Amassing resources to fund affordable housing is a major and consuming part of the job of nonprofits. This is even more the case when they are attempting to meet the housing needs of the most vulnerable among Delaware’s citizens or to make use of housing to renew blighted areas.

It is necessary to reevaluate the current use of the HDF for two reasons. First of all, in light of the level or reduced funding which the Housing Development Fund (HDF) has received over the past few years, and the overwhelming use of these funds to lend viability to tax credit projects, the HDF has little available for creative homeownership and deep-subsidy rental projects and for other special uses. Secondly, the current use of the HDF serves the group of renters targeted by the tax credit program, which is typically between 50% to 60% of area median income (AMI). While some households below 50% of AMI access tax credit units through the assumption of greater rent burdens, this is not the purpose of the program, and it will not make a significant contribution to the daunting number of units required to serve the very-poor and extremely poor. Continued use of the HDF primarily to make tax credit projects viable will not allow it to help DSHA meet the major challenge of housing the poor.

The enabling Delaware legislation for the HDF includes the following injunction [4030 (c)(2)(e)]:

In allocating the resources of the Housing Development Fund over time, any program mix or targeting of funds shall account for the demographics of the population in need of housing, should balance the programs appropriately between rental assistance and ownership, and should apportion the available resources statewide according to local need.

The members of the Governor’s Council on Housing must take this charge into serious consideration. Given the current set of housing needs in Delaware, this will lead to a reexamination of the existing use of the HDF. It may require DSHA to forego the use of some of the tax credit allocation available to it annually, until such time as more resources are available to meet both the needs of conventional tax credit projects and other vital needs. Many creative projects have been funded by the HDF in the past, both with and without the use of tax credits. Strategic use of the HDF is more necessary than ever. We would also like to express our interest in working with you to find ways to expand the resources available to the HDF.

In the light of the austere financial environment and the new needs assessment’s identification of problems which the nonprofits had suspected of being there, the members of the Council on Housing should reflect on its role as a group which can evaluate and prioritize needs, examine policy options, and use its powers to hold hearings and investigations. At the least, this seems a very opportune time for the Council to engage in some strategic planning for the prioritization of HDF use.

The new needs assessment has borne out the real world observations of community-based housing organizations on the matter of the lack of housing for the most needy Delawareans. How will this gap of almost 500 units annually be addressed? How much will it cost to meet the full need as laid out in the Needs Assessment? Can the state find resources to increase the HDF? And what impact can the nonprofit sector have in supplying and preserving units without an important reordering of the use of our limited housing resources?

Households at risk: 18,150 renter households earn less than $20,000 annual income and pay more than 30% of their income toward housing expenses. These precarious socioeconomic conditions place households at risk of being one paycheck away from homelessness.

There is a need for additional rental units either to accommodate new household growth or to relieve the conditions of "at risk" renter households who are cost burdened and residing in overcrowded and/or substandard units. Over the next five years, 2,985 rental units are needed either through new construction or the substantial rehabilitation of vacant dilapidated buildings: an average of 600 units a year. The overwhelming majority of this demand is from Delawareans with very low incomes. This can be broken down by resident income levels as follows:

Preservation of affordable multifamily housing: At least 5,693 rental units are in substandard condition and in need of substantial rehabilitation. This represents 6.9% of the State’s total rental inventory. In addition, 1,963 affordable rental units could be lost due to conversion to market rate housing by 2007 as a result of expiration of affordability restrictions, non-renewal of Section 8 subsidies, or an owners election to prepay a mortgage.

Homeownership Needs