TRANSMITTAL MESSAGE

EXECUTIVE SUMMARY

INTRODUCTION

Historical Background
Governance
Mission
Funding
Programs and Productivity
Ranking Criteria

PROGRAM DESCRIPTIONS

Homeownership
Multi-Family Tax Exempt Bond Financing
Rental Assistance (Section 8)
Low Income Housing Tax Credits
HOME Investment Partnerships
Housing Trust Fund

October 15, 1997

Ms. Donna Capps
SC State Budget and Control Board
Office of the State Budget
1122 Lady Street, 12th Floor
Columbia, South Carolina 29201

RE: Fiscal Year 1996-97 Accountability Report

Dear Ms. Capps:

Transmitted herewith is the FY 1996-97 Accountability Report for the South Carolina State Housing Finance and Development Authority.

The Accountability Report is a direct product of our ongoing Strategic Planning Process. Our agencys Mission Statement, Vision, and Values were established in 1995 when we began the strategic planning. We further developed Issues and Strategies, which are specifically stated actions we will take to address each identified issue. Our Strategic Plan was updated September 21, 2001 at 9:17 AM

I have also included a Program Description for the SC Housing Trust Fund, since we are charged with administering the Fund under South Carolina law. The Trust Fund is not ranked with other Authority programs however because it is, in fact, a separate entity under statute and exists independent of our agency.

Our contact for this Report is Rosalia Moore, Controller for the Authority. Please contact her at , if you have any questions.

Sincerely,

David M. Leopard
Executive Director

Enclosure

Our VISION is that all South Carolinians have the opportunity to live in safe, decent, and affordable housing. One of our four VALUES is CUSTOMER FOCUS. We strive, as an agency, to know and understand our customers and their needs. We respect all persons and value their diversity. We continually seek ways to improve our service. We encourage and appreciate our partnerships.

Ranking Process
The Authoritys five major programs are Homeownership, Multi-Family Tax Exempt Bond Financing, Low Income Housing Tax Credits, Rental Assistance, and HOME Investment Partnerships. We reviewed each of the major programs in the context of our VISION and VALUES, and brainstormed all the possible criteria we could use for appropriately ranking them in priority. Every program the Authority offers is significant, as together, they address the wide range of housing needs of this State.

After careful consideration, we chose to rank the programs based on the number of families served during the fiscal year. We calculated the number of new families served, and added the number of ongoing (maintenance) families and services required by each program to arrive at the total. Applying this standard to each program yielded numeric values, and is the criterion on which priority ranking is based.

Five Major Programs
The Homeownership Program is the core of the Authoritys operations. The program provides affordable homeownership opportunities for persons and families of low- and moderate-to-low income in South Carolina, primarily through the sale of tax-exempt mortgage revenue bonds. The combination of funds generated by the sale of these bonds, early pay-offs from previously sold mortgages, and prepayments support the homeownership program. These funds are recycled to finance new reduced interest rate mortgages and downpayment assistance loans for first-time home buyers, and used for other related affordable housing activities. FY 1996-97 Production: 1,026 new first mortgages totaling $56,812, downpayment assistance loans. In-house servicing administered on 4,164 loans. The average annual household income of borrowers under the program was $22,467. The average home loan amount was $55,190.

The Multi-Family Tax Exempt Bond Financing Program provides affordable rental housing opportunities to lower income South Carolinians, through the construction of new units or the preservation of existing units through rehabilitation. Eligible applicants for real estate development financing under the program are Units of Government, for-profit and nonprofit housing developers, and property owners. Rental housing financed by the program must be available to persons or families of low and low-to-moderate income. These housing developments are monitored annually to ensure compliance with governing Federal and State regulations including but not limited to the review of tenant records, financial documentation, and physical site inspections. FY 1996-97 Production: Property and management compliance monitoring was performed on 37 existing properties containing 6,687 units to ensure compliance with applicable program regulations. From , the Authority played a major role in the production of affordable rental housing via the Multi-family Tax Exempt Bond Financing Program. However no new rental housing units have been produced under the program in the past 6 years due to insufficient annual allocations of State Private Activity Bond Cap made to the Authority.

