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2006 HDAP Gap Financing Guidelines for Housing Credit ... Document Transcript

  • 1. Housing Development Assistance Program (HDAP) 2006 Gap-Financing Guidelines Housing Credit Projects Ohio Housing Finance Agency
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  • 3. Preface: Where these guidelines do not provide specific information with respect to underwriting criteria, the Ohio Housing Finance Agency (OHFA) will first seek guidance in the statutes that govern the funds being used. For HOME funds, OHFA will refer to the Code of Federal Regulations that govern the use of HOME dollars. For state Trust Funds, OHFA will refer to Ohio Revised Code §174 as well as the Code of Federal Regulations governing the use of OHTF funds used to meet the HOME “Match” requirement. 2006 Housing Credit HDAP Guidelines– Page 3
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  • 5. TABLE OF CONTENTS SUBMISSION REQUIREMENTS/APPLICATION REVIEW PROCESS................................................6-10 Submission Requirements........................................................................................8 The Affordable Housing Funding Application..................................................8 Anticipated Funding Levels-Priority of Pools...................................................8 Application Review Process....................................................................................9 GENERAL INFORMATION, THRESHOLD CRITERIA, CALCULATING UNITS...............................12-29 General Information.........................................................................................14-19 Types of Funding Available.............................................................................14 Anticipated Funding Levels-Funds Available.................................................14 Eligible/Ineligible Projects...............................................................................15 Eligible Uses....................................................................................................15 Environmental Review Process.......................................................................15 Underwriting Criteria.......................................................................................16 Financing Terms Loans..........................................................................................................17 Grants.........................................................................................................18 Civil Rights Compliance..................................................................................18 Waivers............................................................................................................18 Threshold Criteria.............................................................................................19-25 Calculating Assisted/Restricted Units..............................................................26-28 RENTAL DEVELOPMENT/MULTIFAMILY TAX-EXEMPT BONDS..............................................30-41 Rental Development-Competitive Housing Credits.........................................32-33 Eligible/Ineligible Projects...............................................................................32 Maximum Fees.................................................................................................33 Funding Limits.................................................................................................33 Match Requirement....................................................................................33 Per Project Limits......................................................................................34 15-Year Lease-Purchase Projects....................................................................33 Multifamily Tax-Exempt Bonds-Non-Competitive Housing Credits....................39 Anticipated Funding Levels.............................................................................39 Application Deadline.......................................................................................39 Eligible Projects...............................................................................................39 Funding Limits.................................................................................................40 POST APPROVAL INFORMATION.........................................................................................42-50 Conditions of Funding Agreement.........................................................................44 Requesting a Loan Closing....................................................................................44 Subsequent Changes..............................................................................................45 Project Administration......................................................................................46-50 Introduction......................................................................................................46 Required Timeframe........................................................................................47 2006 Housing Credit HDAP Guidelines– Page 5
  • 6. Property Standards...........................................................................................47 Conflict of Interest Restrictions.......................................................................48 Reporting and Record Keeping........................................................................48 Monitoring Construction Term Compliance....................................................48 Substantive Changes........................................................................................49 Long-term Compliance Requirements..........................................................................51-52 2006 Housing Credit HDAP Guidelines– Page 6
  • 7. SUBMISSION REQUIREMENTS APPLICATION REVIEW PROCESS 2006 Housing Credit HDAP Guidelines– Page 7
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  • 9. SUBMISSION REQUIREMENTS The Affordable Housing Funding Application The AHFA is used for those applying for HDAP gap financing in connection with the Housing Credit Program. Applications may be available for the following OHFA programs: Housing Development Loan Program • Seed Money Loan • Construction Deposit Loan • Direct Loan • Equity Bridge Loan • Loan Guarantee Anticipated Funding Levels • Housing Credit Gap Financing: To be determined OHFA anticipates having adequate resources to fund all requests for the traditional HDAP award. In the event that HDAP funds are needed to compensate for a lack of funding in the development loan program and there are insufficient funds to award the $200,000 boost to each eligible housing credit project, OHFA will be reserve HDAP funds in the following order: 1. Pool C 2. Permanent Supportive Housing Pool 3. Rural Development Pool 4. Eligible Preservation projects located in Pool C 5. Eligible Preservation projects located in Pool B 6. Eligible Preservation projects located in Pool A 7. Pool B 8. Pool A 9. General Pool 10. Public Housing Authority Pool Calendar Housing Credit Gap Financing: March 16, 2006 Applications must be included with the housing credit application 2006 Housing Credit HDAP Guidelines– Page 9
  • 10. APPLICATION REVIEW PROCESS Once the housing credit reviews have been completed, projects that received a reservation of housing credits will be assigned to a Housing Development Specialist (HDS) who will be responsible for the application review process. OHFA RESERVES THE RIGHT TO DETERMINE THE REASONABLENESS OF ALL COSTS AND FEES ASSOCIATED WITH THE PROJECT. OHFA is to be notified in writing of all changes, financial or otherwise, relating to an application for financial assistance or an approved project. Failure to notify the state may jeopardize the applicant's ability to receive assistance for the proposed project and future projects. Requests to waive any aspect of the Guidelines must be submitted either prior to or concurrent with the application. Late requests will only be allowed for compelling reasons and will require the applicant to be present at the OHFA Multifamily Committee meeting when the HDAP request is to be reviewed. If there are any substantive changes to the project (e.g. change in project activity from rehab to new construction or design of the project) prior to the execution of the Funding Agreement, OHFA may require resubmission of the application. Substantive changes may result in a reduction or revocation of the HDAP award. The application review process for the HDAP funds will include the following: 1. Threshold Review - The threshold criteria assures that all selected projects comply with HDAP requirements and address the priorities and housing needs of the low- and moderate-income persons or households within the community where it is located and indicates an ability to proceed. HDAP staff has the right to raise issues not required, noted or fully resolved during the housing credit review. The request for funding will be evaluated to determine the amount of funds necessary to complete the actual development of the project, considering all other committed sources. 2. Pre-Award Site Visit - The Housing Development Specialist (HDS) may conduct a site visit prior to submitting a recommendation for funding. The purpose of the visit is 1) to allow the HDS to evaluate the proposed project site for suitability and impact on the surrounding community, 2) to allow the HDS to confirm the status of previously funded projects, and 3) to develop the relationship between the applicant and OHFA. Both parties can discuss any issues or concerns regarding the proposed project and the organization is provided the opportunity to familiarize OHFA staff with their programs and operations overall. 3. Formal Recommendation for Funding - The HDS will present the project and submit a recommendation for funding, either for approval or rejection, to the HDS team and the Internal Loan Review Committee (ILR). The ILR will submit a formal recommendation to the Executive Director of OHFA or designee. The Executive Director will issue a positive or negative 2006 Housing Credit HDAP Guidelines– Page 10
  • 11. recommendation. A funding agreement will not be executed until after the funding request has been approved. Applicants will be required to review and confirm the accuracy of the final project description prior to formal approval. OHFA will impose fees for any changes made after the funding request has been approved. 6. After Approval: The applicant is required to notify the Agency immediately if there are any changes to the project, including but not limited to, changes in the ownership, development team, financing structure, unit mix, number of units or affordability. OHFA reserves the right to re- evaluate the project if any changes would have negatively impacted the project’s competitive score. OHFA may elect to rescind the commitment if it determines that the project would not have scored competitively as a result of the changes noted. 2006 Housing Credit HDAP Guidelines– Page 11
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  • 13. GENERAL INFORMATION THRESHOLD CRITERIA CALCULATION OF RESTRICTED AND ASSISTED UNITS 2006 Housing Credit HDAP Guidelines– Page 13
