2017 NCDA Annual Conference Miami, Florida Housing Track: - PowerPoint Presentation

2017 NCDA Annual ConferenceMiami, Florida Housing Track: HOME – Beyond the BasicsJune, 2017 ©2017 NCDA 1

HOME Investment Partnerships Program HOME – Beyond the Basics Presented bySheryl Kenny 2 ©2017 NCDA

Beyond the BasicsThis training will provide a more advanced look at certain areas of the HOME program including: Overview of HOME Rule ChangesMonitoring ResourcesHOME Program Agreements Subsidy layering Grant based accounting Match RequirementsCDBG/HOME Comparison ©2017 NCDA 3

Future Course on Advanced HOMENCDA has received numerous requests for an Advanced HOME course 3 hours is not sufficient time to adequately cover the full range of advanced topicsAdvanced HOME course is in the worksFeedback from today’s attendees will help shape course content Please complete a survey and let NCDA know what you would like to see included in “Advanced HOME” ©2017 NCDA 4

HOME: Past, Present, Future Past: Authorized by the Cranston-Gonzalez National Affordable Housing Act of 1990. The largest Federal block grant to States and local governments designed exclusively to create affordable housing for low-income families.Present : Reduced funding and stricter rules for jurisdictions trying to build and support affordable housing. Unknown future of regulations and funding in general.Future: Housing challenges continue to include aging housing stock and an affordable housing crisis in many areas of the country. Increasing need to connect low-income families to rental and ownership housing opportunities. ©2017 NCDA 5

HOME Review Quick Quiz Where can you find the regulations for the HOME program (CFR#)?What activities can HOME be used for?What is the maximum income cap on household eligibility for the HOME program?When are 2017 HOME income limits effective?If you have a rental program with HOME funds, 90 percent of the units in that year must be at what household income limit? ©2017 NCDA 6

Quick Quiz ContinuedWhat is amount and purpose of the HOME set-aside for non-profit housing providers? What is the amount and purpose of the matching funds for the HOME program?What are the exceptions to the HOME match requirement and how do you qualify?What is the commitment deadline for HOME funds in general? For CHDO funds? ©2017 NCDA7

Cross Cutting RequirementsWhich of the following apply to HOME:Davis Bacon Environmental ReviewSection 3Lead Based Paint RegulationsAffordability Period URAFair Housing©2017 NCDA 8

HOME Rule Changes – HUD’s Purpose Accelerate timely production/occupancy of assisted housing, Strengthen performance of PJs and their partners in producing/preserving affordable housing units,Provide PJs with greater flexibility in the design and implementation of their programs, andIncrease administrative transparency and accountability. ©2017 NCDA9

HOME SurveyUse Your Phone or Laptop 10 Question SurveySee Link Below:https://www.surveymonkey.com/r/VM9CRJB ©2017 NCDA 10

1) HOME Rule changes ©2017 NCDA11

From CPD Notice 14-08 ©2017 NCDA 12

2013 HOME Final Rule HighlightsHOME projects must be completed within four years of commitment.  Any project that is not completed timely will be terminated and PJs will be required to repay HOME funds drawn. [§92.205(e)(2)]HOME-assisted rental units must be occupied by income-eligible households within 18 months of project completion; if not, PJs must repay HOME funds for the vacant units. Note, for units that remain vacant six months following completion, the PJ must identify and develop an enhanced marketing plan and report this information to HUD.  [§92.252]©2017 NCDA 13

2013 HOME Final Rule HighlightsA homebuyer unit must have a ratified sales contract within nine months of construction completion , or the PJ must either convert it to a HOME rental unit or repay the full HOME investment. [§92.254(a)(3)]CHDO set-aside funds must be committed to specific projects within 24 months of the PJ receiving its HOME allocation. The PJ can no longer “reserve” CHDO funds for projects that will be identified at a later date.  [§92.2 Commitment, §92.300(a)(1)]CHDO set-aside funds must be expended within 5 years of when the PJ receives its formula allocation. [§92.500(d)(1)(A) and (C), and §92.500(d)(2)] ©2017 NCDA 14

2013 HOME Final Rule HighlightsPJs must underwrite all HOME projects  to ensure that each project is financially sustainable over its affordability period. The underwriting review evaluates cost reasonableness, market demand, developer capacity, and the commitment of other funding sources. [§92.250(b)]PJs must adopt program policies for homebuyer programs that include underwriting guidelines to determine the appropriate amount of assistance necessary to assist the low-income buyer; assessment of a buyer’s ability to purchase and remain in the home (e.g., housing and consumer debt ratios, anticipated income, and available assets); and anti-predatory lending and subordination policies.   [§92.254(f)]Homebuyers must receive housing counseling before receiving HOME assistance (down payment assistance) or purchasing a HOME-assisted unit.  [§92.254(a)(3)] ©2017 NCDA 15

