**Working Paper No. HF-019**

**THE GSEs’ FUNDING OF AFFORDABLE LOANS:**

**A 2004-05 UPDATE**

**Harold L. Bunce Working Paper No. EMAD-2014-02**

**December 2012**

**Impact of Oil and Gas Exploration**

**on Affordable Housing**

Office of Policy 

Development 

**Stephen Komadina**

and Research 

**Timothy McNally**

**Samuel Young**

**Housing**

**Economic**

**Finance**

**Market Analysis**

W O R K I N G  P A P E R  S E R I E S 

U.S. Department of Housing and Urban Development 

**March 2014**

The contents of this report are the views of the authors and do not necessarily reflect the views or policies of the U.S. Department of Housing and Urban Development or the U.S. government. 

U.S. Department of Housing and Urban Development  |  Office of Policy Development and Research Impact of Oil and Gas Exploration on Affordable Housing

**Impact of Oil and Gas Exploration on Affordable Housing**

This working paper, prepared by the U.S. Department of Hous - 

**Section 8 Project-Based Rental Assistance programs**

ing and Urban Development (HUD), Office of Policy Develop-

(hereafter Section 8 PBRA) provide rental assistance for eligible ment and Research (PD&R), Economic Market Analysis Division families who live in specific housing developments or units. 

Gas/Oil Task Force (GOTF), examines the impact of oil and gas The Section 8 PBRA Program was authorized by Congress in 

exploration on the affordable rental-housing market. The paper 1974 and developed by HUD to provide rental subsidies for 

comprises three sections: the first provides a brief overview of eligible tenant families (including single people) residing in affordable rental-housing programs, the second discusses the 

newly constructed, rehabilitated, or existing rental apartment measurable impacts of oil and gas exploration on affordable 

projects. HUD subsidizes some residential unit rents using the housing, and the third reviews how HUD and state agencies are Section 8 New Construction Program, the Substantial Rehabili-addressing these impacts. An appendix provides detailed defi-

tation Program, and the Loan Management Set-Aside Program. 

nitions related to HUD and other affordable housing programs. 

These subsidies are  *project based*, which means HUD commits the subsidy for the assisted units of a particular property for **Overview of Affordable**

a contractually determined period. Contract rents, plus utility **Housing Programs**

allowances, initially may not exceed the FMRs for similarly 

situated units in newly constructed, substantially rehabilitated, or existing developments in the area, although, under special Affordable rental-housing programs assist low-income house-circumstances, HUD can approve initial contract rents (plus 

holds seeking affordable housing. The tenant-based1 Housing 

utility allowances) for particular assisted projects in an amount Choice Voucher Program (HCVP), Section 8 Project-Based 

up to 120 percent of the applicable FMRs.2 Many Section 8 

Rental Assistance (PBRA) programs, Section 202 (Supportive 

projects have reached the end of their original contract terms Housing for the Elderly)/811 (Supportive Housing for Persons 

and, therefore, have the choice of opting out of the subsidy pro - 

with Disabilities) programs, Low-Income Housing Tax Credit  

gram if the project would be more profitable at market rents. 

(LIHTC) Program, and U.S. Department of Agriculture (USDA)— 

Rural Development’s Rural Rental Housing Section 515 and 538 

The goal of the **Housing Choice Voucher Program, also**

loan programs are designed to provide affordable rental housing **known as the Section 8 Program** (hereafter, the HCVP), is to for very low-, low-, and moderate-income families. 

make rental units in the private housing market affordable to low-income families, elderly people, and people with disabili-Public Housing and the HCVP, which are administered by pub-

ties. Because assistance is tied to the family or individual and lic housing agencies (PHAs), and the Section 8 PBRA, which is not a specific project, participants can choose their own hous-administered directly by HUD, are programs that are allocated ing, including single-family homes, townhomes, or apartments. 

a set amount of funding (some with annual funding and others 

The share of rent HUD pays is based on the payment standard 

with multiyear funding) to serve the greatest number of eligible and on the gross rent minus what the tenant pays, which is 30 

applicants based on operating costs. In the HCVP, emergency 

percent of the tenant’s household income. The PHA determines 

exception payment standards or exceptions to Fair Market 

a payment standard, typically set between 90 and 110 percent 

Rents (FMRs) can be approved for an area in response to hous-

of the FMRs for the area. By law, during the initial lease-up ing market disruptions; however, it is important to note that period, the tenant may not pay more than 40 percent of his or the exceptions do not increase the total allocation of subsidy her adjusted gross income for rent.3 This restriction can limit dollars to the PHA. Emergency exception payment standards 

the use of housing choice vouchers (HCVs). In areas affected 

increase the amount a single applicant can receive but in turn by steep rent increases, such as oil- and gas-impacted areas, the may decrease the total number of applicants served. 