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  • 15. GENERAL INFORMATION The goal of the Ohio Housing Finance Agency’s (OHFA) Housing Development Assistance Program (HDAP) is to provide financing for eligible affordable housing projects to expand, preserve, and/or improve the supply of decent, safe, affordable housing for very low- to-moderate income persons and households in the State of Ohio. Questions concerning the Housing Development Assistance Program should be directed to HDAP staff via the telephone at (614) 466-0400 or via e-mail: Karen M. Banyai - kbanyai@ohiohome.org Arthur Krauer – akrauer@ohiohome.org Virgie Vaido - vvaido@ohiohome.org Sylvia Ray- seray@ohiohome.org Types of Funding Available The HDAP will use the following resources for providing financial assistance to eligible projects. Funds may be awarded in the form of a loan or a grant: HOME Investment Partnerships Funds: Federal regulations relating to environmental review, federal wage rates, federal accessibility, federal acquisition and relocation laws [URA and Section 104(d)], long-term affordability, etc. apply. Ohio Housing Trust Fund (OHTF): The Ohio Housing Trust Fund provides funding to HDAP projects predominantly serving low- to moderate-income households with incomes at or below 50% of the area's median income. The OHTF gives preference to those projects that benefit households with incomes at or below 35% of the area median income for the county in which the project is located, as established by the U.S. Department of Housing and Urban Development (HUD). Applicants receiving an award of OHTF dollars may be subject to State of Ohio Prevailing Wage Rate rules. Applicants receiving an award of are subject to approval from the OHFA Board. OHFA will award HOME and Trust Fund dollars based on the need to meet set-asides specific to each funding source and based on the source most appropriate for the applicant/project. Applicants that have compelling reasons to request a specific source of funding can do so in a separate letter sent to the attention of the Affordable Housing Programs Manager prior to the submission of their housing credit application. However, OHFA may or may not be able to honor the request for a specific type of funds. Anticipated Funding Levels Estimates of HDAP funding levels for the 2006 allocation year will be posted to the OHFA website and are based on anticipated funding levels. Final HDAP funding levels are subject to (1) appropriation of funds to OHTF by the state legislature, (2) allocation by the OHTF-Advisory Committee, (3) receipt of funds. (4) finalization and HUD approval of the state’s Consolidated 2006 Housing Credit HDAP Guidelines– Page 15
  • 16. Plan. To the extent that additional funds become available to HDAP, OHFA will determine the area of greatest need and make a recommendation to either the OHFA Board or the OHTF- Advisory Committee. Eligible/Ineligible Applicants Eligible Applicants: Private for-profit housing developers, not-for-profit 501(c)(3) and 501(c)(4) organizations, and public housing authorities proposing to develop affordable for-sale homes, provide new affordable rental housing opportunities, or preserve affordable at-risk housing. Entities receiving an award of HDAP funds must act as the majority/controlling partner, sole owner, or a general partner/managing member with a material interest in the ownership structure of at least 25% during the entire construction phase. OHFA must approve any changes to the HDAP- Recipient after the construction phase. Regardless of the funding source, to be eligible for funding, religious organizations and their subsidiaries/affiliates must meet the provisions in 24 CFR Part 92.257, as amended September 2003. Ineligible Applicants: Local governments are not eligible for HDAP funding. Eligible Uses HDAP resources may only be applied in the development budget toward non-related party acquisition, hard costs associated with new construction or rehabilitation, and developer fees associated with the proposed development. If market rate housing and/or commercial spaces are involved in the proposed development, costs associated with creating the market rate housing and/or commercial spaces cannot be paid using HDAP funds. Development budget line items that can be paid for using HDAP funds include: • demolition (not applicable for Preservation projects) • on-site improvements • construction and/or renovation costs including construction fee items, construction contingency, and contractor overhead and profit (excluding costs associated with construction of commercial property) • furnishings and appliances • architectural and engineering fees • developer fees and developer overhead • consultant fees • legal fees Other development budget expenses must be covered by sources of financing other than HDAP. Environmental Reviews and Project Eligibility Projects are not permitted to begin construction prior to the completion of the environmental review process and the issuance of a funding agreement. Projects that do begin any construction or construction related activity, other than obtaining site control, prior to the issuance of a funding 2006 Housing Credit HDAP Guidelines– Page 16
  • 17. agreement and receipt of all appropriate clearances (i.e. environmental review clearance, if applicable), at a minimum, the project will be subject to the following penalty: • HOME-funded projects: The funding agreement will be rescinded. OHFA cannot guarantee the availability of other funds to fill the gap. • OHTF-funded projects: The project may request to keep the award of funds. However, the recipient must provide a letter detailing the reasons construction began prior to the completion of the ER process; the applicant must detail what measures will be taken to ensure this does not happen with future projects and request that OHFA not rescind the OHTF award. The Multifamily Committee of the OHFA Board will review all requests to either change the source of the HDAP award, or to keep the award of OHTF dollars if construction begins prior to the completion of the environmental review process. If approved, the recipient will not be able to draw HDAP funds until construction has been completed. The Multifamily Committee may choose to impose additional requirements or restrictions. Regardless of the funding source, OHFA reserves the right to take further action if the recipient violates this restriction on future projects, or has violated this restriction on prior projects. Underwriting Criteria – ALL Rental/Preservation Projects In addition to the housing credit underwriting criteria, projects must also meet the following: 1. For Rural Development and FHA-financed projects, OHFA will use the reserve limits prescribed by those agencies. Applicants will be required to provide documentation from RD or FHA indicating (1) what the reserve requirements are and (2) that RD or FHA will not allow the project to use OHFAs reserve requirements. Exceptions may be made for projects with special circumstances. Owners must provide persuasive evidence in order to secure a waiver of these standards. 2. HDAP funding requests cannot exceed the per project limits set for each of the types of HDAP projects. Financing Terms Applicants that appropriately evidence status as a not-for-profit can request either a grant or loan from HDAP. However, OHFA reserves the right to award either a loan or a grant based on the financial underwrite of the project. Loans: • 2% interest rate; • Loan will mature at the end of the affordability period. The affordability period is defined as the minimum term required in 24 CFR Part 92 plus an extended affordability period imposed by OHFA – total term will be up to 30 years unless the applicant requests and can justify the need for an extended term. 2006 Housing Credit HDAP Guidelines– Page 17
  • 18. • Collateral will be a subordinate mortgage position. OHFA prefers a second or shared second position. If a lower position is necessary, the applicant should indicate so in the application along with an explanation and supporting documentation. • Collateral for Section 8 projects participating in the Mark-to-Market program: OHFA will require collateral in the portion of the owner’s position to the extent that the HDAP assistance is used to fund the owner’s 20% up-front rehabilitation contribution required by the Mark-to-Market program. • Payments will be based on 50% of the project’s cashflow that exceeds a $10,000 threshold. For the first 10 years following the project’s certificate of occupancy, cashflow will be defined as project income minus debt service minus operating expenses minus reserve payments minus payments on deferred developer fee note(s) but excluding any payments on incentive management fees and/or partner/partnership held notes. During the entire term of the loan, repayments to the HDAP-Recipient for the HDAP loan to the project are also excluded from the definition of cash flow (except to the extent that the payment ultimately flows to OHFA). In any year that a payment is made on the deferred developer fee note(s), the project must pay a minimum payment to HDAP of $500. At the end of year 10, any balance on the developer’s fee note will be excluded from the definition of cashflow. Cashflow in years 11 and later will be defined as project income minus operating expenses minus reserve payments excluding payments of deferred developer fee note(s), on incentive management fees and/or on partner/partnership held notes. Any remaining balance on the HDAP loan is due as a balloon payment at the end of the term or upon sale, whichever is first. OHFA may agree to subordinate to other government investors (RD or HUD) and accept payments consistent with their terms. However, this will be evaluated on a case-by-case basis. • Loan interest will accrue and repayment obligations will start following the issuance of the final Certificate of Occupancy for the project. For projects with deferred developers fees used as a project source, OHFA will defer payment on the note until the note is paid or up to 48 months following the issuance of the Certificate of Occupancy, whichever is less. • Loans will be made to the HDAP Recipient as the project’s general partner, managing member or equivalent. The HDAP Recipient may loan the HDAP funds to the project. If the project has more than one general partner/managing member (or equivalent), OHFA reserves the right to determine which will be the HDAP Recipient. If the property is sold prior to loan maturity, OHFA may require that all or a pro-rated amount of the outstanding principal and interest become due and payable. OHFA reserves the right to allow for the forgiveness of all or a portion of the outstanding debt if, at the end of the 30-year loan period, OHFA determines that the property has been maintained as a safe, decent, and sanitary affordable housing project (as defined by the Uniform Physical Conditions Standards or current standards used in the OHFA Program Compliance Office) throughout the term. Eligibility for Grant Funding: 2006 Housing Credit HDAP Guidelines– Page 18
