HUD To Lower Financing Rates For Affordable Multi-Family Rental Housing
The U.S. Department of Housing and Urban Development Secretary made an announcement in Columbus Thursday regarding affordable housing. Mike Foley reports.
HUD Secretary Julian Castro says the Federal Housing Administration will lower the rates it charges to ensure financing for multi-family rental housing properties.
“Effective April 1, we’re lowering the rates for financing in 3 categories – broadly affordable, mixed income and energy efficient housing. At its essence, what we are doing today is a case of less is more. Less borrowing costs mean more capital to rehabilitate affordable housing, more investment in energy efficient upgrades that benefit more people and our environment, more construction and rehabilitation projects which will spark economic activity across the board in communities throughout the United States and including Columbus.”
Castro made the announcement at Poindexter Place, which features 104 apartments for seniors and marks the first phase of redevelopment efforts in the area spurred in part by a $30-million-dollar HUD grant two years ago. Julie DeGraaf Velazquez is the Senior Vice President and Project Manager for Poindexter Village developer McCormack Baron Salazar.
“It’s actually really helpful. HUD has done a lot of work to make its financing programs work much better with affordable and mixed income housing projects like Poindexter. And so that reduction in the mortgage insurance premium actually helps us be able to borrow more money, so get a little more leverage. We have a lot of sources in these projects so the more that we can leverage our first mortgage financing the better. And it also helps with operations because that premium is actually paid over the entire 40-year-life of the loan so to have that be lower means that we are actually able to reduce our operating costs.”
Castro says he hopes for similar transformation plans like Poindexter Village. He estimates the rate adjustments will help rehabilitate nearly 40,000 units nationally over the next three years.
“Columbus is a good example of a medium-size city where there’s a challenge with affordable housing like a lot of other cities. It’s a good mainstream example of how we can all work together to create more affordable housing opportunity. No matter where I go, what I hear from folks is that they’re spending more money on the rent and that folks have a problem finding something that is affordable. That means more people are spending more of their budget on the rent than they ought to be. They’re doubling up. They’re not enjoying as good a quality of life as they could because the rents are so high.”
Columbus Mayor Andrew Ginther says the FHA’s decision will help the city offer more affordable housing, but there’s clearly more to do.
“So the average for a two-bedroom apartment in central Ohio is $812 a month but the median income is only $44,000 a year. So it demonstrates that folks are spending more than half of their income toward safe and affordable housing. I’m told we’re about 54,000 units short of affordable housing in this community. So we’re working with partners and other great organizations in this community to help put together a plan to address that over the next five to ten years because we know that safe and affordable housing is absolutely critical to having strong neighborhoods and places where families can grow and thrive.”
Construction on another 87 multi-family apartments has started adjacent to Poindexter Place, with the end result of additional phases bringing a total of 449 units to Poindexter Village.