1. PART 600 §905.600 – 612 Development Requirements PART 600 §905.600 – 612 Development Requirements 1 Capital Fund Rule – §905.600 - 612 (Subpart F)

2.  § 905.600 (Subpart F) sets forth the requirements and process for developing public housing  Not the same as subpart F of 24 CFR 941 (this is gone)  Begins at § 905.600 2 § 905.600 – General Capital Fund Rule – §905.600 - 612 (Subpart F)

3.  PHAs may use any “generally acceptable” method of development, including:  Conventional  Turnkey  Acquisition  Force Account  Mixed-Finance 3 § 905.600 – General Capital Fund Rule – §905.600 - 612 (Subpart F)

4.  PHAs must consult with affected residents and solicit input prior to submission of a Development Proposal  Applies to all types of development 4 Capital Fund Rule – §905.600 - 612 (Subpart F) § 905.600 – General

5.  PHAs may use the following funding sources to development public housing, subject to program requirements:  Capital Funds  HOPE VI or Choice Neighborhoods Funds  Proceeds from the sale of units under a homeownership program  Disposition proceeds  Private financing  CFFP or OFFP 5 Capital Fund Rule – §905.600 - 612 (Subpart F) § 905.600 – General

6.  Sets forth specific Program Requirements  PHAs cannot develop more public housing than existed in October 1999 (Faircloth Limit)  “Develop” means through new construction and acquisition § 905.602 Program Requirements 6 Capital Fund Rule – §905.600 - 612 (Subpart F)

7.  Each site to be developed must comply with Site & Neighborhood Standards  applies to sites to be newly acquired for a public housing  applies to new construction & rehab  Must be approved by the Field Office prior to Development Proposal approval 7 § 905.602 Program Requirements (Continued). Capital Fund Rule – §905.600 - 612 (Subpart F)

8.  The cost of new construction of public housing units cannot exceed the cost of acquisition/rehab  PHAs must provide evidence, either: - A cost comparison of acquisition vs. construction OR - Documentation of insufficient existing housing. 8 § 905.602 Program Requirements (continued). Capital Fund Rule – §905.600 - 612 (Subpart F)

9.  PHAs must comply with environmental regulations at 24 CFR part 58 or part 50  Field Offices are responsible for all environmental approvals 9 § 905.602 Program Requirements (continued). Capital Fund Rule – §905.600 - 612 (Subpart F)

10.  Sets forth the requirements specific to mixed- finance development  Definition of mixed-finance development:  Development of public housing units which will be owned in whole or part by an entity other than a PHA 10 § 905.604 Mixed-Finance (Continued) Capital Fund Rule – §905.600 - 612 (Subpart F)

11.  HQ Office of Public Housing Investments (OPHI) has responsibility for mixed-finance projects. 11 §905.604 Mixed-Finance (Continued) Capital Fund Rule – §905.600 - 612 (Subpart F)

12.  Development of public housing units which will be 100% owned by a PHA is NOT mixed-finance  This is called “Conventional Development”  Field Offices have responsibility for approving Development Proposals for conventional development 12 §905.604 Mixed-Finance (Continued) Capital Fund Rule – §905.600 - 612 (Subpart F)

13.  Mixed-finance projects doing only modernization can keep existing DOFAs  PHAs no longer have to request this; its automatic  Field Offices must work with PHAs to enter project data into PIC prior to Proposal approval 13 §905.604 Mixed-Finance (Continued) Capital Fund Rule – §905.600 - 612 (Subpart F)

14.  The Rule incorporates definitions of instrumentalities and affiliates.  Aligns with PIH Notice 2007-15  Instrumentality: an entity related to a PHA which is controlled by the PHA  Affiliate: an entity in which a PHA has an interest, but not the same control as an instrumentality.  Public housing developed and owned by instrumentalities or affiliates are handled as mixed- finance. 14 §905.604 Mixed-Finance (Continued) Capital Fund Rule – §905.600 - 612 (Subpart F)

15.  Projects must meet the “pro rata” test:  The proportion of public housing funds must not exceed the proportion of public housing units.  Example:  120 total units of which 50 are public housing (42% pubic housing)  Amount of public housing funds cannot exceed 42% of the total budget 15 §905.604 Mixed-Finance (Continued) Capital Fund Rule – §905.600 - 612 (Subpart F)