  • 19. To be eligible for a grant, the following criteria must be met: • A grant has been requested by the HDAP recipient, • The controlling general partner, managing member or equivalent (HDAP recipient) is a 501(c)(3) or 501(c)(4) – a 25% owner will not qualify for a grant, • At least 20% of the units in the project will be affordable to and occupied by households earning at or below 35% of the AMGI, and • The HDAP Recipient cannot loan the HDAP funds to the project. For housing credit projects that request a direct grant of HDAP funds, the HDAP funds may be included in eligible tax credit basis if the HDAP funds are a general partner’s capital contribution and provided that the project can provide a tax-opinion certifying the funds as part of eligible basis. The project must still meet all of the above noted requirements to be eligible for a grant. However, when considering eligibility for a grant, OHFA will apply the regulations governing the funds awarded (HOME or OHTF) when considering how the HDAP-recipient passes the award onto the project. OHFA reserves the right to award either a loan or a grant based on the financial analysis of the project. Federal Funds Civil Rights Compliance. It is the responsibility of the owner/developer/borrower and any of its employees, agents or sub-contractors in doing business with OHFA to adhere to and comply with all Federal Civil Rights legislation inclusive of the Fair Housing Laws, Section 504 of the Rehabilitation Act of 1973, the Americans With Disabilities Act as well as any state and local Civil Rights legislation along with any required related codes and laws. Should OHFA not specify any requirements, such as design, it is none the less the owners responsibility to be aware of and comply with all non-discrimination provisions relating to race, color, religion, sex, handicap, familial status, and national origin. This includes design requirements for construction or rehabilitation, Equal Opportunity in regard to marketing and tenant selection and reasonable accommodation and modification for those tenants covered under the Laws. OHFA has provided a brief guide to federal accessibility requirements. Waivers Applicants may, with compelling reasons and supporting documentation, request waivers of the Guidelines. OHFA will make best efforts to work with applicants when possible. However, requests for waivers along with supporting documentation must be made prior to the submission of the application in a separate letter. Late requests will only be allowed for compelling reason and will require the applicant to be present at the OHFA Multifamily Committee meeting when the HDAP request is to be reviewed. 2006 Housing Credit HDAP Guidelines– Page 19
  • 20. THRESHOLD CRITERIA In addition to the Threshold Requirements noted in the Qualified Allocation Plan, projects must also provide the following: A. Completed Affordable Housing Funding Application (AHFA) The applicant must complete the HDAP tab of the AHFA. B. Narratives In addition to the narratives required by the Qualified Allocation Plan, the applicant must submit narratives as follows: a) Describe any specific line items (i.e. miscellaneous or other items) in the operating proforma that may need further explanation. b) Preservation projects must outline the project’s current rent structure, indicate the income levels of the current residents (i.e. 30% of the units are occupied by households earning between 30% and 35% of the Area Median Income), and describe the current property manager and any changes to property management that are planned after HDAP funds are used in the project. If owners and/or managers are not changing, please explain the need for additional funds for the project and any role the existing owners and/or managers played in the decline of the project. C. Development Team Information (1) Capacity The application must include an organizational chart for the applicant and resumes of the members of the development team (including consultants, developers/owners, co- developers/co-owners, architects, engineers, and management agent/sales agent). Project development responsibilities should be assigned to qualified paid staff with adequate time and funds budgeted. OHFA reserves the right to evaluate the strength and capacity of the proposed development team in determining HDAP funding awards. Non Profit organizations must include evidence of nonprofit status. If fees are being assessed the project for services provided by a member of the development team, OHFA reserves the right to evaluate any identity of interest among members of the development team. 2006 Housing Credit HDAP Guidelines– Page 20
  • 21. HDAP applicants must have an FTI# at application. (2) Projects Per Developer/Majority Owner Developers may submit more than one project per year based on the capacity of the organization to implement multiple and/or simultaneous projects. OHFA reserves the right to require further information and to make a determination as to the capacity of an organization to carryout multiple projects. D. Site Control No rental project will be recommended for approval of HDAP funding until all sites are under control and the local government notification process (LGN) has been completed. E. Appraisals All projects that include any acquisition costs in the Proforma will be required to submit an “as-is” appraisal that supports those costs. Appraisals will be requested during the project review for the HDAP funds. The appraisal(s) must be for the land (new construction if acquisition is involved) and/or as-is appraisals for existing structures. The purchase price should be less than or equal to the appraised value. If the purchase price is greater then the appraised value, the applicant must explain why. OHFA reserves the right to limit funding of acquisition costs to the appraised value of the site. Projects that do not provide an appraisal prior to the approval of the HDAP award will be required to provide it prior to closing the HDAP. Appraisals cannot be more than six (6) months old at the time of application. If the applicant submits the appraisal to meet a closing condition, the appraisal cannot be more than six (6) months old when received by OHFA. F. Needs Assessment (Market Study) All projects must submit an independent market study, which meets the requirements outlined in the 2006 Qualified Allocation Plan. OHFA reserves the right to independently determine if a market exists for the proposed project and to require additional information and/or another market study. G. Local Government Notification Requirements OHFA cannot approve, nor can it recommend approval, for any HDAP award until the LGN process has been completed. The Housing Development Assistance Program must be noted in the LGN letter. Scattered-site projects will not be reviewed for funding until Carryover has been completed. 2006 Housing Credit HDAP Guidelines– Page 21
  • 22. H. Qualified Cost Estimates Itemized cost estimates from an unrelated third party are required to substantiate the construction costs in the development budget. To be an unrelated third party, there can be no identity of interest between the organization providing the qualified cost estimates and any organization with an ownership interest, including the developer, the general contractor, any member of the development team, their subsidiaries or affiliates (the project architect may submit the estimate). The estimates must be submitted on letterhead and must be signed by the organization providing qualified cost estimate. Estimates must also indicate the status of the design process (i.e. preliminary drawings, working drawings with outline specifications, full-scale drawings and specifications, etc.). The unrelated third party must indicate which standards/codes were used in developing the cost estimates (See the Project Administration section of these guidelines). The unrelated third party must submit a signed statement certifying that the cost estimates for any rehabilitation work being done are sufficient to meet the Ohio Department of Development’s Residential Rehab Standards (RRS). To obtain additional information about the RRS, contact the Office of Housing and Community Partnerships at 614-466-2285. The itemized cost estimate must include a statement from the individual signing the estimate that there is no identity of interest between the signatory and any member of the development team. If any member of the development team or ownership has an identity of interest with the entity providing the qualified cost estimate, the identity of interest relationship must be disclosed. I. Utility Allowance Documentation Each application must contain documentation indicating the current utility allowances for units comparable to the proposed project’s units. The applicant can provide the published utility allowances used by the local Housing Authority for the location in which the project is located. Utility schedules for each unit size in the project must be provided. Unless required to use housing authority utility allowances by another funding source, the applicant can also provide signed cost estimates from the local utility providers indicating an estimated monthly cost for the utility at the proposed project per unit size. J. Environmental Review Requirements Projects may be funded with Ohio Housing Trust Fund (OHTF) or HOME Investment Partnerships dollars at the discretion of OHFA. Best efforts will be made to fund scattered site projects (10 or more non-contiguous parcels) with OHTF dollars. HOME-funded projects are required by statute to comply the environmental review requirements as outlined in 24 CFR Part 58. Regardless of the funding source, applicants must provide the following:  A phase one environmental site assessment that meets American Society of Testing and Materials (ASTM) standards (E1527-00). In addition, the Phase I shall address any 2006 Housing Credit HDAP Guidelines– Page 22
  • 23. environmental conditions (on or off-site) which, while not meeting the ASTM E1527 definition of a recognized environmental condition, could pose a threat to the health or safety of residents at the site. Such potential environmental conditions include, but are not limited to, asbestos, lead paint, mines, air quality, and explosion hazards (above ground storage tanks, overhead pipelines, and oil/gas wells). The ASTM E1527 minimum search distances for government records must be met for each site and the Phase I shall draw justified conclusions on the potential impact on the project sites. The Phase I firm shall provide recommendations regarding all identified environmental conditions. If the Phase I is more than 12 months old at the time of application, the ER firm must provide a letter updating the review. Each project could be subject to a 24 CFR Part 58 Environmental Review. With prior approval, OHFA will allow project developers to obtain ownership of the real estate prior to the Release of Funds, if the following conditions are met: • The property is purchased with non-OHFA funds (state or federal). If the project is funded with HOME funds, the property may not be purchased with any State or other local government HOME or CDBG funds; • OHFA funds (state or federal) or other local government HOME or CDBG funds may not be used to reimburse the cost of acquisition; • The project developer unconditionally agrees that all environmental site conditions on any site within the project will be mitigated, or in the event that mitigation is not possible or financially reasonable, the site(s) will be dropped from the project. The Ohio Department of Development and OHFA will not allow a waiver of this policy. All projects may be subject to an environmental review conducted by the Ohio Housing Finance Agency (either a Part 58 or similar review), regardless of source of funds committed to the project. OHFA will allocate $1,000 per project funded with HOME funds for the publication of the environmental review Public Notice. Regardless of the funding source, construction may not begin until the environmental review process has been completed. OHFA will contact each project successful in receiving an allocation of housing credits, and provide additional information on where to send the Phase I reviews. K. Lead-Based Paint Strategy All projects must adhere to the Department of Development’s Lead-Based Paint Guidelines (found in the annual Consolidated Plan). All projects that involve the demolition and/or renovation of structures built prior to 1978 must submit a lead-based paint strategy that includes the following: (1) Indicate whether or not the property(ies) has(have) been tested for lead-based paint. (2) If the units/buildings have been tested, describe the test results. If the project has not been tested, describe how you derived an estimated cost for testing and confirm that these costs were incorporated in the project’s development budget. (3) Describe how the cost to treat lead-based paint will be covered by the project budget, and how you estimated the cost to treat lead-based paint. 2006 Housing Credit HDAP Guidelines– Page 23
