814 $9,680 $10,793Work‐Focused 65 46 320 319 235 7 362 75 453 995 103 2980Average Income $14,442 $2,902 $13,627 $12,723 $12,109 $12,679 $13,674 $7,614 $12,867 $15,258 $13,100 $13,521
AmrIn 3 12 13 21 23 19 20 22 42 7 182Asian 3 4 21 66 62 11 15 65 146 6 399Black 24 39 175 472 161 3 383 92 475 762 119 2705Hawai 3 1 5 5 7 5 3 10 9 3 51Multi 9 5 25 31 22 26 15 30 79 12 254White 108 239 567 476 543 11 339 590 440 1318 426 5057
Not Hispanic 142 271 732 985 770 11 712 690 986 2190 554 8043Hispanic 8 29 74 86 48 3 71 45 56 166 19 605Grand Total 150 300 806 1071 818 14 783 735 1042 2356 573 8648
No Youth 79 296 458 766 607 6 434 704 568 1262 493 5673Has Youth 71 4 348 305 211 8 349 31 474 1094 80 2975Pct w/Youth 47% 1% 43% 28% 26% 57% 45% 4% 45% 46% 14% 34%
Grand Total 150 300 806 1071 818 14 783 735 1042 2356 573 8648% of Total Voucher Households 1.7% 3.5% 9.3% 12.4% 9.5% 0.2% 9.1% 8.5% 12.0% 27.2% 6.6%
Housing Choice Voucher Demographics Reportas of January 1,2016
Household Type Designation
Racial Demographics
Ethnicity
Household Presence of Youth
