Rental Gap Program

Notice: 

An additional source of funding for the Rental Gap Program is now available through the HOME Investment Partnerships American Rescue Plan Program (HOME-ARP). HOME-ARP funds must be used to benefit individuals or families who are homeless, those at risk of homelessness, and other vulnerable populations.

Developers interested in these funds must submit a supplemental application in addition to their RGP application. For more information regarding how to use the HOME-ARP funds, visit HUD Exchange.

About the Program

The Rental Gap Program (RGP) provides loans to developers for the creation and/or preservation of affordable units. The RGP is designed to increase the supply of decent affordable housing and to eliminate health, safety and property maintenance deficiencies as well as to ensure compliance with applicable codes and standards.

The new creation of affordable housing will generally be defined as one of the following:

1. the new construction of housing units which will be rented to households at or below 60% of Area Median Income (AMI);
   
   
2. the new construction of housing units which will be rented to households at or below 50% of AMI;
   
   
3. the new construction of housing units which will be rented to households at or below 30% of AMI;
   
   
4. the rehabilitation of existing rental units to be rented to households at or below 60% of AMI;
   
   
5. the rehabilitation of existing rental units to be rented to households at or below 50% of AMI;
   
   
6. the rehabilitation of existing rental units to be rented to households at or below 30% of AMI.

Priority Projects

Priority will be given to projects that:

• bring new affordable units to market quickly and/or preserve existing affordable units
  
  
• are “shovel-ready”
  
  
• provide social services to the residents including health and wellness services, eviction prevention, and/or job training

Eligible Projects

• The property must be located in the City of Pittsburgh.
  
  
• The property must comply with zoning requirements.
  
  
• The borrower may not occupy the property to be constructed or rehabilitated.
  
  
• The borrower must own the property prior to or at the RGP closing.
  
  
• The property must comply with environmental and historic review requirements to the extent required by the Federal Government, the Commonwealth of Pennsylvania, and the City of Pittsburgh.
  
  
• The property must contain at least four units.
  
  
• The URA staff must deem the project to be a feasible residential project, based upon established project underwriting processes.
  
  
• Minimum Affordability Requirements:

Number of Rental Units	Affordable Unit Requirements*
4-40	4 units; Units may be any mix of ≤30% or ≤50% AMI.
41+	At least 10% of all units must be affordable. Units may be any mix of ≤30% or ≤50% AMI

 

*If applied percentage is not an integer, minimum number of affordable units is to be rounded up to the next whole number

Eligible Activities 

Funds under the program may be used for the following three activities:

1. For hard and related soft costs associated with rehabilitation and/or new construction of residential affordable housing units
   
   
2. For costs, up to $10,000 per unit and a total project cap of $200,000, associated with providing supportive services appropriate to the residents of the funded units in the proposed project. Such supportive services may include, but are not limited to, health and wellness services, eviction prevention, and job training. Supportive service funding is only available through HOF sourced developments and dependent on availability of funds.
   
   
3. Nonprofit applicants may apply for predevelopment financing to acquire and/or stabilize vacant and abandoned property to be rehabbed/constructed to provide affordable housing in accordance with the program guidelines. The predevelopment loan will be secured by a lien on the project property. The funding may be used for costs including, but not limited to, acquisition, design development, geotechnical analysis, environmental analysis, engineering and reasonable costs of obtaining additional sources of predevelopment financing. The amount of the URA predevelopment loan cannot exceed 50% of the total predevelopment funding and is capped at $200,000.

Funding Terms, Limits and Requirements

Loan Amounts

The maximum loan amount is determined by the number of affordable units, the level of affordability and whether services are provided.

Unit Affordability	Maximum Loan
30% AMI	$75,000 per unit
50% AMI	$50,000 per unit
60% AMI	$35,000 per unit
Additional funding for services	$10,000 per unit, up to $200,000 (HOF sourced only)
Total RGP Funding	$2,000,000 (typically $1,500,00 - $1,750,000)

 

Equity

The borrower is required to provide equity equal to or exceeding 10% of the total development cost. If the non-profit borrower does not have a for-profit partner, this requirement might be waived or reduced with Advisory Board and URA Board of Directors approval.

Rent Limits and the Affordability Period

• For requirements concerning the number of affordable units in developments to be rented affordably, see the Eligible Projects section.
• The borrower must agree to comply with the specified income and rent limits for at least forty (40) years. Priority will be given to projects that have permanent affordability for ninety-nine (99) years.
  
  
• The gross rent for units to be occupied by households who earn at or below 50% AMI may not exceed 30% of 50% AMI. The gross rent for units to be occupied by households who earn at or below 30% AMI may not exceed 30% of 30% AMI.
  
  

Note: If development has received federal subsidy that allows for higher rent calculation, please provide evidence of this subsidy and rent determination.

Interest Rate

The interest rate to be paid on RGP loans will be a preferred rate set by the URA for each loan.

The interest rate will be established based upon the borrower’s capacity to repay the RGP loan through the project’s operating income as determined by the URA.

Loan Term

The maximum term of each loan shall not exceed the remaining term of the first mortgage or thirty (30) years from the date of completion of the rehabilitation or new construction funded by the RGP loan—whichever is longer. The term of affordability requirements, however, may exceed the term of the loan.

How to Apply

Please note, the Rental Gap Program is open to all eligible projects EXCEPT those receiving, or applying for, 9% Low Income Housing Tax Credits from Pennsylvania Housing Finance Agency. Awarded 9% Low Income Housing Tax Credit developments will utilize a separate application process.

1. Review the Rental Gap Program Guidelines
   
   

2. Download and complete the following documents to be included in your application:

   • Rental Gap Program Application Narrative

   • All applicable attachments listed in the Attachments Checklist 

   • A completed Excel Workbook
     
     

3. If you are applying for HOME - ARP funding, you are required to complete an additional application packet. Please download and complete the HOME-ARP Application to include in your submission. 

4. Submit your application via the Ion Wave platform. Note, if you are not already registered with Ion Wave, you will first need to complete the registration process.
   
   

Submit Application