HARVARD UNIVERSITY

AFFORDABLE AND MIXED- INCOME HOUSING DEVELOPMENT, FINANCE AND MANAGEMENT

Harvard Graduate School of Design (SES-5490)

Harvard Kennedy School (SUP-666)

Spring Term 2018

Canvas Course Website: https://canvas.harvard.edu/courses/40668

INSTRUCTOR

Edward H. Marchant Lecturer, Department of Urban Planning and Design (GSD) Adjunct Lecturer in Public Policy (HKS) Telephone: 617-739 2543 (Office) emarchant@msn.com edward_marchant@hks.harvard.edu

CLASSROOM AND CLASS TIME

Harvard Graduate School of Design

Gund Hall, Room 518 Tuesday, Thursday 8:30 a.m.-9:59 a.m. (Class begins promptly at 8:30 a.m.)

Office Hours: By appointment (and normally will be scheduled to be before or after class)

COURSE OBJECTIVES

1. To introduce students to the practical elements and complexities of promoting,

developing, financing, and managing affordable and mixed-income housing from

community-based, public, and private perspectives;

2. To enable students to recognize and understand seven basic subsidy categories

through which housing for low and moderate income individuals and families can be made affordable: development cost, financing, operating, rental assistance, tax credit, entitlement, and project-generated cross income subsidies;

3. To have students demonstrate their understanding of the affordable housing

development, financing and management process by participating in the Affordable Housing Development Competition (AHDC) or by completing an Alternative Final Project based upon a course-relevant topic in which a student has a particular interest; and

4. To establish a more comprehensive understanding of public housing policies and

affordable and mixed-income housing projects through a comparative analysis and ranking of the proposed AHDC projects’ respective “Net Public Values.”

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COURSE DESCRIPTION

SES-5490/SUP-666 is designed for students interested in understanding the fundamentals of affordable and mixed-income housing, including its sponsorship, permitting, financing, design, construction, and management. The course begins by defining the problem that exists in many communities: a lack of decent, well-managed housing affordable to individuals/families paying no more than 30% of their household income toward housing expenses. The “funding gap” that prevents the development of affordable housing is then calculated and alternatives to “plug” this funding gap are explored. Although numerous federal, state and local subsidy programs will be discussed along with private subsidy programs, the course focuses on several of the most significant and representative federal, state and local housing programs used to create rental and/or home ownership affordable housing, including but not limited to the following programs:

IRS Section 42/Low Income Housing Tax Credit Program (LIHTC)

Community Development Block Grant (CDBG)

Choice Neighborhoods Planning and Implementation Grants

Section 8 Rental Assistance Payments (Section 8) –now officially referred to as the

Housing Choice Voucher Program

Rental Assistance Demonstration Program (RAD)

HOME Investment Partnerships Program (HOME)

Tax-Exempt Bond Financing

Tax Increment Financing (TIF)

Federal Home Loan Bank Affordable Housing Program (AHP)

Community Reinvestment Act (CRA)

State and Local Affordable Housing Trusts

Local Inclusionary Zoning By-laws

Massachusetts Comprehensive Permit Program (aka Chapter 40B)

The course does not focus on the specific details of any of these programs. Rather, these programs are explored in general to review how the use of each of them contributes to making the development of affordable housing economically feasible. Normally, several of these federal, state and local subsidies must be aggregated to create a financially feasible and financially sustainable development. Regardless of particular program changes at the U. S. Department of Housing and Urban Development (HUD) and other state and local funding agencies, the fundamentals learned in this course will be useful in working with future federal, state, or local affordable housing programs. The financing principles and development fundamentals learned in this course should also be applicable to designing housing policy programs and developing affordable housing globally. Given the high cost of developing and managing quality affordable housing, the course also discusses various strategies that help maintain affordability over the longest feasible time period so that the scarce available housing resources can be preserved and the public and/or private housing subsidy investments can be “amortized” over an extended time period.

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Students gain practical experience and synthesize their understanding of affordable housing by participating in the Affordable Housing Development Competition (AHDC) or, in exceptional cases, by completing a final project on a course-relevant topic approved by the Instructor in which they have a particular interest. Over the past eighteen years a growing majority of the students have elected to participate in the AHDC, including all students over the last three years. Former students have stated that participation in the AHCD was an extremely valuable learning experience—not to mention a great enhancement to their resumes. However, either final project alternative is acceptable, subject to topic approval by the Instructor. More detailed information on the AHDC is provided below.

