G.O. Bond Proceeds & Publicly Owned Housing: Program Basics & Application Essentials July 10, 2012

2. G.O. Bond Proceeds & Publicly Owned Housing: Program Basics & Application Essentials July 10, 2012

5. Agenda • G.O. Bond funding source • Funding priorities • Publicly Owned Housing Program (POHP) basics • Minnesota Housing funding process • Application and Selection • Due Diligence • Architectural considerations • Tips for putting together a competitive application

6. Welcome • $5.5 million for public housing preservation • Joint effort among stakeholders Jennifer Bergman President, MN NAHRO

7. Funding Source • General Obligation (G.O.) bond proceeds • Bonds issued by State & repaid by state resources • Minnesota Housing’s role is to select projects for funding and close funding • G.O. bond funding requires bond-funded property to serve a public purpose for indefinite period • “B3” Minnesota Sustainable Building Guidelines • Administered under POHP

8. Funding Priorities • Improvements addressing health & safety issues • Improvements that improve energy or water conservation and lower operating costs • Proposals maximizing use of federal or local resources • Proposals that are ready to proceed

9. POHP Eligibility • Development must be public housing owned by a local unit of government • Public housing defined as housing for low-income persons and households financed by the federal government and owned/operated by public housing authorities and agencies formed by cities and counties • All units must meet public housing income limits • Must have Public Housing Assessment System (PHAS) rating of standard or above

10. Terms of Funding • 0% deferred loan forgivable after 20 years • No minimum or maximum loan amount • Can be used as a construction or end loan • Mortgage and Declaration filed on title • Subordinate to existing HUD restrictions • HUD approved streamlined subordination process

11. Eligible Uses • Limited to capital improvements • Add value/life to building & non-recurring in nature • Eligible hard cost examples: major roof reconstruction or replacement, major window replacements, major systems repair or replacement • Eligible soft cost examples: architect’s, attorney’s, or accountant’s fees, environmental testing, title work

12. Ineligible Uses • Ongoing or routine maintenance items such as light bulb replacement, regularly scheduled system maintenance, incomplete replacements (e.g. selective window replacement) • Ineligible soft costs: operating expenses/costs, reserves, marketing expenses, hazard or liability insurance, relocation

13. Funding Process Four Primary Stages

14. Application Stage • Simplified application • Use Project Narratives to tell your story • Firm bids not needed at application, but estimates should be as concrete as possible • Supporting documentation already prepared for HUD • Deadline: 5:00 p.m. August 31, 2012

15. Selection Stage Proposals reviewed on: • Alignment with funding source and program priorities • Cost reasonableness • Cost containment • Management capacity • Operational effectiveness • Stage involves Minnesota Housing underwriters & architects for review/assessment of financial, design, & other project characteristics

16. Due Diligence Stage • Time-intensive & iterative process • Necessary to ensure Minnesota Housing meets its obligation as funding allocator/loan closer • Recorded documents (e.g. Mortgage, Declaration) require a certain level of due diligence • Important to understand the time, money and effort borrowers have to commit • Technical assistance available & plan ahead for items that can be built into the mortgage

17. Due Diligence (cont.) • Examples of Due Diligence required (see sample Loan Closing Checklist): • Scope of work • Environmental • Title/zoning • Organizational documents • Miscellaneous forms

18. Commitment or Loan Closing • Board commitment term is 20 months • Construction loan: more time-intensive and more rigorous oversight by Minnesota Housing • End loan: simpler for both borrower and Minnesota Housing but requires available interim capital financing

19. Architectural Considerations • Seek input early in the process • Refer to Minnesota Housing’s Rental Housing Design/Construction Standards • Submit new or most recent Physical Needs Assessment (PNA) prepared for HUD • Firm bids not required at application • Iterative process as Scope of Work is developed • Environmental considerations

20. B3 Requirements • Overseen statewide by the Center for Sustainable Building Research (CSBR) at the U of M • CSBR processes variance requests (filed through form P1d) and provides technical assistance in conjunction with MN Department of Administration • Variances available if improved area is less than 10,000 square feet or if project involves less than replacement of HVAC system • If project must comply, CSBR can provide guidance directly and through an online planning/tracking tool

21. B3 Contacts and Information Patrick Smith, Center for Sustainable Building Research 612-626-9709, msbghelp@umn.edu B3/Minnesota Sustainable Building Guidelines http://www.msbg.umn.edu/index.html Form P1d (request for ruling on applicability/variance) http://www.msbg.umn.edu/downloads_v2_1/Form%20P1d-Applicability%20Form_V2-1.pdf

22. Putting Together the Application • Consider size of request compared with total funding • Use narratives & submitted docs to demonstrate need, readiness, capacity • Explain any variances from application requirements • Think through the loan processing timeline and readiness to proceed • Seek input early • Technical assistance is available

23. Key Dates & Materials • RFP released: July 2, 2012 • Applications due: August 31, 2012 by 5:00 p.m. • Minnesota Housing Board Selections: November 15, 2012 Access the Application & RFP Guide at: http://www.mnhousing.gov/resources/apply/public-housing/index.htm

24. For More Information Contact Jonathan Stanley, POHP Program Manager 651-284-3178, jonathan.a.stanley@state.mn.us Erika Arms, Architect 651-296-9850, erika.arms@state.mn.us Bob Porter, Multifamily Underwriter 651-297-5142, robert.porter@state.mn.us Julie Tarlizzo, Closing Department 651-296-9822, julie.tarlizzo@state.mn.us 400 Sibley Street, Suite 300 St. Paul, MN 55101 651-296-7608 * 800-657-3769 * TTY 651-297-2361 www.mnhousing.gov