  • 24. (4) Describe the availability of licensed lead testers, contractors and workers in your area, and if there is a shortage of licensed personnel, how might that effect the construction of your project regarding timeline and what strategies will you use to find licensed personnel. For the Department of Development’s Lead-Based Paint Guidelines, please contact the Office of Housing and Community Partnerships at 614-466-2285. L. Uniform Relocation Act Relocation Standards (1) Relocation Forms: All applicants must supply the “Real Property Acquisition and Relocation Certifications and Voluntary Acquisition Forms” for the project as follows:  All HDAP applicants must submit a completed URA Attachment J “Questionnaire on Acquisition, Relocation and Demolition.”  For all projects involving acquisition (if the project shows acquisition costs for buildings in the project budget, this must be completed), the applicant must submit a completed URA Attachment K “Real Property Acquisition and Relocation Certifications.”  For all projects involving the acquisition (if the project shows acquisition costs for buildings in the project budget, this must be completed), the applicant also must complete URA Attachment L “Sample Voluntary Acquisition Form” for each seller of land and/or building acquired for use in the project and must retain these completed forms with original signatures on file, for review by OHFA staff. Each application will be reviewed for compliance with Ohio Department of Development Relocation Policies, the Uniform Relocation and Real Property Acquisition Policies Act of 1970 and Section 104(d) of the Housing and Community Development Act. Any non- compliance issues will be brought to the attention of the applicant and must be resolved prior to execution of the HDAP funding agreement. (2) Relocation Plan: All projects, regardless of funding source, that involve the rehabilitation of (an) existing occupied unit(s) must submit a Relocation Plan. If the project receives federal funds, the plan must meet the requirements set forth in the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended. The Relocation Plan submitted with the HDAP application must address the following: a) During renovation, residents will: (1) stay in place, (2) be temporarily relocated within the project, (3) be temporarily relocated off-site, (4) Be permanently relocated. The applicant may choose a strategy that includes a combination of (1)- (4). b) If some or all residents will stay in place, the applicant must describe the rehabilitation items to be completed and strategies to complete those items without requiring resident relocation. 2006 Housing Credit HDAP Guidelines– Page 24
  • 25. c) If residents will be temporarily relocated or permanently relocated, the applicant must describe what resources are anticipated to be needed to accomplish the relocation (including the applicant’s basis for estimates for the cost of relocation) , the notices that will be provided to residents, how the applicant will staff relocation activities , and source of funds to cover the cost of relocation activities. For the additional questions on relocation, please contact the Office of Housing and Community Partnerships at 614-466-2285. M. Completed HUD 424 Form and Evidence of Clearinghouse Submission HUD Form 424 – Application for Federal Assistance: The applicant (HDAP-Recipient) must submit a completed HUD Form 424 with their application for HDAP (see Attachments and Forms Section of these Guidelines). Evidence of Submission to the Local Clearinghouse: The applicant must provide a copy of the cover letter the applicant sent to the local clearinghouse accompanying one copy of their HDAP application and a post-office stamped return receipt or signed return receipt card evidencing that the application was submitted to the local clearinghouses (see Attachments and Forms Section of these Guidelines). N. Tax Information Disclosure Authorization Applicants must include a completed Attachment M “Tax Information Disclosure Authorization” for each entity that will have ownership of the project (whether during construction and/or after construction completion). OHFA will use this to determine if any organization with an ownership interest in the proposed project has any outstanding tax liens with the State of Ohio. O. Affirmative Marketing Plan OHFA must ensure that all funded projects are affirmatively marketed. A completed Affirmative Fair Housing Marketing Plan with required attachments must be submitted in the HDAP application. P. Farmland Preservation The proposed development must comply with any existing local farmland preservation policy. Each applicant must include a completed ODOD Form 006: Farmland Preservation Policy Questionnaire (see Attachments and Forms Section of these Guidelines). Q. Eligibility The applicant and the project must be eligible for HDAP funding under the Preservation or Rental Development programs as described herein, including adherence to program design requirements. The HDAP funding request must comply with the assistance limits. 2006 Housing Credit HDAP Guidelines– Page 25
  • 26. R. Good Standing with the Ohio Housing Finance Agency and the Ohio Department of Development If any owner, [sole owner, controlling or managing owner (LLC or proprietorship), or general partner] was involved with a project that is in a state of uncured noncompliance (either IRS regulations or OHFA application requirements) due to site audits or the failure to comply with owner reporting requirements during the period of January 1, 2000, through date of application, or remains in a state of noncompliance from a previous year, the project will be rejected. Owners who received an uncured Form 8823 due to a building transfer will still be considered in good standing. In addition, owners or general partners not in compliance or not in good standing with other OHFA programs will be subject to threshold rejection of their applications. HDAP Applicants that previously received assistance from the Office of Housing and Community Partnerships (OHCP) must be in compliance with the applicable program regulations and guidelines, including reporting requirements. Aforementioned entities that are not in compliance will have seven (7) working days from receipt of the deficiency letter to rectify the deficiencies or be subject to a threshold rejection of the application(s). Owners, general partners, and other development team members involved with projects subject to a Voluntary Compliance Agreement or other similar agreements between ODOD and HUD must be currently in compliance with the terms of the agreement. OHFA reserves the right to reject the current application of owners, general partners, and other development team members who are either not cooperating with, or are in violation of an agreement. S. Wage Rate Compliance The applicant will be responsible for compliance with state and federal wage rates that may be applicable to the project. Appropriate wage rates need to be factored into the applicant’s construction budget. Questions regarding the applicability of state prevailing wages should be referred to Department of Commerce (Wage & Hour Bureau) at 614-644-2239. The number of HOME-assisted units in the project will determine the applicability of federal wage rates for the project. Twelve or more HOME-assisted units trigger federal Davis-Bacon wage rates. Questions regarding the applicability of federal prevailing wage (Davis-Bacon) should be referred to the Office of Housing and Community Partnerships at 614-466-2285. T. Site and Neighborhood Standards for New Construction Projects New construction projects will need to meet the site and neighborhood standards found in 24 CFR 983.6. U. Audited Financial Statements Copies of the applicants (HDAP-Recipient’s) most recent audited financial statements must be included in the application. If the applicant does not have audited financials, a letter of explanation must be provided. 2006 Housing Credit HDAP Guidelines– Page 26
  • 27. CALCULATING HDAP-RESTRICTED and HDAP/HOME-ASSISTED UNITS HDAP-Restricted Units: Units in a project that must be affordable to and occupied by households at or below 50% of the AMGI. This is based on the total number of affordable units in a project. • Affordable units are defined as those units that are affordable to and will be occupied by households at or below 60% of the Area Median Gross Income. Projects located in a HUD Participating Jurisdiction must restrict a minimum of 40% of the affordable units, regardless of the amount of HDAP awarded to the project. Projects not located in a HUD Participating Jurisdiction must restrict a minimum of 35% of the affordable units, regardless of the amount of HDAP awarded to the project. HDAP/HOME-Assisted Units: Units that are subject to the HUD High/Low HOME Rent Requirements. To be eligible to receive an award through HDAP, a project must meet the HDAP-Restricted and HDAP/HOME-Assisted requirements, regardless of the funding source. EXAMPLE: Project is located in a PJ Total Units: 62 Affordable units: 50 Market Rate units: 12 Total Project Costs (TPC): $5,250,000 HDAP Request: $ 300,000 Local HOME funds: $ 150,000 Calculating Restricted Units: PJ – 40% of the affordable units must be restricted: 50 x 40% = 20 HDAP-Restricted units Determine the percentage of HDAP in the project for the affordable units: 80.6% of the project is affordable 80.6% x $5,250,000 = 4,231,500 $300,000 divided by $4,231,500 =7.08% Since the required 40% (for a PJ) is greater than the percentage of HDAP funds in the project, 40% is used. If the percentage of HDAP in the project were greater than 40% - the larger percentage would be used to determine the number of HDAP-Restricted Units. 2006 Housing Credit HDAP Guidelines– Page 27
