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Application and Development Process. Getting Ready Technical assistance is available from the Multi-family Production Unit Contact David Danenfelzer 512-475-3865.

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Presentation on theme: "Application and Development Process. Getting Ready Technical assistance is available from the Multi-family Production Unit Contact David Danenfelzer 512-475-3865."— Presentation transcript:

1 Application and Development Process

2 Getting Ready Technical assistance is available from the Multi-family Production Unit Contact David Danenfelzer Applications are currently accepted at any time

3 Application Review Process Initial Approvals Feasibility assessment – preliminary review done by production staff Site review – has TDHCA funded other projects near this site that would constitute undue competition or market impact? Project Design – does the design reflect the goals of the agency and the project HOME compliance – does application reflect probable compliance with all regulations?

4 Underwriting and Funding Award Once initial reviews are completed, application is forwarded to Real Estate Analysis Unit to determine subsidy Costs compared to cost database Budgets reviewed for completeness Underwriting attempts to reconcile two conflicting goals: –Provide as little subsidy as possible –Assure the feasibility of the project

5 Texas Department of Housing and Community Affairs Rental Housing Development

6 Building HOME Training provided by TDHCA Developed by TDHCA and ICF Consulting Who are we? –TDHCA staff –ICF staff

7 Getting to know you … Name Organization My role in HOME is ….. The thing I really want learn is ……

8 Course Objectives Provide explanation of the HOME and TDHCA rules and procedures Explain what will happen as projects are completed and managed over time Answer common questions Share techniques and ideas

9 Course Structure Agenda Training manual Training manual appendices Forms Overheads

10 Rules!!!! Ask questions Share ideas Sticky questions board Training amnesty No cell phones that ring, please

11 Logistics Timing of breaks and lunch Telephones Restrooms

12 Rental Housing Chapter 3 covers: – Eligible activities and forms of assistance – Eligible beneficiaries and properties

13 Eligible Activities HOME funds may be used for: – Acquisition – Rehabilitation – New construction Developers or owners can be: – Nonprofits (incl. CHDOs) – Units of local government – PHAs

14 Forms of Assistance TDHCA provides grants, loans and other forms of assistance Most assistance is an amortizing loan Common forms of assistance with rental housing: – Predevelopment loans and grants for CHDOs – Construction loans – Permanent mortgage loans

15 Forms of Assistance Developers may budget for a developer fee not to exceed 15% CHDOs may receive operating funds See the list on 3-2 of eligible hard and soft costs

16 Operating Deficit Reserves Initial operating deficit reserve in new construction AND rehab projects allowed – Reserve cannot exceed 18 months Reserve can be used only for: – Project operating expenses – Scheduled payments to replacement reserves – Debt service

17 What is a Project? A project is 1 or more buildings on a site or sites under common ownership, management and financing Sites do NOT have to be within a 4- block area Project includes ALL activities associated with the site or building

18 Maximum HOME Investment HOME investment levels are determined by TDHCA underwriting Federal per unit subsidy limit applies Underwriting is based on: – Proportion of total project cost that is HOME- eligible – How many units are HOME-assisted units AND – The financial needs of the project

19 Determining HOME-Assisted Units Only units receiving HOME $ are subject to HOME requirements Number of HOME units must be specified at project commitment – For properties with HOME and non-HOME units, must select fixed or floating HOME units

20 Fixed & Floating Units 1 A = H 1 B 2 A 2 B = H 3 A = H3 B Fixed = 1A, 2B, 3A always HOME units Floating = unit numbers change but always have 3 HOME units

21 Allocation Costs Determine total HOME eligible costs For projects with HOME and non-HOME units, allocate costs across units – If HOME and non-HOME units are comparable, costs can be pro-rated – If units are not comparable, actual costs must be determined unit-by-unit HOME - 2.2

22 Affordability Period Also a compliance period where rents and incomes are controlled Properties must meet HQS inspections Determined by TDHCA and spelled out in Land Use Restriction Agreement Federal requirements apply

