Harris County Community and Economic Development Department

1. Harris CountyCommunity andEconomic Development Department HOME/ADDI Workshop

2. Service Area

3. Service Area Unincorporated Harris County and its 15 cooperative cities. Bellaire Seabrook Deer Park Shoreacres Galena Park South Houston Humble Tomball Jacinto City Waller Katy Webster LaPorte West University Place Morgan’s Point Houston, Baytown and Pasadena receive their own community development funds and are not included in the Harris County service area.

4. How it Works

5. The Consolidated Plan • Five-year plan that addresses: • Housing; • Social services; • Infrastructure; and • Community revitalization needs. • Specifies types of projects to be funded • Application for federal funds under HUD’s formula grant programs: • CDBG; • HOME / ADDI; and • ESG. • Basis for assessing performance

6. The Consolidated Plan aids decision makers in creating strategies to address the following. • Employment and employability • Affordable housing • Adequate streets • Water, sewage and drainage systems • Quality education and Workforce Development • Parks and green space • Community facilities • Quality health care • Crime awareness and public safety and • Safe, peaceful and productive neighborhoods for low- and moderate-income communities

7. Request for Proposals (RFP) • Solicitation and acceptance of proposals • According to federal and state procurement laws and standards • Applicants must: • Be a non-profit organization or governmental agency or entity; • Expend funds within a 12-month period; • Have sufficient working capital; • Meet one Consolidated Plan Objective; • Meet one National Objective; • Benefit eligible residents in CEDD’s HUD Service Area. • Used to address objectives identified in Harris County’s Consolidated Plan

8. Annual Action Plan (AAP) • Detailed description of the allocations of Harris County HUD entitlement dollars (CDBG, HOME, and ESG). • Discusses how resources generated by tax dollars will be utilized for the upcoming program year.

9. Agencies Receive Allocations • Contracts are developed between Harris County and agencies. • Funds are dispersed on a reimbursement basis. • Grants Management staff monitors all projects.

10. Consolidated Annual Performance & Evaluation Report (CAPER) • Describes progress. • Reports on and reviews county’s use of Entitlement funds. • Benchmark for projects to be funded. • Allows for self-assessment.

11. Overview American Dream Downpayment Initiative (ADDI) Home Investment Partnerships (HOME) **Please note, this overview provides general guidelines and regulations as issued by HUD**

12. Purpose – ADDI • To increase the homeownership rate, especially among: • Lower income; and • Minority households. • To revitalize and stabilize communities

13. Purpose - HOME • To expand the supply of: • Decent, affordable housing; • Nonprofit housing providers. • To strengthen: • Ability of state and local governments to provide housing; • Public-private partnerships.

14. Eligible Applicants • For-profit developers • Non-profit housing providers • Community Housing Development Organizations (CHDOs) • Redevelopment organizations • Public Housing Authorities (PHAs)

15. Eligible Activities • Homebuyer Activities - HOME and ADDI • Homeowner Rehabilitation - HOME • Rental Housing (New Construction or Rehabilitation) - HOME • Tenant-Based Rental Assistance (TBRA) - HOME

16. Definitions • Income limits • Match, Eligible forms of match • Long-term affordability • Hard costs • Soft costs

17. Income Limits HOME funds must assist people earning <=80% of the median family income (MFI). PY2005 MFI: $61,000 for a 4 person household.PY2005 Income Limits are in your packet

18. Match • 25% of the total HOME funds • Permanent contribution to affordable housing. It is not leveraging. • Match is not required for: • Administrative funds; • CHDO operating expenses; or • ADDI funds.

19. Eligible Forms of Match • Cash or cash equivalents from non-federal sources. • Value of waived taxes, fees or charges associated with the HOME project. • Value of donated land or real property. • Cost of infrastructure improvements associated with the HOME project. • A percentage of the proceeds of single- or multi-family housing bonds issued by state, or local government.

20. Eligible Forms of Matchcon’t. • Sweat equity • $10/hour for unskilled labor • Regular rate for skilled professionals • Must be part of regular program, not only for the specific project • Direct costs of supportive services to residents of HOME projects • Direct cost of homebuyer counseling to families purchasing homes with HOME assistance.

21. Long Term Affordability To ensure affordable housing over the long term, HOME imposes: • Rent requirements; and • Occupancy requirements. The length of the affordability period depends on: • The amount of the HOME investment; and • The nature of the activity.

22. ACTIVITY AVG. PER-UNIT HOME $ MINIMUM AFFORDABILITY PERIOD Rehab or Acquisition of Existing Housing <$15,000/unit $15,000-$40,000/unit >$40,000 5 years 10 years 15 years Refinance of Rehabilitation Project Any $ amount 15 years New Construction or Acquisition of Rental Housing Any $ amount 20 years Long-Term Affordability

23. Hard Costs • Acquisition of land (for a specific project) • Site preparations or improvements, including demolition • Securing of buildings • Construction materials and labor

24. Soft Costs • Financing fees • Legal and accounting fees, including cost certification • Appraisals • Architectural/engineering fees • Environmental reviews • Builders’ or developers’ fees • Affirmative marketing, initial leasing and marketing costs

25. Homebuyer Activities

26. Eligible Activities - ADDI Homebuyer Activities • ADDI funds may be used for: • Downpayment; • Closing costs; and • Rehabilitation in conjunction with home purchase.