Following the class presentations of the AHDC proposals, each student will rank the respective AHDC projects based upon evaluation criteria formulated and discussed during the course. Each student will also define his/her personal “Net Public Value” criteria and describe each project’s “Net Public Value” (Public Benefits less Public Expenses).

AFFORDABLE HOUSING DEVELOPMENT COMPETITION (AHDC)

Several enterprising Harvard graduate students with an interest in affordable housing initiated the Affordable Housing Development Competition (AHDC) in 2001 and enlisted the organizational and financial support of the Federal Home Loan Bank of Boston (FHLB Boston) and Citizens’ Housing and Planning Association (CHAPA). Sponsors of the 2018 AHDC also include Kevin P. Martin & Associates, P.C.; Boston Society of Architects/AIA; The Kuehn Charitable Foundation; and ICON Architecture, Inc. The primary objective of this competition is to create opportunities for local graduate students “to work with both for-profit and nonprofit housing developers to find creative solutions to the challenge of developing affordable housing in the Boston metropolitan area and to introduce students to the issues related to affordable housing development and to the individuals and organizations active in the production of such housing.”

Students from this course have traditionally shared in the cash prizes ($10,000, $7,000, and $4,000) awarded to the three top-ranked proposals, including all three of last year’s winning proposals. These cash awards are shared equally by the project sponsor and the student team. The winning proposals from last year’s competition have been posted on the AHDC website listed below. Students should review each of these winning proposals as early in the course as possible. More comprehensive AHDC information is available at the Federal Home Loan Bank of Boston website at www.fhlbboston.com/compete. A copy of the Preliminary Information Timeline that is included at the AHDC website is attached at the end of this syllabus. This timeline includes a link to the three AHDC Student Coordinators (Aliya Bhatia, HKS; Jack Popper, GSD; and David Tisel, MIT DUSP), all of whom have taken this course.

The Instructor strongly encourages participation in the AHDC for any student who desires a practical “hands-on” team experience in developing affordable or mixed-income housing.

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COURSE AUDIENCE

The course is designed to be useful to students with any of the following interests: affordable housing development, permitting, financing, design, construction, and/or property management; affordable housing preservation; mixed-income housing; special needs housing; housing-based supportive services; syndication of low income housing tax credits; local, state, or federal housing policy program design, implementation and/or evaluation; public private partnerships; affordable housing advocacy; comprehensive neighborhood revitalization; and/or community development corporation (CDC) and nonprofit sponsorship of affordable or mixed-income housing.

COURSE COMMUNICATION

Communication with the class regarding announcements, assignments and other matters will be done primarily through Canvas (https://canvas.harvard.edu/courses/40668). All enrolled students will have access to Canvas.

COURSE PREREQUISITES

Students should have an interest in any of the components of affordable housing listed above in the Course Audience description. Although a basic real estate finance course similar to the Instructor’s Real Estate Finance and Development Fundamentals for Private and Public Participants course (SUP-665/ SES-5492) would be helpful, a prior understanding of real estate development finance is not required. The course will include three ungraded financial exercises at the beginning or the course. These financial exercises have been designed to introduce students to or reinforce students’ understanding of fundamental affordable housing financing principles and practices.

FORMAT

The course will be a mix of lectures, case discussions, exercises, student presentations, and a field

visit to each of the proposed AHDC sites. Leading practitioners in the field will participate in at least

two classes.

Active classroom participation by students is encouraged and expected throughout the

course. Given the Instructor’s interactive teaching style, classroom participation will be an

important grading component.

Students are expected to attend all classes. The class will begin promptly at 8:30 a.m. and

students are expected to arrive on time. Cellphones must be turned off and placed out-of-

sight. Laptops are to be used for note taking only.

A bus tour has been scheduled for Saturday, March 3 from 8:00 a.m. to Noon. The sites for each of the proposed 2018 AHDC projects located within the Greater Boston will be visited to the degree practical within this four hour time period.

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READING ASSIGNMENTS

Detailed reading assignments for each class will be posted on Canvas and/or emailed to enrolled students in advance of each class. Students are responsible for checking for posted assignments and/or announcements in advance of each class.

The Internet is the best source for historical and current information on affordable housing and students will be asked to utilize it throughout the course. An annotated list of useful affordable housing and community development Internet resources will be distributed early in the course and most of the assigned reading will be available on the Internet.

Materials not available on the Internet or Canvas will be distributed in class.

