What is the Regional Housing Initiative (RHI)?
RHI is a program designed to encourage the development, rehabilitation and preservation of quality affordable rental housing throughout the Chicago metropolitan region. The Initiative is a partnership of seven housing authorities (Cook County, Waukegan, Lake County, Joliet, McHenry County, Oak Park, and Chicago), the Illinois Housing Development Authority and the Metropolitan Planning Council. The public housing authorities (PHA’s) have agreed to make project-based subsidies (RHI vouchers) available for up to 355 rental housing units in developments throughout the metropolitan region.
What is the purpose of the Regional Housing Initiative?
RHI is designed to bring quality housing opportunities closer to employment centers and areas served by transit. As employment centers have moved out of central city, housing options at various price points have not always kept pace. The lack of conveniently located housing, available for entry-level workers, is now being recognized as a problem for the metropolitan Chicago area. It renders the region’s job centers less attractive for new business location and the expansion of existing businesses. It also contributes to excessive commutes and congestion. RHI was created to address these problems.
What is the benefit of RHI to owners of apartment buildings?
RHI enables owners to well-managed multifamily rental properties to have predictable rental income stream for as long as they want (up to 10 years, renewable). RHI vouchers generally fund the difference between reasonable market rents the tenant’s rent payment. Tenants are required to pay 30% of gross monthly income, plus a utility allowance.
Why should multifamily family developers be interested in RHI?
In addition to a steady stream of rental income, RHI gives developers a competitive advantage when applying to Low Income Housing Tax Credits. The Illinois Housing Development Authority gives four points to developments that have been awarded RHI vouchers. Additionally, RHI is backed by the Metropolitan Mayors Caucus: all buildings approved for RHI vouchers must comply with the MMC’s Housing Endorsement Criteria.
What is an RHI voucher?
An RHI voucher is a project-based rental voucher that must be applied for through the RHI competitive process managed by the Metropolitan Planning Council. It provides rental support to qualified families, which is paid directly to the landlord. Unlike most rental vouchers, RHI vouchers are attached to apartments, not tenants. RHI vouchers are intended to provide affordable rental housing near jobs and must meet the RHI program requirements (see applications at www.regionalhousinginitiative.org).
What is the maximum and minimum number of RHI vouchers that I can apply for in my building or development?
RHI is intended to foster economically diverse living environments. Therefore no more then 25% of a development can receive RHI vouchers, except in the case of special needs housing.
RHI vouchers/units can constitute 100% of the units in a development, if the development is supportive housing for people with disabilities.
The minimum number of RHI vouchers/units per development is 5. They must represent at least 25% of the total number of units.
- 12-unit development, non-supportive housing. Maximum number of RHI vouchers applicable: 25% of 12 = 3. Proposal does not qualify (less than 5 subsides).
- 28-unit development, non-supportive housing. Maximum number of RHI vouchers applicable: 25% of 28=7. proposal qualifies (more then 5 subsidies).
- 4-unit development, supportive housing for people with disabilities. Maximum number of RHI vouchers applicable: 100% of 4=4. Proposal does not qualify (less than 5 subsidies).
- 5-unit development, supportive housing for people with disabilities. Maximum number of RHI vouchers applicable: 100% of 5=5. Proposal qualifies (5 subsides).
Are seniors-only buildings eligible for RHI subsides?
No. Proposals with occupancy restricted to seniors will not be considered for assistance under RHI.
Are there restrictions on who I lease apartments to?
Yes. Potential residents for RHI units must be referred by the housing authority that has jurisdiction over the area where the development is located, or “Lead Housing Authority”. All of the participating housing authorities will refer potential residents to the Lead Housing Authority.
RHI is designed to bring housing opportunities closer to employment opportunities. Consequently, all of the housing authorities will establish a “working preference” for families to be referred to RHI apartments. The working preference will establish priority for residents who are working, or in training for work, within a 12-mile radius of the apartments.
Must I accept any tenant referred to my building?
No, owners or their agents are expected to screen rental applicants. However, owners must comply with all applicable non-discrimination and fair housing laws and regulations in screening and making offers of housing.
Are there restrictions on how much rent I can charge?
