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Los Angeles Housing Department Affordable Housing Trust Fund Notice of Funding Availability 2010 Round 1

Los Angeles Housing Department Affordable Housing Trust Fund Notice of Funding Availability 2010 Round 1. Rushmore D. Cervantes Interim General Manager Timothy Elliott Acting Director, Major Projects Division November 30, 2009. 2009 AHTF Round 2. 49 applications requested $243 million

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Los Angeles Housing Department Affordable Housing Trust Fund Notice of Funding Availability 2010 Round 1

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  1. Los Angeles Housing DepartmentAffordable Housing Trust FundNotice of Funding Availability2010 Round 1 Rushmore D. Cervantes Interim General Manager Timothy Elliott Acting Director, Major Projects Division November 30, 2009

  2. 2009 AHTF Round 2 49 applications requested $243 million $21.6 million in commitments awarded Family projects 6 Seniors projects 6 Total 12 Fully Funded 1 Applying for HUD 202 1 9% Tax Credit 10 Received allocation 8

  3. FUNDS AVAILABLEApproximately $32.8 million will be available, including $11.3 million in CRA Funds from various Redevelopment Project Areas.

  4. CRA/LA 5% tax increment fundsas of 11-19-09

  5. CRA/LA 5% funds

  6. CRA/LA 5% funds

  7. PROPOSED CHANGES for 2010 RATING AND RANKING For 9% tax credit projects, subsidies will be based on the amount necessary for an apparent winning tie breaker. Projects will be ranked based on the lowest ratio of calculated gap financing relative to the maximum eligible loan amount, including all eligible subsidy boosts.

  8. CHANGES for 2010 (Cont.) Funding is suspended for: • Projects with Proposition 1 (C) as the primary leveraging source*, and • Preservation of “At-Risk” projects * Projects involving TOD must provide evidence of an alternative permanent guarantee source acceptable to LAHD by January 29, 2010

  9. CHANGES for 2010 (Cont.) Priority will be given to projects in the following order: • Fully Funded: • if the loan subsidy request is comparable to the average request per unit for other projects being considered in this funding round. • TCAC 9% Set-Aside - with an apparent winning tie-breaker ranking within the available credit ceiling. • TCAC 9% Los Angeles County Geographic Apportionment • HUD Section 202/811 - with an apparent winning score based on the previous round. 5. Projects with public or private leverage source funding, in combination with 4% tax credits.

  10. 5% Subsidy Boosts • Projects located in Balanced Communities (New) • Projects with New Generation Fund (NGF) acquisition loans (New) • Projects located in Transit-Oriented Districts • Projects located in South Los Angeles

  11. 1.7 Subsidy Limits

  12. Calculating LAHD Maximum Subsidy EXAMPLE: Sunshine Heights Project: 1) has an NGF Loan; 2) is located on a site that meets Balanced Communities criteria; and, 3) is located within one-quarter mile from a transit station, as defined in Section 1.8. Therefore, the project may claim a 15% boost.

  13. Ranking SUBSIDY LEVERAGE PERCENTAGE Projects will be ranked based on the lowest ratio of calculated gap financing relative to the maximum eligible loan amount, including all eligible subsidy boosts. Example: Sunshine Heights Project If the Calculated Gap = $1,380,000 Project’s Maximum LAHD Subsidy = $11,311,722 Then the Project’s Subsidy Leverage Percentage = $1,380,000 ÷ $11,311,722 or 12.199%

  14. SAMPLE RANKING CHART

  15. 1.2 Eligible Projects • Multi-family rental housing projects located within the City of Los Angeles • Assisted units affordable at 60% AMI, but must comply with the affordability requirements of the chosen leveraging source • Rents at least 10% below market established by appraisal or market study • Income targeting across all unit types

  16. Eligible Projects (Cont.) Special needs projects may apply under this NOFA. Special needs projects are defined as serving: • Disabled households • Survivors of physical abuse • Chronically ill persons, including those with HIV

  17. Eligible Projects (Cont.) The definition of an eligible project excludes the following special needs populations: • Persons who have experienced chronic homelessness • Chronic substance abusers • Persons with serious emotional disturbances • Individuals exiting from institutional settings • Other groups that will require intensive services as defined in LAHD’s Permanent Supportive Housing Program (PSHP).

  18. 1.4 Eligible Activities • Acquisition/predevelopment reimbursement at construction loan closing • For rehabilitation projects, any net reduction in the number of units must be necessary to improve habitability or marketability of the project • Construction and permanent financing expenses including demolition if conducted after environmental clearance, off-site public improvements

  19. 1.3 Ineligible Projects • Projects targeting special needs populations served under the PSHP • Projects at risk of losing affordability due to expiration of affordability covenants or market/other conditions.