No textbook will be required. The Instructor will be happy to recommend reference resources for interested students. MIDTERM QUIZ AND WRITTEN ASSIGNMENTS

1. Midterm Quiz focused on Affordable Housing Finance Fundamentals (February 20)

2. Personal Definition of “Net Public Value” and "Net Public Value" Ranking of AHDC projects (April 17)

3. Final Team Project (AHDC Submission/Supplementary Report or Alternative Final Project) (no later than April 17, dependent upon class presentation date).

In addition to the quiz and two written assignments listed above there are two additional written assignments that are interim components of the AHDC Submission. The following interim submissions will not be graded but brief comments will be provided by the Instructor:

1. AHDC Project Schedule with Current Project Status (March 6 or March 8, dependent on meeting date with Instructor)

2. AHDC Project Progress Report (March 27)

The Final Project will be a team effort requiring a formal classroom presentation and the submission of an AHDC Proposal. The AHDC proposal (including, if required, a brief Supplemental Memo addressing question raised by the Instructor or c lassmates following the team classroom presentations). Students will also be required to complete a Team Contribution Allocation Form for each AHDC team member who is a student in this course. The Team Contribution Allocation Form will be a confidential document for review by the Instructor only.

Alternative Final Project topic proposals are due no later than January 30; earlier submissions

are strongly encouraged and the Instructor encourages students with a particular topic

interest to discuss the proposed topic with the Instructor after the first or second class.

There will not be a Final Exam in this course.

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CLASSROOM PRESENTATIONS

The Affordable Housing Development Competition (AHDC) /Alternative Final Project classroom presentations have been scheduled for April 10, April 12, and April 17.

GRADING

Grades will generally conform to the GSD recommended grading distribution policy and will be determined based upon the following inputs:

Attendance and Classroom Participation Quality (20%),

Midterm Quiz (15%),

Written Assignment (Net Public Value Definition and Project Ranking) due April 17 (20%), and

Final Project: Project Proposal (if applicable), Interim Project Schedule and Project Status Reports, Classroom Presentation, Final Report or AHDC Submission/Supplementary Report, and Team Contribution Allocation Form (if applicable).

Consensus critical evaluations of an AHDC team member’s performance will be seriously considered by the Instructor in assigning final grades (45%).

As noted previously, participation in classroom discussion is a very important component of this course. Each class is designed to encourage active participation by all students. With the exception of required university-sponsored travel for studios and extraordinary events, health issues, or religious observances, students are expected to attend all classes. Classes will begin promptly at 8:30 am and sign-in sheets will be distributed at each class.

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COURSE OUTLINE (GSD SES-05490 / HKS SUP-666) SPRING 2018

AFFORDABLE AND MIXED-INCOME HOUSING

DEVELOPMENT, FINANCE AND MANAGEMENT

Detailed assignments and readings for each class will be posted on Canvas

https://canvas.harvard.edu/courses/40668

and/or emailed to enrolled students throughout the course.

CLASS DATE DAY TOPIC COMMENTS

1 JAN

23

TUES Course Overview

Affordable Housing Development Competition (AHDC) Overview, Benefits, and Requirements Alternative Final Project Option Affordable Housing Development Process (Introduction of Assignment for Next Class)

Please bring a

name card to

each class with

a minimum font

size of 125.

2 JAN

25

THUR Affordable Housing Development

Process: Stages and Steps

Interrelationships and Relative

Importance of Respective Components

in the Affordable or Mixed-Income

Housing Development Process

Exercise to be

prepared for

discussion

Distributed at

prior class and

available on

Canvas

3 JAN

30

TUES Fundamentals of Affordable Housing

Finance (Gap Financing) (Class I)

Defining and Plugging the Affordable Housing Funding Gap

Understanding Seven Basic Gap Financing Subsidy Vehicles

Exercise to be

prepared for

discussion.

Available on

Canvas

Reminder: Students

not planning to participate in the

AHDC must submit proposals for their

proposed Alternative Final Project no later

than today.

NOTE: STUDENT INTRODUCTORY SESSIONS FOR THE AHDC PROGRAM HAVE BEEN SCHEDULED FOR FEBRUARY 5 AND FEBRUARY 6. DETAILS ARE

PROVIDED IN THE ATTACHMENT AT THE END OF THIS COURSE OUTLINE.

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CLASS DATE DAY TOPIC COMMENTS

4 FEB

1

THUR Understanding Seven Basic Gap

Financing Subsidy Vehicles (Class II)

Quantifying Each Subsidy’s Financial

Impact to Better Understand its

Contribution to Affordability

N/A FEB

5

or

FEB

6

MON

TUES

Affordable Housing Development

Competition (AHDC) Student Intro

Sessions

“Students learn about the competition

and meet other students to form teams.