Rents for RHI apartments should be consistent with rents charged for non-RHI units in the units in the same development. These rents should also be considered “reasonable” in relation to other comparable private market rents.
Rents may not exceed 110% of fair market rent as determined by HUD. In high cost areas, rents may go up to 120% of fair market rents.
RHI apartments that are financed using low-income housing tax credits may not charge more than the tax credit maximum rents.
Rents for RHI apartments may be adjusted annually, subject to a determination of rent reasonableness.
Where do I find the Fair Market Rents (FMRs) for Chicago City and Cook, Lake and McHenry Counties?
Updated FMR’s are available as part of the RHI application or visit this HUD link to obtainn updated FMRs.
How much do tenants pay?
Tenants are obligated to pay approximately 30% of their adjusted monthly income for rent and utilities not included in the rent. If utilities are included in the rent their payment for them will be calculated into the rent payment from the lead housing authority.
Can RHI vouchers be used for occupied units, if existing residents qualify for RHI?
No. Only vacant units can have RHI vouchers attached to them.
Can I use RHI if current residents of my building or development need to be relocated?
The answer to this will depend on the housing authority that has jurisdiction where your building or development is located. The housing authority must agree to give relocates highest priority on its waiting list to return to that property. If relocation is required, you should first contact the Lead Housing Authority to determine if such a prioritization is possible.
If existing residents need to be relocated, the Uniform Relocation Act must be followed.
When is the application due?
RHI applications are accepted on a rolling basis. However, applications that are also applying for low Income Housing Tax Credits and seeking the additional points that an RHI award provides must coordinate their applications to meet the IHDA deadline by contacting MPC as early as possible in the application process. Deadlines to contact MPC and set up preliminary interviews are posted at www.regionalhousinginitiative.org
What makes an RHI application competitive?
Applicants should focus on access to employment and transition their proposal would provide to residents to apartments receiving RHI subsides, and how their proposal will foster or create a mix of incomes.
- Access to jobs and transit: Applicants should focus on the ways in which access to jobs and transit will be created for the residents of RHI-assisted apartments. Access to jobs can most easily be established by the building being located near established job centers or areas of strong job growth. Particularly for proposals located in areas of high poverty or minority concentrations, proximity to job sources and specific job linkages are important to make a project attractive for RHI. Buildings that are located in areas with high poverty or minority concentrations are required to submit a specific plan for connecting RHI assisted residents with jobs, and support them in gaining and sustaining employment. Buildings that are located in high poverty areas must further demonstrate strong job linkages to be competitive for RHI, particularly if they propose a high percentage of RHI and other affordable apartments in the proposed development. Proposal located near bus and train stops (Metra, Pace, CTA) will also receive favorable consideration when being scored.
- Mix of incomes and attainability: Applicants should focus on the mix of incomes in the environment that will be established by the proposal. The RHI selection panel will consider the mix of incomes proposed within the building – between residents of RHI assisted and non-assisted units. The RHI selection panel will also consider the mix of incomes proposed between the project and the surrounding neighborhood. For example, a proposal might include a higher percentage of assisted units if its surrounding community has a low concentration of poverty and/or minority population.
For more information on selection criteria, please see the RHI application.
What advantages can RHI bring to my proposal if I am also applying for Low Income Housing Tax Credits?
RHI developments have advantages in attracting other local and state funding and support.
1. Conforms with IHDA preferences for Low Income Housing Tax Credits (see IHDA’s Low Income Housing Tax Credits Qualified Allocation Plan available at IHDA’s web site).
- Four (4) additional points may be awarded by IHDA to tax credit applications approved for RHI vouchers under the Economic Efficiencies provisions of IHDA’s Low Income Housing Tax Credit Qualified Allocation Plan – Project-based Housing Choice Voucher conversation Participants
- Successful RHI proposals should be located close to jobs and transportation may be eligible for five points (5) under the Live Near Work Initiatives provision.
- Successful RHI proposals should include a mix of incomes and my be eligible for additional points under the Mixed Income Population provisions.
- RHI proposals located in any of the municipalities covered by the recently passed Affordable Housing Planning and Appeals Act that are located in Cook, Lake or McHenry counties will receive three points in IHDA’s tax credit scoring.
