Community HOME Investment Program CHIP

1
Community HOME Investment Program (CHIP)
2
Staff

• Brian Williamson, Director
• Community Development and Finance Assistance
  Division
• 404 679 1587
• Steed Robinson, Director
• Office of Community Development
• 404 - 679 3168
• Jane Keefe, Affordable Housing Programs Manager
• 404 679 - 3167
• Kay Garrison, CHIP Consultant
• 404 679 - 0573
• Angela Davis, Grants Management Specialist
• 404 679 - 1591

3
History of the HOME Program

• Created by the National Affordable Housing Act
• To provide decent affordable housing to
  lower-income households
• Expand the capacity of non-profit housing
  providers
• Strengthen the ability of state and local
  governments to provide housing
• Leverage private-sector partnerships

4
History of the HOME Program (continued)

• HOME funds are allocated by formula to States
• DCA used part of its allocation to fund the
  Community HOME Investment Program (CHIP) - 3
  million - 6 million/year
• HOME regulations are at 24 CFR Part 92

5
CHIP Funding to Date

• To date, DCA has awarded over 42.4 million in
  CHIP funding
• 24.9 million has been expended by local
  governments on CHIP projects
• Other 17.5 million is actively at work today

6
Eligibility

• Eligible Local Government Applicants
• Local governments not designated by HUD as
  Participating Jurisdictions (PJs) under the HOME
  program
• Includes jurisdictions not eligible under DCAs
  State Administered CDBG Program that are also not
  HOME PJs
• List of Ineligible HOME PJs follows

7
Ineligible HOME PJs

• Albany, Atlanta, Macon, Savannah
• Roswell, Marietta
• Athens/Clarke County Consolidated Government
• Augusta/Richmond County Consolidated Government
• Columbus Consolidated Government
• Clayton, Cobb, Dekalb, Fulton and Gwinnett
  Counties

8
Other Eligibility Requirements

• Compliance With State Planning and Financial
  Reporting Laws
• The Georgia Planning Act
• The Service Delivery Act (HB 489)
• The Local Government Audit Act
• DCA Local Government Finance Report

9
Restrictions on Eligibility

• Prior Recipients of CHIP Funding
• Resolve outstanding audit/monitoring concerns
• Acceptable level of expenditure and performance

10
Eligible CHIP Activities

• Homeowner Rehabilitation
• Homebuyer Activities
• Rental Housing

11
Ineligible Activities

• Project reserve accounts
• Tenant Based Rental Assistance per DCA
• Match for other federal programs, except McKinney
  Act funds
• Operations or modernization of public housing
• Pre-payment of loan income mortgages under 24 CFR
  248
• Double-dipping

12
Ineligible Activities (continued)

• Reimbursement of State Recipient Owned Property
• For property used for non-CHIP purpose
• For property in its inventory

13
Ineligible Activities (continued)

• Cannot be used for rental assistance if receipt
  of funds tied to occupancy in a particular
  project known as Project Based Rental
  Assistance
• While HOME regulations allow tenant based rental
  assistance, DCA does not allow tenant assistance
  as an eligible CHIP activity

14
Basic HOME Rules

• Definition of a Project
• Form of Subsidy
• Amount of Subsidy
• Eligible Costs
• The Property
• The Applicant or Beneficiary
• The Long-term Affordability of Project
• Applicability of Other Federal Requirements

15
Basic HOME Rule Subsidy Limits

• Must have a minimum of 1,000 per project not to
  exceed
• 102,155 - 0 BR unit
• 117,100 - 1 BR unit
• 142,395 - 2 BR unit
• 184,211 - 3 BR unit
• 202,209 - 4 BR unit

16
Basic HOME Rule The Property

• Property Type (s)
• For Homebuyer Activities
• Must serve as principal residence
• Single-family
• Two-to-four-unit property
• Cooperative
• Mutual housing project if recognized as
  homeownership by state law
• Manufactured home

17
Basic HOME Rule The Property

• Property Types (s)
• For Rehabilitation Activities
• Occupied by income eligible homeowner
• Must be owners principal residence
• Includes
• Traditional single-family housing owned in fee
  simple
• A condominium unit
• A cooperative unit
• Mutual housing
• Manufactured home

18
Basic HOME Rule The Property

• Property Types
• For rental activities
• One or more buildings on a single site, or
  multiple sites that are under common ownership,
  management and financing

19
Note on Manufactured Housing Activity

• Maximum of 5,000 in CHIP for reconstruction,
  down payment or second mortgage assistance if
  used manufactured housing unit
• Used manufactured housing unit can be no more
  than five (5) years old

