Recently, we received some questions from one of our sister state housing finance agencies about our Mixed-use/Mixed-income (MUMI) financing. It is always nice to respond to something like this, because we are very proud of the impact of the MUMI program. I believe the questions raised and our responses are worth repeating to a larger audience, so I am paraphrasing our exchange below.
What led to the creation of the Mixed-use/Mixed-income (MUMI) program?
The MUMI program resulted from concerns expressed by VHDA stakeholders and partners about challenges many of our communities face, such as deteriorated urban communities, the lack of affordable housing options near places of employment, increased income segregation in residential areas, traffic congestion, and seniors and persons with disabilities being increasingly disconnected when they are unable to drive. The goal was to address these challenges through people living closer to the goods and services they need on a day to day basis, more efficient use of land and public infrastructure, pedestrian friendly neighborhoods, and encouraging reinvestment and revitalization in existing corridors.VHDA determined that there was a need for a financing product for projects involving rental housing units and other uses important to the community (such as retail and cultural venues). Such projects typically supported local revitalization efforts, yet there are very few lenders in the marketplace interested in considering such properties as a single project (particularly the smaller projects) to provide long-term fixed-rate mortgage financing.
When it was created? Was legislation needed to create it?
The MUMI program was created in 2004. Legislation was passed that added the conditions to VHDA’s enabling legislation (Code of Virginia, 36-55.30:2).How often it has been used?
VHDA has financed approximately 63 MUMI deals and generated 2,885 housing units. The majority of the properties have involved three to 15 rental units, but a handful of larger deals involve 150-200 units. These projects are diverse and include affordable, workforce and market-rate rental housing units, along with retail shops, offices (including space for municipal offices), museums and community theaters. To see how MUMI financing has been used to transform communities, check out REACH Virginia case studies.Who tends to use it? Non-profit developers, for-profit developers or both?
The MUMI program has been used by both for-profit and non-profit developers. Often, the locality (as part of its community and economic development efforts) serves as a facilitator between the developer and VHDA. In some cases, non-profit affiliates of local redevelopment and housing authorities are engaged in the deals. In any event, local government support is critical.What are “revitalization areas” – is this related to HUD’s Revitalization Areas program or is it something different in VA? Are there many or few revitalization areas – i.e., is this program eligible to many areas or a few?
Revitalization Areas are defined in Title 36 of the Code of Virginia. The definition encompasses many existing types of revitalization areas and is intended to allow localities the ability to designate an appropriate area relatively easily. Download a quick reference document.How easy has it been for developers to combine this financing with other financing sources, particularly LIHTC?
Projects often involve an array of financing, including Historic Tax Credits, HOME, CDBG, local economic development grants, and in some cases, New Markets Tax Credits. While the LIHTC program is compatible with the VHDA MUMI program, the LIHTC syndication market may limit the practical use of MUMI and LIHTC together. The introduction of mixed-income and mixed-use elements into a LIHTC deal may cause some concerns for LIHTC syndicators, but under certain circumstances developers have been able to address these concerns.Please comment if you have any additional questions.
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