In January 2014 the State Housing Finance Agency (HFA) announced a significant change in its 80/20 program, which offers developers low-cost financing for market-rate projects where 20% of the units are set aside as affordable housing.
Until recently, 80/20 housing developments could benefit from tax-exempt private activity bond financing for the full development costs as long as they set aside 20% of the units for households earning up to 50% of AMI. Under the new policy, HFA will only issue bonds to provide low-cost financing for 20% of the development costs. In other words, low-cost financing will only be available for the affordable units. Developers will have to find other sources of financing for the market-rate units, which HFA may continue to provide through taxable bonds.
CHPC estimates that the new policy will make available over $440m in additional bond issuing capacity, based on a review of HFA’s Official Statements from 2005-2013 that is part of our upcoming Pump Up the Volume report.