2013 HOME Final Rule HighlightsProperty standards are updated  to reference current national codes and to require that PJs establish standards that will sustain quality assisted housing for at least the affordability period.  Within the 2013 Rule, property standards requirements are reorganized by project type – new construction, rehabilitation, acquisition without rehabilitation, and manufactured housing. [§92.251]PJs must identify and plan for major systems repairs.  For rental rehabilitation projects with 26+ units, this must be done via a capital needs assessment. The PJ must require that the scope of rehabilitation work and replacement reserves deposits must be sufficient to ensure the useful life of essential building components throughout the period of affordability. For homeownership housing, major systems must have a useful life of at least five years upon project completion. [§92.251(b)(ii) and (viii)] PJs must develop inspection policies and procedures, including initial inspections of properties to be rehabilitated or acquired to determine the necessary scope of work to bring each property up to applicable standards; and progress and final inspections for all new construction and rehabilitation projects to ensure projects are constructed according to approved plans. HUD will issue guidance to identify for PJs the minimum required inspectable elements based on the Uniform Physical Conditions Standards.  [§92.251(g)] ©2017 NCDA 16

2013 HOME Final Rule HighlightsTo qualify as a CHDO, a nonprofit must have paid staff whose experience qualifies them to undertake CHDO set-aside activities.   Capacity cannot be demonstrated by use of a consultant, except in the first year that a CHDO becomes certified.  [§92.2 Community housing development organization]Each time the PJ commits HOME funds, it must re-certify a nonprofit’s qualifications to be a CHDO and its capacity to own, sponsor, or develop housing.  [§92.300(a)]The roles of owner, developer, and sponsor for CHDOs using set-aside funds are more specifically defined. Among other changes, the 2013 Rule permits a PJ to provide CHDO set-aside funds for a CHDO that owns rental housing that it does not develop.  [§92.300(a)(2) – (6)] ©2017 NCDA 17

2013 HOME Final Rule HighlightsDuring the affordability period, PJs must examine the financial condition of projects  with 10 or more HOME-assisted units at least annually, and must take action where feasible to correct problems that threaten a project’s financial viability.  [§92.504(d)(2)]PJs may utilize a risk-based monitoring system and adjust the schedule of ongoing rental unit inspections as part of a risk-based monitoring system, but inspections must occur no less frequently than every 3 years. The first on-site inspection must occur within 12 months of project completion.   §92.504(d) PJs are permitted to charge certain fees: reasonable application fees, homebuyer counseling fees, and ongoing rental monitoring fees. The cost of inspections and income determinations for Tenant-Based Rental Assistance (TBRA) recipients may be charged as project soft costs.    [§92.214(b)(1) and §92.209(a)] ©2017 NCDA 18

2013 HOME Final Rule HighlightsPJs must develop risk-based monitoring systems for all HOME funded activities and projects, including on-site monitoring schedules and financial oversight protocols for rental properties.  [ §92.504(a) and §92.504(d)(2)] ©2017 NCDA19

From CPD Notice 14-08 ©2017 NCDA 20

Group ExerciseSelect one of the HOME Regulations changes that is the most challenging for your group. Discuss strategies for complying with the new requirement.Identify any information and/or training that is needed to help with complianceReport to the group which regulation you selected, why it is challenging, and at least one strategy you discussed to increase compliance ©2017 NCDA 21

2) HOME Monitoring RESOURCES ©2017 NCDA22

Purpose of MonitoringServe households most in need of housing resources Maintain quality programsEnsure federal funds are appropriately usedMaintain public trust that programs are working as intendedSafeguard fundsEnsure contractors, CHDOs and subrecipients are using funds according to written agreements ©2017 NCDA 23

HUD HOME Risk Factors for PJsFactor 1: Financial HOME Grant in top quartile of region’s PJsExpenditure/Commitment deadlines not met?PI not receipted in IDISSingle audit not submitted to federal clearinghouse OR PJ has open findings and is overdue in carrying out corrective actionKey staff have demonstrated inability to administer HOME program or key vacancies open for 6+ months ©2017 NCDA 24

HUD HOME Risk Factors for PJs PhysicalPJ has not had HUD onsite monitoring visit in the past 3 yearsManagementPJ has large rental projects (i.e., 25+ units)PJ administers more than 3 HOME activity typesCHDO activities not progressing based on commitment and disbursement reports Program functions are carried out by other entitiesAffordability requirements not met for activitiesStaff capacity in adequatePJ not monitoring projects/programs OIG has scheduled review or is in the process of a reviewPJ has been found to be non-compliant with Environmental Reviews ©2017 NCDA 25