  • 28. Calculating HDAP/HOME-Assisted Units: (1) Add the HDAP and HOME (all sources of HOME dollars) funds together: $300,000 plus $150,000 = $450,000 (2) Determine the percentage of HDAP/HOME in the project: $450,000 divided by $5,250,000 = .08571 or 8.571% 8.571% times 62 units = 5.31 units rounds up to 6 HDAP/HOME-Assisted units. Always round up. (3) Compare the projects total cost per affordable unit to the appropriate 221(d)(3) limit (depending on location and bedroom size). If there is a mix of bedroom sizes, an aggregate 221(d) (3) limit based on the percentage of each unit size in the project must be used to perform this calculation. The per-unit subsidy cannot be greater than: (a) the cost to build the affordable unit and (b) the aggregate 221(d)(3) limit. EXAMPLE: (a) Project cost per unit (excluding commercial and common space): $5,250,000 divided by 50 affordable units = $105,000 The project could qualify for up to $630,000 based on the TPC for the units (6 X $105,000) (b) Aggregate 221(d)(3) limit per unit: $74,000 The project could qualify for $444,000 based on the aggregate 221(d)(3) limit (6 X $74,000) (c) The project requested $450,000. The HDAP award per Assisted unit is $75,000 ($450,000/6 = $75,000). Note: The per-unit award cannot exceed either criteria (a) or (b) above. The requested subsidy of $450,000 ($75,000 per Assisted unit) exceeds the aggregate 221(d)(3) limit. The applicant may either accept a reduced HDAP award or maintain more Assisted units. (4) Determining the number of additional Assisted units needed. If the total HDAP/HOME request is greater than (a) or (b) above: 1. Determine the difference: $450,000 minus $444,000 = $6,000 2. Divide by the appropriate per-unit maximum from (a) or (b) above. In this instance, the project exceeds (b) the aggregate 221(d)(3) limit. $6,000 divided by $74,000 = .08 Round up to determine the project needs one additional Assisted Unit for a total of 7 Assisted units. Projects with fewer than five (5) Assisted units are not subject to the Low HOME rent requirement. 2006 Housing Credit HDAP Guidelines– Page 28
  • 29. Low HOME Rent Units: 20% of the Assisted Units. 7 Assisted Units X 20% = 1.4 units – round up to 2 Units. High HOME Rent Units: total assisted units minus the Low HOME units. 7 Assisted Units minus 2 Low HOME units = 5 High HOME units. The units subject to the High/Low HOME rents can be pulled from the pool of HDAP-Restricted units or Housing Credit units. These units must be distributed evenly among the various unit sizes. OHFA reserves the right to require applicants to evenly distribute the Assisted units among new construction and rehabbed units, as well. Exception to Rent Restrictions (50% rents and High and Low HOME Rents): Units that have project-based rental assistance with units that are occupied by families below 50% of the AMGI and pay no more than 30% of their adjusted income toward rent are exempted from the rent restrictions associated with High and Low HOME Rents and Restricted Units at 50% AMI. Project-based rent assisted units can charge up to the contract rent prescribed by their project-based rental assistance contract. However, these projects must still comply with the occupancy requirements that accompany the restricted and assisted units in (1) and (2) above. Should the project-based assistance contract be discontinued, the project will then be required to comply with the restricted rent (50% AMI) and High and Low HOME Rent requirements. 2006 Housing Credit HDAP Guidelines– Page 29
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  • 31. RENTAL DEVELOPMENT MULTIFAMILY TAX-EXEMPT BOND PROJECTS 2006 Housing Credit HDAP Guidelines– Page 31
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  • 33. RENTAL DEVELOPMENT All applicants must act as a general partner or sole owner of the project during the construction phase. A. Eligible/Ineligible Projects Eligible Projects: In addition to traditional multifamily rental projects and 15-year lease-purchase projects: Transitional housing is eligible for HDAP funding if the applicant provides supportive services, the services are appropriate to the population being served, and the applicant designates a maximum occupancy period for residents prior to leasing units in the project. The minimum occupancy period for transitional housing is six months. Single-Room Occupancy (SRO) housing is eligible for funding if it meets the following definition: each unit must contain either food preparation or sanitary facilities if the project consists of new construction, conversion of non-residential space, or reconstruction. For the acquisition or rehabilitation of an existing residential structure or hotel, neither food nor sanitary facilities are required to be added to the unit but should be retained if they currently exist. If the units do not contain sanitary facilities, the building must contain sanitary facilities that are shared by residents. Ineligible Projects: If any construction or construction related activity is initiated, other than site control, prior to a commitment through HDAP and receipt of all appropriate clearances (i.e. environmental review, if applicable), the entire project may be ineligible for funds. HDAP cannot be used to assist projects that:  must be licensed to allow for residents to occupy the development and/or  local zoning codes define the unit(s) proposed to be developed as a group home and/or  are identified as hospitals, nursing homes, sanitariums, lifecare facilities, retirement homes (if providing significant services other than housing are mandatory for residents), employer housing, mobile homes and student housing.  have received a new allocation of tax-exempt bond or 501(c)(3) bond financing for new construction,  have received FAF funds specifically attributed to the development or revitalization of projects in connection with other OHFA programs, and/or  have received a HUD 202 Capital Assistance Grant.  that have previously received an award of HDAP funds through OHFA or the Office of Housing and Community Partnerships. OHFA reserves the right to evaluate projects that have received other forms of federal subsidy (such as Capital Advance Grants through HUD 202 or 811; HOPE VI; Public Housing Authority 2006 Housing Credit HDAP Guidelines– Page 33
  • 34. funds; Rural Development 515 financing with new construction) and determine what amount, if any, the project needs to be financially feasible. Short-term housing (occupancy of less than six months), student housing, and shelters are also not eligible for funding. OHFA would prefer that HDAP resources be used to provide new opportunities for affordable housing or to preserve “at risk” affordable housing for the residents of Ohio. Therefore, OHFA reserves the right to determine whether or not the rehabilitation of existing affordable renter- occupied housing is eligible. For this purpose, ‘affordable’ is defined as housing which, as a result of one of the funding sources in the project, is required to maintain below market-rate rents on any of its units and maintain occupancy of those units by households whose income is at or below 60% AMGI. Applicant’s requesting funds for this purpose must be prepared to present compelling reasons why HDAP funds should be used to rehab an existing affordable project. This restriction does not apply to projects submitted under Preservation Program (the Preservation Program is designed only for projects submitting applications in the Fall Funding Round). Applications for the rehabilitation of an existing rental property must either include a change of ownership and management, or the applicant must demonstrate that the current condition of the property in need of rehabilitation was no fault of the ownership or management. In addition, the applicant must demonstrate that the rehabilitation is necessary to maintain safe, decent, and sanitary housing. B. Maximum Fees Fee limits for housing credit projects will be consistent with the limits imposed by the Qualified Allocation Plan. HDAP Applicants should refer to the QAP for fee limits. C. Funding Limits - Competitive Housing Credits Match Requirement:  Projects located in one of three major PJ areas (Cincinnati, Cleveland, Columbus): Applicants must evidence a dollar-for-dollar match of the HDAP request in local government funds up to $250,000 or the amount requested, whichever is less. Projects that qualify as serving a permanent supportive housing population in the housing credit program may use McKinney Vento Continuum of Care to meet the match requirement; however, OHFA reserves the right to cap the amount that is used to meet this requirement. Projects that qualify as a Green Community may use funding received from the Enterprise Foundation for Green Communities to meet the match requirement; however, OHFA reserves the right to cap the amount used to meet this requirement.  Projects located in any other PJ areas must evidence a $0.50 for each dollar of the HDAP request in local government funds up to $250,000 or the amount requested, whichever is less.  Projects not located in a PJ area are not subject to this requirement. 2006 Housing Credit HDAP Guidelines– Page 34
  • 35. OHFA will adopt a broad definition for what constitutes match including, but not limited to, tax abatements, land donated by government, and local HOME or Trust fund dollars. HDAP will provide funding up to the lesser of the (1) per project limits, (2) 50% of the total project costs, or (3) amount of local government match funds, if applicable Per Project Limits: • Up to $250,000 per project located in a HUD Participating Jurisdiction (PJ area) • Up to $550,000 per project located in a Non-Participating Jurisdiction (non-PJ area) • Up to $750,000 per project that qualifies as a Permanent Supportive Housing Project in a Participating Jurisdiction (based upon funding availability and OHFA’s ability to meet all required set-asides) • Up to $750,000 per project the meets the requirements of a Green Community OHFA reserves the right to award projects additional HDAP funds up to $200,000 per project to compensate for any loss of development loans. • Projects in the Permanent Supportive Housing pool and Green Community projects that qualify for up to $750,000 of HDAP are not eligible for the additional award of HDAP funds. 2006 Housing Credit HDAP Guidelines– Page 35
  • 36. 15-Year Lease-Purchase Projects Restrictive Covenants must be filed with the County in which the property is located. Units may be leased for 15 years prior to being sold to a qualified, eligible homebuyer. During the 15-year lease period, the HDAP funds awarded to the project will be considered as a 2% loan as defined in these guidelines. If the property is sold prior to the end of the 15-year compliance period, the entire HDAP award including principal and accrued interest will be due and payable to OHFA. OHFA reserves the right to forgive a pro-rated portion of the outstanding debt provided the project has been maintained as safe, decent, and sanitary affordable housing up to the point of sale. In addition, (1) OHFA must approve the new ownership structure and (2) the new owner must agree to continue to maintain the project according to the terms and conditions of the Funding Agreement. HDAP term cannot exceed 30 years at application. Projects that receive a grant of the HDAP funds must agree to maintain a minimum affordability of 20 years for new construction. If the home is sold to a qualified homebuyer following the 15-year lease period, the HDAP Recipient must agree to place a deed restriction on the property for the remainder of the 20-year affordability period. At or after year 15: OHFA reserves the right to forgive any unpaid accrued interest and ½ of the outstanding principal balance of the HDAP award made to a non-profit recipient, provided the homes have been maintained as safe, decent and sanitary housing (as defined by the Uniform Physical Conditions Standards or current standards used in the OHFA Management Compliance department). The HDAP-Recipient must select from among the following options: Option One: 30-year affordability period  At year 15 of the housing credit compliance period, the outstanding HDAP award will be allocated among all affordable units in the project.  For those units sold to qualified homebuyers, the HDAP Recipient may request that OHFA permit them to pass on a the proportionate amount of the outstanding HDAP principal to the income-eligible homebuyer as affordability subsidy. OHFA will provide a 15-year, non-interest-bearing loan, subject to recapture. Income-eligible homebuyers will be determined as follows:  The HDAP-Recipient will be required to income-qualify homebuyers at the time of purchase of their home, regardless of when they took occupancy or signed a purchase agreement. Any portion of the HDAP award not used must be returned to OHFA. 2006 Housing Credit HDAP Guidelines– Page 36
