The Local Innovation and Fast Track (LIFT) Program is to expand the state’s supply of affordable housing. There are two parts of the program, LIFT Rental to fund affordable rental housing developments and LIFT Homeownership to fund homeownership developments.
Background
The Oregon Legislature established the LIFT program in 2015 with an investment of $40 million for the 2015-2016 biennium. OHCS worked with the Housing Stability Council and stakeholders to develop a plan for the efficient and maximum use of funds to create a large number of new affordable housing units to serve low-income Oregonians, specifically for historically underserved communities, which the Legislature defined in statute as rural communities and communities of color.
Using Article XI-Q bond funding as a source for housing development, LIFT requires the state to have an ownership or operational interest in any real property developed. OHCS operates the LIFT program by requiring an operational interest in any real property developed which has been codified by specific requirements in the LIFT financial loan documents.
Eligible activities
All housing created or acquired must serve families earning at or below 60% County Area Median Income (AMI) for rental housing. LIFT Rental funds are eligible to be used for any net increase in new affordable units; this can be accomplished through new construction of units, the conversion of existing non-residential structures to housing units, or the acquisition of newer market-rate residential developments. Acquistion of newer properties means properties that have been placed in service recently and don't require funding for renovations. More details about eligibility and funding requirements are in the LIFT Rental manual.
Defining operational controls
As part of the operational controls that OHCS is using instead of ownership of each project, Department of Justice and OHCS have established certain controls in the LIFT legal documents that are signed before construction begins. These controls are laid out in:
The LIFT loan program is funded through bonds sold under the authorization of the Oregon Constitution’s Article XI-Q. These bonds differ from Federal Private Activity Bonds (used in 4% Low-Income Housing Tax Credit deals) but have enough overlap that OHCS has adopted similar requirements for monitoring all projects funded with Article XI-Q bonds. This means requiring audited financial statements for the operating fund that the Single Asset Entity will be setting up for the housing development.
Development resources and lending terms
LIFT Rental funds are made available through the Oregon Centralized Application process on a rolling basis, contingent upon OHCS receiving funding from the Oregon legislature each biennium. They are often used to leverage the use of other resources such as the 4% Low-Income Housing Tax Credit when available.
- Loan term
- 30 years when used in combination with 4% LIHTC and bond financing
- Interest rate
- The default rate is 0%. For projects with an investor or lender, a nominal interest rate can be applied upon request.
- Repayment
- Payments are deferred during the loan term. At loan maturity, the loan can be repaid in full as a balloon payment or the borrower can choose to extend affordability for an equal amount of time as the original loan term (20 or 30 years) for loan satisfaction.