California Department of Housing and Community Development

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Multifamily Housing Program2011-2012 Funding
Round 1C-6

• California Department of Housing and Community
  Development

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Multifamily Housing Program (MHP)Proposition 1C
Summary

• 1.5 billion allocation for affordable housing
  approved in the 11/7/06 General Election
• Bond funds included approximately
• MHP General 345 million
• Supportive Housing 195 million
• Homeless Youth 50 million

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MHP/HY/SH NOFA November 22, 2010

• Funding Available
• 90 million (MHP General)
• 30 million (Homeless Youth)
• 80 million (Supportive Housing)
• 10 million maximum loan amount per project
• Function of unit size, location and affordability
  level

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MHP Program Changes Carried Over From 1C-5

• AB 927 Senior unit set-aside (MHP NOFA Section
  S)
• AB 1460 Priority points for projects which
  utilize sustainable building methods (MHP SH
  NOFA Section C and D7 in Scoring)
• USDA RD loan commitment requirements (MHP NOFA
  Section C)
• Elevated loan limits are available for Homeless
  Youth projects (SH HY NOFA Section L)
• Point scoring differences (SH NOFA Section V HY
  NOFA Section U MHP NOFA Section W)

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MHP Program Changes Carried Over From 1C-5
(contd)

• Sandwich loans
• Scrutiny of rehabilitation projects
• Hard debt service on public agency financing

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Timetable - MHP
NOFA issued November 22, 2010
Application forms available November 22, 2010
Applications due March 3, 2011 (by 5 PM)
Loan and Grant Committee Meeting June 2011
Awards issued July 2011
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Timetable HY SH
NOFA issued November 22, 2010
Application forms available November 22, 2010
Applications due from February 15, 2011 to 5 PM December 31, 2011
Loan and Grant Committee Meeting As necessary due to OTC status
Awards issued Month following L G Meeting
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MHP Program Overview
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MHP Regulations

• Governed by two sets of regulations
• Multifamily Housing Program Specific Regulations
  (MHP Regulations)
• Uniform Multifamily Regulations (UMR)
• Available at
• http//www.hcd.ca.gov/fa/mhp

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Geographic Distribution (MHP)

• Statute requires HCD to
• ensure a reasonable geographic distribution of
  funds
• To prevent award imbalance, distribution target
  of no less than approximately
• 45 percent Southern California
• 30 percent Northern California
• 10 percent Rural Area

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Eligible Sponsor

• Non-profit, for-profit and local public agencies
• Demonstrate
• Experience developing, constructing, owning and
  operating affordable rental housing projects
• The entity that submits information for the award
  of the experience points (D3) must be the named
  Sponsor on the Application
• Must demonstrate site control
• MHP Section 7303 and UMR Section 8303

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Eligible Project

• Multifamily rental and transitional housing
  projects of five or more units
• New construction
• Acquisition and rehabilitation
• Rehabilitation
• Conversion of nonresidential structures
• Must not have started construction as of the
  application due date
• MHP Section 7302

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MHP Emphasis

• Emphasis on units for
• Deeply targeted incomes (MHP A, B or C)
• Large families (two or more bedrooms)
• Special Needs Populations

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HY Emphasis

• Emphasis on units for
• Homeless/at risk of homelessness, aged-out
  of foster care or ran away from home
• Emancipated youth under age 18
• Persons who are at least age 18, but not older
  than age 24

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SH Emphasis

• Emphasis on units for
• Homeless/at risk of homelessness and disabled
  adult or disabled emancipated youth
• Disabled mental illness, HIV/AIDS, substance
  abuse, developmental disability or long-term
  chronic health condition

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Eligible Use of Funds

• Costs attributable to Restricted units for
• Construction/rehabilitation
• Off-site/on-site improvements
• Capitalized operating and replacement reserves
  (replacement reserves can be funded from
  Operating Income)
• Child care facility and social service facility
  integrally linked to Project
• Developer fee
• MHP Section 7304

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Permanent Only Loans

• Loan Terms
• 55 year term
• 3 percent simple interest (principal and interest
  deferrable)
• First 30 years mandatory debt service of .42
  percent of outstanding principal balance
• Next 25 years adjusted to cover HCDs monitoring
  costs
• Unpaid interest and principal due at end of term

