In July, Pennsylvania Housing Finance Agency (PHFA) announced the initial award recipients of their new Housing Options Grant Program – Multi-Family (HOP-MF). HOP-MF was established by the General Assembly of Pennsylvania for the development of affordable housing units, including, but not limited to, building new units, rehabbing existing properties to make them affordable housing units, or preserving existing affordable units. The General Assembly of Pennsylvania allocated $100 million of American Rescue Plan Act (ARPA) funds for PHFA to administer.
To address these objectives, PHFA created three subprograms: Emergency Grant Initiative, Preservation Initiative, and New Construction Initiative. The Emergency Grant Initiative provides funding for emergency repairs to existing deed-restricted affordable housing at a maximum of $50,000 per unit or $1 million per project, whichever is less.
The Preservation Initiative provides funding to rehabilitate properties on a non-emergency basis to ensure the stability of the building through the affordability period. A maximum of $60,000 per unit or $5 million per project, whichever is less, is available.
Lastly, the New Construction Initiative is exactly how it sounds. This program provides financing for the construction of affordable rental properties. A maximum of $100,000 per unit or $7.5 million, whichever is less, can be provided.
In addition to the program basis guidelines, owners will be limited to receiving the lesser of three awards or $10 million. Further, HOP-MF funds are not intended to be used in conjunction with current or anticipated low-income housing tax credits (LIHTC). Therefore, applicable projects may not have received or plan to apply for LIHTCs in calendar years 2018 through 2026. Moreover, projects that are still in the LIHTC compliance period (15 years) are not eligible.
Additional guidelines can be found on the PHFA website.
Applications were due in June 2023. A total of $4.3 million was awarded amongst 11 housing projects. The remaining funds must be awarded by December 31, 2024, and all funds must be expended by December 31, 2026. Applications under the Emergency Repair Initiative will continue to be accepted on a rolling basis until such time that the grant award total reaches $10 million.
A nonprofit recipient must remain cognizant of the source of HOP-MF funds. The program is funded by the U.S. Department of Treasury, Coronavirus State and Local Fiscal Recovery Funds (SLFRF) and has been identified as a high-risk program. As such, recipients may be subject to additional audit requirements under Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). As a reminder, if you expend more than $750,000 of federal awards, you can be subject to a Single Audit or Program-Specific Audit under the Uniform Guidance.
However, the U.S. Department of Treasury has recognized that many recipients of SLFRF have not received federal assistance before or the other federal assistance they expended did not exceed the $750,000 threshold. So as to not put any additional burden on these recipients, the U.S. Department of Treasury has allowed an alternative approach: a compliance examination engagement in accordance with Government Auditing Standards. This is significantly less in scope than a Single Audit or a Program-Specific Audit.
McKonly & Asbury, LLP is a leader in accounting for affordable housing partnerships. Our team has the specialized knowledge to help you ensure you comply with IRS and tax credit allocating agency reporting requirements. For more information on these services and more be sure to visit our Affordable Housing page, and don’t hesitate to contact us.