1 Section 8 voucher programs generally are associated with eligible tenant households and whatever units those households choose that pass inspection and in which the owners agree to accept the vouchers. PHAs may also tie a certain percentage of their Section 8 vouchers to projects through long-term contracts with project owners. These vouchers are referred to as project-based vouchers, or PBVs. 

2 HUD PIH (2013c). 

3 HUD PIH (2013b). 

Economic Market Analysis Working Paper Series

1

Impact of Oil and Gas Exploration on Affordable Housing

difference between the charged rent and the subsidy may be so The Section 538 program focuses on partnerships between the 

high that the HCVs cannot be used effectively. HUD’s Office of USDA and qualified lenders to provide decent, affordable rental Public and Indian Housing (PIH) maintains utilization rates for housing for low- and moderate-income rural households with 

HCVPs, which the GOTF is analyzing. 

incomes of up to 115 percent of AMI, which is higher than those served by the Section 515 program. Rents, including utilities paid The **Section 202 program,**which began in 1959, and the****

by the tenant, cannot exceed 30 percent of 115 percent of AMI. 

**Section 811 program**, which began in 1991, are intended to encourage development of affordable housing for very low-The **Low-Income Housing Tax Credit (LIHTC) Program** is an income seniors and people with disabilities by providing non-indirect subsidy program of Section 42 of the Internal Revenue profit groups with interest-free capital advances. HUD permits Code.8 It is administered by state housing finance agencies and funds to be used for building, purchasing, or rehabilitating a overseen by the Internal Revenue Service (IRS). The IRS issues project and provides a minimum ongoing 3-year rental-assistance credits to state agencies, which in turn allocate the credits to payment that covers the difference between the nonprofit’s op -

multifamily developers. The qualification process and standards erating costs and tenant rental payment amounts. The capital 

vary by state, but states must adhere to a number of federal 

advances are forgiven if a property participates in the programs requirements. Developers can raise capital for their projects by for 40 years.4, 5

selling equity stakes in the project to investors, enabling those investors to reduce the amount of federal taxes they owe. Inves-The **Section 515 and 538 Rural Rental Housing programs**, tors receive the tax credits for 10 years provided the property administered by the USDA—Rural Development office, encour-continues to meet program requirements, which provides in - 

age commercial financing of rural rental housing and provide 

centives for the investors to ensure the property is well managed affordable housing for very low-, low- or moderate-income 

over the life of the credits. 

families. Income levels are defined as follows:  *very low income* is less than 50 percent of the Area Median Income (AMI);  *low* LIHTC projects must have at least 20 percent of their units avail - 

*income* is between 50 and 80 percent of AMI; and  *moderate* able to households with incomes of less than 50 percent of 

*income* is capped at $5,500 more than the low-income limit. 

AMI or at least 40 percent of their units available to households The Section 515 Rural Rental Housing program provides direct, with incomes of less than 60 percent of AMI. Gross rents are 

competitive mortgage loans to nonprofit or for-profit rural 

restricted to a maximum of 30 percent of 60 percent of AMI, 

housing developers to provide affordable housing for very low-regardless of household income; maximum rent and income 

income, low-income, and moderate-income families; elderly 

limits are adjusted for different unit and household sizes, respec - 

people; and people with disabilities.6 A loan to a nonprofit 

tively. These restrictions must remain in place at the property organization or public body may be for up to 100 percent of 

for at least 15 years, during which time investors may face tax loan to value (LTV), while a loan to a partnership, limited part-penalties for noncompliance. If owners do not opt out of the 

nership, or for-profit corporation operating on a limited-profit program after 15 years, the affordability restrictions must re-basis cannot exceed 97 percent of LTV. Funds may be used to 

main in place for the federal minimum of 30 years. Many state construct new housing or to purchase and rehabilitate existing agencies, however, require longer affordability periods.9

structures for rental purposes; the maximum term is 30 years, LIHTC properties may also accept HCVs, subject to the require - 

with an amortization period not to exceed 50 years.7 Section 8 

ments of the HCVP program. This feature can be particularly 

or state rental assistance may also be used in conjunction with important to low-income households that meet AMI requirements the Section 515 loan. Tenants in properties financed with Sec-but are still unable to afford a unit without paying 40 percent of tion 515 loans may also receive Section 515 rental assistance, their income in rent. If gross rents were less than FMRs, house-which pays the difference between 30 percent of the tenant’s 

holds would have to make rent payments equal to only 30 per - 

income and the monthly rental rate. 

cent of their income. 