HUD HOME Risk Factors for PJsClient Dissatisfaction and complaints to HUD, when PJ is found to be in non-compliance with HOME regs PJ’s income determination methodology has not been monitored in the past 3 yearsPR22 shows that > 20% of projects are not moving forward as required from commitment to construction to completion and occupancy©2017 NCDA 26

PJ HOME Risk Factors for SubrecipientsTotal Grant Amount Staff Turnover in Key PositionsHOME Findings in AuditCustomer ComplaintsPerformance IssuesDesk Monitoring Reveals Errors/Missed DeadlinesLate Reports/InvoicesContract Non-Compliance ©2017 NCDA 27

Determining RiskDevelop Risk Assessment FormAssign A Point Value To Each Sub-factor “High”, “Moderate”, Or “Low” RiskTotal PointsPlan Your Monitoring Accordingly 28©2017 NCDA

HUD Monitoring GuideUse to Prepare for HUD Monitoring VisitUse to Monitor Subrecipients, Contractors, CHDOs, HOME Activities See online access to HUD’s monitoring guide:https://www.hudexchange.info/resource/290/hud-community-planning-and-development-monitoring-handbook-65092-rev6/ ©2017 NCDA29

HUD Monitoring Guide7-2 -  Overall Management Systems 7-3 & 7-4 - Review of Homeowner Rehabilitation Projects/Programs7-5 & 7-6 - Review of Homebuyer Projects/Programs7-7 & 7-8 - Review of Rental Projects/Programs7-9 & 7-10 - Review of TBRA Projects/Programs7-11 & 7-12- Review of CHDO Qualifications and Activities/Procedures ©2017 NCDA 30

HUD Monitoring Guide7-13 - Review of Match Requirements 7-14 - Review of Beneficiary Written Agreements7-15 - Review of Contractor Written Agreements7-16 - Review of Owner, Developer, Sponsor Written Agreements7-18 - Review of Subrecipient Written Agreements7-19 - Review of Subrecipient Management ©2017 NCDA 31

3) HOME Program Agreements ©2017 NCDA32

HOME WRITTEN AGREEMENTSSee §92.504(a)  Responsibilities. PJ is responsible for managing day-to-day operations of its HOME program, ensuring that HOME funds are used in accordance with all program requirements and written agreements, and taking appropriate action when performance problems arise. ©2017 NCDA33

HOME WRITTEN AGREEMENTSBefore disbursing any HOME funds to any entity, the PJ must enter into a written agreement with that entity The contents of the agreement may vary depending upon the role the entity is asked to assume or the type of project undertaken©2017 NCDA 34

SUBRECIPIENT AGREEMENTSA subrecipient is a public agency or nonprofit organization selected by the PJ to administer all or some of the PJ's HOME programs to produce affordable housing, provide down payment assistance, or TBRA ©2017 NCDA 35

SUBRECIPIENT AGREEMENTSThe agreement between the PJ and the subrecipient must include: Use of the HOME fundsProgram incomeUniform administrative requirements at 92.505Other program requirements per federal lawAffirmative marketing at 92.351 Period of agreement, budget, timelineContinued on next slide ©2017 NCDA 36

SUBRECIPIENT AGREEMENTS The agreement between the PJ and the subrecipient must also include:Requests for disbursement of funds for eligible costs onlyReversion of assets Maintenance of records and required reportsEnforcement of the agreement/remedies for breach of agreementWritten agreements with subs of subsDescription of fees not allowed by HOME ©2017 NCDA 37

OWNER, SPONSOR, DEVELOPER AGREEMENTThe written agreement committing the HOME funds to the project must meet the requirements of “commit to a specific local project” in the definition of “commitment” in §92.2 and contain the following: Use of HOME FundsAffordabilityProject RequirementsProperty Standards Other Program Requirements such as Affirmative Marketing, non-discrimination, anti-displacementRecords and Reports©2017 NCDA 38

OWNER, SPONSOR, DEVELOPER AGREEMENTEnforcement of Affordable Housing elements of the Agreement Request for disbursement of funds for eligible costs onlyDuration of agreementCHDO provisions for CHDOsProhibiting ineligible fees charged to renters and owners Signed and dated ©2017 NCDA 39

CONTRACTOR AGREEMENT The PJ selects a contractor through applicable procurement procedures and requirements. The contractor provides goods or services in accordance with a written agreement (the contract)of HOME funds with a minimum of: Use of HOME FundsProgram RequirementsDuration of AgreementSee 92.504 for additional requirements ©2017 NCDA 40