2. Conforms with approved regional Housing Endorsement Criteria:
The RHI program selection panel recommends RHI awards based on the Housing Endorsement Criteria developed and approved by the Metropolitan Mayors Caucus. Proposals which comply with this Housing Endorsement Criteria are generally sites that are near jobs and transit, well-managed and well-designed. RHI supports local workforce housing goals across the Chicagometropolitan region, and positions a project to be competitive for support from their local jurisdictions.
3. Conforms to the new state housing policy:
RHI reflects the priorities of the State’s housing policy agenda, which includes addressing the housing need of low-income workers who cannot afford to live near their jobs. RHI is also an effective tool for Cook and Lake county municipalities covered by the recently passed Affordable Housing Planning and Appeals Act trying to expand their stock of affordable homes.
What is the Agreement to enter a Housing Assistance Payment (AHAP)?
In the case of new construction or substantial rehabilitation, once RHI vouchers are awarded to a development the owner must execute an Agreement to enter a Housing Assistance Payment (AHAP) contract with the Lead Public Housing Authority with jurisdiction over the area where the development is located. The AHAP is a contract that requires the owner to construct or rehabilitate the housing in accordance with approved construction drawings and specifications or work write-ups. It also fixes initial contract rents for the assisted apartments that will be included in the Housing Assistance Payments (HAP) contract.
The AHAP must be executed prior to the new construction or rehabilitation proposals commencing construction. AHAP templates are located within the RHI application.
What is the Housing Assistance Payments (HAP) contract?
Once the apartments are ready for occupancy, the owner enters into the HAP contract with the lead public housing authority. The HAP contract governs the flow of subsidy to the development for the RHI assisted apartments, explains the roles and responsibilities of the agency and owner, term, penalties and other matters. All payments are subject to annual appropriations of voucher funds by Congress throughout the HAP contract term. HAP templates are located within the RHI application.
What is the length of a HAP contract?
The HAP contract may have a term of up to 10 years, with further extensions to be determined by the lead PHA.
Use RHI to leverage additional resources
Developers applying for IHDA Low Income Housing Tax Credits in 2014 can receive extra points in their application scoring if they tap RHI resources and advance RHI goals. To be eligible for the extra points awarded to tax credit proposals utilizing these subsidies, RHI applicants participating in IHDA's 2014 tax credit round must contact MPC program assistant Angie Leyva at (312) 863-6017 or email@example.com to schedule a meeting with RHI staff after receiving preliminary application award by February 28, 2014. This meeting is required to discuss the RHI proposal and coordinate the tax credit and RHI applications. Developers who secure a commitment from RHI will improve their scores on the Tax Credit ranking system, by leveraging project-based subsidies.
Additionally, since successful RHI proposals must be located close to jobs and transportation, RHI proposals may also be eligible for points under the Live Near Work and/or Transit provisions (see IHDA’s Low Income Housing Tax Credit Qualified Allocation Plan for details).
- RHI is also an effective tool for Cook, Lake, McHenry and Will county municipalities who are covered by (or at risk to being covered by) the Affordable Housing Planning and Appeals Act and who are trying to preserve or expand their stock of affordable homes. RHI proposals located in those communities and applying for tax credits will also receive extra points in IHDA’s tax credit scoring.
- Underscoring that RHI is an effective tool for promoting the stability and occupancy of existing apartment buildings near jobs and transportation, MPC, the Metropolitan Mayors Caucus, the Preservation Compact, the Chicagoland Apartment Association, Community Invesment Corporation, Urban Land Institute and other partners recently produced a Multifamly Resource Guide to provide property owners and managers with information on RHI and a number of other programs and resources to support their buildings' long term sustainability and affordability.
- Cook County property owners and managers interested in RHI may also be able to leverage additional resources available through the County and the Preservation Compact, including the Suburban Cook County Multifamily Preservation Initiative (SCCMPI) -- which is linked to County HOME dollars, the Energy Savers program and more.
- Finally, since its amendment in 2009, RHI owners have been able to benefit from the Housing Opportunity Tax Incentive Act, which can leverage savings amounting to approximately one extra month's rent each year for each RHI apartment in property.
For more information,contact Breann Gala.