  • 37.  The loan amount per home would be forgivable over a 15-year period as follows:  100% of the loan amount per home will be forgiven prorata during a 15-year period for households that, at the time of purchase, have incomes at or below 65% AMI  50% of the loan amount per home will be forgiven prorata during a 15-year period for households that, at the time of purchase, have incomes greater than 65% AMI but less than or equal to 80% AMI  HDAP affordability subsidy will be used only for the difference between the maximum eligible mortgage amount and the sales price of the home (sales price may not be greater than the fair market value evidenced by an appraisal no more than six months old).  A second mortgage must be filed with the County Recorder’s Office. The portion of the OHFA loan not forgiven must be returned to OHFA only upon sale of the property. If the property is sold for less than the total principal balance (primary loan + OHFA loan), based on an appraisal, OHFA will waive repayment of any shortfall owed to OHFA. Option Two: 20-year affordability period  At Year 15 of the housing credit lease-purchase compliance period, the HDAP award will be allocated among the units in the project.  For units that are sold to qualified homebuyers who do not need or want affordability subsidy, OHFA reserves the right to forgive 50% of the principal amount of the HDAP award and interest accrued, on a unit-by-unit basis, if the project has been maintained as safe, decent and sanitary affordable housing for the 15-year lease-purchase compliance period.  The HDAP Recipient will take a second mortgage on each home equal to the remaining amount of the HDAP award allocated to the home. This mortgage will replace the HDAP Restrictive Covenant placed on the home during the 15-year housing credit compliance period. The mortgage will be assigned to OHFA.  If the homebuyer maintains the home as his/her primary residence for the remainder of the 20-year affordability period (from the housing credit placed-in-service date), the entire amount of the second mortgage will be forgiven.  If the homebuyer ceases to be the primary resident of the home at any time during the remainder of the 20-year affordability period (from the housing credit placed-in-service date), the entire amount of the second mortgage will come due and payable.  There will be no pro-rata forgiveness of the amount of the second mortgage for this option.  Units that remain rental for 20 years or more after the housing credit placed-in-service date are not subject to additional affordability requirements. Any outstanding HDAP award may be forgiven if the unit has been maintained as safe, decent and sanitary affordable housing. 2006 Housing Credit HDAP Guidelines– Page 37
  • 38. Option Three: Available for rehabbed units only  At Year 15 of the housing credit lease-purchase compliance period, the HDAP award will be allocated among the units in the project.  For units that are sold to qualified homebuyers, OHFA reserves the right to forgive 50% of the principal amount of the HDAP award and interest accrued, on a unit-by-unit basis, if the project has been maintained as safe, decent and sanitary affordable housing for the 15-year lease-purchase compliance period.  OHFA will require repayment of the remainder of the HDAP award, on a unit-by-unit basis, on any home sold to a qualified homebuyer who does not need or want any additional affordability subsidy. No additional affordability restrictions will be placed on these units.  If the homebuyer demonstrates the need for the additional subsidy, Option 1 or Option 2 must be used. All Options:  Units that are not sold must remain affordable for the full 30-year rental affordability period. There is no partial forgiveness at Year 15. OHFA reserves the right to forgive the outstanding principal and accrued interest only at the end of the affordable period, and only if the units have been maintained as safe, decent, and sanitary affordable housing throughout the entire affordability period.  Units that were new construction multi-unit homes at application must continue as rental units for a 30-year affordability period. • If a multi-unit home is sold, the HDAP award allocated to the unit will be immediately due and payable to OHFA. NOTE: Units that were new construction at application must select either Option 1 or Option 2. Homes must be sold to qualified homebuyers. Units that involved rehabilitation at application may select any of the three options. OHFA reserves the right not to forgive 50% of the HDAP award and accrued interest on a unit-by-unit basis if any home is sold to a homebuyer who is over-income. If the homebuyer wishes to sell the home during the affordability period to a qualified homebuyer, the non-profit may formally request that OHFA allow the subsidy to stay with the home, and the new homebuyer be allowed to assume that obligation for the remainder of the affordability period. In the event of foreclosure, repayment of the HDAP funds will be based on shared net proceeds, as defined in 24 CFR Part 92, which may allow the homebuyer to recover some or all of any downpayment and/or capital improvement investments. D. Project Design Requirements Affordability Restrictions – Rent Structure 2006 Housing Credit HDAP Guidelines– Page 38
  • 39. HDAP financing requires that the following rent and occupancy restrictions are reflected in the application and are complied with throughout the entire affordability period. (1) Restricted Units: The HDAP application must be for the number of restricted units in the project. For projects located in PJ areas, 40% of the project’s affordable units must be occupied by and affordable to households at or below 50% AMI. For projects located in Non-PJ areas, 35% of the project’s affordable units must be occupied by and affordable to households at or below 50% AMI. If the percentage of HDAP used to finance the project exceeds 40% in a PJ or 35% in a non-PJ, the set-aside of restricted units must equal or exceed the percentage of HDAP funding in the project. (2) Assisted Units: See “Calculating HDAP-Restricted and HDAP/HOME-Assisted Units” for more detail on this topic. 2006 Housing Credit HDAP Guidelines– Page 39
  • 40. MULTIFAMILY TAX-EXEMPT BOND PROJECTS Except as noted below, these HDAP guidelines will apply to the Multifamily Tax-Exempt Bond Projects. Anticipated Funding Levels Multifamily Tax-Exempt Bond Projects with Non-Competitive Housing Credits: $1,500,000 subject to funding availability. Developers considering applying for HDAP funds should consult the OHFA website at http://www.homebuyerohio.com/hdl/default.htm to determine whether or not funds are available to assist projects funded with tax-exempt bonds. OHFA reserves the right to fund projects to meet set-asides in HOME (i.e. the CHDO set-aside) and/or the Ohio Housing Trust Fund. Application Deadline Applications must be received by OHFA on or after July 1, 2006 and before March 1, 2007. Applicants receiving an award of HDAP must apply for an allocation of volume cap within 12 months of approval of the HDAP award. However, the project cannot have closed on the bonds prior to application. Closing “in Escrow” will be considered by OHFA to be closed. This condition may be waived only under extraordinary circumstances. Eligible Projects Projects involving multifamily tax-exempt bond financing (private purpose volume cap) for the preservation of affordable housing will be eligible for HDAP. Projects must apply for and have received a letter of eligibility for non-competitive housing credits. Eligible applicants are private housing developers and public housing authorities that receive an award of volume cap after July 1, 2004 for the acquisition and rehabilitation or rehabilitation only of an existing Section 8 or USDA Rural Development (RD) project and have received an allocation of non-competitive housing credits. Applicants must be a general partner/managing member with a material interest of at least 25% in the ownership structure. Preservation projects will be defined as: 1. Projects with a project-based rental subsidy contract that will expire (Section 8) or be depleted (RD) within 24 months of the date of application. 2. RD projects which are subject to prepayment within 24 months of the date of application. 3. Troubled projects that have received assistance through the USDA Rural Development office and are in need of substantial rehabilitation in order to be considered safe, decent, and sanitary. 2006 Housing Credit HDAP Guidelines– Page 40
  • 41. Funding Limits Total HDAP funds in the project cannot exceed 50% of the total cost of the project. The HDAP gap financing will provide funding up to:  $250,000 per project located in Akron, Canton, Cincinnati, Cleveland, Columbus, Dayton, Toledo, and Youngstown  $350,000 for all other areas The match requirement does not apply. 2006 Housing Credit HDAP Guidelines– Page 41
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  • 43. POST-APPROVAL INFORMATION 2006 Housing Credit HDAP Guidelines– Page 43
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  • 45. CONDITIONS OF FUNDING COMMITMENT A. Cost Certification At the completion of construction, each project will be required to obtain and submit a cost certification prepared by an independent certified public accountant. B. Changes to Approved HDAP Applications OHFA is to be notified in writing of all changes, financial or otherwise, relating to an application for financial assistance or an approved project. Failure to notify the state may jeopardize the applicant's ability to receive assistance in the future. If there are any substantive changes to the project prior to the execution of the Funding Agreement, OHFA may require resubmission of the application. REQUESTING A LOAN CLOSING Once the appropriate authority has approved the request for an award through HDAP, the HDAP- Recipient may not be changed during the entire construction period. OHFA will enter into a Funding Agreement with the HDAP-Recipient and Limited Partnership, if applicable. Once the Funding Agreement has been signed by all appropriate parties, the HDAP-Recipient may formally request a closing of the HDAP. Closing procedures will be sent to each applicant along with the applicant’s copy of the Funding Agreement. These procedures are also available on the OHFA website. 2006 Housing Credit HDAP Guidelines– Page 45
