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PA Bulletin, Doc. No. 15-142



Pennsylvania Housing Affordability and Rehabilitation Enhancement Fund (PHARE); Principles and Elements of Plan; Revised 2015 Draft Plan

[45 Pa.B. 476]
[Saturday, January 24, 2015]


Pennsylvania Housing Affordability and Rehabilitation Enhancement Fund (PHARE)

 The PHARE Fund was established by the act of November 23, 2010 (P. L. 1035, No. 105) (PHARE Act) to provide the mechanism by which certain allocated State or Federal funds, as well as funds from other outside sources, would be used to assist with the creation, rehabilitation and support of affordable housing throughout this Commonwealth.

 The PHARE Act did not allocate any funding but did outline specific requirements that include preferences, considerations, match funding options and obligations to utilize a percentage of the funds to assist households below 50% of the median area income. The PHARE Act provides a fairly broad canvas regarding the types of programs and the specific uses of any funding to allow flexibility in working with other State and Federal acts and programs.

Marcellus Shale Impact Fee

 The Marcellus Shale impact fee legislation, the act of February 14, 2012 (P. L. 87, No. 13) (Impact Fee Act) specifically allocates certain amounts from the impact fee into the PHARE Fund to address the following needs, including:

 • Support for projects that increase the availability of affordable housing for low and moderate income persons and families, persons with disabilities and elderly persons in counties where unconventional gas wells have been drilled (regardless of production levels).

 • Provide rental assistance, in counties where unconventional gas wells have been drilled, for persons or families whose household income does not exceed the area median income.

 • Specifies that no less than 50% of the funds are to be used in fifth, sixth, seventh and eighth class counties.

Direct Allocation—The PHARE Fund will receive a direct yearly allocation from the portion of funds set aside for local distribution. The direct allocation is as follows: $5 million each fiscal year beginning in 2012 and thereafter.

Windfall/Spillover Funds—Additional funds may become available because the Impact Fee Act limits amounts allocated to qualifying municipalities (as defined in the Impact Fee Act) and provides that any money remaining, after all allocations have been made to qualified municipalities, would also be deposited into the PHARE Fund.


 The PHARE Act provides the mechanism to address the housing needs in impacted counties/communities of the Marcellus Shale region.


 In accordance with the PHARE Act and the Impact Fee Act, the moneys will be used to address significant housing needs in impacted counties and communities with the following additional criteria:

 • 50% of the funds must be spent in fifth through eighth class counties.

 • 30% of the funds must benefit persons/families below 50% of the median area income.

 1) Maximize resource leveraging—To the greatest extent possible, the resources allocated will be used as leverage for other public and private resources. Additionally, local nonfinancial assets should be identified and leveraged when possible—including transportation, schools, recreation, employment, health, community, and economic development support and other amenities. Preference:  Applications that also include Optional Affordable Housing funds (under 53 Pa.C.S. Chapter 60 (relating to optional affordable housing funding)) or local share portions of the impact fee, or both.

 2) Address greatest need—The moneys will be allocated in communities where the greatest housing needs are identified based on housing needs studies and assessments, interviews, real estate price factors, housing stock analysis, market studies and consideration of the extent of gas wells drilled and related activity. The limited resources available should be used to meet the most significant and pressing housing needs but may also be used to address longer term housing needs. Preference: Projects/programs that: 1) assist with the rehabilitation of blighted, abandoned or otherwise at risk housing and the reuse of vacant land where housing was once located; or 2) provide funding for owner-occupied rehabilitation, first-time homebuyers and rental assistance.

 3) Foster partnerships—The funds should be used to maximize sustainable partnerships that will be committed to addressing the housing needs in these communities over a significant period of time. While the funds are to be used to directly support housing to meet the needs in the impacted communities, the projects should also help establish capacity to address those needs over the longer term. Preference: Projects/programs that incorporate social service entities that offer additional services to the residents within the community where the project/program is taking place.

 4) Effective and efficient—Ensure that the resources are used effectively and efficiently to meet the housing needs of the impacted communities. Given the expectation that demand for many types of housing will greatly exceed the funds available, it will be critical to maximize the effectiveness and efficiency for housing investments by the PHARE Fund. Preference: Projects/programs that assist the residents with the greatest need in that particular region.

 5) Equitable and transparent—Create a plan and allocation process that will equitably meet the housing needs in impacted communities and establish a process that provides transparency to all stakeholders. Funding decisions and reporting will be done in accordance with the legislative requirements.

Elements of the Plan

Analysis of need—One of the most critical components of the plan is to continually assess housing need in these communities. From both a quantitative and qualitative perspective the requirement to have accurate, reliable data from which funding decisions can be made is imperative.

 It is important to recognize that this data will need to be municipality-specific to capture the unique and likely different housing needs in the various communities. In addition, the housing/real estate markets are diverse across the impacted communities and the analysis of need will require an understanding (qualitative and quantitative) of individual markets to make appropriate resource allocation decisions.

 Building upon analysis already undertaken by the Housing Finance Agency (Agency) and the Commonwealth, additional analysis may be performed to assess specific housing issues in the impacted communities and to identify housing needs (persons with special needs, elderly, larger households, physical disabilities, homeless, and the like) to appropriately target PHARE Fund resources to those in greatest need of housing, especially due to the impact of the Marcellus Shale development. In addition to types of housing analysis, the Agency will consider different income levels, nature of housing stock and the housing needs of those across a broad spectrum (homeless, near homeless, very low income, low income, temporary and seasonal workers, permanent work force, and the like).

