Detroit Housing Commission

Replacement Housing Factor Program

The Affordable Housing Program

The Affordable Housing Program (AHP) is a subsidy fund designed to assist in the development of affordable housing for low and moderate income households. The Chicago Federal Home Loan Bank (Chicago FHLB) contributes 10% of its previous year's net income to the AHP each year. The allocation is split between the Chicago FHLB's competitive application program and the non-competitive homeownership set-aside program, Downpayment Plus® (DPP™). The AHP is governed by Federal Regulation 12 CFR Part 951.

The AHP Competitive Program
Financial institutions that hold stock in the Chicago FHLB can apply for AHP funds on behalf of community projects. The Chicago FHLB awards AHP funds twice a year through a competitive process. The AHP subsidy may be in the form of a grant ("direct subsidy") or a below-cost interest rate on an advance (loan) from the Chicago FHLB to a member. Member institutions are encouraged to work with non-profit organizations, for-profit entities and public agencies in developing AHP applications.

Eligible Uses
AHP subsidies must be used for one of two broad purposes:

- To finance the purchase, construction and/or rehabilitation of owner-occupied housing for households with incomes at or below 80% of area median income; or

- To finance the purchase, construction and/or rehabilitation of rental housing. At least 20% of the units, must be occupied by, and affordable to, households with incomes at or below 50% of area median income.

Eligible uses of funds under the competitive program are acquisition, construction, or rehabilitation costs, including related soft costs, interest-rate buydowns, and downpayment and closing cost assistance. AHP funds may not be used for capitalized operating reserves, non-residential space, or to provide support services. The benefits of the AHP subsidy must be passed through to the project or the end user.

Eligibility Requirements
Applications will be evaluated to determine whether they meet the eligibility requirements per 12 CFR 951.5(b) of the AHP Regulation, including:

- The project must be either an owner-occupied project or a rental project.

- Applications must demonstrate project feasibility. The review will include an analysis of the sources and uses of funds, project costs, operational feasibility, and the need for the AHP subsidy. Relevant factors in determining project feasibility include, but are not limited to, applicable financial ratios, market demand, and other non-financial project characteristics.

- AHP subsidies for approved projects must be likely to be drawn down within one year of the date of approval of the application.

- AHP assisted projects must be retained as affordable (via a recorded retention mechanism) for five years for owner-occupied projects and fifteen years for rental projects.

- A project's sponsor must be qualified and able to perform its responsibilities as committed to in the AHP application.

- The project must comply with applicable federal and state fair housing and accessibility laws and regulations.

Application Scoring
Applications that meet the eligibility requirements will be scored on a 100 point scoring system based on nine criteria:

- Use of government-owned or other donated or discounted properties

- Sponsorship by a not-for-profit organization or government entity

- Income targeting

- Housing for homeless households

- Promotion of empowerment

- First District Priority (criteria annually selected by the Chicago FHLB)

- Second District Priority (a housing need identified annually by the Chicago FHLB

- AHP subsidy per unit

- Community stability

These criteria are explained in detail in the Chicago FHLB's Application and Scoring Instructions published semi-annually with the AHP application.

Applications achieving the highest scores will be awarded funds until all available AHP funds for a given competitive round are exhausted. The next four highest scoring applications will be placed in reserve and may be awarded funds should funds become available prior to the next round of funding.

Projects awarded funds will be monitored by the Chicago FHLB throughout the retention period (five years for owner-occupied projects; 15 years for rental projects) to ensure that they remain in compliance with AHP regulations and with the commitments made in the AHP application.