20
Note on Manufactured Housing Activity

• Maximum of 7,500 in CHIP for reconstruction,
  down payment or second mortgage assistance if
  new manufactured housing unit
• Maximum total funding (both CHIP and other funds)
  for manufactured housing rehabilitation is 5,000

21
Basic HOME Rule The Property

• Property Value
• Homebuyer -- Cannot exceed 200,160
• Rehabilitation -- Cannot exceed 200,160, after
  rehabilitation
• Higher limits in MSAs See Appendix I
  in Manual

22
Basic HOME Rule The Property

• Property Standards
• Must meet state and local codes
• Must have written rehabilitation standards
  similar to work specifications and generally
  describe the method and materials to be used when
  performing rehabilitation activities
• New construction must meet model energy code
• Handicapped accessibility, if applicable

23
Basic HOME Rule The Property

• Property Standards (continued)
• Senate Bill 443 for New Single Family
• Site and neighborhood standards at 24 CFR
  983.6(b) apply only to new construction of rental
  housing
• For manufactured homes
• New manufactured housing must meet the
  construction and safety standards of 24 CFR 3280
• Must be installed to state and local codes

24
Basic HOME Rule The Applicant or Beneficiary

• Only for low-income or very low-income families
  and individuals
• Only for those whose annual gross income does not
  exceed 80 of median by household size
• Income limits are published by HUD annually by
  county
• Other targeting required for HOME rental
  properties

25
Basic HOME Rule The Applicant or Beneficiary

• Appling County Low Income Limits
• 1 person 2 person 3 person
• 26,000 29,700 33,400
• 4 person 5 person 6 person
• 37,100 40,100 43,050
• 7 person 8 person
• 46,050 49,000

26
Basic HOME Rule Long Term Affordability

• Home Investment Per Unit Term
• Less than 15,000 5 years
• 15,000 - 40,000 10 years
• More than 40,000 15 years
• New construction rental 20 years
• Refinancing of rental housing 15 years

27
Basic Home Rule Application of Other Federal
Requirements

• HOME is subject to a number of
• other federal requirements

28
Other DCA Requirements

• Historic Preservation
• Citizen Participation

29
General Award Information and Requirements

• 3 - 6 million in CHIP for FFY 2008
• Maximum award of 300,000

30
Remember!

• Bonus points for CHIP in designated DCA
  Revitalization Area
• ARMs or other variable rate or flexible
  mortgages reviewed by DCA
• DCA-5 and DCA-8 forms to differentiate proposed
  number of units for manufactured housing units
  versus stick-built units by activity
• DCA-4 to differentiate need for type of housing
  being proposed (manufactured housing versus
  stick-built)
• Applications to include copy of local governing
  body resolution
• Consider innovative concepts in design for
  in-fill neighborhoods as a possible innovation
  to gain additional points

31
Matching Requirements

• There are no matching requirements for CHIP
• DCA provides the non-federal match

32
Pre-Award Costs

• Pre-award costs are ineligible
• Preparation of applications
• Cannot be reimbursed if awarded CHIP

33
Procurement

• Applicable to private consultants, engineers,
  architects
• Not applicable to RDCs/non-profits
• Must follow the Common Rule (24 CFR Part 85)

34
Compliance with Common Rule

• Develop a RFP
• Indicate level of importance of evaluation
  factors
• Capacity of organization
• Current workload of applicant
• Applicants previous CDBG or CHIP housing
  experience
• Qualifications of key personnel
• Level of services provided
• Mobility/proximity to project
• Cost to perform services
• Local governments experience with applicant

35
Procurement Process

• Publicize the RFP
• Allow 30 days for responses
• Send letter with RFP to at least 7 known
  providers
• Negotiate with at least 2 respondents
• Evaluate proposals and document
• Consult with counsel
• Gain full council/commission approval
• Sole source approval if only one response

36
Appendix E

• Supplemental CHIP Information
• Be sure and review this Appendix for helpful
  hints in making your application more competitive
  and complete
• Requirements for single-family or rental
  development projects
• Lead based paint requirements
• Down Payment Notices under URA

37
Administrative Fees

• Maximum of up to 5 percent of CHIP award
• Administrative Fee of 15,000 if awarded
  300,000 in CHIP

38
Project Delivery Fees

• Up to 2,000 for stick-built rehabilitation or
  re-construction
• Up to 1,000 for stick-built down payment or
  second mortgage assistance
• Up to 750 for manufactured housing
  rehabilitation
• Up to 750 for other manufactured housing with
  long-term lease
• Up to 1,000 for other manufactured housing on
  land owned by unit owner

