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Final Application Best Practices

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1 Final Application Best Practices
Section 523 Self-Help Housing Technical Assistance Prepared by NCALL Research October 2007, last updated 3/09

2 Free Template from
Throughout this slide presentation, NCALL’s recommended “best practices” will be notated with a *BP. Free Template from

3 A. Introduction

4 What Now? You should have:
An approved Pre-application (need and capacity exists) First group of participants ready to close their loans House and site plans (approved by RD) Cost estimates Land Prepared staff *BP By the time the Final Application is approved you should be one month away from beginning construction on the homes.

5 Allow 6 months to complete Final Application
What’s Covered? Items needed for Final Application Helpful tips on accomplishing these items Some things to do while grant is getting approved

6 RD’s Expectations from grantees:
Operate within RD’s regulations Carry out the responsibilities of the Grant Agreement including: Recruiting low and very-low income applicants and applicants from substandard housing Building the number of homes proposed Building the houses in a timely manner Keeping program costs within the required limit Ensuring that participants work on each others’ homes Setting up an acceptable accounting system

7 A working relationship with Rural Development is critical
NCALL is available throughout the process *BP Use NCALL as a resource ANYTIME assistance is needed!

8 B. Final Application Format

9 Required Format The format of the application is very important
Rural Development requires that the information be in a specific order A three-ring binder with table of contents and tabbed sections must be included Tabs must correspond with item numbers on RD checklist

10 *BP An organization can drastically reduce its chances of error by having someone that did not put the Final Application together recheck the Final Application for completion and accuracy before copying and mailing it to Rural Development.

11 Application Processing Through Grant Closing Checklist (RD AN 4387)
RD’s checklist Refer to the Final Application Manual for actual checklist

12 NCALL’s Final Application Review Checklist
Checklist NCALL uses to review applications It is has more detail and will help with assembling the application and meeting all of the requirements See Guide for actual checklist

13 1. Standard Form 424, version 2 Standard Form 424, v. 2, “Application for Federal Assistance” and Intergovernmental Review Response (e) First thing that reviewers see, sample in Manual Provides RD will all of the pertinent information about the project – how many homes, time period, area, funding Must be complete

14 To ensure that you are using the most recent, accurate form, you can:
*BP There are many outdated or incorrect forms out there. Use the correct form! To ensure that you are using the most recent, accurate form, you can: Contact the State or Area RD office Go to or NCALL’s website,

15 Intergovernmental Review
Intergovernmental review established to foster partnership through coordination of Federal funding Include response from SPOC, may be on A-95 Not every state has a SPOC, refer to Guide for list

16 1b. Survey on Ensuring Equal Opportunity for Applicants
This form helps to ensure that the government is fairly distributing grant funds Complete this required form and include it in your application

17 2. Waiting List of Participants
Waiting list should include: Information on potential applicants are interested in participating in the self-help program Names, addresses, number of persons in household and total annual income is required Date of initial contact not required but helpful for marketing & recruitment (See sample form in Guide) *BP Aim to have at least twice as many potential participants as would be needed to complete the grant

18 3. Proof of Qualified Participants
Proof is required that participants in the first group have qualified for assistance or been determined “eligible” by RD Proof will be letters from RD

19 What Has to Happen for DE letters to be issued:
Full application must be processed and reviewed Household income is verified Credit history is checked All other eligibility requirements met Loan Originator determines payment subsidy and maximum loan amount Letter of eligibility is issued

20 *BP Include a cover page to this section
Narrative should include number of families in the first group, list of family names, total cost estimates, total 502 loan amount and other loan/grant information that will be used for the participant

21 If additional loans, advise RD’s local office
If RD 502 loan does not cover complete building costs, include narrative indicating how gap will be covered If additional loans, advise RD’s local office Additional debt = increased debt to income ratios Proof will be needed that these funds have been secured

22 4. Lot Options for First Group
Land for the first group must be in control Purchase agreements Copy of deed if owned Option agreements Include a narrative identifying number in first group, how land is controlled, by whom, when it will be purchased and where it is located

23 Controlling land in a timely manner is critical
One of the worse things that can happen is applicants are ready to build, full-time staff are hired and subs are scheduled – but there is no land!