4 HUD MFH (2013a). 

5 HUD MFH (2013b). 

6 USDA Rural Development (2013a). 

7 USDA Rural Development (2013b). 

8 GPO (2013). 

9 HUD (2013d). 

Economic Market Analysis Working Paper Series

2

Impact of Oil and Gas Exploration on Affordable Housing

**What Impacts on Affordable**

to be balanced when the supply of vacant, available housing is **Housing Can Be Measured?**

sufficient to allow for adequate mobility of existing households. 

Large inflows of energy-sector workers can absorb any vacant 

As oil and gas exploration and drilling begin in an area, large units, leading to a tight rental market. Tight rental market con - 

numbers of workers temporarily move to the area and need 

ditions are very likely in rural, oil-impacted areas where the access to housing. Many energy companies and energy-related 

number of existing rental units is low. As the supply of available employers provide a housing allowance for workers to use toward vacant rental units declines, rents typically rise. Figure 1 high - 

rent, and the influx of workers into relatively rural areas can lights the impact on housing market rents and rental vacancy 

rapidly absorb most vacant units. Property owners may raise 

rates in the Minot-Williston area of Mountrail, Ward, and Williams rents and not renew existing leases in hopes of attracting well-Counties in North Dakota. Because many of the oil-impacted 

paid energy workers, displacing current tenants and forcing 

areas are in rural counties, however, data on real-time rental them to look for other housing. Seniors and other residents 

market conditions are lagged or may not be readily available. 

on fixed incomes may be disproportionately affected by sharp 

increases in rent levels, because a greater share of their fixed **Rent Changes**

income may need to be spent on housing. 

The second common variable for measuring rental-housing 

Subjective and anecdotal information regarding the effects on markets is rent changes. If rents increase and vacancies decline affordable housing in oil-impacted areas is typically easy to enough, property owners who offer affordable rental options 

obtain. It is important, however, to gather and analyze data 

may discontinue program participation to take advantage of 

that can be compared over time and across geographical areas. 

housing market conditions, further decreasing the supply of  

The GOTF found three primary variables to measure affordable 

rental units available to low-income households. During 2011 

housing market impacts across oil-impacted areas: (1) rental 

and 2012, two Section 8 PBRA projects in North Dakota opted  

vacancy rates, (2) rent changes, and (3) HCV utilization rates. 

out of their rental assistance contracts. One is a 30-unit project in Williams County, and the other is a 96-unit project in Ward **Rental Vacancy Rates**

County. The Ward County project had been renting a two- 

bedroom unit for $485 a month; after the transition to conven-The rental vacancy rate is one common variable for measuring 

tional units, the rent for the same unit increased to $1,100 a rental-housing markets. A rental-housing market is considered **Figure 1. Minot-Williston, North Dakota: Market Rents Have Increased and Vacancy Rates Have Declined Sharply****Since 2009**

80.0

4.0

70.0

3.5

60.0

3.0

50.0

2.5

40.0

2.0

30.0

1.5

20.0

1.0

10.0

0.5

0.0

0.0

2008

2009

2010

2011

2012

2013

Year-over-year percentage change in asking rent (left scale) 

Vacancy rate (right scale) 

Source: Analyst’s estimates

Economic Market Analysis Working Paper Series

3

Impact of Oil and Gas Exploration on Affordable Housing

month. The combination of sharp rent increases and a decrease often provide housing allowances to cover housing costs, this in the number of affordable units available will further constrain subsidy can drive up housing market rents in oil-impacted 

affordable housing markets in impacted areas. 

areas. These rent changes can be measured by looking at the 

size and frequency of rent concessions and changes in gross 

As with the Section 8 PBRA programs and the Section 8 HCVP, 

rents over time. The short-term dislocation that strong rent 

certain aspects of the LIHTC Program can limit its effectiveness growth causes can lead PHAs to ask for emergency exception 

in providing affordable housing in oil- and gas-impacted areas. 