Homebuyer, Homeowner, or TBRA Tenant Agreement When a PJ provides assistance to a homebuyer, homeowner or tenant the written agreement may take many forms depending upon the nature of assistance. At a minimum: (i) For homebuyers, value of the property, principal residence, lease-purchase, if applicable, and resale or recapture provisions. Amount of HOME funds, form of assistance, e.g., grant, amortizing loan, deferred payment loan, the use of the funds (e.g., down-payment, closing costs, rehabilitation) and the time by which the housing must be acquired. (ii) For homeowners, specify the amount and form of HOME assistance, rehabilitation work to be undertaken, date for completion, and property standards to be met. (iii) For tenants, the rental assistance contract or the security deposit contract must conform to §§92.209 and 92.253. ©2017 NCDA 41

4) Subsidy Layering ©2017 NCDA42

General Project RequirementsUnderwriting and Subsidy Layering Analysis If other funds in HOME Projects, PJ must:Adopt Subsidy Layering Guidelines; andAnalysis of proposed HOME project, using SL Guidelines must: Determine that the PJ is not putting more HOME funds into the project “than is necessary to provide affordable housing.” Analyze reasonableness of expenses, fees and return on investment in the project budget, and an examination of financial agreements such as loan and partnership documents.The project files must contain the subsidy layering and underwriting analysis for the project. 43 ©2017 NCDA

Underwriting and Subsidy Layering [§92.250(b)] PJ must adopt underwriting guidelines:That it must not invest more HOME funds, alone or with other assistance: than necessary to provide quality affordable housing that is financially viable for a reasonable period of time (at a minimum, the period of affordability). that provides return that exceeds PJ’s established standards for the size, type, and complexity of the project. For determining reasonable level of profit or return on owner/developer’s investment in project and evaluate projects before committing HOME funds. PJ must develop, implement & certify that it has followed written policies & procedures which address Project Underwriting, Developer Capacity, & Market Need 44 ©2017 NCDA

Underwriting and Subsidy Layering [§92.250(b)] PJ’s Guidelines must require: Examination of sources and uses for each project and determination of whether the costs are reasonable; Assessment, at minimum, of: Market conditions of the neighborhood where project will be located Housing development experience and financial capacity of developerFirm financial commitments for the project. PJs will be required certify that these assessments have been completed at the time of project funding in IDIS 45 ©2017 NCDA

Underwriting and Subsidy Layering [§92.250(b)] Homebuyer Program Policies (§92.254(f)(1)) – PJ must have underwriting standards that evaluate:Housing debt and overall debt of the family, Appropriateness of the amount of assistance, Monthly expenses of the family, Assets available to acquire the housing, and Financial resources to sustain homeownership;Underwriting requirement does not apply to: Homeowner rehab (unless HOME funds are provided as amortizing loan) 46 ©2017 NCDA

Subsidy Layering Forms and Examples ©2017 NCDA47 See May 25th HOME Webinar on Underwriting for Homebuyer ActivitiesHUD’s webinar is provided here: https://www.hudexchange.info/trainings/courses/single-family-underwriting-home-downpayment-assistance-underwriting-template-webinar/1969/ As of 6/6/17, HUD was still finalizing the underwriting template and will post the document at the link above when complete

5) Financial Management and Grant Based Accounting ©2017 NCDA48

Grant Based Accounting Changes For each program year, the following tracked:2 Year Commitment DeadlineWaived by Congress in FY17 Appropriations PackageCHDO 2 Year commitment deadline remains 8 Year Expenditure RequirementCHDO 15% Set-aside Requirement ©2017 NCDA 49

Grant Based Accounting Changes 50 PJ Example FY2015 Grant Based Accounting Deadlines HUD Notification Date - FY2015 HOME Grant 2 Year - Commitment Deadline 2 Year - CHDO Commitment Deadline (at least 15%) 8 Year Expenditure Deadline 8/15/2015 8/31/2017 8/31/2017 9/30/2023 $1,514,118 $1,514,118 $227,118 $1,514,118 This example assumes a HUD grant agreement date of 8/15/2015 using actual 2015 HOME allocations. ©2017 NCDA

Tips and ResourcesGBA is significantly different from FIFO See Grant Based Accounting Matrix Of Key Changes By Program https://www.hudexchange.info/resources/documents/Grant-Based-Accounting-Matrix-of-Key-Changes-by-Program.pdfFunding HOME activities for each grant program year should be consistent with the PJ’s Annual Action PlanWhen committing or drawing funds in IDIS, verify the correct HOME grant year Use the updated IDIS manual to answer most of your questions about GBA and HOME:www.hudexchange.info/onecpd/assets/file/HOME-IDIS-training-Manual-for-PJs.pdf ©2017 NCDA 51