39
Lead Based Paint Project Delivery Fees

• 100 per unit for procurement and oversight of
  lead inspection and/or risk assessment
• 300 per unit for procuring and overseeing lead
  hazard reduction construction work
• 100 for procuring and overseeing clearance

40
Lead Project Delivery Fees

• If project administrator is completing lead
  inspection and/or risk assessment and clearance
• 300 PDC to Administrator
• Selecting, hiring, and overseeing
• Lead construction contract and work

41
Professional Fees

• Primarily for new construction developments
• Engineering/Architectural at 7 of construction
  cost paid for with CHIP
• Developer Fee at 10
• Real Estate Fee at 7
• DCA can limit based on scope of
  engineering/architectural fees

42
Application Submission

• Application due April 1, 2008
• Must be postmarked no later than April 1, 2008
• Or hand delivered by close of business April 1,
  2008
• If mailed, use certified or registered mail

43
Application Submission

• Send original and 3 copies
• Original photographs in all copies
• If combining CDBG and CHIP, submit original and 4
  copies

44
Mailing Address

• Mail applications to
• Administrative Secretary
• Office of Community Development
• Georgia Department of Community Affairs
• 60 Executive Park South, N.E.
• Atlanta, Georgia 30329-2231

45
Mapping

• If project is site-specific
• If project is in targeted neighborhood
• DCA-12 Mapping is Required

46
Resolution

• Local Governing Body Resolution Required
• Authorizing the CHIP Application
• Authorizing person named in resolution to act on
  behalf of City for CHIP application
• DCA-1 must be executed by
• Chief elected official or
• Person named in resolution to act

47
Instructions for Completing Application Forms

• Application Summary
• Must be signed by Chief Elected Official or
  person authorized in resolution
• If site-specific or targeted neighborhood, check
  on line 19 that Location Map is enclosed

48
DCA 2

• Proposed Accomplishments
• Example
• Activity Measure Accomplishments
• Housing of housing units 15
• Rehabilitation of persons served 35

49
DCA 3

• Community-Wide Needs Assessment
• No Longer Required

50
DCA 4

• Description of Needs to be Addressed
• Include documentation supporting type of activity
  proposed
• If also applying for CDBG, a separate description
  of needs is required for CHIP

51
DCA 5

• Description of Activities
• Identify each activity by name and number
• For each activity provide
• Financial technique
• Additional resources
• Partnerships
• Cost Summarizes
• Marketing strategy
• All other documentation in support of rating and
  ranking

52
DCA 6

• Low- and Moderate-Income and Civil Rights Benefit
  Calculation
• Not required for CHIP

53
DCA 7

• Budget Summary
• Review eligible activities
• Budget within appropriate line items
• Be consistent with cost summaries on DCA-5

54
DCA 8

• Budget Analysis
• Backed up by credible estimates of costs prepared
  by qualified individuals and agencies
• For leverage contributions, attach clear
  commitments
• For other supporting actions, attach clear
  commitments

55
DCA 9

• Environmental Review Checklist
• Floodplain and Wetland
• FEMA
• Georgia Department of Natural Resources
• US Fish and Wildlife Service
• Local RDC or DCA

56
DCA 9

• Environmental Review Information (continued)
• Cultural Resources
• Historic Preservation Division of Department of
  Natural Resources
• RDCs

57
DCA 10

• Certified Assurances
• Signed by Chief Elected Official
• Or authorized person in resolution for applying
  for CHIP
• Be sure to reference and attach information on
  potential conflicts of interest

58
DCA 11

• Not required for CHIP
• No CHIP Joint Applications

59
DCA 12

• Maps Must be included for CHIP if
• Site-specific
• Targeting an area or neighborhood

60
DCA 13

• CDBG Disclosure Report
• Complete Part I
• Answer the two questions on Part II
• If either answer is YES, complete remainder of
  report (Parts III through VI)

61
Note on Activity Numbering System

• Activity Numbers
• Composed of prefix indicating purpose of activity
• Composed of second component indicating activity
  code
• Used on
• DCA 5
• DCA 6, if combined CDBG and CHIP
• DCA 7
• DCA 8

62
Application Review Process

• Overview of Rating and Selection System
• Statewide Competition
• DCA Housing Review Panel
• Compared in terms of
• Demographic Need
• Program Strategy
• Program Feasibility

63
Maximum Points for CHIP

• Maximum possible score is 400
• Demographic Need/ in Poverty 40
• Demographic Need/ in Poverty 40
• Demographic Need/Per Capital Income 40
• Program Strategy
  150
• Program Feasibility 130
• Maximum Total Points 400

64
Final Ranking

• Points are totaled for each applicant
• Total scores ranked highest to lowest
• Funds awarded to extent available
• Applicant demonstrating greatest need breaks tie