The Rental Assistance (Section 8) Program provides housing (and sometimes utility) payment assistance to low and very low income South Carolinians who require some support in order to secure or maintain a decent home. The Rental Assistance program is funded directly by the Department of Housing and Urban Development and administered for the State by the Authority. The Authority serves 22 rural counties throughout the State with the Rental Assistance program. The program assists elderly, handicapped, disabled, and lower income individuals and families. 1996 Statistics - 83% of all tenants were very low income. The predominant source of tenant income of State Rental Assistance households was Supplemental Security Income (SSI) or Temporary Assistance to Needy Families (TANF-formerly known as AFDC). Other sources of tenant income are Social Security and Earned Wages. The average adjusted annual income of Section 8 households was $6,321. The average household size is 2.5 persons. 88% of households are female headed. 39% of State Program renters are White; 61% are African-American. FY 1996-97 Production: $10.2 million in Rental Assistance payments were made for over 4,000 tenant families. 2,000 Waiting List applications were taken and processed. Over 5,000 Housing Quality Standard inspections were performed. Tenant family compliance monitoring was enhanced through the Authoritys partnerships with the SC Department of Social Services and the Department of Revenue.

The Authority allocates and monitors the Low Income Housing Tax Credit Program for the State of South Carolina. The Tax Credit program, which is managed by the Internal Revenue Service, is the primary source of new affordable rental housing production nationwide, and in South Carolina. Rental units financed with Tax Credits are created primarily through new construction or rehabilitation. Housing Credits are allocated based on State population. Annual credit awards are calculated at $1.25 per resident. South Carolinas 1996 Per Capita credit amount was $4.58 million. The program encourages private development of quality rental housing offering income tax credits as an incentive to private real property owners and developers to construct, rehabilitate, or purchase units for rent to lower income families or individuals. Affordable rental units have been developed across the state in urban, suburban, and rural communities alike since the programs inception in 1987. FY 1996-97 Production: 1,387 rental units providing 3,479 bedrooms were financed to address the housing needs of an anticipated 5,218 lower income South Carolinians. More than 30% of developments were monitored for compliance and inspected for Federal Housing Quality Standards.

The HOME Investment Partnerships Program is designed to promote partnerships between and among the public and private sectors to support a wide range of affordable housing activities from owner-occupied housing rehabilitation, to home buyer assistance, to rental unit construction, to tenant-based rental subsidy. The HOME program is funded directly by the Department of Housing and Urban Development and administered for the State by the Authority. Funds in the form of loans and grants are awarded to Units of Government, traditional nonprofit agencies, for-profit developers, and special nonprofit organizations called Community Housing Development Organizations (CHDOs). Since the programs implementation in 1991, the Authority has qualified 23 CHDOs as housing development partners primarily by providing direct technical assistance and training. The Authority received $10 million in HOME funds in 1996. HOME funds must be leveraged at 25% with private or other resources. FY 1996-97 Production: 55 recipients were awarded HOME funds totaling over $7 million. 150 households received rehabilitation assistance; 247 households received construction financing and /or downpayment and closing cost assistance; and 402 rental housing units were developed. 100% of housing units financed using HOME funds were reviewed for compliance with applicable Federal and State tenant eligibility and housing quality requirements during the fiscal year.

Historical Background
The South Carolina State Housing Finance and Development Authority is an agency of the State created to provide adequate housing for South Carolinians. The State Housing Authority was established in June of 1971 by Act No. 500 of the South Carolina Code of Laws. In a series of legislative amendments over a quarter century of service, the agencys powers have been expanded to meet the states ever-changing affordable housing needs.

In 1977, the Authoritys governing legislation was amended to permit the issuance of revenue bonds to support certain housing programs. The agency's name was officially changed in 1988 to its current form which reflects the variety of housing activities in which it is currently engaged. Later that same year, the Code of Laws was again amended authorizing the issuance of home equity conversion mortgage loans.