Interested students must attend at

least one of these sessions and

complete the online student registration.

Registering will help identify you and

your skill set to help the student

coordinating committee form teams.”

Old South Church

645 Boylston Street

Boston, MA

6:00 – 8:00 PM

Directions

available at

AHDC

Website

5 FEB

6

TUES Critical Affordable Housing

Information Resources Available on

the Internet

Please bring

laptop to class

6 FEB

8

THUR Fundamentals of Affordable Housing

Finance (Rental Housing) Preserving Long Term Affordability

Financial

Exercise to be

prepared for

discussion

Available on

Canvas

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CLASS DATE DAY TOPIC COMMENTS

7 FEB 13

TUES Fundamentals of Affordable Housing Finance (For Sale Housing) Alternatives to Preserve Long Term Affordability

Financial

Exercise to be

prepared for

discussion

Available on

Canvas

N/A FEB

13

TUES Meet the Developer Night and Finalize

Team Formation

“Meet with developers, learn about the

projects. Finalize team formation.”

Old South Church

645 Boylston Street

Boston, MA

6:00 – 8:00 PM

8 FEB 15

THUR Preparing a Capital Cost Pro Forma

Defining the Development Program and

Establishing Site Plan and Building

Design Objectives

N/A FEB

16

FRIDAY Individual Registration Deadline

“Final date to complete online student

registration.”

N/A FEB

19

MON AHDC Team Registration and

Developer Preference Deadline

“Team leaders email student

coordinators list of team members, team

project managers, and top three project

preferences.”

9 FEB 20

TUES MIDTERM QUIZ: AFFORDABLE

HOUSING FINANCE FUNDAMENTALS

10 FEB

22

THUR Low Income Housing Tax Credit

(LIHTC) Program and the Qualified

Allocation Plan (QAP): Policy Objectives

and Basic LIHTC Program

Characteristics

Preparation

includes a Tax

Credit Yield

exercise to be

prepared for

discussion

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CLASS DATE DAY TOPIC COMMENTS

11 FEB

27

TUES Guest Speaker (TBA)

The Guest Speaker will be a LIHTC

Industry Expert.

12 MARCH

1

THUR Preparing an Operating Pro Forma

Defining the Preferred Income Mix

Preparing a Sources and Uses of

Funds Statement

Defining the Proposed Subsidy Mix

13 & 14 MARCH

3

SAT Site Visits to Proposed AHDC Sites

within the Greater Boston Area

Site Visit to Charlesview Residences in

Allston) (Time Permitting)

Bus Tour will be held “Rain or

Shine.”

Bus Tour will be held “Rain or Shine.”

Bus leaves

promptly at 8:00

a.m. from Gund

Hall. Returns to

Gund Hall at

noon.

15 MARCH

6

TUES AHDC Project Team Meetings with

Instructor and Team Meetings

Instructor will meet with each AHDC team individually to review each Team’s Project Schedule and current project status.

Written

Project Schedule

Required

16 MARCH 8

THUR AHDC Project Team Meetings with

Instructor and Team Meetings

Instructor will meet with each AHDC team individually to review each Team’s Project Schedule and current project status.

Written

Project Schedule

Required

N/A MARCH

13

TUES Spring Recess

N/A MARCH

15

THUR Spring Recess

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CLASS DATE DAY TOPIC COMMENTS

17 MARCH

20

TUES Putting Together a Comprehensive Debt, Equity and Subsidy Application for Publicly-Assisted Affordable Housing Projects: The Massachusetts “OneStop” Financing Application

18 MARCH

22

THUR Property Management and Asset

Management Tasks Appreciating the Importance of Quality Property Management In Achieving Long Term Economic Sustainability Critical Property Management Issues for Proposed AHDC Projects

AHDC Progress

Report

(based upon

previously

distributed

Progress Report

Form)

to be submitted by all AHDC teams at the beginning of class on March 27

19 MARCH

27

TUES YIMBY: Developing Affordable

Housing in an Affluent Suburban Community

The Massachusetts Comprehensive Permit Law: Creative Legislation to Expand the Supply of Affordable Housing in Massachusetts Advantages and Disadvantages of Mixed-Income Housing

Case study to be

prepared for

discussion

AHDC Progress

Report due today

20 MARCH

29

THUR Affordable Housing: A Global Perspective

Guest Speaker (Confirmed):

David A. Smith Founder and CEO Affordable Housing Institute™ Boston, MA

“Mr. Smith is the founder of the Affordable Housing Institute AHI), a not-for-profit corporation. AHI develops sustainable housing financial ecosystems worldwide. With more than 30 years direct experience in affordable housing, Mr. Smith uniquely combines the roles of practitioner and theoretician, participant and policymaker.”