Financial ManagementCash Disbursement DeadlineNot to be confused with Expenditure DeadlineMaximum limit of 15 days between: Receipt of funds in Local HOME Trust Fund Account and Disbursement (expenditure) of those funds. Funds not disbursed within 15 days must be returned to Treasury HOME Trust Fund Account InterestEarned on HOME funds disbursed within 15 days is HOME Program IncomeEarned after 15 days must be sent to Treasury 52 ©2017 NCDA

Financial Management Uniform Administrative Requirements2 CFR Part 200 (replaces – 24 CFR Part 84 & 85)For awards made after 25 December 2014Big Picture Of Financial Mgmt – Grantees & Subrecipients ProcurementEquipment, SuppliesReporting Closeout Procedures 53 ©2017 NCDA

Financial Management Uniform Administrative Requirements2 CFR Part 200 (also replaces - OMB Circulars A-87 (PJs) & A-122 (Subrecipients) – see HUD SD-2015-01)Defines eligible costs and how costs charged Apply to salaries, admin. costs, travel, & purchase and lease of real property 54 ©2017 NCDA

Financial Management Uniform Administrative Requirements2 CFR Part 200 – Cost Principles Examples:§200.423   Alcoholic beverages.Costs of alcoholic beverages are unallowable.§200.438   Entertainment costs. Costs of entertainment, including amusement, diversion, and social activities and any associated costs are unallowable, except where specific costs that might otherwise be considered entertainment have a programmatic purpose and are authorized either in the approved budget for the Federal award or with prior written approval of the Federal awarding agency. 55 ©2017 NCDA

Financial ManagementAudits2 CFR Part 200 (also replaces - OMB A-133)Single AuditCovers federal costs and all financial statementsPJs and subrecipients that spend $750,000 (up from $500,000) or more Less than $750k audit not required but financial statements must be available 56 ©2017 NCDA

HOME Local Fund TypesProgram Income (PI) Funds received by the PJ, which were generated from the use of HOME or HOME matchProgram Income for Administration (PA)10% of PI set aside for administrative expensesRepayments to local account (IU)Ineligible project-related disbursementsCreate receipt only if directed by HUD field officeRecaptured Funds (HP)Funds received by the PJ as part of a homebuyer recapture provision 57 ©2017 NCDA

Program Income I Gross income received by recipient or subrecipient directly generated from use of HOME fundsPI important additional ongoing source of funding Use must meet all HOME requirements (becomes HOME funds) PJ must track receipt and expenditure of program incomeIncreases amount that can be spent under administrative cap (i.e. ten percent of HOME grant plus program income). 58 ©2017 NCDA

Program Income II Examples…proceeds from:Sale or lease of real property improved with HOMEGross rent from PJ’s HA real property or personal property (after deducting costs to generate income) Rent from non-PJ HA property is not PIPrincipal and interest on HOME loans sale of loans made with HOME funds or matching contributions Interest earned on program income 59 ©2017 NCDA

Program Income III Excludes… CHDO ProceedsRecapture of Homebuyer loans [HP]Repayments of HOME funds (e.g., for ineligible activities) [IU] Proceeds from fundraising activities carried out by subrecipientsNew - gross income from the use, rental, or sale of real property received by the project owner, developer, or sponsorUnless the funds are paid by the project owner, developer, or sponsor to the PJ, or subrecipient. 60 ©2017 NCDA

Program Income IVSee new guidance on HOME Program Income Beginning w/2017 annual action plan: –Must include local account funds received during the program year in the following year’s annual action plan.Applies to all funds in the local account, including:Program income (PI) Recaptured funds (HP)Repayments to the local account (IU) 61 ©2017 NCDA

Program Income VPJ may allow subrecipients to use PI for affordable housing or require them to return it to PJMust be spelled out in agreementMust track and report whether used or returned to PJSubrecipient retained PI does not increase admin. cap 62 ©2017 NCDA

General PI Management PJs have to estimate and plan for PI and HP in the Annual Action Plan for the following year.PJs have to track and receipt PI & HP in IDIS. PJs no longer have to disburse PI & HP before drawing additional funds from the Treasury account (See HUD Webinar on HOME Grant-Specific Commitment Interim Rule) ©2017 NCDA 63