24 Often grantees need interim financing to obtain land
Control land by purchasing or entering into an option agreement See sample of Option to Purchase Real Estate in Guide Caution!! 523 Grant funds CANNOT be used to option or purchase land.

25 5. Evidence of Lot Availability
Evidence of lot availability for remaining groups is required Lists of available lots, maps and prices are required Include a narrative summarizing what land is available, whether site development is required, timeframe for completion More information on land is available in the “Land” section at the end of the manual

26 6. House Plans, Specs, Detailed Cost Estimates
Certified house plans are required for EVERY model that will be built during the grant period Specifications are required for every model and for every family in the first group Detailed cost estimates are required

27 House Plans Certified house plans are required for EVERY model that will be built during the grant period A complete set consists of plans and blueprints which have been certified by an architect or engineer licensed in your state CERTIFIED!

28 Blueprints need to include the following views with mechanicals noted:
Foundation plan Floor plan Cross section Front and rear elevations Right and left side elevations Average cost per set is $500-$700 Include a statement of the square footage of livable space for each plan

29 Codes and Standards Local and state building codes set the minimum standards Local authorities can require additional standards All house plans must be approved by RD Research building codes for each location since requirements may vary Each plan must conform to state and local codes and comply with RD’s standards The dwelling must also be affordable to the applicant

30 There are several ways to obtain house plans:
Local Building Supplier House Plan Book Rural Development NCALL Other Self-Help Providers Software – Cheap Architect

31 Cost of Obtaining House Plans
Take into consideration cost before committing to the house plans Remember, it costs on average $500 - $700 per set of plans You owe me $4,200! YOU

32 Standardize plans Limit selections to three basic plans
Plans can have varying living areas and varying number of rooms Cost estimate and use of materials will remain the same Construction Supervisor and participants will become familiar with plans Try to standardize the cabinet and kitchen arrangement House plans should be prepared in advance of the formation of the first group of participants Only one set needs to be certified original, the rest can be copies

33 *BP Choose plans based on what is in demand by surveying the target area and participants’ affordability!!

34 After participants choose a particular house design, copies of the blue prints go to:
RD in the 502 application Local building official when applying for a building permit Construction supervisor Participant file in the grantee’s office

35 Developing Specifications
After selecting house plans, develop a specification sheet Use Form RD , “Description of Materials” One spec sheet should be used for each participant in the first group

36 The “Description of Materials” Form 1924-2 can be located at www
The “Description of Materials” Form can be located at regs/forms/ pdf. Contact NCALL or the local RD office if you need assistance Material identification should be detailed Attach additional sheets if necessary and manufacturer’s specification sheets for equipment and/or special materials

37 The design must meet RD’s requirements which include:
RD’s Thermal Performance Standards (1924-A, Exhibit D) RD’s guidelines for affordability No income producing facilities No swimming pool

38 Inspect every spec sheet for accuracy and completeness
If questions arise, the specs and plans submitted to RD will be used by the RD building inspector Use the Guide for Inspection of Construction of Dwellings and Buildings Construction supervisor responsible for completing the specs submitted in each loan application The State and the RD State Architect must approve the plans and specifications

39 Cost Estimates One of an agency’s primary responsibilities is to accurately estimate the cost of each participant’s home before it is built These cost estimates must be accurate, they eventually become the participant’s 502 mortgage Avoid making estimates that are unrealistically low

40 Cost estimates can range from 2% to 3% over, but never under
Under estimating the cost of construction may force the participant to seek a second “subsequent” mortgage If the costs are overestimated, the mortgage will be larger than needed and the participant might not get all of their deserved “sweat equity”

41 *BP If there is a significant time between the time of actual construction and the time of cost estimates were obtained, update the figures to reflect the current market prices.

