WASHINGTON, DC–Fannie Mae is launching a program that offers affordable housing developers financial incentives to build or rehabilitate properties with an eye on healthy features — specifically, features that have been proven to promote the health of residents.
It is the first time one of the GSEs has launched a major initiative connecting financial incentives for developers to health metrics.
The program, called Healthy Housing Rewards, is similar to Fannie Mae's energy initiative, which provides financial incentives to developers to include energy-efficient design features. Unlike energy efficiency, though, there is not a clear link between a building's performance or return, and healthy features.
Nonetheless Fannie Mae believes it has a clear mandate to move forward with the program. “We think there is a clear connection between affordable housing and the health of the folks who live there,” Bob Simpson, vice president of Affordable, Green & Small Loan Business within Fannie's multifamily product line, tells GlobeSt.com.
Healthy Housing Rewards provides a pricing break of 15 basis points for borrowers who incorporate specific design features into their construction plans. A few examples include outdoor spaces or playgrounds, fitness equipment, community gardens, a pest management plan, a rule prohibiting smoking, or a staircase that is well lighted and finished in the same materials as the lobby.
140-Point Health Index
These attributes are part of the 140-point Center for Active Design's Healthy Housing Index. To receive the preferable financing, borrowers need to get a score of at least 90 on this index. The Center for Active Design is the first approved provider under this program, Simpson says. “The index it developed is based on 45 evidentiary-based features that provide a healthier environment.”
“We think a combination of these features is realistic for a majority of affordable housing projects,” he continues. “We have seen projects that were built as affordable that include some of these attributes – you can build this in an affordable way.”
The features also aligns with some of US state housing authority tax credit programs, he says.
This initiative will target properties where at least 60% of the units are serving tenants at 60% of average median income or less.
It is possible, even likely, that changes may be made to the program as it gets underway.
“This is something that hasn't been done before and we are entering it with the knowledge that we will have more to learn,” Simpson says. “We will monitor its progress and if there are tweaks we need to make over time we will do it.”
WASHINGTON, DC–Fannie Mae is launching a program that offers affordable housing developers financial incentives to build or rehabilitate properties with an eye on healthy features — specifically, features that have been proven to promote the health of residents.
It is the first time one of the GSEs has launched a major initiative connecting financial incentives for developers to health metrics.
The program, called Healthy Housing Rewards, is similar to
Nonetheless
Healthy Housing Rewards provides a pricing break of 15 basis points for borrowers who incorporate specific design features into their construction plans. A few examples include outdoor spaces or playgrounds, fitness equipment, community gardens, a pest management plan, a rule prohibiting smoking, or a staircase that is well lighted and finished in the same materials as the lobby.
140-Point Health Index
These attributes are part of the 140-point Center for Active Design's Healthy Housing Index. To receive the preferable financing, borrowers need to get a score of at least 90 on this index. The Center for Active Design is the first approved provider under this program, Simpson says. “The index it developed is based on 45 evidentiary-based features that provide a healthier environment.”
“We think a combination of these features is realistic for a majority of affordable housing projects,” he continues. “We have seen projects that were built as affordable that include some of these attributes – you can build this in an affordable way.”
The features also aligns with some of US state housing authority tax credit programs, he says.
This initiative will target properties where at least 60% of the units are serving tenants at 60% of average median income or less.
It is possible, even likely, that changes may be made to the program as it gets underway.
“This is something that hasn't been done before and we are entering it with the knowledge that we will have more to learn,” Simpson says. “We will monitor its progress and if there are tweaks we need to make over time we will do it.”
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