payment standards. A recent example was Mountrail, Ward, 

In housing markets with strong annual rent growth and tight 

and Williams Counties in North Dakota. The fiscal year (FY) 

vacancy rates, multifamily developers and investors have less 2013 two-bedroom FMRs for the three counties were $614, 

incentive to accept 30 years of rent restrictions and be limited $641, and $605, respectively. These FMRS were based on the 

to income-qualified tenants by participating in the LIHTC Pro-American Community Survey data collected through the end of 

gram. The equity advantage to participation may not be as criti-2010. After a request for emergency exception payment stand-

cal in areas where the oil industry’s impact on employment and ards, HUD commissioned a local survey of gross rents. Based 

population growth is expected to continue for 10 to 25 years 

on the findings from the survey, the 2013 FMRs were revised 

and where housing construction has not been able to keep pace to $1,041, $1,087, and $1,026.10 Adjusted FMRs enable PHAs 

with demand. If developers and private lenders believe that 

to increase the amount a low-income family can receive for 

recent trends in rent growth will continue for the foreseeable monthly rent expenses. While the amount received by an HCV 

future, higher LTV ratios could be seen as an acceptable risk. 

holder increases, the total amount of funds provided to the 

PHA does not. Figure 2 details the relationship between the 

**HCV Utilization Rates**

cost per HCV and the number of HCVs used in Minot, North 

Dakota. Despite the implementation of emergency exception 

The third common variable for measuring rental-housing 

payment standards in July 2011, HCV utilization continued to 

markets is HCV utilization rates. Because energy companies 

decline, resulting in fewer families being served. 

**Figure 2. Decreasing HCV Utilization and Increasing Cost per Voucher** 800

600

750

550

700

500

650

450

600

400

550

350

500

300

450

250

400

200

Jan-09

Jul-09

Jan-10

Jul-10

Jan-11

Jul-11

Jan-12

Jul-12

Jan-13

Jul-13

Total vouchers used (left scale)

Monthly costs ($) (right scale)

HCV = housing choice voucher. 

Source: HUD Office of Public and Indian Housing

10 HUD (2013a). 

Economic Market Analysis Working Paper Series

4

Impact of Oil and Gas Exploration on Affordable Housing

HCVs enable very low-income tenants to rent any market-rate 

percent. HCV utilization rates are measured by dividing the  

rental-housing unit, with a rent that is less than the payment number of unit months leased using HCVs by the total number  

standard, which meets the housing quality standards of the 

of unit months available.  *Unit months available* is the number of program. The tenant pays a portion of the rent, based on his or units a PHA is permitted to serve using its Annual  Contributions her income, directly to the landlord; the PHA pays the differ-Contract. PHAs can choose to lease more than that amount but  

ence between the tenant’s portion and the charged rent. When 

will not receive housing assistance payments (HAPs) from HUD  

market rents are relatively close to the FMRs, the program 

for those units, and the HAPs will not count toward their annual affords low-income households many rental-housing choices. 

funding level rebenchmarking. Most PHAs stay well below the 

number of unit months available based on available funding. 

Energy exploration and drilling, and the influx of workers it HUD’s Regional Public Housing Offices maintain the data and 

creates, typically put strong upward pressure on housing market update it monthly. 

rents. As a consequence, either the market rents exceed the FMR 

or the amount that a PHA needs to subsidize a unit increases 

HCV utilization rates declined in states with rural areas affected and fewer households can be assisted. When such upward pres - 

by shale oil and gas drilling activity (Figure 3). During May 2009, sure occurs, HCV utilization rates go down. For example, the 

before much of the nationwide increased energy activity, HCV  

HCV utilization rates for Minot and Williston, North Dakota, 

utilization rates in North Dakota and Montana were more than 

and Sydney, Montana, were all less than 50 percent in May 

85 percent. After the sharp increase in energy exploration in 2013, down from 88, 98, and 97 percent, respectively, in May 

both states, HCV utilization rates in affected rural areas declined 2009.11 By comparison, during the same period, the national 

to less than 50 percent in May 2013. In energy-impacted areas HCV utilization rate remained relatively constant at nearly 95  

near urban centers, however, the decline in utilization rates was **Figure 3. An Increasing Portion of PHAs With Low HCV Utilization Rates Are Located in Rural Areas in Oil- and****Gas-Impacted States**