  • 46. SUBSEQUENT CHANGES The HDAP-Recipient is required to notify OHFA immediately and request approval of any changes that occur in the project at any time during construction or during the affordability period. Such changes include, but are not limited to, changes in the development team (developer, general contractor, sales agent/management entity, etc.); changes in the number of units or unit mix; changes to the target population; etc. The request should be sent to: Ohio Housing Finance Agency 57 East Main St. Columbus, OH 43215 Attn: Affordable Housing Programs Manager Fax number: 1-614-466-0606 OHFA reserves the right to assess fees for the following: Amendments to a funding agreement: $ 500 per request Extensions of a funding agreement: $ 500 per extension Reinstatement of an expired funding agreement: $1,000 Review and Appeal Process: • Loan staff will review the request and notify the HDAP-Recipient by mail of its decision. • The HDAP-Recipient may formally appeal a negative decision by submitting a letter to OHFA stating its reason for the appeal. The OHFA Internal Loan Review Committee will review the appeal and a formal response will be issued to the HDAP-Recipient. • In the event that this committee also issues a negative decision, the HDAP-Recipient may continue the appeal process by submitting a letter to OHFA asking that the Multifamily Committee review and consider the request. The HDAP-Recipient will be notified when the Committee will be reviewing the request and may attend this meeting to present the facts and circumstances behind the request. OHFA staff will present its reasons for denying the request. The decision of the Multifamily Committee is final. OHFA will issue a letter formally notifying the HDAP-Recipient of the Committee’s decision. 2006 Housing Credit HDAP Guidelines– Page 46
  • 47. PROJECT ADMINISTRATION In addition to the standards and requirements previously indicated, the following will be required of HDAP applicants/HDAP-funded projects. A. Introduction The Project Administration unit works with HDAP recipients from the completion the underwriting stage until the completion of the project. Responsibilities of the Project Administration unit include: • Processing draw requests • Coordinating the environmental review process for Ohio Housing Trust Fund projects • Conducting construction phase site visits; monitoring project progress • Reviewing and processing requests for amendments and extensions to funding agreements • Monitoring compliance with relevant Federal and State regulations • Completing the project close out process; reviewing project files related to the financial and general administration of projects • Addressing construction phase issues • Administering the CHDO Competitive Operating Grant Program When funding awards are announced, Project Administration will provide recipients with a copy of the Project Administration Manual, which will describe the policies and procedures recipients must follow. The Manual will also be available by download from the OHFA web site. A Project Administration representative will be assigned to the project and will provide the recipient with any technical assistance necessary to assist the recipient in successfully completing this phase of its project The representative assigned to the project will be the recipient’s contact at OHFA until the project is completed, and should be notified of all situations that may affect the progress of the project. Regular communication between OHFA and the recipient will be critical to ensuring the timely completion of the project. Projects awarded HDAP funds should familiarize themselves with the Project Administration Manual. While much important information is discussed in the paragraphs that follow, the recipient will better be able to pursue an HDAP project after reviewing the Project Administration Manual. Contact: Barry Accountius, Manager, Project Administration Ohio Housing Finance Agency 57 East Main Street Columbus, Ohio 43215 (614) 995-4512 baccountius@ohiohome.org 2006 Housing Credit HDAP Guidelines– Page 47
  • 48. B. Required Timeframe Construction must begin on the project within 12 months of the date the HDAP funding agreement is signed. If acquisition of land/buildings is proposed, acquisition must occur within 12 months of the date the HDAP funding agreement is signed. Projects funded in part with housing credits: (1) Commencement Date: the effective date of the agreement. This is the date the agreement is signed by either the Ohio Housing Finance Agency or the Ohio Department of Development. (2) Construction Completion Deadline: Housing credit placed-in-service deadline. The project must be completed by this date. (3) Final Draw Deadline: The date the recipient must submit its final draw request. • New Construction projects: 30 days following the Construction Completion Deadline • Rehab projects: 30 days prior to the Construction Completion Deadline (4) Final Performance Report Deadline: For both new construction and rehab projects, the Construction Completion Deadline for rehab projects will be used. This is the date on which the funding agreement expires, and the recipient must have submitted a Final Performance Report for the project. C. Property Standards Each project funded by HDAP will be required to meet the following construction standards: For projects involving new construction: • Site and Neighborhood Standards – 24 CFR 983.6(b) • State and Local Code Requirements. If no state and local codes apply, the project must use a nationally recognized model code. • Model Energy Code • Handicapped Accessibility Requirements • Manufactured Housing must be constructed following the manufacturer’s written instructions and must meet the construction and safety standards of 24 CFR 3280. For projects involving rehabilitation: • State and Local Code Requirements. If no state and local codes apply, the project must use a nationally recognized model code. • Handicapped Accessibility Requirements • Office of Housing and Community Partnerships’ Residential Rehabilitation Standards For projects involving reconstruction - defined as rebuilding on the same lot as existing housing present at the time the project is funded without changing the total number of units in the project. This can include replacing substandard units of manufactured housing with a new manufactured housing unit. 2006 Housing Credit HDAP Guidelines– Page 48
  • 49. • Manufactured Housing must be constructed following the manufacturer’s written instructions and must meet the construction and safety standards of 24 CFR 3280. • For projects involving the rehabilitation of pre-1978 structures: Applicable state and federal laws, rules and regulations governing the testing and treatment of lead-based paint, including disclosures to residents/buyers. Applicants must also follow the Ohio Department of Development’s lead-based paint policy found in the Department’s Consolidated Plan. • Subdivision Requirements: For subdivisions, at a minimum § 711.041, 711.05, 711.09, and 711.10 of the Ohio Revised Code (ORC) apply. All other relevant sections are also applicable. D. Conflict of Interest Restrictions No owner, developer or sponsor of a project assisted with HDAP funds (or officer, employee, agent or consultant of the owner, developer or sponsor) may occupy housing developed with (assisted by) HDAP funds except for an employee or agent of the owner or developer who occupies a rental unit as the project manager or as a maintenance worker for that housing development. An HDAP applicant may request an exception to the above provisions, if: • The person receiving benefit from the HDAP development is a member of the low-income group intended to be served by the development, and the exception will permit the person to receive generally the same interests or benefits as are being made available or provided to other beneficiaries of the development; • The person has withdrawn from his or her functions or responsibilities, or the decision-making process with respect to the specific HDAP-assisted housing in question; • Tenant protection requirements in Section 92.253 of the HOME regulations (concerning proper leases, proper termination of tenancy, and proper tenant selection processes) are observed; • Affirmative marketing requirements in Section 92.351 of the HOME regulations are observed regardless of the project size. The request for an exception must be provided to OHFA in writing describing how the person/persons for which the exception is requested meets the above criteria. Persons for whom exceptions are requested cannot occupy any unit in the HDAP-funded development until/unless OHFA provides a written approval of the exception request. OHFA has full discretion to determine the appropriateness of the arrangement proposed. D. Reporting and Record Keeping The applicant will be responsible for compliance with applicable implementation, reporting and record keeping requirements associated with the HOME Investment Partnerships Program, OHFA, and State regulations. E. Monitoring Construction Term Compliance OHFA is required to monitor the administration of awards received through the HDAP. The projects will be monitored through regular site visits during the construction phase of the project. Semi- annually, during the term of the Funding Agreement, using a web-based reporting system, OHFA will request a Status Report from the applicant. Recipients are typically given thirty days to complete the 2006 Housing Credit HDAP Guidelines– Page 49
  • 50. report. Upon completion of the project, the applicant is required to submit a Final Performance Report to OHFA. The due date of this report is clearly stated in the Funding Agreement. Awardees must adhere to the audit requirements of OMB Circular A-133 and OHFA’s submission requirements for audits. Each project will also undergo a close-out monitoring. The purpose of this close-out site visit is to ensure that the terms and conditions of the Funding Agreement were carried out properly. OHFA will review the project’s progress/completion, financial administration, contract management, EEO/Fair Housing, resident/participant’s eligibility, and/or record keeping. A physical inspection will be made of all HDAP or HOME-assisted units. Once the on-site monitoring visit is complete, OHFA will notify the recipient in writing of any conclusions made as a result of the visit, and OHFA will work with the recipient to resolve any noted deficiencies. F. Substantive Changes If the recipient is unable to fulfill its obligation under terms of the Funding Agreement, during its term, OHFA may terminate the Agreement. The applicant’s obligation under the terms of the Funding Agreement may not be assigned. A Funding Agreement is specific to an applicant and is tracked by its Federal Employer Identification Number (EIN). Any merger or consolidation of the applicant during the term of the Funding Agreement may prevent the applicant from proceeding. Please bring all such matters to the immediate attention of the OHFA staff. The recipient may, at any time during the term of the Funding Agreement, request an amendment. Requests for amendments shall be in writing and shall specify the requested changes and the justification for the changes. OHFA shall review the request in terms of the regulations and goals relating to the project. OHFA also reserves the right to determine if an approved amendment request would have affected the project’s original threshold review and/or original competitive score in rendering its determination. Should OHFA consent to the amendment of the Funding Agreement, the amendment shall be drawn, approved and executed in the same manner as the original agreement. Amendments to the Funding Agreement are exclusively to allow for changes within the approved scope of the project and/or approved award of funds and budget. OHFA will not increase the amount of funds awarded to a project with an executed Funding Agreement. Nor will OHFA approve an amendment for a recipient to use OHFA funds, of any amount, for an approved activity that OHFA is not currently funding. The Funding Agreement contains four important dates: the beginning date, the date construction/rehab is to be completed, the final date that financial draws can be made, and the date the Final Performance Reports are to be submitted to OHFA. The time between the beginning date and the due date of the Final Performance Report is considered the term of the Funding Agreement. Each project will have occupancy and affordability terms that extend beyond the term of the Funding Agreement. Attachment A of the Funding Agreement contains the approved activities and project budget. 2006 Housing Credit HDAP Guidelines– Page 50