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Program Limitations

• Payment of state prevailing wages to laborers
  working on MHP-financed projects is required
• Sponsor distributions limited to 50 percent of
  cash flow (UMR Section 8314)
• 9 percent tax credit projects are not eligible to
  apply for MHP General funds (HY and SH projects
  are permitted to use 9 credits though lower per
  unit loan limits and other restrictions apply)

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Developer Fee Limits

• Limit of 1.2 million from funding sources (C7)
• New construction and substantial rehabilitation
  projects first 30 units, 23,000 per unit. Each
  unit in excess of 30, 9,500 per unit
• Acquisition and rehabilitation projects without
  substantial rehabilitation first 30 units,
  11,000 per unit. Each unit in excess of 30,
  5,500 per unit
• Land donations from local jurisdiction or master
  developer may not be counted as capital
  contribution
• Cash contributions from master developer or other
  entities, which are contingent upon the
  development of the Project may not be counted as
  capital contribution

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Developer Fee Limits (continued)

• Developer Fee Calculation
• Includes lease-up fees, incentive fees, or other
  property management fees, in excess of those
  customarily charged by property management firms
  for lease up activities, which are paid to the
  Sponsor, Co-Sponsor or affiliate of the Sponsor
  or Co-Sponsor

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Application Overview
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Application

• Universal Application used by HCD, TCAC, CDLAC
  and CalHFA
• http//www.hcd.ca.gov/fa/mhp/UniversalApplication.
  xls
• MHP Application Attachment
• http//www.hcd.ca.gov/fa/mhp/MHPApp1C_6Attachment.
  xls
• Homeless Youth or Supportive Housing Project
• Use Supportive Housing Application Attachment
  instead of the MHP Application Attachment
• http//www.hcd.ca.gov/fa/mhp/MHPSH_App1C_6attachme
  nt.xls

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General Instructions

• Submitting Application
• Three-ring binder with sleeve on the side
• Large lettered tabs and divide the binder into
  seven sections Universal Application, Universal
  Application Attachments (1-11), MHP or SH
  Attachments A, B, C, D, E
• Set up dividers with numbered tabs to correspond
  to the Universal Application and MHP Program
  Specific Checklist (A1)
• For items that are not applicable to your
  application, place a sheet stating the item is
  Not Applicable behind the tab

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General Instructions (continued)

• COMPLETE original and one duplicate of
  application
• No facsimiles, late, incomplete or revised
  applications will be accepted
• Applications must meet all eligibility
  requirements upon submission
• Applications with internal inconsistencies will
  not be rated and ranked

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Organizing the Application

• Submit your application binders in this order
• Universal Application
• Universal Application Attachments 1 - 11
• MHP Attachments A, B, C, D, E
• HY or SH SH Attachments A, B, C, D, E
• Remember Once your MHP General application is
  received, it must stand on its own to represent
  your Project

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Disclosure

• Disclosure of Application
• Information becomes PUBLIC RECORD available for
  review by the public
• Use Discretion
• Sponsor is waiving any claim of confidentiality
  and consents to the disclosure of all submitted
  material upon request

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Project Evaluation

• Eligibility
• Feasibility
• Scoring

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MHP/SH Attachments
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A1 Universal Application and MHP Checklist

1. Proof of site control
2. Current Preliminary Title Report
3. Relocation Plan with estimated costs
4. Utility Allowance Chart by unit size
5. Org. charts for Borrower, Sponsor, Developer,
   Affiliates
6. Legal Status Questionnaire
7. Previous Participation Certifications
8. Evidence of enforceable commitments -
   Construction
9. Evidence of enforceable commitments - Permanent
10. Market Study with Rent Comparability Matrix
11. Current Appraisal

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A2 Eligibility Criteria

• Other funding sources are insufficient to cover
  Project development cost
• As of application due date, construction has not
  commenced (demolition is considered
  construction if cost of demolition is included
  in the development budget)
• Application complete and on MHP approved forms

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A2 Eligibility Criteria (continued)

