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Update on the MHSA Housing Loan Program and the proposed Local
Government Special Needs Housing Program
December 2015
MHSA Background
MHSA Housing Loan Program
The MHSA Housing Loan Program was established in 2006 utilizing $400 Million of Mental Health Services Act (Proposition 63) funds
The program goal was to create 10,000 new affordable rental housing opportunities for the homeless, or at risk of being homeless, mentally ill.
A minimum of 2/3 of the funds had to be used for capital loans and up to
1/3 of the funds could be used to for a capitalized operating subsidy reserve (“COSR”) sized to last 15 to 20 years.
Counties commit to provide supportive services for the mentally-ill residents for the life of the MHSA Loan (20 to 55 years).
In 2008, the Department of Mental Health (DMH) and CalHFA signed an Inter-Agency Agreement for CalHFA to jointly administer the MHSA Housing Loan Program through May 30, 2016
MHSA Statistics
• As of December 1, 2015 CalHFA has closed MHSA loans on 161 projects that create a total of 8,898 units of which 2,266 are reserved for MHSA eligible clients and their families.
• Over $237 million in MHSA loan funds leveraged approximately $2.9 billion in total development costs. Over $116.5 Million in MHSA Capitalized Operating Subsidy Reserves were provided by Counties to assist 1,392 MHSA units.
• The original MHSA goal was to create 2,500 new permanent supportive housing opportunities for MHSA clients. CalHFA anticipates that by the time the last units are completed in 2017 that there will be over 2,600 MHSA rental units available statewide.
MHSA Housing Loan Program
MHSA Success StoriesAvalon Apartments (developed by ACOF)13218 Avalon Boulevard, Los Angeles, CA 90061Completion Date: December 2014Total Units: 55 units MHSA Regulated Units: 31 unitsMHSA Loan: $3,000,000 Total Development Cost: $20,600,000
Cabrillo Gateway (developed by Century Housing)2001 River Avenue, Long Beach, Los Angeles CountyCompletion Date: August, 2015Total Units: 40 special needs units MHSA Regulated Units: 16 unitsMHSA Loan: $1,600,000Total Development Cost: $ 31.5 Million
MHSA Housing Loan Program
MHSA Success Stories
MHSA Housing Loan Program
Ford Road Plaza (developed by EDEN Housing)215 Ford Road, in San Jose, Santa Clara CountyCompletion Date: November 2014Total Units: 55 units MHSA Regulated Units: 5 unitsMHSA Loan: $885,000MHSA COSR: $500,000 Total Development Cost: $28.3 Million
Legacy Apartments Developed by PALM Communities72490 El Centro Way, Thousand Palms, Riverside Completion Date: April 2012Total Units: 80 units MHSA Regulated Units: 15 unitsMHSA Loan: $1,622,400MHSA COSR: $1,377,600 Total Development Cost: $25 Million
Parkview San Marcos (Hitzke Development with C & C Development)363 – 379 Autumn Dr., San Marcos, San Diego CountyCompletion Date: September 2014Total Units: 84 unitsMHSA Regulated Units: 14 unitsMHSA Loan: $1,637,804MHSA COSR: $1,637,804Total Development Cost: $32.6 Million
MHSA Success Stories
MHSA Housing Loan Program
Heather Glen Shared Housing – developed by the Regional Housing Authority of Sutter and Nevada Counties817 F Street, Marysville, Yuba CountyCompletion Date: June 2013Total Units: 4-plex (2 & 3 Bdrms)MHSA Regulated Units: 10 residentsMHSA Loan: $550,000MHSA COSR: $276,410Total Development Cost: $550,000
News Making Project
Cathedral Gardens (developed by EAH, Inc.)668 21st St., Oakland, Alameda CountyCompletion Date: December 9, 2014Total Units: 100 unitsMHSA Regulated Units: 5 unitsMHSA Loan: $500,000Total Development Cost: $ 41.7 Million
“2015 Affordable Residential Housing outside of San Francisco” 1st place award from the
MHSA Housing Loan Program
COMM 22 (developed by BRIDGE Housing & MACC)22nd & Commercial in San Diego, San Diego CountyCompletion Date: December 2014Total Units: 70 units for seniors MHSA Regulated Units: 13 senior unitsMHSA Loan: $1,462,318 Total Development Cost: $82.6 Million
MHSA Senior Housing
MHSA Housing Loan Program
Cotton’s Point Senior Apts. (META Housing)2358 S. El Camino Real, San Clemente, Orange CountyCompletion Date: June 2014Total Units: 76 units for seniors MHSA Regulated Units: 15 senior unitsMHSA Loan: $1,622,400 Total Development Cost: $31.9 Million
Changes Over Time
CalHFA hoped to leverage the MHSA Housing Loan Program into significant CalHFA lending lactivity, but the collapse of the bond market limited CalHFA’s interest rate competitveness.
