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Subcommittee reviews proposed Affordable Housing Service Program guideline changes and available funds
Summary
Staff proposed administrative changes to the Affordable Housing Service Program guidelines, including reimbursement rules, loan structure options (recourse/nonrecourse), advance payments for capacity-building applicants, eligible applicant clarifications, and a small pool of available AHSP funds.
Buncombe County staff presented proposed administrative updates to the Affordable Housing Service Program (AHSP) guidelines and an accounting of currently available AHSP funds.
Jonathan Jones, staff member, walked the subcommittee through recommended clarifications and new language intended to reduce applicant confusion and align the program with development financing realities. Jones said the AHSP will continue to operate on a reimbursement basis and that staff added language to clarify that applicants cannot combine awards from multiple years to exceed a program maximum. He said applicants may request advance payments in specific cases where capacity building is necessary to deliver a project.
Jones explained proposed clarifications to eligible applicants, saying applicants may be for-profit entities, nonprofits or other legal forms and must indicate if the borrower entity will differ from the applicant. He also described limits on eligible reimbursable costs: the draft language would exclude property acquisition, purchase options or agreements, feasibility studies and other predevelopment costs from reimbursement until after a loan agreement is executed, while still allowing those costs to be included in application budgets for review.
On loan structure, Jones said the county's default has been recourse loans but noted that 4% low-income housing tax credit projects often require a nonrecourse permanent structure. He described an approach where the county issues a recourse loan during construction and converts to nonrecourse terms in the permanent phase so projects can use tax-credit partnership structures as intended.
Jones also described construction-term options including an existing five-year, fully amortizing construction term at 2 percent interest and a proposed option to allow nonprofit partners to request a 0 percent interest construction loan that would continue at 0 percent after the property transfers to an owner-occupant.
Regarding funds, Jones said there is roughly $399,000 in an unallocated portion of the FY23 budget, about $311,000 carried from FY25, and a little more than $450,000 from program income, for a combined AHSP pool of $1,162,161 available to designate to housing projects.
Subcommittee members asked whether proposed guideline changes would apply to projects already in the pipeline; Jones said the subcommittee would need to decide on retroactivity at a future meeting. He said staff plan to revisit the policy later this fall and, if the subcommittee recommends changes, present them to the full board for approval in the typical fall/winter application cycle.