• Project site must be free from environmental
  conditions which are infeasible to correct
• Site is reasonably accessible to
• Public transportation, shopping, medical
  services, recreation, schools and employment
• Must demonstrate Article XXXIV authority
• New construction projects with demolition
• Number of bedrooms in new Project must be at
  least equal to the number of bedrooms demolished

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A2 Eligibility Criteria (continued)

• Relocation Eligibility Requirements
• Application must contain a preliminary Relocation
  Plan
• Developmental budget must contain funding for
  Relocation Expenses
• Final Relocation Plan must be approved by the
  Department prior to funding
• MHP Section 7315

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A2 Eligibility Criteria (continued)

• Site Control Requirements
• Must be in the name of the Sponsor
• Documents showing site control
• Lease
• Contract of Sale
• Disposition and Development Agreement
• Preliminary Title Report
• Option to Purchase or Lease
• Preliminary Title Report required in all cases
• Not older than six months
• UMR Section 8303

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A2 Eligibility Criteria (continued)

• Proof of Site Control
• Can take any of the forms indicated, but must
• Be fully executed and unilateral
• Name seller and purchaser or lessee
• Include dollar amount and terms of agreement
• Be signed by all parties
• Not have expired

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A3 Recycling Program Narrative

• In an effort to encourage all projects to
  implement as many environmentally friendly
  options as possible, the MHP application will
  require a narrative describing how the Project
  will implement and encourage residents to utilize
  project-based recycling programs

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MHP/SH AttachmentsSection B - Eligibility
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B1 Tenant Selection Criteria

• Provide description of your tenant selection
  criteria and describe rationale
• Senior Projects (B1a) Provide evidence of Fair
  Housing Compliance (legal opinion)

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B2 Organizational Documents

• Sponsor and Ultimate Borrower (if formed)
• Articles of Incorporation
• By-laws
• Partnership Agreements
• If organized under laws of different state
• Submit Certificate of Good Standing for Foreign
  LP/Corp/LLC plus Certificate of Registration

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B3 Governing Board Resolution

• Authorizes application submission
• Specifies authorized signatory
• Must reference the NOFA date and the amount of
  loan request
• Must state that the entity is authorized to do
  business in California
• Sample resolutions are provided

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B4 Names of Officers and Board Members

• Be certain not to disclose personal data
  (addresses, phone numbers, etc.) unless the board
  members have authorized the release of such
  information keep in mind that the application
  is a public document

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B5 Environmental Reports

• Phase I Environmental Site Assessment
• Other Environmental Reports (i.e. Phase II,
  Asbestos, Lead-based paint)
• Mitigation information (if applicable)
• Do not attach database records search

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B6 Maps

• Parcel map showing site location
• Scaled Distance Map
• Two mile radius of site
• Indicate amenities

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B7 Article XXXIV of the California Constitution
requires voter approval authorizing development
of low-income housing

• Provide evidence that Article 34 authority exists
  for this Project or
• Provide a legal opinion letter explaining why
  this Project is exempt from Article 34
  requirements

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MHP/SH AttachmentsSection C - Feasibility
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C1 Insert the Development Timetable
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Maximum Allowable Loan Amount

• C2 Worksheet to Determine Maximum Allowable
  Loan Amount
• C3 Loan Limit Worksheet
• C4 Shared Cost Calculation Worksheet
• C5 MHP Loan Calculation Worksheet

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Loan Limits

• MHP (see pages 31-45)
• http//www.hcd.ca.gov/fa/mhp/2010IncomeRentsLoanLi
  mits.pdf
• Homeless Youth or Supportive Housing Units (see
  pages 46-75 Chart A for 9 credits, Chart B
  without 9 credits) http//www.hcd.ca.gov/fa/mhp/
  2010IncomeRentsLoanLimits.pdf

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In the Supportive Housing Application, see Item
C5b
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In the Supportive Housing Application, see Item
C5b
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C6

• This item (evidence of commitment status for
  development funding) has been replaced by
  Universal Application Attachments 8 and 9
• See MHP or SH Application Attachment
  Instructions for what constitutes evidence of
  commitment

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C7 Developer Fee Calculation

• Not a required application attachment
• Tool to assist Sponsor in calculating allowable
  amount of developer fees