More recent changes between 1990 and 1994 have allowed the Authority to determine the income eligibility of persons and families entitled to mortgage loans under the Homeownership Assistance Programs; created the South Carolina Housing Trust Fund and designated the Authority as the Fund's administrator; and amended several important provisions of the Trust Fund Act.

Governance
The Authority's powers are vested in a nine-member Board of Commissioners which includes the Governor and the State Commissioner of the Department of Health and Environmental Control (or their designees), and seven at-large members. Commissioners, appointed by the Governor, serve four-year terms or until their successors are appointed. The Board of Commissioners establishes agency policies and oversees its operation. The Authoritys Board meets monthly.

Mission
The Authoritys mission is to promote and provide safe, decent, and affordable housing for the citizens of South Carolina. The agency exists for the primary purpose of expanding housing opportunities for lower income South Carolinians as defined by governing State and Federal legislation. The Authority accomplishes its mission by offering quality housing programs and services, working collaboratively with other public agencies and nonprofit organizations, and through effective partnerships with the private sector.

Funding
The South Carolina State Housing Finance and Development Authority is self-supporting and operates at no expense to the taxpayers of South Carolina. The Authority is the state's single largest public financier of single family and multi-family housing. Agency funds are leveraged with other public and private resources to finance affordable home mortgages for first-time home buyers, construct or rehabilitate rental housing, and expand housing options for special needs populations to include the very low income elderly, disabled, and homeless.

Programs and Productivity
The Authoritys five (5) major programs are: Homeownership, Multi-Family Tax Exempt Bond Financing, Rental Assistance (Section 8), Low Income Housing Tax Credits, and HOME Investment Partnerships. These programs are financed in one of three ways, by 1) money generated by the sale of revenue bonds, 2) Federal programs funded by the U.S. Department of Housing and Urban Development (HUD) or the Internal Revenue Service (IRS), or 3) State funds transferred to the SC Housing Trust Fund.*

*A Program Description is also included for the SC Housing Trust Fund since the Authority administers the Fund under State law. The Trust Fund is not ranked with the other 5 major agency programs because it is a separate entity and exists independent of the Authority.

The Authority provided housing assistance to more than 26,000 South Carolinians, and produced over 4,200 units of affordable housing through its five major programs during fiscal year 1996-97. Of this total, 7,723 new families statewide were directly assisted by the provision of affordable home mortgage and downpayment assistance loans, rental assistance, or the construction or rehabilitation of single and multi-family housing units. The agency provided housing maintenance services to another 19,066 families through loan servicing, tenant certification, and unit inspection during the reporting period.

Ranking Criteria
Each of the Authoritys five major programs were ranked on the basis of the total number of families assisted during fiscal year 1996-97. The ranking formula considers two workload factors: New Families Served and Maintenance. New Families Served are those that received first-time housing assistance during the fiscal year. Maintenance is a measure of the number of families and housing units that were certified or inspected by agency monitoring staff. Staff routinely conduct on-site visits to ensure compliance with income and other relevant eligibility requirements, and inspect units for livability based on Federal Housing Quality Standards (HQS).

The number of new families served, added to the maintenance factor, yielded the total number of families assisted by each program during the fiscal year. This formula was applied to each of the five major programs, and is the basis on which priority was determined. Programs* included in the Program Description section of this Report are listed in priority order using the ranking formula below.

Ranking Formula: New Families + Maintenance (Families / Units) = Total Housing Assistance

Performance Measures: (FY )

Workload Indicators:
• 1026 new first mortgages totaling $56,812,280
• 511 down payment assistance loans
• Of 10,601 loans outstanding servicing administered on 4164

Efficiency Measures:

• All services provided at no cost to South Carolina Taxpayers
• Program operating cost of less than $57 per outstanding loan

Effectiveness Measures:

• Total of 25,405 first mortgage loans and 1,875 down payment assistance loans
• Current average annual family income of home purchasers is $22,068 and average loan amount is $55,373 Authority maximum income limit is 79% of the HUD median income for South Carolina.

Program Cost: (FY )

Operating cost for the Homeownership program was $604,343.