Understanding of real estate market dynamics—The plan for the utilization of these resources has been developed to address and continuously reevaluate the specific housing real estate markets in each community. The ''micro'' markets could be significantly different in the impacted communities and the plan is sufficiently flexible to address those differences.

 The housing and real estate development ''capacity'' will also have significant impact on the ability of these funds to be used effectively and efficiently to meet the needs of the communities. Based on the preliminary finding from the Lycoming College research available at, the Agency has some insight into the existing housing development capacity in some of the impacted communities. This will serve as a foundation for investment inincreasing the capacity. There will be need for ongoing analysis of capacity (private, nonprofit, public) as part of the plan. In some of these communities there has been no significant housing market in decades while in others there is a robust market that may be addressing some part of the housing needs. The plan will help determine where additional housing development capacity may be necessary, or where other strategies may be implemented for meeting the housing needs in those communities.

Allocation and use—The funding vehicle's allocation process, created by the plan, must also be supportive of and responsive to the needs of the housing and real estate development market and should foster coordinated local trust fund plans and resources. Funds may be used to support predevelopment, site acquisition and infrastructure development, planning and preconstruction activity in addition to direct support of development and operation of projects and housing programs including employee assisted housing programs. Funds may be provided in various forms designed to best support the particular activity including the following grants: market rate, amortizing, balloon, bridge or soft loans; capital contributions; capital financing subsidy support; operating and supportive service reserve funding; and rental or homeowner assistance. Funds may be specifically allocated to address timing issues presented in the development of affordable housing projects, when other financing is available, construction season, local zoning or other approvals. In addition, funding may be directed for administration by the Agency for certain projects approved for low income housing tax credits or other Agency resources. Preliminary allocations may be made for projects/programs awaiting approval of additional resources. Projects/programs that do not begin within 1 year may have the preliminary allocation withdrawn.

High quality design and construction—A vital element of the plan will be the development of housing that is both of good quality design and construction and will be sustainable over a long period of time.

 The opportunity to meet the growing housing needs in these communities will necessitate that this housing be available as an asset for the community for many generations. To meet that objective it will require that projects funded with these resources meet the highest design and construction quality standards available and that all projects ensure sustainability to the long term (both financial and physical). Funds may be specifically allocated to support green and renewable energy sources and as leverage to consumer programs available through utility companies or other business partners.

Targeting of resources—It is likely that the funds in this program will not be sufficient to meet all the housing needs and mitigate every housing impact created by the shale gas development; therefore, investment decisions will target the limited funds to projects that meet the principles outlined in this notice and most comprehensively address the elements of the plan.

 When possible these funds will be targeted and stay focused on mitigating the very specific housing impacts created by the shale development in the impacted and designated communities. This element will likely result in the determination that while there may be worthy housing projects that could be funded with these resources, the focus of development will be on most comprehensively addressing the direct and tangible housing impacts. Priority may be given to target resources in tandem with approved county housing trust fund plans or plans for the utilization of local share impact fee funds, or both.

Stakeholder input—The plan for allocation of resources will provide for broad stakeholder input concerning the principles and elements of the plan.

 There are many diverse interests that are concerned about the anticipated housing impact and therefore how these resources will be allocated to address the need. To the greatest extent possible opportunities should be created for relevant and legitimate stakeholders to comment and advise the plan. This element will need to be managed for practicality and efficiency to maximize input. Preference: Applicants who provide a process where members of the community and other stakeholders may provide input on the application prior to submission.

Application/Allocation Process

 Based on the legislative requirements of the PHARE Act and the Impact Fee Act, the Agency has developed an application/request for proposals (RFP) for eligible applicants interested in applying for the funds.

 Eligible applicants include counties that have adopted impact fees as well as municipalities who have further contributed to PHARE by means of windfall/spill over funds from the impact fee. While only eligible applicants may apply, nonprofit and for-profit organizations may be part of the application process.

 The elements of the application and allocation process include:

 • Adoption of ''plan'' for managing the anticipated funds by the Agency.

 • Announcement of application and possible training/information session concerning the elements of the application.

 • Applications accepted and reviewed by the Agency staff based on the application and plan requirements.

 • Project recommendations reviewed by the Agency.

 • Announcement of preliminary funding approval.

 • The Agency will establish an annual application process that will allow the agency to address housing needs in the impacted communities.

 • The Agency may amend the plan, application and the allocation process at any time, upon written publication of the amendments.

 • The Agency, as part of the RFP process, will require all applicants to target a minimum of 30% of their funding to support households with incomes below 50% of median area income.

 • The Agency will require applicants to include information on how the county is using its Act 137 (Local Housing Trust Fund) moneys to address housing needs in the community. This will be included as part of the Comprehensive Plan section of the RFP.

 Preliminary approval and funding of applications is contingent upon receipt of funds under the Impact Fee Act.

Executive Director

[Pa.B. Doc. No. 15-142. Filed for public inspection January 23, 2015, 9:00 a.m.]

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