65
Rating Factors

• Demographic Need
• Absolute number of people in poverty
• Percent of people in poverty
• Per Capita Income

66
Rating Factor

• Program Strategy
• Leveraged Resource Commitments
• Public Private Partnerships
• Long Term Commitment to Affordable Housing
• Innovative Approaches
• DCA Designated Revitalization Area

67
Rating Factor

• Program Feasibility
• Design Quality
• Cost Control and Cost Reasonableness
• Resource Commitment
• Marketing/Demand

68
Elements of a Successful Application Program
Strategy

• Leveraging
• Obtain real commitments with terms and conditions
  including estimated dollar amounts
• Set forth examples by each activity for total
  funds CHIP, owner, and other funds
• Meet with lenders and obtain real commitments

69
Elements of a Successful Application Program
Strategy

• Meet with partners and obtain real commitments
• Below market interest rates
• Waive MIP
• Longer Loan terms
• Lower Origination fees
• Finance closing costs and back taxes
• Reduced closing costs
• Homebuyer education
• City and Non-Profit Contributions
• Habitat Involvement

70
Elements of a Successful Application Program
Strategy

• Public/Private Partnerships
• Tell DCA who they are
• Tell DCA the type of partner they are
• Include their commitment letters with real terms
  and conditions
• Meet with these partners and obtain firm
  commitments

71
Elements of a Successful Application Program
Strategy

• Long-term Commitment to Affordable Housing
• Communitys recent program history
• Housing types and number of units/dollars
• Future commitment strategic plans
• Previous applications, even if not awarded
• Community staff for housing
• Local PHA or Non-profit Administrators
• For-profit administrators
• If administered by consultant, what is
  communitys involvement

72
Elements of a Successful Application Program
Strategy

• Innovation
• Describe innovative features
• Use essential features to program design
• Use unique features
• Special populations

73
Elements of a Successful Application Program
Strategy

• DCA Designated Revitalization Area
• Was new for FFY 2005 and still applies in FFY
  2008
• Bonus points for targeting CHIP assistance in DCA
  Designated Revitalization Area

74
Elements of a Successful Applications Program
Feasibility

• Program Design
• Present a quality program design
• Detailed description of overall program
• Program Administration
• Role of each entity community, consultant,
  non-profit sub-recipient
• Communitys role
• Responsible party for reports, financial
  accounting, application procedures, day-to-day
  operations
• Does design meet identified needs
• Proposed activities should conform to needs
• Waiting lists for each activity
• If proposing down payment assistance, give proof
  of standard affordable housing on market for sale

75
Elements of a Successful Application Program
Feasibility

• Program Design (continued)
• Application in-take and processing
• Include all procedures
• Pre-screening
• Pre- application
• Full application
• 1st come, 1st served
• Client application documentation
• Verification
• Assistance with bank/other loan
• Waiting lists
• Development of new waiting lists
• Mandatory homeownership counseling

76
Elements of a Successful Application Program
Feasibility

• Program Design (continued)
• Financing Technique
• Maximum amount of CHIP by activity
• Minimum required other or leveraged funds by
  activity
• Basis for homeowners portion
• Every applicant does not need the same amount of
  assistance
• Very-low income vs. low-income
• Very-low might require 75 leverage
• Low-income might require 50 leverage

77
Elements of a Successful Application Program
Feasibility

• Program Design (continued)
• Financing Technique
• Or do you customize CHIP loan based on the gap
  financing needed after the first lender
  establishes the maximum loan amount
• Caution some applicants in the past have set
  forth a financing plan for only one activity, but
  proposed several activities
• Finance plan for each activity is required

78
Elements of a Successful Application Program
Feasibility

• Program Design (continued)
• Program Policies
• Provide details
• Set forth communitys required program policies
• Include DCA and HOME requirements

79
Elements of a Successful Application Program
Feasibility

• Program Design (continued)
• Construction Management
• Contracting
• Work write-ups
• Bidding procedures
• Negotiation or bidding
• Bid packages
• Minimum property standards
• Pre-bid conference
• Contractor qualifications
• Contracts
• Contractor solicitations
• Inspections, draws, project completions
• Lead based paint requirements

80
Elements of a Successful Application Program
Feasibility

• Cost Control and Cost Reasonableness
• Need specifics to assure proposed outcomes
• Need specifics to assure costs are reasonable for
  each activity
• Number of units
• Average CHIP
• Maximum CHIP
• Minimum Required Other Funds
• Average Other Dollars
• Total Dollars
• PDC/unit (regular)
• PDC/unit (lead)