2.0

1.1 

PA 

MD 

WY 

OH 

U.S. total 

CO 

NY 

VA 

MT 

WV 

NM 

ND 

0.0

TX 

– 1.0 

– 2.0

– 1.6 

– 1.7 

– 1.8 

– 1.8 

– 2.3 

– 3.3 

– 3.5 

– 4.0

– 5.2 

– 5.4 

– 6.0

– 6.2 

– 8.0

Percentage point change 

– 10.0

– 12.0

– 13.2 

– 14.0

HCV = housing choice voucher. PHA = public housing agency. 

Source: HUD Office of Public and Indian Housing

11 HUD PIH (2013a). Note: HUD’s Office of Public and Indian Housing manages the SharePoint site; readers may require special privileges to access this site. 

Economic Market Analysis Working Paper Series

5

Impact of Oil and Gas Exploration on Affordable Housing

less pronounced. For instance, in Texas, the percentage-point exception payment standards include the city of Minot, Burleigh change in HCV utilization rates increased slightly, by 1.1 percent, County, Foster County, McHenry/Pierce County, Mountrail 

from May 2009 to May 2013. The proximity of the Eagle Ford 

County, and Stutsman County. In Pennsylvania, Susquehanna, 

Shale area to Houston allows for the relatively large supply of Bradford, and Tioga Counties were approved for emergency 

housing resources in the urban area to absorb some of the impact exception payment standards. (The GOTF is currently collect-of net in-migration of energy workers. A similar experience is ing data and monitoring the impact of emergency exception 

reported for the Niobrara Shale area in northeastern Colorado. 

payment standards in affected areas to analyze their effective-The Fort Collins-Loveland and Greeley metropolitan areas are 

ness. The result of this analysis will be presented in a future near the epicenter of oil activity in the Niobrara area. The supply working paper.)

of housing, hotels, and apartments in these metropolitan areas State agencies are using new legislation and existing programs absorbs a portion of energy personnel, limiting impacts on the to provide additional funding and affordable housing resources surrounding rural housing market areas. As a consequence, the to areas directly impacted by natural resource exploration, espe - 

percentage-point change in HCV utilization rates in Colorado 

cially in rural counties. The Pennsylvania  *Act 13/Impact**Fee* legis - 

declined by 2.3 percent from May 2009 to May 2013, only 

lation, signed into law in February 2012, enacted a fee on every slightly more than the national average decline of 1.8 percent. 

unconventional natural gas well drilled in the Marcellus Shale formation in the state. The fee amount depends on the price 

**How HUD and State Agencies**of gas during the year of production; 60 percent of the funds **Manage the Impact**

collected are allocated to areas directly impacted by natural re - 

source exploration activity. Projects eligible for funding through This section highlights the adjustments made to existing HUD 

the Pennsylvania  *Act 13/Impact Fee* legislation include infrastruc - 

programs and the new affordable housing resources made avail - 

ture, environmental programs, delivery of social services, and able from funds provided by state housing finance agencies. The affordable housing.12

response from HUD and state agencies focused on increasing 

The Pennsylvania Housing Finance Agency (PHFA) was allocated 

program flexibility and providing additional resources and fund - 

$2.5 million of impact fee funds that were collected in 2011, and ing to areas impacted by natural resource exploration. 

in 2012 (and each year thereafter), $5.0 million will be collected In areas experiencing significant shocks to the rental-housing for use in counties where active unconventional wells are present. 

market and with little or no market-based data on which to base Since December 2012, PHFA has awarded $16.05 million to 

revised FMRs, HUD/PD&R, in conjunction with the Department’s fund 59 projects in 22 counties.13 Funded projects will provide PIH, can authorize emergency exception payment standards for  

new affordable housing units, rehabilitative home improvements PHAs to use. Developed for use in disaster-impacted areas where to existing owner and renter units, or rental assistance. 

annually published FMRs may not be able to capture rapidly 

Projects and programs funded during 2012 and 2013 in Penn-

changing conditions, emergency exception payment standards 

sylvania include the 50-unit Wyalusing Meadows, an affordable increase a PHA’s flexibility by permitting HCVs to be set up to townhome rental development for general occupancy in Bradford 135 percent above FMRs. Without an approved exception rent, 

