OHFA Annual Plan - Ohio Housing Finance Agency

annual production of more than 250,000 units for more than 20 years to close the gap.These national figures are reflective of the affordable housing gaps in Ohio as well.Few programs exist to meet the operating costs of affordable housing. Apartmentcommunities encounter the following costs and challenges:• Taxes: The use of the income approach to property valuation results in most taxcredit properties being over-valued. This results in higher payments of property taxes.At present there is no policy, program, or state law that helps to address this issue.However, tax abatements and other agreements are available for relief.• Utilities: Utility cost increases are reflected in a reduction in the net rent an ownerreceives as a result of the utility allowance most housing programs require. Otherthan encouraging the resident to reduce usage, the owner has few options to reducethe impact of rising utility allowances. The IRS has issued a revised utility allowanceregulation that should ensure more accurate allowances.• Insurance: Costs are covered by property revenues; increasing costs have negativelyimpacted many property budgets.• Compliance: Compliance fees of multiple programs can increase a property’s costs;there is not a specific program available to reduce these costs confronted by properties.HUD subsidy programs help to pay many of the operating costs of affordable apartmentcommunities; however some subsidies are not available to all properties. More importantly,even those properties with a dedicated subsidy for operating costs find that the costs arerising faster than the subsidy payments, leaving a significant gap between what is collectedthrough rents and subsidies and what must be paid to operate the property. The programsand resources that exist to increase the energy efficiency of apartment homes usuallyrequire an investment from the owner. Cash constrained properties find it difficult to raisethe capital necessary to fund energy efficiency measures.RecommendationsThere is significant interest and need for the preservation and development of affordablehousing in Ohio. It is also recognized that development and operating costs are twounique, intertwined problems that create additional challenges. Primary and secondaryrecommendations were developed to address these affordable housing needs.Primary1) Expand the use of multifamily bonds. As a state-wide entity, OHFA can issuemultifamily bonds for projects anywhere in Ohio. The Agency is also responsible forallocating 4 percent tax credits to federally subsidized projects. These two responsibilitiesplace OHFA in a unique position to impact preservation projects. OHFA should review thecosts associated with issuing bonds and make adjustments as appropriate to ensure OHFA isan attractive issuer of multifamily debt. Explore the viability of OHFA financing or providingcredit enhancement.2) End mandatory extended use. Reinstate the qualified contract process to ensureproperties can transition to the best use.3) OHFA will direct significant tax credit allocations for the preservation ofaffordable housing. OHFA will enhance established priorities that recognize thatpreservation projects significantly outnumber the resources available and therefore, willdevelop a sound and reasonable criterion that strives to achieve the highest number oflong-term sustainable preservation units. Revise policies to ensure that multiple fundingresources, (ie. HOME, HDAP, AHT, etc.) are efficiently utilized in projects with tax credits and15