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C8 Unit Mix and Income Information

• Complete the Unit Mix and Income Information
  chart
• For rental assistance, operating, project based
  and other subsidies attach evidence of commitment
• If not available, attach other documentation such
  as Reservation or third-party letter stating the
  following
• Annual subsidy amount
• Date or expected date of award
• Term
• Number of subsidized units
• If not available, attach Voucher Payment Standard
  and Fair Market Rents from Housing Authority

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C9 Transition Reserves

• If Project depends on project-based rental
  subsidy, attach calculation of Required
  Transition Reserve funding

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C10 Non-Special Needs Population Justification of
Services Coordinator

• Attach narrative description of tenant needs and
  the role of the resident Services Coordinator in
  linking tenants to services

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C11 Estimate of Construction Cost Based on
Prevailing Wage

• Complete C11 based on prevailing wages

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Insert the Following Documents

• C12 Copies of Planning Approvals
• C13 Copies of Resumes for Project Contractor and
  Architect
• C14 Copies of Schematic Drawings

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Rehabilitation Projects

• C15 Provide a narrative description of current
  condition of structures
• C16 Provide a detailed narrative description of
  the intended scope of work
• C17 Provide a copy of current rent roll including
  household composition and income

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C18 Letter to Local Government

• Statutory requirement to notify local government
  jurisdiction that application is being submitted
• Must be addressed to the City Council or County
  Board of Supervisors (whichever is applicable)
• THIS IS AN ELIGIBILITY THRESHOLD REQUIREMENT

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C19 Operating Expense Comparables

• Minimum three comparables
• One market rate one affordable housing
• Same primary market area
• Similar size, number of units and amenities

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MHP/SH AttachmentsSection D - Scoring
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D1 Extent Project Serves Households at the Lowest
Income Levels - 35 points

• Enter total number of Restricted Units
• Enter number of units for MHP A, B, or C
• Scoring sheet will auto calculate

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D2 Extent Project Addresses the Most Serious
Identified Local Housing Needs - 15 points

• (A) 5 points for either
• Letter from City or County
• Local need identified in local housing policy
  document
• The local housing policy document in which the
  need is identified
• A statement that the Project meets the need
• Must specifically name the Project

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D2 Extent Project Addresses the Most Serious
Housing Needs (continued)

• Or
• If 70 percent of Project units are reserved for
  Special Needs Populations
• Letter from local government department stating
  that the Project will address a serious local
  housing need as it relates to Special Needs
  Populations

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D2 Extent Project Addresses the Most Serious
Housing Needs (continued)

• AND Choose option B, C or D - 5 or 10 points
• (B) - 10 points
• At least 70 percent of units reserved for Special
  Needs Populations or
• At least 70 percent of units have two or more
  bedrooms and located in Alameda, Contra Costa,
  Los Angeles, Marin, Monterey, Napa, Orange, San
  Diego, San Francisco, San Luis Obispo, San Mateo,
  Santa Barbara, Santa Clara, Santa Cruz, Solano,
  Sonoma, or Ventura counties

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D2 Extent Project Addresses the Most Serious
Housing Needs (continued)

• (C) - 5 or 10 points
• Comparable Market Rental Data Forms
• At least the five nearest comparable projects
• Senior projects - limit comparables to this
  population
• One rental data form for each comparable
• If weighted vacancy rate is lt 3 percent 10
  points
• If weighted vacancy rate is lt 5 percent 5 points

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D2 Extent Project Addresses the Most Serious
Housing Needs (continued)

• (D) - 5 or 10 points
• Vacancy Rate Determined by Market Study
• Performed by qualified third party per TCAC
  guidelines
• Senior projects - limited to this population
• Vacancy rate lt 3 percent 10 points
• Vacancy rate lt 5 percent 5 points

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D3 Development and Ownership Experience of
Project Sponsor - 20 points

• Affordable housing developments completed in the
  five years preceding application due date
• Minimum ten units
• Exception If proposed project has lt 15 units,
  and 70 percent of units reserved for Special
  Needs Populations, a completed project may have
  five units

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D3 Development and Ownership Experience of
Project Sponsor (continued)