Performance Measures: (FY )

Workload Indicators:
• Thirty-seven developments containing 6,687 units.
• Property and management reviews at 100% of developments for compliance with applicable state and Federal legislation.

Efficiency Measures:

• All services provided at no cost to South Carolina taxpayers.
• Review tenant records, annual financial statements, and perform physical inspections for 100% of developments.
• Provide program training to on-site management personnel..

Effectiveness Measures:

• 6,687 good quality units at affordable rents available for low to moderate income individuals or families.
• Satisfied property and management reviews of all developments with a minimum of follow-up inspections necessary.

Program Cost: (FY )

Operating cost for the Multi-Family Tax Exempt Bond Financing program was $391,918.

Performance Measures: (FY )

Workload Indicators:
• Over 5,000 housing quality inspections of rental units performed.
• Over 2,000 waiting list applications taken and processed.
• Monthly rental assistance payments made for over 4,000 tenant families to over 1,000 propery owners/agents.

Efficiency Measures:

• Program operating costs of less than $300 per tenant family assisted.
• Tenant family compliance is enhanced throiugh inter-agency cooperation with the Department of Social Services and the Department of Revenue.

Effectiveness Measures:

• Over 4,000 families including more than 10,000 people receive rental assistance through the Authority.
• Over 4,000 rental units were maintained up to HUD quality standards.

Program Cost: (FY )

Operating cost for the Rental Assistance program was $1,355,377.

Performance Measures: (FY )

Workload Indicators:
• Allocated $5.3 million ($53 million--10 year total) in LIHTC, 100% of LIHTC available
• 1387 units providing 3,479 bedrooms for an anticipated 5218 persons to be served
• Over 30% of placed in service LIHTC developments monitored for compliance with applicable federal and state requirements for maximum rent and income limits as well as inspect for housing quality standards.

Efficiency Measures:

• Maximize the allocation of LIHTC available to promote the efficient production of affordable rental housing units
• Maximize the equitable distribution of LIHTC between rural and urban communities
• Minimize the amount of carry-over allocations returned.
• Exceed IRS requirements for performing monitoring inspections of 20% of LIHTC developments.

Effectiveness Measures:

• Allocated $31 million ($310 million--10 year total) to 316 developments containing 10,540 units in 44 counties
• Performed compliance monitoring inspections for over 30% of LIHTC developments annually.

Program Cost: (FY )

Operating cost for the Low Income Housing Tax Credits program was $298,393.

Performance Measures: (FY )

Workload Indicators:
• Processed 83 applications, of which 55 were recipients of HOME awards totalling over $7 million.
• 150 households received rehabilitation assistance; 247 households received construction financing and/or down payment and closing cost assistance; and 402 rental units were developed.
• 100% of the units receive property reviews for compliance with federal and state requirements.

Efficiency Measures:

• Maximized the allocation of HOME funds to promote the efficient production of affordable housing units.
• Average HOME subsidy was $17,121.

Effectiveness Measures:

• The state is allocated approximately $9,000,000 annually
• Average number of HOME awards made each year is 40
• Average dollar amount of awards $200,000

Program Cost: (FY )

Operating cost for the HOME program was $408,280.

*A Program Description is also included for the SC Housing Trust Fund since the Authority administers the Fund under State law. The Trust Fund is not ranked with the other 5 major agency programs because it is a separate entity and exists independent of the Authority.

Performance Measures: (FY )

Workload Indicators:
• Processed 66 applications of which 56 developments were recipients of Trust Fund awards.
• Over 498 affordable housing units built or rehabilitated.
• Property or management reviews of development for compliance with applicable state legislation and program requirements.

Efficiency Measures:

• All services provided at no cost to the Housing Trust Fund.
• Maximized the allocation of HTF funds to promote the efficient production of affordable housing units.
• Maximize the equitable distribution of HTF between rural and urban communities.
• Inspected majority of units placed in service.

Effectiveness Measures:

• Allocated $5.17 million to 56 developments which provided safe, decent housing for an estimated 1532 persons annually.
• Satisfied property and management reviews of all developments with a minimum of follow-up inspections necessary.