42 There are four types of costs:
Construction materials Subcontracted labor Land Other variable costs Take-offs help to determine the quantity and quality of construction materials required by a house plan

43 Construction Materials
To do a take-off, the Construction Supervisor must: Review the drawings of a single house plan Record the materials that are called for in the drawings Once the take-off is completed, you should have a full listing of all materials (quantity and quality) required

44 To get the best price, get bids on the materials. Before doing this:
The project must be described in detail, including material to be used and quantity Outline the time frame in which materials are needed Set a bidding date deadline

45 After obtaining the material bids, visit the supplier
Meet the salesperson Discuss delivery format, return policy, service area and inquire about credit accounts for the participants Look for discounts for bulk purchases or get a guarantee on prices in advance

46 Subcontractors The subcontracted activities are: Excavations
Licensed electrical work Plumbing Use Exhibit B-2 of 1944-I as a guide The participants’ construction tasks must equal at least 65% of construction activities

47 When requesting bids, make sure that you:
Describe the project, materials and work to be done Outline the requirements and anticipated time frames Make the plans and specs available Set a bidding deadline date

48 After obtaining bids: Interview the potential subcontractors Ask for and check client references View their past jobs Determine their integrity and timeliness Get a copy of their license and insurance coverage – check the expiration date of both Include the participants in this process, they will be signing the contracts Advise the participants, explain benefits and drawbacks concerning the subcontractors

49 Prepare a construction contract (samples in the book) and attach the subcontractor bids
Participants and subcontractors sign the construction contract Rural Development’s contract is preferred *BP If construction contracts other than RD’s are to be used, get RD approval

50 Land and other variable costs
In addition to direct costs, the indirect costs need to be determined Indirect construction costs include: Land Fees (permits, surveys, closing costs, etc) Appliances and equipment Site improvements (grading, fences, driveways) Landscaping Contingency funds (3-5%)

51 Rural Development Parameters
“Officers, employees or representatives of organization will not solicit or accept gratuities, favors or anything of monetary value from suppliers, contractors or others doing business with your organization.) – 1944-I, Exhibit A, Paragraph (o)

52 “Board members or employees for your organization shall not directly or indirectly participate for financial gain in any transaction involving the organization or the participants. Includes activities of selling real estate, building materials, supplies and services” – 1944-I, Exhibit A, Paragraph (q) “While contracts are generally awarded to the lowest bidder, alternative policies are common.” – (a)(10) & (11)

53 Attachment O of OMB Circular A-110
In addition to some required application forms, NCALL has included some forms that may help in the management of the self-help program. See Final Application Manual.

54 Preparing House Designs
A General Flow of Events Research Building Standards Determine local building codes Determine acceptable RD design Select House Designs *BP Have the house designs approved by RD as early as possible to ensure they meet RD standards

55 Estimate Costs for Each House Design
Get Plans Certified Estimate Costs for Each House Design Prepare material take-offs Determine which construction jobs to subcontract Issue request for bids, evaluate bids, select suppliers and subcontractors

56 Involve Individual Families
Each family selects their lot and house plan Prepare House Documents for 502 Dockets For each family 502 docket, prepare - Detailed house plans and specs Plot plan Water/waste disposal system (if applicable) Cost estimate

57 VII. Send Docket to RD for Approval
VIII. Send House Documents to Local Officials a. Building permit obtained IX. Construction

58 Construction Contract
Sample of the RD Construction Contract, Form RD , in Tab 5 or: Contact the State or Area RD office NCALL’s website,

59 Guideline for Purchase of Bidding Supplies/Soliciting Subcontractors
A guideline will need to be established (Attachment O–OMB Circular A-110) Organizations may use their own procurement policies and procedures They must meet the minimum standards on page 98 in the Guide

60 See samples in Guide of:
Cost estimate summary Construction task matrix Self-help family time sheets

61 7. Staffing Needs and Hiring Schedule
A self-help organization needs: A good program A sound budget A committed Board Qualified and motivated staff!