81
Elements of a Successful Application Program
Feasibility

• Cost Control and Cost Reasonableness (continued)
• Set forth maximum CHIP and minimum required
  leverage
• Tell DCA total cost including CHIP and leveraged
  funds
• Set forth costs for lead hazard reduction
  separately
• If completed preliminary cost estimates, tell DCA
• What is basis of total project cost by activity

82
Elements of a Successful Application Program
Feasibility

• Cost Control and Cost Reasonableness (continued)
• Set forth cost to conduct lead hazard reduction
  separately
• Define minimum property standards for each
  activity
• Set maximum CHIP s per type of housing activity
• Set minimum required other or leveraged funds by
  activity
• Are costs and PDCs reasonable
• Tell DCA specifics about preliminary cost
  estimates
• Based on previous program averages
• Per square foot in market place
• Verified, standard, affordable homes for sale

83
Elements of a Successful Application Program
Feasibility

• Resource Commitment
• Tell DCA types of funding proposed as leverage
• Show DCA the level of control you have over
  committed resources
• Get firm, not loose, commitments
• Propose appropriate, reasonable PDCs for each
  housing activity
• Get commitments for only what is needed
• Get dollar commitments
• Show only needed amount on DCA-8

84
Elements of a Successful Application Program
Feasibility

• Program Marketing/Demand
• Tell DCA basic marketing strategy
• Have all program applicants been pre-approved
• Present a well defined and/or proven marketing
  strategy
• Fair and open to all qualified applicants
• Document that proposed activity is needed and
  appropriate for community
• Existing waiting lists
• Proof of houses in standard condition on market
  at affordable price range
• Get details and documentation from real estate
  community

85
Lead Based Paint Requirements

• DCA recognized that HUD requirements are costly
• DCA does not expect homeowner to pay for lead
  with their funds or other funds
• DCA does not expect grant administrator to cover
  added cost
• DCA has provided for additional project delivery
  fees for lead
• For budgeting purposes, estimate
• Total cost of regular rehabilitation without lead
• Apply your communitys finance plan to these
  costs
• Estimate separately the cost of lead
• Provide a total cost with lead

86
Example of Estimating Cost of Rehabilitation and
Lead

• Estimated Cost of Regular Rehabilitation is
  20,000
• Homeowner required to pay 25
• Balance from CHIP, not to exceed 15,000
• CHIP funds 15,000
• Other funds 5,000
• Total funds for regular rehab 20,000
• Lead Hazard _at_ 25 of total 5,000
• Grand total w/lead 25,000

87
Disposition of Applications

• Awards announced around August 15, 2008
• Denied applicants will receive notification

88
Pre-Funding Site Visits

• One unannounced site visit if
• Site-specific
• Targeted area or neighborhood

89
Making Your Application Competitive

• A Closer Look at Rating Factors Strategy
• Leveraging
• Compared in terms of total funds versus other
  funds
• Compared by category of activity
• Homeowner rehabilitation
• Down payment or new construction
• Combined program activities

90
Making Your Application Competitive

• A Closer Look at Rating Factors - Strategy
• Public/private partnerships
• Partnerships proposed to enhance or carry out
  activities

91
Making Your Application Competitive

• A Closer Look at Rating Factors Strategy
• Long-term commitment
• Compared based on jurisdictions long-term
  commitment to affordable housing
• Recent program history
• Future commitment

92
Making Your Application Competitive

• A Closer Look at Rating Factors Strategy
• Innovation
• Innovative features
• Uniqueness of program design
• Serving special populations
• Unique Design Concepts

93
Making Your Application Competitive

• A Closer Look at Rating Factors Strategy
• Bonus Points for Targeting CHIP in DCA Designated
  Revitalization Area

94
Making Your Application Competitive

• A Closer Look at Rating Factors Feasibility
• Design Quality
• Application in-take and process
• Financing Techniques
• Construction Management
• Program Administration

95
Making Your Application Competitive

• A Closer Look at Rating Factors Feasibility
• Cost Control and Cost Reasonableness
• Degree to which outcomes are assured
• Costs are reasonable
• Minimum Property Standards
• Maximum CHIP Assistance
• Basis of total costs
• Lead Hazard costs
• Project Delivery Fees

96
Making Your Application Competitive

• A Closer Look at Rating Factors Feasibility
• Resource Commitment
• Number of commitments
• Type of funding commitments
• Local government funding commitments
• Note Amount of commitment is reviewed under
  strategy.

97
Making Your Application Competitive

• A Closer Look at Rating Factors Feasibility
• Marketing/Demand
• Well defined or proven plan
• Feasible plan
• Not defined or infeasible
• Fair and open to all qualified applicants

98

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