16.  Identity of interest: When the Owner of a mixed- finance project wants to serve as general contractor  Identify of Interest issue now approved as part of the Development Proposal approval  OGC and Assistant Secretary approval no longer needed  PHA must still provide an independent cost estimate  the general contractor cost must be lower than the estimate 16 §905.604 Mixed-Finance (Continued) Capital Fund Rule – §905.600 - 612 (Subpart F)

17.  Incorporates Operating Subsidy Only provisions of PIH Notice 2004-5  Projects that use no public housing funds for development and only receive Operating Subsidy  Provides provision for Capital Fund Only projects  Project that use public housing funds for development, but receive no Operating Subsidy 17 §905.604 Mixed-Finance (Continued) Capital Fund Rule – §905.600 - 612 (Subpart F)

18.  Provides regulations pursuant to section 35(h) of the Act  PHAs may deviate from public housing requirements for mixed-finance projects where reductions in operating subsidy have negatively impacted project feasibility.  Formerly known as “Transformation”  35(h) could not be implemented until regulations in the Rule were published 18 §905.604 Mixed-Finance (Continued) Capital Fund Rule – §905.600 - 612 (Subpart F)

19.  Objective is to restructure projects to make them feasible  Rule sets forth a process and conditions for HUD approval  PHAs must prepare an Alternative Management Plan for HUD approval  Plans reviewed and approved by HQ  Plan updates must be approved yearly 19 §905.604 Mixed-Finance (Continued) Capital Fund Rule – §905.600 - 612 (Subpart F)

20.  Prior to developing public housing, PHAs must submit a Development Proposal  Specific elements of a Development Proposals are identified  Elements are the same for both conventional & mixed-finance  No more “mixed-finance” proposal 20 § 905.606 – Development Proposal Capital Fund Rule – §905.600 - 612 (Subpart F)

21.  Elements of a Development Proposal Include:  Project Description  Site Information  Description of all Participants  Project Schedule  Description of Compliance with Accessibility requirements 21 Capital Fund Rule – §905.600 - 612 (Subpart F) § 905.606 – Development Proposal

22.  Project Costs:  Total Project Budget  Construction Budget  Draw Schedule  Independent Cost Estimate or construction contract 22 Capital Fund Rule – §905.600 - 612 (Subpart F) § 905.606 – Development Proposal

23.  TDC/HCC Calculation  Financing Description  Funds must be irrevocably committed  10 year operating pro forma  Cooperation Agreement, if relevant 23 § 905.606 – Development Proposal (Continued) Capital Fund Rule – §905.600 - 612 (Subpart F)

24.  Environmental Documentation  Market Analysis (if there are non-PH units)  Program Income information 24 Capital Fund Rule – §905.600 - 612 (Subpart F) § 905.606 – Development Proposal (Continued)

25.  For Mixed-Finance Projects PHAs will still use the HUD “Rental Term Sheet” (HUD form 50030)  Term Sheet captures many elements of a Development Proposal into one document 25 Capital Fund Rule – §905.600 - 612 (Subpart F) § 905.606 – Development Proposal (Continued)

26.  Submission of all evidentiary documents for mixed-finance projects no longer required.  HUD has determined that only certain documents must still be submitted for approval. 26 Capital Fund Rule – §905.600 - 612 (Subpart F) § 905.606 – Development Proposal (Continued)

27.  PHAs first submit draft documents for HUD approval prior to approval of the Development Proposal  PHAs then submit final, executed documents for HUD approval after closing  No public housing funds can be spent until HUD approves final, executed documents 27 § 905.606 – Development Proposal (Continued) Capital Fund Rule – §905.600 - 612 (Subpart F)

28.  The following mixed-finance documents must be submitted to HUD:  Regulatory & Operating Agreement (R & O)  Mixed-Finance ACC Amendment  Land Lease and Memorandum of Lease  Management Documents (agreement, plan, lease) 28 § 905.606 – Development Proposal (Continued) Capital Fund Rule – §905.600 - 612 (Subpart F)

29.  HUD Declaration of Restrictive Covenants (DORC)  Partial Release of the Declaration of Trust, if required  Survey & Title Report  Certifications & Assurances (HUD form 50151)  Attorney Opinion Letter 29 § 905.606 – Development Proposal (Continued) Capital Fund Rule – §905.600 - 612 (Subpart F)