Recaptured Funds [HP]Repayments by homebuyer assisted by HOME funds with recapture provisionDeposited in local HOME account (or subrecipient account) and are Treated like Program Income in all ways (except recorded in IDIS as [HP]) Except that they can’t be used to increase admin. cap 64 ©2017 NCDA

Repayments of HOME Funds [IU]PJ must repay because funds were invested :In a project terminated before completion, or In housing which failed to comply with HOME requirements.Deposited in either (at HUD’s discretion):Local HOME account or Treated like Program Income in all ways (except recorded in IDIS as [IU]) And can’t be used to increase administration capPJ’s HOME Treasury Account Special HUD procedure adds back into PJ’s grant in IDIS 65 ©2017 NCDA

Financial Management ExerciseRun the HOME Deadline Compliance Status Reports - Grant Specific Sort by PJ, find your PJ and record the shortfall amounts and deadlines for HOME commitments and disbursementsDiscuss strategies with your group for meeting future deadlines©2017 NCDA 66

Financial Management Exercise ©2017 NCDA67

6) Matching Contribution Requirement 68 ©2017 NCDA

Matching Contribution RequirementOverview 25% Match RequiredTo encourage partnership between Federal Government and PJsContributions to HOME- and non-HOME-Assisted Housing allowedNon-HOME housing must meet HOME requirements 69©2017 NCDA

Match RequirementsOverview Timing of Match is importantMatch requirement not tied to individual projects but to total project funds expended during the Federal Fiscal YearMatch obligation incurred w/ every HOME project drawdown Match credit can be added at any time during yearMust have sufficient match credit at end of Federal Fiscal Year to cover match obligationsExcess Match carries overMay be used for subsequent match obligation 70 ©2017 NCDA

Match Requirements Part II Fiscal Year Summary (From HUD 40107-A, HOME Match Report form) 1. Excess match from prior federal fiscal year $ 25,000.00 2. Match contributed during current federal fiscal year (see Part III.9.) $ 75,000.00 3. Total match available for current federal fiscal year (line 1 + line 2) $100,000 4. Match liability for current federal fiscal year (Based on HOME grant expenditure of $330,000) $ 82,500 5. Excess match carried over to next federal fiscal year (line 3 minus line 4) $ 17,500 71 ©2017 NCDA

Match RequirementsHOME Funds Required to be Matched Grant funds (not PI) expended for HOME projects, ownership programs, and TBRAHOME funds not required to be matchedAdministrative and planning costs; CHDO operating expenses; CHDO capacity building; and Project specific assistance to CHDOs, but only when participating jurisdiction waives repayment. 72 ©2017 NCDA

Match RequirementsRecognition of Matching Contribution Match Contributions to HOME-assisted housing and tenants - ITenants – Non-federal contributions to HA tenants. E.g., State-funded tenant-based rental assistance program 73 ©2017 NCDA

Match RequirementsRecognition of Matching Contribution Match Contributions to HOME-assisted housing and tenants – IIHOME-Assisted Units – Non-federal contributions made to HOME-assisted units.Partially HOME-Assisted Projects: >50 percent of HA units in a project Contribution to non-assisted units counts<50 percent of HA units Contribution only to HOME-assisted units and HOME-eligible units counts 74 ©2017 NCDA

Match RequirementsRecognition of Matching Contribution Match Contributions to HOME-assisted housing and tenants – IIIMixed-Use Projects If at least 51 percent of floor space is residential and at least 50% of residential dwelling units are HA: Contribution to commercial space and non-assisted units counts 75 ©2017 NCDA

Match RequirementsRecognition of Matching Contribution Match Contributions to non-HOME-assisted housing and tenants – INon-HOME TBRAMeets HOME TBRA requirementsDocument how it meets HOME requirementsNon-HA Project Units Meets HOME rental or ownership requirements; andAgreement w/owner that imposes HOME requirements 76 ©2017 NCDA

Match RequirementsRecognition of Matching Contribution Match Contributions to non-HOME-assisted housing and tenants – IINon-HA Units (continued)PJ monitors housing for HOME requirementsMixed-income and mixed-use unit count only for contributions to affordable units 77 ©2017 NCDA

Match RequirementsRecognition of Matching Contribution Match Contributions to non-HOME-assisted housing and tenants – IIIMatch for non-HA units may be in any eligible form of matching contribution (next slide) except: Forbearance of fees;On-site and off-site infrastructure;Direct cost of supportive services; and Direct costs of homebuyer counseling services 78 ©2017 NCDA

Match RequirementsForms of Matching Contribution Cash ContributionsForbearance of FeesDonated Real PropertyOn- and off-site infrastructureAffordable Housing Bond ProceedsDonated Site Preparation and Construction Materials and Equipment Donated or Voluntary Labor or ServicesSweat equityDirect Cost of Support and Homebuyer Counseling Services 79 ©2017 NCDA