23 Roles of Nonprofit and CHDO Nonprofits may be: – Developers, owners and sponsors – Property managers – Program administrators (as subrecipients) CHDO as owner, developer or sponsor counts towards CHDO set-aside

24 Eligible Properties No requirements on structure type or style of property Eligible types of housing include: – Transitional and permanent housing – SROs and group homes – ECHO units

25 Ineligible Properties Property previously assisted with HOME during its affordability period HOME funds be used alone or in combination with HUD-funded public housing program funds (e.g., Public Housing capital programs such as Development, CIAP or CGP to acquire, rehabilitate, or construct public housing units). –HOME funds can be used to develop new public housing units when the units also receive HOPE VI funds. HOME funds cannot be used to operate public housing units under any circumstances.

26 Property Standards Acquisition only: – State/local code – If no state/local code applies, Section 8 HQS Rehabilitation: – Texas Minimum Construction Standards AND applicable state/local building codes – HQS STANDARDS

27 Property Standards New construction: – State/local code OR – If no local code, Southern Building Code – International Energy Conservation Code All construction must be done according to written specifications STANDARDS

28 Ongoing Property Condition Properties must be maintained to meet HQS at a minimum and any other local codes Inspections will be carried out

29 Other Standards Handicapped accessibility (Section 504 and Fair Housing) requirements Site and Neighborhood Standards apply to new construction of rental housing Environmental Review Lead-based paint

30 Rent and Occupancy Requirements Will be legally enforced for the term of the affordability period through: – Covenants – Deed restrictions – Developer cannot buy out of terms May only be terminated upon transfer by or deed in lieu of foreclosure (Financial obligations do not go away.)

31 HOME Rents High HOME and low HOME rents –Formally set in LURA –Tenants given notice of increases Adjust rents for tenant-paid utilities

32 Initial Occupancy Projects must have at least 20% of units occupied by families at/below 50% of MFI – Rents must be at Low HOME rent level 90% Of households must have incomes at/below 60% of MFI – Balance of units may be at/below 80% of MFI

33 Ongoing Occupancy Projects must have at least 20% of units occupied by families at/below 50% of MFI – Rents must be at Low HOME rent level – Balance of units may be at/below 80% of median with high HOME rent level Owners must make every effort to maintain compliance when renting next available unit

34 Initial Income Eligibility To determine eligibility, use 1 of 3 income definitions: – Part 5 (gross) income – Adjusted gross income defined by IRS for IRS Form 1040 – Annual income as reported on Census long form Source documentation must be obtained and verified

35 Annual Income Re-examinations Annually, tenant income must be re- examined – Review source docs OR (if LURA allows) – Get written statement and certification from the family OR – Get written statement from another means- tested government program At least every 6th year, source docs MUST be reviewed

36 Increases in Tenant Income If the income of a tenant in Low HOME Rent unit increases up to 80% of MFI: – May increase rent to High HOME rent level – Must rent the next HOME-assisted unit (fixed projects) or next available unit (floating projects) at Low HOME rent

37 Increases in Tenant Income If income of a tenant in a HOME unit exceeds 80% of MFI... – Tenant may remain in HOME- assisted unit BUT – Tenant must pay rent equal to 30% of adjusted monthly income (HOME fixed units) Projects with HOME and LIHTCs are exempted from this requirement

38 Increases in Tenant Income in Floating Unit Projects Exception for tenants whose income increases above 80% MFI in floating HOME units -- rent cannot exceed comparable market rent In floating unit projects, next available unit must be rented to HOME-eligible tenant

39 Tenant Selection Owners must have clear procedures and criteria for tenant selection Maintain waiting lists Keep all applications on file May not reject Section 8 without other cause

40 Home Lease Terms Leases must be for at least 1 year, unless agreed upon by owner and tenant Leases may not contain certain provisions Owner may terminate tenancy with 30 days notice under certain conditions Owners MUST adopt written tenant selection policies and criteria

41 Monitoring and Inspections TDHCA will verify compliance with HOME requirements each year On-site property inspections are required: – Every 3 years for projects with 1-4 units – Every 2 years for projects with 5-25 units – Each year for projects with 26 or more units