The loss of anticipated loan fee revenue from CalHFA financing resulted in CalHFA operating the MHSA Program at a loss.
The State Department of Health Care Services assumed the role of State DMH in 2012.
In January 2015, Counties were permitted to reclaim unused MHSA housing funds through the AB1929 process. Eight counties have requested the return of funds totaling approximately $4.1million.
COSR funds have been used at a faster rate than projected because of higher operating costs, higher vacancy rates or turnover and MHSA clients being unable to qualify for SSI and pay any rent.
MHSA Housing Loan Program
MHSA Housing Loan Program
Winding Down the MHSA Loan Program
Final Application Deadline for MHSA funds held by CalHFA: March 1, 2016
Deadline for CalHFA to approve MHSA Loans/COSR’s: May 30, 2016
Deadline to close MHSA Loans at start of construction: May 30, 2017
Deadline to close and fund MHSA Loans after occupancy: May 30, 2018
Below are the final MHSA deadlines for submittal of new MHSA Applications or closing and funding of MHSA loans.
Release of Unencumbered MHSA Funds
MHSA Housing Loan Program
MHSA funds are considered “encumbered” once CalHFA has provided loan approval. After May 30, 2016, local governments should determine how to use the balance of their funds following one of the below described processes:
Request the release and return of all unencumbered MHSA funds through the AB1929 process (see State DHCS Information Notice 15-004);
Provide a letter to CalHFA allocating unencumbered funds to existing Capitalized Operating Subsidy Reserves (COSR’s) tied to other MHSA funded Projects; or
Request the rollover of unencumbered funds to the proposed CalHFA administered Local Government Special Needs Housing Program (SNHP) using State DHCS approved forms and procedures (still to be developed).
CalHFA Servicing of MHSA Funded Projects
• MHSA Residual Receipt loan payments will be remitted to local governments annually. (NOTE: State DHCS has indicated these funds are subject to use restrictions as imposed by MHSA funds returned to Counties under the AB1929 process.)
• CalHFA will provide localities with annual Capitalized Operating Subsidy Reserve (COSR) remaining term projections by Project.
• To ensure the long term availability of COSR funds for MHSA Projects, CalHFA will require Borrowers obtain local government approval when COSR draw requests will shorten the projected term of COSR availability.
MHSA Housing Loan Program
Continued DHCS & CalHFA Partnership Servicing MHSA Funded Projects
Please direct CalHFA questions related to MHSA occupied projects to
Tom Armstrong – Multifamily Asset [email protected]
(916) 326-8641
Please direct DHCS questions to Donna Ures – Chief,
MHSA Oversight & Fiscal Reporting Section [email protected]
(916) 324-0401
MHSA Housing Loan Program
Local Government Special Needs Housing Program (SNHP) starting Spring 2016
• CalHFA has the capacity and expertise to administer a special needs housing program to assist local governments in meeting their special needs housing development goals.
• Local governments can assign MHSA and other local funds to CalHFA for the development of housing for MHSA clients.
• The draft SNHP Term Sheet and Participation Agreement are subject to change. Final versions can be provided directly to interested localities.
• CalHFA needs verbal participation commitments by Feb. 26, 2016
Please reply to:Debra L. Starbuck, MHSA Lead Housing Finance Officer
California Housing Finance Agency – Multifamily [email protected] 530-878-8075
Special Needs Housing Program (SNHP)
Differences Between the Special Needs Housing Program and the MHSA Housing Loan Program
• The SNHP publishes recommended loan and COSR limits (without the MHSA cap of 30% of unit development costs).
• SNHP maximum rents have been reduced to 30% of 30% of AMI (as opposed to the higher MHSA cap of 50% of AMI).
• To cover CalHFA’s operating costs, the SNHP Program Participation Fee of 5% is higher than the 1% MHSA fee – however, local government’s can choose to pass along 1% of this fee to Developers.
• The borrower paid 1% Underwriting Fee is based on the total SNHP funds provided to a Project (MHSA excluded COSR).
• SNHP annual servicing fees are now fixed at $7500 (1-4 units) or $15k (5 or more units) verses the MHSA annual fee that is 0.42% of the MHSA loan amount.
• Under the SNHP, CalHFA will advise localities (as opposed to State DHCS) of any regulatory or loan default situations and discuss viable options for remedy. The locality will be the party to decide the appropriate course of action.
NOTE: The locality remains financially liable for any costs related to default remedies.
Differences Between the Special Needs Housing Program and the MHSA Housing Loan Program