Match RequirementsForms of Matching Contribution Cash contributions - IContributed permanently to the development of a HOME project (or to non-HA affordable housing), only (New):In the amount by which the investment reduced the sales price to the homebuyer, or If development costs exceed the fair market value of the housing, in an amount by which the contribution enabled the housing to be sold for less than its development cost. 80 ©2017 NCDA

Match RequirementsForms of Matching Contribution Cash contributions - IILoans if all repayments (including interest) are deposited in local HOME account and only if funds are loaned to HA project;Cash contribution to a nonprofit organization for use in HA project;Grant equivalent of a below-market interest rate loan; and/or Proceeds of bonds (not repaid with revenue from affordable housing project ) that are loaned to a HA or other qualified affordable housing project. 81 ©2017 NCDA

Match RequirementsForms of Matching Contribution Forbearance of Fees State and local taxes, charges or fees (by public or private entities) are waived, foregone, or deferredAllowed only when they are “normally and customarily imposed or charged by public or private entities” 82 ©2017 NCDA

Match RequirementsForms of Matching Contribution Donated Real PropertyValue, before HOME assistance provided and minus any debt burden, lien, or other encumbrance, of donated land or other real propertyDonation by PJ, non-federal public entities, private entities, or individualsFederal-assisted acquisition allowed if purchase price substantially less than appraised value. Contribution allowed is difference between purchase price and appraised value. 83 ©2017 NCDA

Match RequirementsForms of Matching Contribution On-site and off-site infrastructure (supporting HA housing)Provided they are not paid from federal sources (e.g., CDBG) Infrastructure improvements must have been completed no more than 12 months before HOME funds are committed to project. 84 ©2017 NCDA

Match RequirementsForms of Matching Contribution Affordable housing project bond proceeds Issued by a state or local government or agency with following limitations:50% of proceeds from a multi-family bond issue count as match;25% of proceeds from a single-family bond issue count as match;Total bond funds counted cannot exceed 25% of a PJ’s total annual match Contribution. Excess above 25% can be carried over 85 ©2017 NCDA

Match RequirementsForms of Matching Contribution Donated site-preparation and construction materials and equipmentNot acquired with federal funds “Reasonable” value of materials may be counted as match“Reasonable” rental value of such equipment 86 ©2017 NCDA

Match RequirementsForms of Matching Contribution Donated or voluntary labor or professional servicesDonated to affordable housing. HUD sets a rate for unskilled labor. Rate for professional services is that customarily charged by person providing services. 87 ©2017 NCDA

Match RequirementsForms of Matching Contribution Sweat EquityIf part of PJ’s established homeownership program, Rate set by HUD for unskilled labor 88©2017 NCDA

Match RequirementsForms of Matching Contribution Direct cost of supportive servicesProvided to families residing in HOME-assisted units during period of affordability or during term of TBRANecessary to facilitate independent living or are required as part of a self-sufficiency program, supportive services 89 ©2017 NCDA

Match RequirementsForms of Matching Contribution Direct cost of homebuyer counseling servicesProvided to homebuyers who receive HOME-assistance in their purchase of a home Counseling services (including post-purchase counseling during affordability period) 90 ©2017 NCDA

Match RequirementsIneligible Forms of Match Contributions made with or derived from federal resources or funds (including CDBG). Interest rate subsidy attributable to federal tax-exemption on financing Value attributable to federal tax credits;Owner equity or investment in a project; and Cash or other forms of contributions from Applicants for or recipients of HOME assistance or contracts, or Investors who own, are working on, or are proposing to apply for, assistance for a HOME-assisted project. 91 ©2017 NCDA

Match RequirementsWhen credit is given - I Cash contribution – when expended;Grant equivalent of a below-market interest rate loan – at loan closing;Waived taxes, fees, and charges – at time state or local government or other entity notifies project owner; Value of donated land or other real property - at time ownership of property is transferred to HOME project (or affordable housing) owner;Infrastructure Improvements - at time funds are expended or at HOME commitment, if funds were expended prior to that; Donated material - at time it is used for affordable housing; 92 ©2017 NCDA

Match RequirementsWhen credit is given – II Donated use of site preparation or construction equipment - at time equipment is used for affordable housing;Donated or voluntary labor or professional services - at time work is performed;Bond proceeds - at time of loan closing. Social services provided to residents of HOME-assisted units - at time that social services are provided during period of affordability; and Homebuyer counseling services - at time that homebuyer purchases unit or for post-purchase counseling services, at time counseling services are provided. 93 ©2017 NCDA