62 Staffing / Personnel Personnel issues include determining staffing needs, developing job descriptions, developing personnel policies and recruiting staff The regulations require: Proposed hiring schedule Availability of prospective employees Board’s signed statement that authorizes the Executive Director to hire the necessary staff

63 Rural Development regulations do not allow nepotism in the self-help program
Individuals that work for a grantee that are related must disclose the nature of the relationship 1944-I does not allow relatives working together in the same line of command

64 Hiring Schedule A hiring schedule should be included in the Final Application Include all of the positions that will be paid out of the self-help housing grant funds *BP See page 110 for a sample

65 Indicate: Which positions are filled The anticipated hiring date of the remaining positions Which positions will be full-time? Part-time? What percentage of their time will be charged to the self-help program

66 Availability of Prospective Employees
To prove the existence of potential candidates, include a resume’ and letter of commitment from the candidate If waiting until grant approval, include a description of how needed staff will be located and a brief report on available personnel in the area

67 Identifying the availability of personnel in the area will require:
the number of applications received for the job advertised a narrative describing the expected hiring process

68 Job Description Job descriptions are required, typical staffing for the self-help program are: Executive Director/Project Director: Responsible for running and managing the self-help housing program Group Coordinator/Loan Packager: Works directly with the participants, screens, counseling, training, helping them fill out the required forms, etc. Secretary/Bookkeeper: Keeps records for 523 grant funds and 502 participant loan accounts Construction Supervisor: Responsible for construction

69 See Guide for sample job descriptions
*BP We recommend that new grantees use the traditional SH positions Rural Development needs to be notified for prior approval prior to hiring changes occurring

70 Salary Ranges and Fringe Benefits
Develop salary ranges and fringe benefits for each position Both must be justified as being reasonable in the proposed area (OMB Circular A-112, Attachment B, Paragraph 6(2)) A good salary survey can help establish fair and competitive rates *BP See Guide for sample survey

71 8. Authorized Representative of Applicant
Provide the name, address and official position of the applicant’s representative that is authorized to act for the applicant and work with Rural Development

72 9. Budget Information – Non Construction
Requirements: 424-A Detailed Budget Detailed Budget Narrative RD Letter Method of TA Cost

73 Authorized expenses: Prohibited use of funds: Personnel salaries
Reasonable office expenses and supplies Employment benefit costs Purchase or lease of power tools Insurance Reasonable fees for training Consultant and legal fees Annual audits Prohibited use of funds: Paying for labor on the houses Purchasing real estate or building materials for the families Paying any debts, expenses or costs to the participants Any lobbying activities prohibited in OMB Circular A-122

74 424-A Budget must be on form SF-424A, “Budget Information (Non-Construction Programs) Complete it using the example in the Guide See NCALL’s website for the most recent version

75 Detailed budget narrative
Include a detailed budget See sample in Guide Remember to include funds for NRSHHA dues Detailed budget narrative Include a detailed budget narrative RD Letter Include a letter from RD identifying the equivalent value of comparable contractor-built 502 homes, less than 12 months Include total square feet and total living area Should include the actual or projected cost of an acceptable site and site development

76 Method of TA Cost Calculation
Include the calculation of how the total grant amount was calculated Indicate which allowable method was used See sample calculation in Guide

77 10. Indirect or Direct Cost
Requirements Transmittal Letter Response Proposal

78 Direct Cost Allocation
Indirect Cost Mechanism used by federal government Recommended when shared costs become impractical to be charged directly to various funding sources Direct Cost Allocation Used by single funded organizations or those which can track costs consistently RD has a contract with Department of Interior’s National Business Center to approve cost policies

79 An approved direct or indirect cost policy must be submitted
Document the indirect cost rate or the lack thereof If a new policy is needed: Prepare proposal for submission to DOI for approval and include proposal in application DOI will not review proposal until grant is approved