  • 51. Situations Requiring an Amendment A formal amendment to an executed Funding Agreement is required if: • an amount of HDAP greater than 10% of the award is being transferred from one approved HDAP- funded activity to another approved HDAP-funded activity • the amount most recently approved by OHFA for any previously approved activity is being increased or decreased by more than 10%. The total project budget may vary by 5%, without the need for an amendment, provided no single activity varies by greater than 10%. • the recipient is proposing a new activity that is not identified in the Attachment A. • there is a change in the approved project or activity scope, location or design, number and type of beneficiaries or anticipated accomplishments. Extending the Term of the Funding Agreement 1. If the recipient is unable to complete the project within the term of the Funding Agreement, the recipient must submit a written request to OHFA no later than 60 days prior to the agreed upon date the construction/rehab is to be complete. Failure to comply with OHFA’s Amendment and Extension policies will be considered during future funding application reviews and may disqualify future applications for funding. OHFA reserves the right to determine if an approved amendment request would have affected the Project’s original threshold review and/or original competitive score in rendering a determination. 2. Each Funding Agreement contains an Occupancy and Affordability Agreement. The beginning date of the Occupancy and Affordability Agreement shall be the same as the due date of the Final Performance Report. The ending date will be determined by the type of project that is developed, 15 years for homeownership projects, 30 years for all rental projects. The time between these dates is considered the occupancy and affordability term. Any extension to the term of the Funding Agreement automatically extends the occupancy and affordability term. 3. If the recipient is unable to fulfill its obligation under terms of the Occupancy and Affordability Agreement, during the term of the Agreement, the recipient may request to assign its obligation. OHFA reserves the right to determine the suitability of the assignee and the assignee must have OHFA’s written consent to carry out the responsibilities of the recipient. G. Drawing on the HDAP award OHFA reserves the right to evaluate the project’s progress during the construction phase to determine how the HDAP funds may be drawn. For example, OHFA may elect to limit the draws to an amount comparable to the project’s completion. 2006 Housing Credit HDAP Guidelines– Page 51
  • 52. LONG-TERM COMPLIANCE REQUIREMENTS The HDAP requires that recipients commit to occupancy and affordability restrictions on rental and homeownership units funded in part by the OHFA (ODOD) HDAP as a condition of the award of funds. OHFA imposes the binding commitments to ensure that the HDAP meets the intent of state and federal program laws and regulations with respect to serving low-income households. HUD mandates that ODOD report information annually regarding the use of state and federal funds awarded for permanent and transitional housing. ODOD has created the Consolidated Plan Annual Performance Report to relay information to HUD on all of the ODOD housing programs. The HDAP will gather data using the HDAP Resident Data tab in the Owner’s Report section of the OHFA Compliance Tool. The completed report will provide general project information (i.e. current gross rent/utility allowances, any change in ownership), characteristic information for each new household that has moved into the project during the report period, and documentation verifying compliance with Fair Housing, Civil Rights, EEO and the Affirmative Marketing Strategy. The Compliance Tool is available by download from the OHFA web site. The reporting period is the previous January 1st to December 31st. The completed HDAP Owner’s Report is due on March 1st of each year. Failure to submit the required reports may make a recipient ineligible to receive HDAP funding and other OHFA and ODOD funding and result in a Hold on Funds being placed on all existing awards until the recipient complies with the reporting requirements. OHFA will conduct on-site evaluations periodically to verify the information submitted using the Compliance Tool and ensure compliance with the occupancy and affordability restrictions as agreed upon. The following are some of the requirements that OHFA monitoring staff will be reviewing for compliance: Definition of Income: • Applicants must use the Section 8 definition of income for HDAP-assisted units. This definition must be used when adjusting HOME rents on HDAP-assisted units that are occupied by household’s whose income has exceed 80% of the AMI. Income Verifications: • The verification of income must be completed no more than 120 days prior to the beneficiary’s occupancy of the HDAP-assisted unit. Income must be projected forward, including any anticipated raises, overtime, bonuses, etc. over the coming year, not the prior year. Reporting: • Applicants must report on occupancy and affordability to OHFA on an annual basis using OHFA required report formats. 2006 Housing Credit HDAP Guidelines– Page 52
  • 53. Fixed/Floating Units: • Applicants can request to designate assisted units as fixed units within the project or can request to allow the assisted units to “float.” OHFA will presume that assisted units will be floating unless the applicant requests otherwise. Re-certifications for Rental Projects: • Home regulations provide that a full re-certification (including source documentation) must be completed at move in and every six years thereafter, for each resident household. However in interim years, the owner can use a resident-signed re-certification statement. If the project has LIHTCs, the IRS regulations must be used unless a waiver has been granted by OHFA’s Office of Housing Management. Tenant Selection Process: • All developers must have a written, homebuyer/tenant selection process that is in compliance with all applicable Fair Housing/Affirmative Marketing regulations. OHFA staff may monitor the applicant to ensure that there is a written process, that the process complies with Fair Housing/Affirmative Marketing, and that the process is being followed by the management agent/sales agent. Section 8 and Assisted Units (Housing Credit Gap/Tax-Exempt Bond Gap/Rental/Lease-Purchase during the lease period and Preservation): • HDAP-assisted units within the project cannot charge the applicable Section 8 voucher/certificate payment standard if that payment standard exceeds the High or Low HOME rent (whichever is applicable). • For HDAP-assisted units with project-based Section 8, the project can collect the project’s contract rents on those HDAP-assisted units only if the resident of the HDAP-assisted unit has an income that is at or below 50% of the area median income. Leases: • Leases cannot contain any lease provisions prohibited by the HOME program detailed in 24 CFR 92.253(b). 2006 Housing Credit HDAP Guidelines– Page 53
  • 54. CONTACT NAMES OHFA STAFF Underwriting (Application Reviews – Subsequent Changes): Karen M. Banyai 614-752-4185 email: kbanyai@ohiohome.org Virgie Vaido 614-995-4511 email: vvaido@ ohiohome.org Arthur Krauer 614-387-1656 email: akrauer@ ohiohome.org Sylvia Ray 614-387-1854 email: setaylor@ ohiohome.org Project Administration (CHDO and Construction Monitoring): Barry Accountius 614-995-0489 email: baccountius@ ohiohome.org Mark Marino 614-466-9333 email: mmarino@ ohiohome.org Johnie Torain 614-728-2685 email: jtorain@ ohiohome.org Mat Johnson 614-644-5650 email: mjohnson@ohiohome.org Legal staff (Loan Closings): Michael Richter 614-728-9758 email: mrichter@odod.state.oh.us Debbie Stevenson 614-995-4513 email: dstevenson@odod.state.oh.us Long Term Compliance Todd Carmichael 614-466-2912 email: tcarmichael@ohiohome.org OFFICE OF HOUSING AND COMMUNITY PARTNERSHIPS 614-466-2285 Lead-Based Paint Guidelines Ohio Dept. of Development’s Residential Rehab Standards Relocation and Affirmative Fair Marketing Federal Davis-Bacon Wage Rates State Prevailing Wage Rates: Department of Commerce, Wage & Hour Bureau 614-644-2239 2006 Housing Credit HDAP Guidelines– Page 54
  • 55. USEFUL WEBSITES Ohio Housing Finance Agency www.homebuyerohio.com www.housing.ohio.gov www.odod.state.oh.us Ohio Department of Development www.odod.state.oh.us/ Office of Housing and Community www.odod.state.oh.us/cdd/ohcp/ Partnerships Department of Housing and Urban www.hud.gov/ Development HUD’s Rent & Income Limits http://www.hud.gov/offices/cpd/affordablehousing/library/index.cfm Universal Design http://www.ncsu.edu/ncsu/design/cud/ Metropolitan Statistical Areas (MSA’s) in Ohio http://lmi.state.oh.us/Maps/MapofMSAs.htm HUD: Real Estate Acquisition and Relocation http://www.hud.gov/offices/cpd/library/relocation/index.cfm HUD’s Participating Jurisdictions in Ohio http://www.hud.gov/offices/cpd/affordablehousing/programs/home/snapshot/snapsheet/oh/index.cfm Code of Federal Regulations (Title 24-Housing & Urban Development; Section 92=HOME) http://www.gpoaccess.gov/ecfr/ Building HOME: A HOME Primer http://www.hud.gov/offices/cpd/affordablehousing/library/building/index.cfm Priority Investment Areas (Competitive Points) http://www.odod.state.oh.us/research/ProductListing.html#G200 HUD’s Office of Single Family Housing - Ohio http://www.hud.gov/local/oh/working/localpo/sfhsg.cfm  HUD-approved housing counseling agencies HUD – Buying a Home http://www.hud.gov/buying/index.cfm 2006 Housing Credit HDAP Guidelines– Page 55
  • 56. Fair Housing Laws and Executive Orders http://www.hud.gov:80/offices/fheo/FHLaws/index.cfm HUD People with Disabilities Link http://www.hud.gov/groups/disabilities.cfm Ohio Civil Rights Commission http://www.state.oh.us/crc/ ODOD/OHCP Civil Rights Link: http://www.odod.state.oh.us/cdd/ohcp/CivilRights.htm Includes: • 2003 Ohio Fair Housing Contacts • Analysis of Impediments Checklist • Standard Fair Housing Program/Conducting an Analysis of Impediments • Chapter 10: Civil Rights, Fair Housing and Equal Opportunity • Affirmative Fair Housing Marketing Guide • Civil Rights Directory • The History of Fair Housing as a Civil Right in the State of Ohio • HUD's Fair Housing and Lead-Based Paint Memorandum • Analysis of Impediments To Fair Housing Choice Memorandum • Accessibility Notice for Housing Programs • Accessibility Notice for Non-Housing Programs Buying Your Home – HUD Booklet http://www.hud.gov/offices/hsg/sfh/res/stcosts.pdf Ohio Department of Commerce, Office of Consumer Affairs (Predatory Lending Issues) http://www.com.state.oh.us/ODOC/dfi/consumeraffairs.htm 2006 Housing Credit HDAP Guidelines– Page 56
  • 57. 2006 Housing Credit HDAP Guidelines– Page 57