42 Additional Federal Requirements

43 FEDERAL REQUIREMENTS –Fair housing and equal opportunity –Handicapped accessibility –Labor standards –Environmental review –Flood insurance –Lead-based paint FED REGS

44 FAIR HOUSING AND EQUAL OPPORTUNITY Applicable laws: –Title VI of Civil Rights Act of 1964 –The Fair Housing Act –E.O Equal Opportunity in Housing –Age Discrimination Act of 1975 Cannot discriminate on the basis of race, color, religion, sex, national origin, handicap, familial status or age page 12-1 to 12-2

45 AFFIRMATIVE MARKETING Owners must adopt affirmative marketing procedures –Informing the public, owners and tenants about Fair Housing and housing opportunities –Assessing efforts and taking corrective action when necessary Procedures apply to projects with 5 or more units page 12-2

46 HANDICAPPED ACCESSIBILITY Americans with Disabilities Act –Civil rights to persons with disabilities –Facilities built after 1/93 must be accessible –Barriers in existing facilities must be removed, if achievable Fair Housing Act –Requires multi-family dwellings meet certain design/construction standards page 12-3

47 SECTION 504 Prohibits discrimination on the basis of handicap Four components: (1) program accessibility (2) employment accessibility (3) administrative requirements These 3 requirements apply to all programs of recipient & subrecipients -- not just the program receiving federal funds! page 12-4

48 SECTION 504 (4) removal of physical barriers Requirements differ based on whether project is: New construction Substantial rehab Other rehab

49 EMPLOYMENT AND CONTRACTING Applicable laws: –E.O Equal Employment Opportunity –Section 3 –Executive Orders concerning minority and womens business enterprise page 12-5

50 LABOR REQUIREMENTS Four applicable laws Fair Labor Standards Act –Basic minimum wages –Overtime at time and one-half Copeland Anti-Kickback Act –Governs deductions –Cant induce employee to forgo pay –Requires weekly payrolls page 12-6

51 LABOR REQUIREMENTS Contract Work Hours and Safety Standards Act –Requires time and one-half for hours over 40 per week –Addresses health and safety issues Davis-Bacon Labor Standards –Requires wages & benefits at prevailing local rates –Addresses apprentices and trainees

52 LABOR REQUIREMENTS CWHSSA and Davis-Bacon triggered at: –12 or more HOME-assisted units –$2,000 construction contract under CDBG except for residential rehab of less than 8 units There is new guidance from HUD on implementing Davis-Bacon in a more flexible way

53 PROCUREMENT Procurement rules: –Local governments - 24 CFR –Nonprofit subrecipients - 24 CFR No federal to any contractor or subcontractor who is: –Debarred –Ineligible –Suspended page 12-7

54 ENVIRONMENTAL REVIEW REQUIREMENTS Environmental review requirements are at 24 CFR Part 58 –Requires review of all federally-assisted activities –Sets forth level of review required Step 1: Start the review process when activities are known page 12-7

55 ENVIRONMENTAL REVIEW PROCESS Step 2: Aggregate activities by location or type Step 3: Determine level of review required: –Exempt –Categorically excluded –Require an environmental assessment Step 4: Document the files based on level of review required

56 ENVIRONMENTAL REVIEW PROCESS If necessary... Step 5: Publish FONSI and NOI/RROF notices Step 6: Submit FONSI and RROF to HUD Step 7: Once approved, begin activities

57 FLOOD INSURANCE No federal assistance in areas designated by FEMA unless: –Community is in National Flood Insurance Program OR it has been a year since the designation AND –Flood insurance is obtained page 12-11

58 LEAD-BASED PAINT PJs still under requirements at 24 CFR Part 35 AND Lead provisions in Section HQS apply Proposed regulations published - new rule coming! page 12-12

59 LEAD-BASED PAINT General requirements: –Notification and disclosure –Identification of defective paint surfaces –Treatment of defective paint surfaces –Response to children (under age 6) with EBL Test chewable surfaces If necessary, treat chewable surfaces

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