80 11. Monthly Activities Schedule
A finalized monthly activity schedule is necessary Monthly activities schedules allow for: Setting specific goals Identifying time targets Identifying person’s responsible for tasks Letting everyone know what he/she is suppose to do and whether they are on target or not Identifying potential problems and opportunities Improving decision-making process Focusing on grant activities to results

81 The four most significant time elements are:
*BP When planning, estimate a time range instead of a specific date, this keeps your schedule more realistic The four most significant time elements are: Duration of each step Earliest time each step may be started Latest time each step may be started Latest time each step may be completed

82 It takes everyone’s commitment to implement the SH project
The activity schedule should not be created and forgotten Use it to stay on track Adjust if necessary See Guide for samples

83 12. Personnel Practices and Procedures
A copy of the most recent personnel policies is required Or new policies for a new organization Must be in compliance with federal, state and local laws that effect employees See Guide for sample personnel policy

84 See Guide for sample forms
Personnel forms also need to be included in the application and should include: Time Sheets Travel Advance Requests Mileage Forms Leave Requests Employment application See Guide for sample forms

85 What are personnel policies?
A written guide the defines the relationship between the organization and the staff Describes expectations and procedures Must be thorough, specific and legal as well as acceptable by RD Board’s personnel committee should review the plan

86 *BP It is strongly recommended that an attorney versed in labor laws review the policies. Check your community for pro bono services to nonprofits.

87 How should personnel policies be written?
Keep the sentences short Avoid complex terms Drop all unnecessary words Stay gender-neutral whenever possible How should personnel policies be used? To provide guidance to the managers In an orientation of a new employee

88 When should it be revised?
Review annually and revise as needed Changes in the laws, regulations, employee benefits, and other areas may prompt a review and revision This responsibility may be given to the Board’s personnel committee or the program staff Ensure that the Board approves them See Guide for sample policies

89 13. Authorizing Resolution
A resolution must be adopted by the Board of Directors: Authorizing one or more specified persons are authorized to act on organization’s behalf It must state that they are able to: Sign the Grant Agreement, 1994-I, Exhibit A Sign Form RD “Assurance Agreement” Work with RD on the self-help program Must include authorized person’s name, title, address

90 14. Assurance Agreement RD Form 400-4
Include a signed copy of this form Sample form in Guide

91 15. Fidelity Bond Coverage
Read Subpart C of 7 CFR 3015, deals with “Bonding and Insurance” Determine how it applies to you Review it with a lawyer and accountant Complete form RD “Position Fidelity Schedule Bond Declarations” to demonstrate compliance All staff who have authority to make purchases, execute contracts or sign checks should be covered *BP Amount of the coverage should be at least equal to the maximum amount of funds and property the organization will have at anytime

92 16. Evidence of Interest Bearing Checking Account and Statement of Repayment of Interest
Submit a copy of the account agreement of your two-signature interest-bearing checking account Include a signed statement saying that the organization will return, on a quarterly basis, any interest earned in excess of $250 per year If the grantee is a public body, interest in excess of $100 must be repaid.

93 17. Group Agreement (including Exhibit B-2)
Include a copy of your group agreement It must include Exhibit B-2, indicating the breakdown of construction *BP Each member of the group must read the document or have the document read to him/her, thoroughly understand it, and sign it *BP The enforcement of the membership agreement is key to the success of each group

94 18. Request for Obligation of Funds Form RD
Include this completed form, RD At item 45, on the back, have the authorized representative sign and date two copies of the form See Guide for sample

95 19. Self-Help TA Grant Agreement
Include a signed, but not dated, copy of the grant agreement

96 20. Certification Regarding Drug Free Workplace
Include a signed and dated AD 1049 See Guide for form

97 21. Certification Regarding Debarments
Include a signed and dated AD 1047 See Guide for form

98 22. Certification Regarding Lobbying
Include a signed and dated RD 1940-Q, Exhibit A-1 See Guide for form

99 23. Statement of Compliance
Include a statement that the organization complies with the requirements of the appropriate 7CFR 7 CFR establishes uniform requirements for the administration of grants The organization’s authorized representative must sign and date it See sample letter in Guide