30.  HUD Headquarters OPHI and OGC will review:  R & O  Lease  Certifications & Assurances  Opinion Letter  DORC  Partial Release from the DOT 30 § 905.606 – Development Proposal (Continued) Capital Fund Rule – §905.600 - 612 (Subpart F)

31.  Field Office Public Housing & OGC will review:  Survey  Title Report  Management Documents  Partial Release of the DOT 31 § 905.606 – Development Proposal (Continued) Capital Fund Rule – §905.600 - 612 (Subpart F)

32.  Prior to acquiring land, PHAs must submit an Acquisition Proposal  Refers to purchase of vacant land for future public housing development  Field Offices process and approve Acquisition Proposals  A DOT and ACC is required  Development Proposal still required prior to commencing development of the site 32 § 905.608 – Acquisition Proposal Capital Fund Rule – §905.600 - 612 (Subpart F)

33.  Sets forth conditions for HUD approval of Proposals  Proposals should be reviewed for:  Compliance with regulations  Eligible and reasonable sources & uses of funds  Financial viability  Protection of Federal interest 33 § 905.610 – Technical Processing Capital Fund Rule – §905.600 - 612 (Subpart F)

34.  Subsidy layering analysis required for mixed-finance projects prior to HUD approval (24 CFR 4.13)  Analysis done by Headquarters (OPHI)  HUD must certify that the amount of HUD assistance is no more than necessary  Not the same as subsidy layering for PBV units 34 § 905.610 – Technical Processing (Continued) Capital Fund Rule – §905.600 - 612 (Subpart F)

35.  Mixed-Finance projects must comply with HUD Safe Harbor Standards  Limitations on Fees:  Developer fee  Management fee  Contractor fees  Analysis done by Headquarters 35 Capital Fund Rule – §905.600 - 612 (Subpart F) § 905.610 – Technical Processing (Continued)

36.  HUD must approve any “material change” to an approved Development Proposal  Material change is:  Change in the number of public housing units  Change in # of bedrooms by more than 10%  Change in the cost or financing by 10%  Change in the site 36 § 905.610 – Technical Processing (Continued) Capital Fund Rule – §905.600 - 612 (Subpart F)

37.  Funding of predevelopment expenses  For conventional development: up to 5% of public housing funds may be spent for predevelopment costs without HUD approval  For mixed-finance: no predevelopment funds spent without HUD Headquarters approval 37 § 905.612 – Disbursement of Funds Capital Fund Rule – §905.600 - 612 (Subpart F)

38.  Predevelopment Costs include:  Proposal development  Soft costs (A/E, survey, appraisal, etc.)  Demolition (with SAC approval)  Predevelopment Cost do not include:  site work  infrastructure  construction  other hard costs 38 Capital Fund Rule – §905.600 - 612 (Subpart F) § 905.612 – Disbursement of Funds (Continued)

39.  Conventional Development: once the Development Proposal is approved by HUD, PHAs may expend funds; no further HUD review  Mixed-Finance: prior to expending funds, HUD must approve final, executed evidentiary documents previously submitted in draft form 39 § 905.612 – Disbursement of Funds (Continued) Capital Fund Rule – §905.600 - 612 (Subpart F)

40. MAJOR CHANGES PART 600 §905.600 – 612 Development Requirements MAJOR CHANGES PART 600 §905.600 – 612 Development Requirements 40 Capital Fund Rule – §905.600 - 612 (Subpart F)

41. PART 600 General Questions: Q1) If we acquire vacant land for future public housing development do we have to place the land under a HUD Declaration of Trust? 41 Capital Fund Rule – §905.600 - 612 (Subpart F)

42. PART 600 General Questions: Q2) At what point should a development project be input into PIC? 42 Capital Fund Rule – §905.600 - 612 (Subpart F)

43. PART 600 General Questions: Q3)How should information required as part of a Development Proposal be submitted to HUD? 43 Capital Fund Rule – §905.600 - 612 (Subpart F)

44. PART 600 General Questions: Q4) Where can we find the mixed-finance forms, such as the Rental Term Sheet or TED Calculator or other forms? 44 Capital Fund Rule – §905.600 - 612 (Subpart F)

45. PART 600 General Questions: Q5)Do the HUD Cost Control and Safe Harbor Standards apply to all public housing development? 45 Capital Fund Rule – §905.600 - 612 (Subpart F)