Q&A
Challenges in expanding homeownership programs and potential LIHTC conversions
1:26:06
·
4 min
Kim Darga explains the challenges and resource requirements for making Open Door and Home First programs accessible to lower-income households, as well as the potential for converting LIHTC subsidized rentals to homeownership.
- Darga discusses the need for more public resources to target lower AMI levels in the Open Door program
- She explains that the current down payment assistance program serves households up to 80% AMI, with an average income of purchasers at 68,000
- Darga outlines the complexities involved in converting LIHTC properties to homeownership, including resident interest, financial viability, and potential barriers to purchase
Kim Darga
1:26:06
Okay.
1:26:06
So, Opendoor, so as I mentioned, we have to if we're gonna invest public resources, we need to know that we're providing affordability within the community.
1:26:17
And also because we impose income limitations, if we don't do that, we don't there's not actually demand.
1:26:26
Right?
1:26:27
So we can go deeper, but it requires more public resources.
1:26:35
And the other thing that I think we just need to be cognizant of is that there is correlation between income as and debt to income, and that in order to qualify for a unit within HPD financed housing, right, if you're coming through housing connect, you're getting financing within the private market.
1:26:58
Meaning, the lender is gonna look at your credit score and your debt to income, and you may or may not qualify for a loan based on factors outside of HPD's control.
1:27:11
Right?
1:27:11
So it's well, it's possible to do so.
1:27:15
It is much more resource intensive.
1:27:19
We are already investing on average last year for 110,000 a unit for the Opendoorion housing.
1:27:26
So If you were to bring down the AMI dramatically on the sales prices, the public investment would be significantly higher.
1:27:36
You could offset that if there were other resources.
1:27:39
And if it wasn't fully the city investing.
1:27:43
On down payment assistance, it the current program serves households up to 80% AMI, the average income of a purchaser recent family purchasing is 68,000.
1:27:56
So it's actually significantly lower.
1:27:59
We are we do have low income households that are purchasing through that program.
1:28:06
And then on conversions.
1:28:09
You know, this is an interesting question.
1:28:12
The loan come housing tax credit conversions are probably the most financially feasible.
1:28:20
Because you don't you shouldn't have significant acquisition costs, although you can.
1:28:27
It it is still possible that the current owner if they are going to allow a conversion, there would be a sale involved.
1:28:36
Right?
1:28:37
That's not all that was the case.
1:28:38
It varies.
1:28:42
Even with that, there are other factors that would be need to be addressed in order for a conversion to be viable.
1:28:53
You'd want to know that at least 80% of the tenants are interested.
1:28:57
At least 80% of the tenants are good standing on their rent payments.
1:29:02
And at least 80% of the tenants are have attended training.
1:29:06
Those are standard rules of thumb that we've used that have indicated that you have a group of residents that are ready to step into the ownership space, and they have a critical mass of other residents in their property that are interested.
1:29:25
Where it is harder to actually effectuate conversions is if you have a non regulated, let's say, tax credit property, and there's a private site acquisition that also needs to be accounted for.
1:29:44
In those projects, the residents basically have the sales price for the insiders, the current residents, has to be sufficient to help cover the acquisition costs.
1:29:55
And so depending on the market that the property is in, that can be pretty high and may end up being some barrier to purchase.
1:30:05
Our down payment assist, down payment assistance is available.
1:30:09
So that might be a tool to help.
1:30:12
But there are definitely some challenges.
1:30:14
It's it's not impossible.
1:30:15
We have seen a few requests specifically in the Li Tech preservation program to convert.
1:30:22
But there are also there's it's complex, and it may not work out in every project.