100 24. Assurances – Non-Construction Programs
Complete SF 424B “Assurances -- Non-Construction Programs” Certifies to Rural Development the organization’s accounting system is certifiable by a CPA as meeting the Grant Agreement Signed and dated by authorized representative

101 25. RD Managers’ or Area Managers’ Recommendation
Hold a section for this to be added later by RD

102 26. T&MA Contractor’s Review and Recommendation
Hold a section for this to be added later by RD Required under National Office Contract

103 27. National Office Review
Hold a section for this to be added later by RD

104 C. Putting the Final Application Together

105 *BP Check every page for completeness, signatures and dates
Use the Rural Development checklist for order and format Include a Table of Contents and tab the sections *BP Check every page for completeness, signatures and dates *BP Send the application to NCALL first for a draft review Make 2 copies of the application Submit applications in an original and one copy to the designated RD office

106 D. Monthly Activities

107 *BP See Guide for a monthly breakdown of activities to keep on schedule for completing the application

108 E. Grant Closing and Drawdowns

109 Request for Advance or Reimbursement, Form SF-270
Form completed monthly and submitted to the RDM, original and two copies Used to notify RD of the grant funds used during the previous month, the unspent funds on hand, and the projected need for the next month Written justification should be forwarded if amount exceeds the projected need for the next 30 days Must be in the RDM’s office 15 days prior to the beginning of the month If in order, RD will try to have advance check delivered on the first of the next month This is normally the only report of grant expenditures that RD will require during the grant period

110 Rural Development can establish an electronic transfer for the funds
They will need the routing and account numbers The first grant draw can be for the month in which the grant was closed, the following month and can include funds for tool and equipment purchases

111 F. Land

112 Land Survey Criteria Land must be in a rural area
Lot size – can not be subdivided Roads – contiguous to and must have direct access to a street, maintained road or driveway, must be paved or all weather Water – approved well or public central water system *BP Public water is preferable Sewer – approved public sewer or septic system *BP Public sewer is preferable Site approval – State Director delegate site approval responsibility to appropriate person

113 Land Development Key ingredient to the program
Approach the search in an organized and systematic manner Controlling land is critical Many other activities depend on it Interim financing may be necessary 523 funds may not be used to option or purchase land *BP Contact RD for ideas on where to look

114 Land Survey Resources 7CFR Part 3550 1924-A 1924-C
RD Community Development Manager Health Department County or City planner, engineer, or city planner Soil Conservation Service Soils Book County Court House, Tax Office, Recorder of Deeds Utility Companies

115 Land Survey Process Preparing a site search map
Identify land that is completely ineligible Identify and plot locations with desirable features Plot drawbacks Talk to county governments or local universities to help with survey process Windshield survey – review sites for: Topography, flood plains, erosion Access to public roads, vegetation, existing structures Unique features

116 Land analysis form Selecting the site Investigate ownership
Check into tax records Assume that every parcel is for sale See Form in Guide Selecting the site Assess suitability of the location Check zoning Look for community facilities Make sure it fits RD guidelines Would you want to live there? Why or why not? Assess physical characteristics Determine acquisition and development costs

117 Optioning vs. Purchasing
Option agreements Contract between seller and potential buyer Buyer not obligated to buy, seller obligated to sell Options should be between seller and participant See Option language in Guide Purchasing land Grantees can purchase land for later resale to participants Can be beneficial when purchasing multiple lots 523 funds cannot be spent for this purpose Interim financing necessary

118 Interim financing No single pot of money available
Seller financing may be an option AHP, CRA, CDBG, HOME, Housing Trust Funds HAC Other private corporations or foundations See NCALL’s Funding Sources Guide for more information

119 G. Personnel Issues

120 There are many personnel issues that must be handled
*BP See the Guide for helpful information on: Developing job descriptions Creating a salary survey Interviewing, selecting, and hiring personnel

121 The End

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