County. In Fayette County, in southwestern Pennsylvania, 36 

PHAs can set HCVs up to 110 percent above FMRs. 

new single-family homes for purchase by low- and moderate-

FMRs are set using the most recent data available, but the data income households will be constructed at the Glen at Three 

lag real-time rental-housing market conditions. After emergency Oaks. Half of the new homes will be sold to low-income house - 

exception payment standards are approved, they remain in effect holds and the remaining half to moderate-income households. 

until (1) HUD is able to complete a thorough housing market 

A rental rehabilitation program, which offers money to  current, analysis, (2) new data become available, or (3) new, higher 

past, and prospective landlords, will help stabilize the availability FMRs are set. Areas impacted by natural resource exploration 

of affordable housing units for low- and moderate-income house - 

and development are eligible for emergency exception payment 

holds available at the FMRs for a period of 7 years in Wyoming standards. In North Dakota, the areas approved for emergency 

County. The six-unit Clinton Street Gardens Homeless  Veterans 12 PA PUC (2013). 

13 PHFA (2013a). 

Economic Market Analysis Working Paper Series

6

Impact of Oil and Gas Exploration on Affordable Housing

Housing project will provide affordable units for homeless veter - 

which the prevailing rents in part of the FMR area are significantly ans in Indiana County. Proposals for FY 2013 funds were due in more or less than the FMRs for the entire area. In 2012, HUD 

June 2013, and PHFA is expected to dispense $8.7 million. Pro - 

created a methodology to adjust rental assistance payment stand - 

posals must ensure that at least 30 percent of the funds awarded ards for housing market areas that experience significant shocks will be used to help families with incomes equal to or less than from increased natural resource exploration.15

50 percent of the AMI. A comprehensive list of funded projects 

***Fair Market Rents (FMRs).*** Section 8 of the United States Hous - 

in 2012 and 2013 is available on the PHFA’s website. 

ing Act authorizes housing assistance to aid lower income families In North Dakota, the state legislature in 2013 reauthorized the in renting safe and decent housing. Housing assistance payments Housing Incentive Fund (HIF) with $35.4 million to create 

are limited by FMRs established by the U.S. Department of 

1,000 new affordable rental-housing units for essential service Housing and Urban Development for different geographic areas. 

workers (ESW) and low- and moderate-income households. 

In general, the FMR is the amount needed to pay the gross rent The units must remain affordable for a minimum of 15 years. 

(shelter rent plus utilities) of privately owned, decent, and safe An ESW is an individual employed by a city, county, or school rental housing of a modest (nonluxury) nature with suitable 

district; a medical or long-term care facility; the state of North amenities. The FMR is generally set at the 40th percentile gross Dakota; or others determined by the North Dakota Housing 

rent level for units in a housing market area. A public housing Finance Agency (NDHFA) to fulfill an essential public service. 

agency may establish a payment standard for its jurisdiction 

In August 2013, the NDHFA committed more than $20 million 

that falls between 90 and 110 percent of the FMR. 

from the HIF to fund 18 projects with nearly 500 rental units.14 

***income limits.*** Income limits are used to determine the income Examples of projects funded include 43 units that are reserved eligibility of applicants for public housing, Section 8, and other for ESW within the 74-unit Williston State College Housing 

programs subject to Section 3(b)(2) of the United States Hous-Phase II and 23 units that are reserved for ESW within the 43-ing Act of 1937, as amended. The most important definitions 

unit Renaissance on Main, both of which are in Williston, North relating to income limits are—(1)  *low income* is defined as 80 

Dakota. In Minot, the 48-unit Rolling Ridge Estates, with 24 ESW 

percent of Median Family Income (MFI), (2)  *very low income* units, was funded. The conversion of the former Williston Ju - 

is defined as 50 percent of MFI, and (3) 30 percent of Area 

nior High School into 44 LIHTC units for elderly people started Median Income is defined as an income targeting standard in 

renovations in 2012 and opened in 2013. The project was 

the 1998 Amendments to the Housing Act of 1937. Income 

supported with funds from the HIF and the Neighborhood 

limits are adjusted based on family size; larger families have Stabilization Program. 

higher income limits.16

**Appendix. Glossary of Terms**

***Median Family Income (MFI).*** MFI estimates use 5-year data collected by the American Community Survey (ACS), augmented 