27. Types of Assistance - ADDI Homebuyer Activities Homebuyer Activities • Available to first-time homebuyers only • First-time homebuyers have not owned a home for three-years prior to purchase of a home with ADDI assistance. • The amount of assistance is the greater of: • $10,000; or • 6% of the purchase price of the home.

28. Homebuyer Activities Eligible Costs - ADDI • Acquisition costs • Related reasonable and necessary soft costs • Development hard costs for related rehabilitation.(Including cost of reduction of lead paint hazards and the remediation of other home health hazards.)

29. Homebuyer Activities Eligible Properties - ADDI Eligible property types include: • Single-family home; • Two-to-four family home; and • Condominium unit.

30. Homebuyer Activities Eligible Activities - HOME • HOME funds can be used for: • Acquisition • Rehabilitation • New construction • Lease-purchase if conveyed within: • 36 months of signing; or • 42 months of project implementation.

31. Homebuyer Activities Eligible Activities - HOME(cont’d) Conversion of HOME rental units to homeowner units • If additional HOME funds --> affordability period is set by amount of direct assistance • If no additional funds --> minimum affordability of original rental units

32. Homebuyer Activities Eligible Costs - HOME Hard Costs • Acquisition • Site preparation or demolition • Construction • Soft Costs • Fees and Appraisals • Homebuyer Counseling Relocation Costs

33. Homebuyer Activities Eligible Properties - HOME Eligible property types include: • Single-family home; • Two-to-four family home; and • Condominium unit.

34. Homebuyer Activities Maximum Property Value – ADDI and HOME • Two things need to be <95% of the median area purchase price*: • After – rehab value of the property; • Acquisition only purchase price; or • Harris County has set the maximum purchase price at $115,000. *$138,110

35. Homebuyer Activities Property Standards Acquisition • Must meet state/local housing standards and codes • If no state/local standards, then Section 8 HQS applies • House must be inspected • House must meet standards at time of occupancy

36. Homebuyer Activities Property Standards Acquisition and Rehab Properties must: • Meet written rehab standards, and • Meet state/local code/standards • If no state/local code, meet a national code • Be inspected prior to occupancy • Present no health and safety defects • Meet applicable codes: • At project completion; and • Within 2 years of transfer.

37. Homebuyer Activities Property Standards New Construction Properties must: • Meet state/local code and standards; • If no state/local code, meet a national code; and • Also meet Model Energy Code.

38. Homebuyer Activities The Applicant* • Occupy property as principal residence for a minimum of five years • Must meet eligible low income requirements • At purchase for existing housing • At contract signature for new construction • At signing of lease-purchase agreement *Applicant = individual or beneficiary

39. Homebuyer Activities Income Eligibility • PJs can use one of the three income definitions to determine annual income: • Annual Gross Income under Part 5 • Census Long Form • IRS Form 1040 adjusted gross income* • Review source documents • Project income for next 12 months Income verification is good for six months. *For more information – www.hud.gov

40. Homebuyer Activities Recapture Provisions • Recapture most like a conventional loan • Buyer pays back direct subsidy • Direct subsidy is: • Assistance that reduced purchase price from fair market value; and • Direct assistance to the homebuyer (ex: downpayment or closing cost assistance). • May sell to any willing buyer

41. Homebuyer Activities Recapture Provisions(continued) • Recapture all or part of subsidy • Development subsidies NOT subject to recapture • Use resale provisions when: • Development subsidy only; or • No $ subject to recapture.

42. Homebuyer Activities Other Federal Requirements Other Federal requirements may apply: • Fair Housing and equal opportunity; • Affirmative marketing; • Davis-Bacon labor standards; • Flood insurance; • Relocation; and • Lead-based paint.

43. Homeowner Rehabilitation Activities

44. Homeowner Rehabilitation Activities Eligible Activities • Assists owner-occupants with: • Repairs • Rehabilitation • Reconstruction

45. Homeowner Rehabilitation Activities Special Purpose Homeowner Repairs • Ineligible IF the property does not meet minimum property standards upon completion: • Weatherization; • Emergency repair; and • Handicapped accessibility.

46. Homeowner Rehabilitation Activities Forms of Assistance • Most common: • Grants • Deferred payment loans • Interest or non-interest bearing loans Can also use: • Loan guarantees • Interest subsidies • Other forms approved by HUD

47. Homeowner Rehabilitation Activities Eligible Costs • Hard Costs: • Actual rehab • Accessibility improvements • Utility connections • Soft Costs • Relocation Costs

48. Homeowner Rehabilitation Activities Eligible Property Types • To be eligible, housing must be: • Occupied by income-eligible family • The owners’ principal residence • Types of eligible housing include: • Single family housing; • Condo unit; • Co-op or mutual housing unit if recognized by state law.

49. Homeowner Rehabilitation Activities Maximum Property Value • The value after rehabilitation <95% of median purchase price for the area. ($138,110) • In Harris County, the value must not exceed $115,000.

50. Homeowner Rehabilitation Activities Property Standards • All rehab projects must meet standards and state/local codes • If no local code exists either: • Uniform Building Code, National Building Code; • Standard Building Code; • CABO One to Two Family code; or • FHA Minimum Property Standards.