  20. 1.7 Conditions of Commitment • The term of commitment will be for two (2) consecutive funding rounds for the selected leveraging funding source • Applicants who fail to apply for the primary leveraging source will have their AHTF commitment withdrawn

  21. 1.8 Maximum Loan Amounts • The maximum LAHD loan available to any one project is $14 million • In aggregate, the total outstanding loan amount to any one borrower, developer, or general partner may not exceed 5% of LAHD's loan portfolio balance

  22. 1.10 Loan Terms and Conditions • 5% interest: May be higher or lower if it is found to be beneficial to the project • Simple Interest calculated on the loan amount outstanding and based upon a 365-day year and actual number of days elapsed • Payment - Interest will be paid from residual receipts of the project. Unpaid interest will be deferred and due at maturity of the loan • Term - Forty-Two Years (24 month construction period plus 40 year permanent loan period)

  23. 1.10.7 Relocation Displacement of site residents is to be minimized. • Projects must adhere to the Uniform Acquisition and Relocation Act of 1970 (URA), or • Section 104(d) of the Housing and Community Development Act of 1974 as amended • City of Los Angeles Rent Stabilization Ordinance (RSO) relocation benefit amount must be the minimum assistance provided where federal benefits would be less

  24. Relocation (cont.) • URA regulations require that persons who are scheduled to be displaced must be provided with a General Information Notice (GIN) as soon as feasible. • For the purposes of this NOFA, “as soon as feasible” is the application deadline date for NOFA applications. • It is required that copies of the GINs sent to each of the tenants residing at the project site be submitted with the NOFA application (Attachment 4b). • The GIN must state that local, state, and/or federal regulations regarding relocation or displacement payments may apply.

  25. 1.10.9 Leasing Preference • Displaced tenants who meet all occupancy requirements must have the first right of refusal to rent a new unit • At 50% completion, the applicant must notify LAHD of its timeframe for accepting applications from displaced tenants • Applicant must provide a two-month priority lease-up application period for displaced tenants before marketing to the public at large

  26. Leasing Preference (Cont.) • Referred families would be required to meet all of the project’s normal legal occupancy requirements for unassisted families • The developer is not required to hold units off-line if a sufficient number of qualified voucher holders are not referred

  27. Leasing Preference (Cont.) • Priority shall be given to displaced tenants meeting income and other eligibility requirements (for projects located within CRA/LA Redevelopment Areas only; please refer to California Health and Safety Code Section 33411.3) • Priority leasing for 10% of the total units shall be given to applicants that are "situationally homeless" and have been approved for Section 8 vouchers by the Housing Authority of the City of Los Angeles (HACLA) contract agencies • The servicing agency will make the determination that families referred to these projects have experienced a recent, non-chronic episode of homelessness and do NOT demonstrate a need for intensive services

  28. 1.10.12 Related Party Fees The maximum allowable pre-approved related party management fee is $15,000. This fee must be substantiated prior to closing by the developer and cannot include charges for any office overhead for the development of the project or project operating expenses.

  29. 1.11.5-6 Davis-Bacon and Prevailing Wage Requirements • Assuming HOME funds will be used, all projects will be required to pay Davis-Bacon wage rates • CRA-financed projects must pay State of California prevailing wage or Davis-Bacon wage rates, whichever is higher • Project sponsors shall be responsible for determining the applicability of residential versus commercial wage scales for projects subject to State Prevailing Wage requirements

  30. 1.13 Supportive or Enhanced Services • Income generated by the project may not be utilized to fund supportive services prior to the payment of residual receipts • Not more than $400 per unit per year will be allowed towards funding supportive service coordination for special needs populations as defined in Section 1.2 • For projects serving seniors or other tenant populations, no more than $100 per unit per year for service coordination will be allowed

  31. 1.14 Environmental Review • Projects using federal funds must comply with the National Environmental Policy Act (NEPA) • Projects must obtain California Environmental Quality Act (CEQA) clearance through the City of Los Angeles Planning Department (Exhibit 4) • NEPA and CEQA differ in their requirements. Project approval under CEQA does not constitute NEPA project approval (and vice-versa)

  32. 1.16 Incentive Programs • LADWP Sustainable Building Incentive Program: Projects exceeding Title 24 Energy Standards by a minimum of 10% for new construction, may be eligible for up to $200,000 in additional funding • The Smoke-Free Incentive Program has been eliminated.

  33. Part 2.THRESHOLD REQUIREMENTS • Applications that fail to meet threshold requirements will not be considered for funding • Completeness and scoring will be based entirely on the documents contained in the application • No additional documents shall be accepted

  34. 2.2 Organizational Documentation Applications must identify ALL members of the Development Team (Ownership Structure). The following organizational documents must be submitted with the application: • Certified Board Resolution authorizing the participation in the NOFA • Resolution must identify the authorized signatories • Executed within past 90 days • Organization Chart of the proposed ownership structure • Organizational documents for each entity shown on the chart

  35. Sample signature block Sample signature block to be used in LAHD loan documents must include: • Chairman of the Board, President, or any Vice President; and • Secretary, any Assistant Secretary, Chief Financial Officer, or any Assistant Treasurer Executive Director plus a signature from either category will suffice.

