OKLAHOMA CITY – The Oklahoma Housing Finance Agency continues to seek and receive input on guidelines for a program designed to increase accessibility to housing across the state.
House Bill 1031X, passed during this year’s special session, appropriated $215 million to create the Oklahoma Housing Stability Program, allowing developers to apply for special gap financing for new construction of single-family homes and multifamily rental housing. The program also provides homebuyer down payment and closing cost assistance in rural and urban Oklahoma communities.
The OHFA will function as administrator of the program.
Consumer down payment, closing cost assistance
According to the white paper, in order to qualify, homebuyers must use an OHFA-approved lender partner when applying for a mortgage and will be eligible to receive a total of 8.5% assistance for down payments and closing costs with the 5% grant from the OHSP program combined with 3.5% from OHFA.
The consumer assistance allocation is 20% of the state funds, or $40,850,000 after administrative costs.
At least 15% of the consumer down payment and closing cost assistance will be set aside for homebuyers who purchase homes built with funds utilizing the Homebuilder Subsidy Program, with preference given to homebuyers looking to purchase homes in communities that have been under a federally declared natural disaster within a year of the date of the OHFA interest rate lock.
Mike Means, executive vice president of the Oklahoma Home Builders Association, said the criteria could benefit Shawnee as it continues to rebuild after the April tornado.
Means proposed the addition of a preference for cities that donate buildable lots for infill development in small towns. He said the OHBA has been working with the Municipal League on developing a plan to build on infill lots and restore communities, an effort that coincides with previous discussions from the Oklahoma Legislature and reduces costs.
“It would add supply, that workforce housing that everybody’s talking about across the state that we need more of,” Means said.
Homebuilder subsidy for homeownership
As it’s currently written, there will be a 40% allocation, or $81.7 million, to assist homebuilders in increasing the current supply.
In a public input session earlier this month, Darrell Beavers, housing development programs director with the OHFA, listed what he said are three “hallmark ideas” about the financing for the subsidy.
Beavers said the OHFA chose 0% loans for 24 months as encouraged by the Legislature. Secondly, he said the agency would provide 90% of the financing, with the homebuilder providing 10% of their its money upfront for the project. Thirdly, 10% of the original loan would be forgiven as each house closes in an urban area, or 15% for rural areas.
According to the draft white paper, the sales price of the homes will be capped at $160 per square foot in urban areas and $140 in rural areas. The OHFA board of trustees would evaluate and potentially readjust the limits based on market conditions. Home sizes may range from 1,300 to 2,200 square feet and must have a minimum of a two-car attached garage and building facades that are at least 60% brick.
Anya Mashaney, state director of the Oklahoma Association of Realtors, is concerned about the type of housing the program incentivizes homebuilders to construct.
“Anytime you’re talking infill, there’s not a lot of homes that have two-car garages, so it’s going to stick out like a sore thumb, aside from design requirements not necessarily being constructive to housing stability and giving people options for housing,” Mashaney said.
She said it would be ideal to incentivize the construction of 1,000- to 1,600-square-foot homes.
Developer subsidy for rental housing
To increase the availability of rental options across the state, the program currently sets a 40% allocation, or $81.7 million, to provide gap financing of up to 10% of a development’s total cost to both for-profit and nonprofit developers to build single-family and multifamily units.
Developers must have at least two years’ experience developing single-family homes or multifamily units. Rural developments will receive 75% of funds, with urban receiving the remaining 25%. This subsidy has a maximum allowable total development cost of $250,000 per unit, according to the white paper.
Mashaney, who has been experiencing difficulties finding homes in good condition for first-time homebuyers on limited income, said she’s disappointed that 40% of the program is going to rentals as opposed to more affordable housing for sale.
She said rentals can largely be privately funded by nature of being profitable ventures.
The OHFA has three more input sessions in rural areas.
Housing Stability Program Input Sessions will take place in Tahlequah on Aug. 7, Woodward on Aug. 8 and Lawton on Aug. 15.
After considering input from both the sessions and the online forum, Beavers said they’ll develop the application process.
Corey Bornemann, housing development supervisor for the OHFA, said the HSP is a $215 million program, but will be replenished by a revolving loan fund.
“As it sits right now, once we allocate all those funds, once it’s revolved through that, then it’s kind of done,” Bornemann said.
OHFA Executive Director Deborah Jenkins said $215 million is “a great start,” while encouraging further comments from the public.
“I believe it’s the largest investment that the state has ever invested in housing, and we’d like for them to consider doing it again. So it’s going to take all of us, nothing is off the table,” Jenkins said.
A link to the white paper and the forum to submit comments and ideas can be found at OHFA.org.