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CLASS DATE DAY TOPIC COMMENTS

21 APRIL

3

TUES Housing for Special Needs Targeted

Populations: What Are the Special

Development Team, Site, Design,

Funding, Property Management and

Supportive Service Requirements for

Special Needs Housing?

Be prepared to

discuss Matrix

that you have

prepared

N/A APRIL

4

WED AHDC PROPOSALS DUE AT FEDERAL HOME LOAN BANK OF BOSTON

BY 10:00 AM

FHLB Boston

800 Boylston

St

Boston, MA

22 APRIL

5

THUR Final Project Presentations

(Affordable Housing Development

Competition Projects)

AHDC Team

Presentations

23 APRIL

10

TUES Final Project Presentations

(Affordable Housing Development

Competition Projects)

AHDC Team

Presentations

24 APRIL

12

THUR Final Project Presentations

(Affordable Housing Development

Competition Projects)

AHDC Team

Presentations

25 APRIL

17

TUES Personal Definition of Net Public Value

(NPV) re: Affordable Housing

Developments

Comparative Net Public Value Ranking

of AHDC Projects

Discussion/Critique of Proposed AHDC

Projects

Written

Assignment

(Individual)

26 APRIL

19

FINAL

CLASS

THUR Continued Discussion/Critique of

Proposed AHDC Projects

Course Evaluations

Course Review

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Housing Development Competition – Timeline

Event Date & Time Location

Invitations Mailed to

Developers

December 2017

Applications Due from

Development Organizations

Mid-January 2018

Student Intro Sessions Students learn about the

competition and meet other

students to form teams.

Interested students must attend

at least one of these sessions

and complete the online

student registration.

Registering will help identify

you and your skill set to help

the student coordinating

committee form teams.

Monday, February 5

6:00 to 8:00 p.m.

Tuesday, February 6

6:00 to 8:00 p.m.

Old South Church

645 Boylston Street

Guild Room, 4th floor

Boston, MA

Directions

Meet the Developer Night

and Finalize Team

Formation Meet with developers, learn

about the projects. Finalize

team formation.

Tuesday, February 13 6:00 to 8:00 p.m.

Old South Church

645 Boylston Street

Mary Norton Hall, 2nd floor

Boston, MA

Directions

Individual Registration

Deadline Final date to complete the

online student registration.

Friday, February 16

Team Registration and

Developer Preference

Deadline

Team leaders email student

coordinators list of team

members, team project

managers, and top three

project preferences.

Monday, February 19

2018 Student Coordinators

Competition Begins! Team and developer pairings

are emailed to project

managers.

Wednesday, February

21 6:00 to 8:00 p.m.

Mentor Night Student teams meet with

finance and design mentors.

Developers are welcome.

Wednesday, February 21 6:00 to 8:00 p.m.

Old South Church

645 Boylston Street

Mary Norton Hall, 2nd floor

Boston, MA

Directions

Related Links

Articles about the

Competition

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Workshop Night

Affordable housing finance

Sustainable development

Submitting a successful

proposal

Wednesday, March 7 6:00 to 8:00 p.m.

Old South Church

645 Boylston Street

Mary Norton Hall, 2nd floor

Boston, MA

Directions

Second Mentor Meeting Mid- to late-March To be scheduled by team.

Submission Deadline Wednesday, April 4

10:00 a.m.

Please submit the Competition

Proposals, the Executive

Summary, and Printing

Directions (letter or legal size

and preferred binding

placement) to the Dropbox set

up by the student

coordinators.

Please direct questions to

the 2018 Student Coordinators

Awards and Reception including presentation of final

proposals. If you are not a

participant in the competition

(student team, developer,

mentor, advisor, or

sponsor),click here to register

for the event.

Tuesday, April 24

Boston Society of Architects

280 Congress St., Suite 200

Pearl and Fort Point Rooms

Boston, MA

Directions

Post Competition Breakfast Tuesday, May 1

Boston Society of Architects

280 Congress St., Suite 200

Pearl and Fort Point Rooms

Boston, MA

Directions

Address: 800 Boylston Street, 9th Floor, Boston, MA 02199 | : 617-292-9600 | : info@fhlbboston.com

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