  36. Corporations & L.P’s • Certificate of Good Standing by the Secretary of State dated within 6 months • Articles of Incorporation • By Laws reflecting affordable housing as one of its purposes • Certified Certificate of Limited Partnership (form LP-1) and any amendments (form LP-2) • Full copy of the Partnership Agreement and any amendments • Current Board of Directors list • Current City Business License

  37. 2.3.1 Appraisal • AS IS appraisal prepared not more than six (6) months prior to the date of the property’s acquisition • If the property has not been purchased, not more than six months prior to the date of the purchase contract • Value may not be determined solely on sales comparables of properties financed by public agencies • If a residential income approach is not utilized, applicants must submit either a separate market study completed within the last six (6) months, or the “TCAC Rent Comparability Matrix”

  38. 2.3.2 Phase I or Phase II • Phase I Environmental Assessment (ASTM) standards (E 1527-05) completed or updated within the last six (6) months • If Phase I indicates the need for further assessment, a Phase II report must be submitted • The applicant must include a cost estimate for any required remediation

  39. 2.3.3 Lead/Asbestos • Rehabilitation projects must submit an asbestos assessment and lead-based paint report completed within the past twelve (12) months • For occupied sites, assessment must include minimally invasive sampling of readily accessible surfaces • Testing and compliance shall be consistent with HUD’s “Guidelines for the Evaluation and Control of Lead-Based Paint Hazards in Housing” (June 1995), including chapter 7- Lead-Based Paint Inspection (1997 Revision) • If the assessment determines that lead is present, a Lead Abatement Plan must be submitted

  40. Lead/Asbestos (cont.) • For new construction with complete demolition of all existing structures: • A letter in-lieu of a lead test report is sufficient • Letters should include: • An indication of the presence of lead • A statement that that the appropriate (federal, state, and local) abatement protocols will be followed

  41. 2.3.4 Soils Report • All new construction projects must submit a soils report completed within the last twenty-four (24) months • Report shall include conclusions and recommendation for construction of proposed development • Reports for sites occupied by structures must include subsurface investigations conducted to City of Los Angeles standards

  42. 2.3.5 Engineering Inspection • All rehabilitation projects must submit: • a property needs assessment report completed within the last twelve (12) months • Work write-up • Detailed specifications • Schematic drawings • Floor plan • Cost estimate • Completed by a qualified engineer or building inspector • Must identify the remaining life of all major systems including, but not limited to, plumbing, electrical, HVAC, foundation, and roof

  43. 2.3.6 Historic Preservation • Submit Assurances and Conditions Certification (Attachment 1) with dated photographs of entire site and surrounding properties • Describe: • Condition of the property, age of the buildings • Any known historic properties in project area • Properties that appear to be historic within a ½ mile radius • Applicants shall not undertake any demolition prior to the completion of LAHD environmental review

  44. 2.4 Community Support Community Support Letters to be submitted with application: • Letter of Support from the appropriate Council Office(s) for the project site(s) dated within six (6) months prior to the application deadline • CRA Letter of Acknowledgement and Support dated within six (6) months

  45. Community Support (Cont.) CRA Letter of Acknowledgement & Support (Attachment 8): • Completed the Agency’s Design Review? • Consistent with CRA Housing Design Guidelines? • Consistent with the Redevelopment Area Plan?

  46. 2.5 Site Control • Demonstrate site control through the period required by TCAC • Current title report (no more than 90 days old) • Purchase option or agreement must acknowledge that government funds may be used but property will not be acquired through eminent domain

  47. Site Control (Cont.) Voluntary Acquisition Documentation (Attachment 4d) • Must consist of a letter, on the Applicant’s letterhead, addressed to the previous property owner • Must state that the Applicant is interested in acquiring the property for a proposed project that may receive funding assistance from HUD, but that the Applicant does not have the authority to acquire the property through eminent domain • Must also include the offer amount, which must be representative of the current market value

  48. 2.6 Zoning and Land Use Compliance • Affordable Housing Referral Form (Attachment 10): Project information must be completed by the applicant and submitted to LAHD • LAHD will verify entitlement status with City Planning (New) • Public hearing must be waived or scheduled prior to the issuance of an LAHD commitment

  49. 2.12 LAHD Business Policy • Developers with uncorrected monetary or non-monetary defaults on LAHD Loans are ineligible to apply • Outstanding Rent/Code invoices to be paid for all properties owned • Rehab projects under current ownership in LAHD’s Rent Escrow Account Program (REAP) are not eligible to apply • Attachments 7 and 7b require a list of all residential income properties owned by the applicant, or any of its partners or in which principals have a vested interest

  50. PART 3SELECTION CRITERIA 3.1Project Feasibility All projects must demonstrate: • 15-year positive cash flow • Reasonableness of costs in relation to the type and size of the development • Contingency • 5% -10% new construction • 10% -15% rehabilitation

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