• Experience points awarded if
• Project Sponsor or affiliate was sole developer
• Project Sponsor or affiliate in partnership with
  another entity if
• Controlled key aspects
• Had sufficient staff to manage the development
  process
• Received majority share of developer fee

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D3 Development and Ownership Experience of
Project Sponsor (continued)

• Projects were developed by staff (or a principal)
  currently employed by Sponsor if
• Staff had primary responsibility for the
  development process
• Staff will serve as Project Manager, or directly
  supervise the Project Manager and have primary
  responsibility for managing the development
  process

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D3 Development and Ownership Experience of
Project Sponsor (continued)

• Only experience of one entity counted
• Experienced entity must have controlling interest
  in partnership, primary responsibility for
  development, ongoing control of operations and
  sufficient staff
• Must receive majority share of developer fee

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D4 Percentage of Units for Families, Supportive
Housing or Special Need Populations or At-risk
Rental Housing Developments - 35 points

• Scoring sheet will auto-calculate for unit size
  and Special Needs Population designated units
• At-risk Rental Housing must meet TCAC definition.
  Attach completed checklist and supporting
  documentation

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D5 Leverage of Other Funds - 20 points

• Developer fee is not included
• Value of donated land may be included if
  supported by an appraisal
• Rural, Non-rural As defined by TCAC
• Attachment D5 will auto-calculate

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D6 Project Readiness - 15 points

• Enforceable commitments - construction
• Enforceable commitments - deferred
• Environmental
• Have all clearances (NEPA CEQA)
• If NEPA Responsible Entity is not the locality
  Submit form to appropriate NEPA Responsible
  Entity
• Phase I Environmental Site Assessment

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D6 Project Readiness - (continued)

• Local design review approval
• Public land use approvals (not to include
  building permits and ministerial approvals)
• Either
• Fee Title or long-term leasehold (attach PTR or
  documentation of lease agreement)
• Working drawings at least 50 percent complete
  (attach architect certification)

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D7 Adaptive Reuse, Infill, Proximity to Site
Amenity or Sustainable Building Methods - 10
points

• Infill Vacant or soon to be vacant lot in
  established or developed area
• Adaptive Reuse Rehabilitation of vacant
  commercial or industrial buildings in developed
  areas
• Proximity to Site Amenity Must qualify for any
  points under TCAC
• Sustainable Building Methods Must qualify for
  any points under TCAC

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Homeless Youth or Supportive Housing Projects D8
Commitments for Operating Subsidy or Services
Funding - 5 points

• A commitment for the operating subsidies,
  sufficient to sustain project operations for five
  years or longer from the local government.
• A commitment for services funding, sufficient to
  make available services adequate to meet the
  needs of the tenants housed in the Supportive
  Housing Units, for five years or longer. Must
  include
• Project name, description of services to be
  funded or provided, dollar value of funds or
  in-kind services (if cash is to be provided,
  state the source of funds), term of funding or
  service provision and a brief description and
  history of the agency/organization providing the
  funding or services.

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D8a Catalyst Program

• Projects that have received an award from the
  Departments Housing Policy Development Division
  via the Catalyst Projects for California
  Sustainable Strategies Pilot Program will receive
  five bonus points in the application scoring
  process. More information is available on the
  Departments website at http//www.hcd.ca.gov/hpd
  /cpcsspp.html

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• Service Plan Requirements

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Index and Checklist (Application Item B14)

• Part 1. Populations to be served
• Part 2. Supportive Services Plan
• Part 3. Supportive Services Budget
• Part 4. Project Sponsor and Service
  Provider Experience
• Part 5. Property Management Experience

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Tenant Selection Narrative Part 1, Section 3

• Must conclusively document occupancy will be
  limited to eligible households
• Occupancy by Homeless Youth or Supportive Housing
  households must be documented for the greater of
  5 units OR 35 of the total units

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Occupancy Standards, Exit Strategies, and Rent
Subsidies Part 1, Section 4

• Describe policies related to duration of stay
• Describe strategies to ensure viable housing
  options for Homeless Youth exiting the project
  or reassigning units
• Describe subsidies which will allow for project
  feasibility. Describe how the subsidies may
  function (be reduced) in the event tenant income
  increases