Match RequirementsMatch Credit when more than one PJ is involved: HOME-assisted project PJ making match credit may keep it or allow other PJ to claim credit.Non-HOME-assisted projectPJ making match credit receives credit.Match Credit for a consortium is calculated based on the consortium as a whole 94 ©2017 NCDA

Match ExampleMiddle City has three sources of $75,000 total match to HA projects: A donation of $5,000 in cash by a bank; Mid City waived its building permit fee (normally $5,000) and land was donated by a generous abutter ( property was appraised at $100,000 and property was sold for $40,000=$60,000 donation); and Mid City provided infrastructure improvements (worth $5,000 in labor and materials) to site with a Public Works crew. 95 ©2017 NCDA

Match Example Part III Match Contribution for the Federal Fiscal Year (From HUD 40107-A, HOME Match Report form) Project No or other ID Date of Contri-bution Cash Foregone Taxes, Fees, Charges Appraised Land/Real Property Required Infrastruc-ture Site Prepara-tion Bond Financing Total Match #16-01 9/30/09 $5,000 $5,000 #16-21 12/25/09 $5,000 $60,000 $65,000 #16-23 4/1/10 $5,000 $5,000 Total $75,000 96 ©2017 NCDA

Match RequirementsReduction of Matching Contribution Requirement PJs that are in fiscal distress or that are in a federally-declared disaster area may qualifyFiscal distress – Two criteria for determining fiscal distress: Poverty rate and Per capita income. One criterion 50% match contribution reduction, good for one year. Both criteria, 100% match contribution reduction, good for two years. 97 ©2017 NCDA

Match RequirementsReduction of Matching Contribution Requirement Disaster areasIf PJ is located in a federally-declared disaster area (under Stafford Act), it may request a reduction of its match contribution requirement. PJ’s HUD field office may grant up to 100% reduction for two years, and may extend it for an additional year at request of PJ. 98 ©2017 NCDA

Match ExerciseDiscuss match sources for your PJ and share ideas with group membersDoes your PJ have excess match? What are ways to find eligible HOME match when match falls behind or is at risk of being short?©2017 NCDA 99

7) Home vs cdbg comparison ©2017 NCDA 100

CDBG and HOME ComparisonSee Handy Resource Comparison Chart on the following page, which summarizes the differences to consider when determining whether to use CDBG or HOME for a specific activity or project ©2017 NCDA 101

102 Requirement CDBG (Project Based) HOME (Unit Based) 1. Income Limits 80% of AMI (“Moderate Income”) – Threshold for all CDBG housing [50% of AMI (“Low Income”)] Ownership: HOME AU 80% of AMI (“Low Inc.”) Rental: 1. HAUs: 80% of AMI; However : 2. 90% of PJ ’s units: 60% of AMI 3. Large projects: 20% of units at 50% of AMI (“Very Low Income”) 2. Funding Limits: CDBG (Project) and HOME (Assisted Units) 1. If more than 51% L/M occupied, no funding limits 2. If between 20% & 50% L/M occupancy and supporting new construction of non-elderly rental units, CDBG funding is pro-rated to L/M Occupancy. 3. Assistance for downpayment assistance can’t exceed 50% of the downpayment Apportioning funds based on HOME Funds/TDC = # of HA units to Total units (e.g. 10% of TDC requires at least 10% HOME Assisted [HA] units) Maximum per unit subsidy Minimum - $1000 per HA Unit 3. Eligible Activity Limits No New Construction (but acquisition & site improvements OK) No restrictions 4. Affordability Period None (Income eligible at occupancy) 5 – 20 Years 5. Restriction on Subsequent Funding No Can add for 1 year after completion but can’t exceed Max. per unit Subsidy No additional HOME funds during affordability period 6. Subsidy Layering, Underwriting, & Market Analysis No Yes (except DPA-only & owner-occupied Rehab.) 7. Rent Limits Grantee establishes & makes public “Affordable Rents” Standards 1. High HOME Rent (for 51 to 80% AMI units) 2. Low HOME Rent (for 50% and lower AMI Units 8. Property Standards None Yes 9. Other Requirements Cross-Cutting Federal Requirements (ERR, Labor, Lead Paint, etc.) 1. Rental: Fixed or Floating Units Determination 2. Ownership: Resale Requirements (Recapture funds or limited resale) 3. Cross-Cutting Federal Requirements ©2017 NCDA

Discuss Advanced HOME TrainingIn what specific areas of the HOME program do you or your staff need training?Training format options:Case StudiesBest PracticesHands-On Exercises Advanced Certification©2017 NCDA 103