For the convenience of the reader, we provide the following 

by the most recent 1-year ACS information, and updated with 

definitions of terms (in alphabetical order) related to HUD and Consumer Price Index data.17 The Census Bureau defines a  *family* other affordable housing programs. 

as “a group of two or more people (one of whom is the house-

holder) related by birth, marriage, or adoption and residing 

***emergency exception payment standards.*** HUD regulations together,” and defines a  *household* all people who occupy a hous - 

enable public housing agencies to request emergency exception ing unit.18 One-half of families have incomes greater than the payment standards outside the “basic range” of 90 to 110 percent estimated MFI, and one-half have incomes that are less than the of the Fair Market Rent (FMR). These emergency exception 

MFI. 

payment standards are typically used to accommodate cases in  

14 NDHFA (2013). 

15 HUD PD&R (2013a). 

16 HUD PD&R (2013b). 

17 HUD (2013b). 

18 United States Census Bureau (2013). 

Economic Market Analysis Working Paper Series

7

Impact of Oil and Gas Exploration on Affordable Housing

***public housing agency (PHA).*** A PHA is an entity tasked with United States Census Bureau. 2013. “Current Population 

managing housing for low-income residents at rents they can 

Survey (CPS).” Available at **http://www.census.gov/cps/about/

afford. HUD administers federal aid to PHAs and provides tech-

cpsdef.html (accessed September 2013). 

nical and professional assistance. PHAs determine eligibility for U.S. Department of Agriculture (USDA), Rural Development. 

low-income housing based on income, age, disability status, 

2013a. “Direct Rural Rental Housing Loans.” http://www. 

and citizenship.19 PHAs are also charged with administering 

rurdev.usda.gov/HAD-Direct_Rental_Loans.html (accessed

the Housing Choice Voucher Program. An individual PHA may 

September 2013). 

manage public housing units, a voucher program, or both. 

———. 2013b. “Multi-Family Housing Programs and Loan 

***tax credit.*** A tax credit is a subtraction from the amount an Services.” Available at http://www.rurdev.usda.gov/Support 

individual or a business entity owes in taxes. Federal housing 

Documents/3560-3chapter02.pdf (accessed September 2013). 

tax credits derived from Section 42 of the Internal Revenue 

Code are awarded to developers of qualified projects by state U.S. Government Printing Office (GPO). 2013. “GPO’s Federal 

and local entities. Developers then sell equity interest in these 

Digital System, Collections Page.” Available at http://www.gpo. 

projects to investors to raise capital for their projects, reducing 

gov/fdsys/browse/collectiontab.action (accessed September 

the amount of debt the developer would otherwise have to 

2013). 

borrow. Because the debt is less, a tax credit property can, in turn, offer lower, more affordable rents. Provided the property U.S. Department of Housing and Urban Development (HUD). 

maintains compliance with the statutory requirements, inves-

2013a. “Final 2013 Fair Market Rent Documentation System.” 

tors receive a dollar-for-dollar credit against their federal tax Available at** http://www.huduser.org/portal/datasets/fmr/fmrs/

liability each year over a period of 10 years, creating a return 

docsys.html&data=fmr13 (accessed September 2013). 

on their capital investment. The annual credit amount is based 

———. 2013b. “FY 2013 HUD Income Limits Briefing Mate-

on the amount invested in the affordable housing.20

rial.” Available at **http://www.huduser.org/portal/datasets/

il/il13/IncomeLimitsBriefingMaterial_FY13.pdf (accessed **References**

September 2013). 

———. 2013c. “HUD’s Public Housing Program.” Available  

North Dakota Housing Finance Agency (NDHFA). 2013. 

at** http://portal.hud.gov/hudportal/HUD?src=/topics/rental_ 

“Agency Selects Projects Addressing Critical Housing Needs.” 

assistance/phprog (accessed September 2013). 

Available at http://ndhousing.areavoices.com/2013/08/12/

agency-selects-projects-addressing-critical-housing-needs/

———. 2013d. “What Happens to Low-Income Housing Tax 

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# Document Outline

- Cover
- Impact of Oil and Gas Exploration on Affordable Housing    - Overview of AffordableHousing Programs
  - What Impacts on AffordableHousing Can Be Measured? 
  - How HUD and State AgenciesManagethe Impact
  - Appendix. Glossary of Terms
  - References 

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