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Service Plan Summary Part 2, Section 1

• Narrative Summary of Services Plan
• Service Needs of Population
• Lead Service Provider
• Key Services available
• Staffing

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Characteristics of Permanent Homeless Youth
Housing

• Tenant holds a lease and is responsible for rent
  (not required)
• Tenant has own room or apartment and is
  individually responsible for arranging any shared
  tenancy (not required)
• Tenant may stay as long rent is paid and the
  terms of lease complied with
• Unit subject to applicable state and federal
  landlord tenant laws
• Tenants participation in service(s) shall not be
  required as a condition of tenancy

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Verification from Funding Agency Part 2, Section
3

• Agency shall be knowledgeable of the supportive
  service needs of the Target Population
• Agency shall endorse the services plan and the
  Project Sponsor as a known provider of Supportive
  Services similar to those proposed
• Use Supportive Service Verification Form

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Supportive Services ChartPart 2, Section 4

• Record in chart
• Each Support Service separately
• Population to be served
• Short Description of the Service
• Name of Service Provider
• Relationship to Sponsor
• Type of Agreement (i.e., MOU or letter of
  commitment)
• Service Location on or off Project site

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Services Delivery Chart Part 2, Section 5

• List each Staff Position separately
• Describe the roles and duties of each position
• Indicate percentage of full-time equivalent staff
• Name the employer organization of the position
• Specify Location work will be performed

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Staffing Level Table Part 2, Section 5b

• Indicate staffing level by completing
  calculation
• Total SH or HY Units
• Total FTE Support Service Staff
• Number of SH or HY Units per FTE Staff Person
• If Staff level differs from HCDs historical
  averages 10 15 households per staff for
  intensive services or 15 25 households per
  staff for less service intensive, provide a
  narrative explanation.

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Tenant Engagement Part 2, Section 6

• Provide narrative of tenant engagement plan
• Explain how the Sponsor will elicit tenant
  participation in the services

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Collaboration Part 2, Section 7

• Provide a Narrative Description of the
  Collaboration Relationship (Section 7A)
• Provide Collaborative Relationship Documentation
  such as a Contract, MOU or Letter of Intent
  (Section 7B)

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Measurable Outcomes and Plan for Evaluation -
Part 2, Section 8a

• Applicants must establish reasonable outcomes and
  outcome measures for
• Residential Stability
• Increased Skills or income
• Greater Self-determination
• Applicants must reasonably describe the proposed
  system for tracking the data and agree to report
  on the data annually

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Service Utilization Part 2, Section 8b

• Applicant must describe plan for collecting and
  analyzing service utilization data
• Prior to tenancy
• During tenancy
• Which systems of care will provide the data (i.e.
  health, mental health, substance abuse, criminal
  justice)
• How data will be collected and analyzed

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Supportive Services Budget Part 3, Section 1
103
Supportive Services Cost Per Unit Part 3,
Section 2

• Indicate supportive services cost per unit by
  completing calculation
• Total SH or HY Units
• Total Supportive Services Costs
• Total Supportive Service Costs per Unit
• If supportive service cost per unit differs from
  a range of 5,000 - 10,000 per unit, provide
  narrative explanation

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Funding and Service Commitments Part 3, Section 3

• A minimum of 25 of total Service Budget must be
  committed at the application stage
• Letters of Commitment or Intent to Fund must
  provide the following on organization letterhead
• Project name
• Description of services to be funded or provided
• Value of funds or in-kind services
• Term of funding or service provision
• History of organization providing funds or
  services

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Experience Part 4, Section 1

• Document 24 months experience in ownership or
  operation of one special needs or supportive
  housing project containing 5 or more dwelling
  units
• Document 24 months experience in providing
  services to the target population
• Property manager must have 24 months experience
  in managing a supportive housing or special needs
  housing project containing 5 or more dwelling
  units
• This is a threshold requirement

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Service Funding History Part 4, Section 2B

• Document the funding history of the qualifying
  service provider
• Document that the provider will be able to access
  funds from the programs that fund the services
  identified in the Supportive Services Plan
• List only funding obtained in last 5 years