HOME Investment Partnerships (HOME) Program

HOME Investment Partnerships (HOME) Program

FY2013 HOME General Purpose (GP) Program Summary and Application Guide

The Washington State Department of Commerce (“Department”) uses federal HOME Investment Partnership (HOME) Program resources from the U.S. Department of Housing and Urban Development to develop and preserve affordable housing statewide.

The FY2012 HOME GP Guidelines, Procedures and Application Guide works in conjunction with the following documents:

·  Request(s) for Proposals (RFP) issued by the Department

Application forms used for the Housing Trust Fund (HTF) General Application (available on the Department’s website at www.commerce.wa.gov)

Questions regarding this Handbook, other HOME GP program questions or requests for electronic or paper formats of the above documents should be referred to Michelle Campbell at (360) 725-3039 or .

TABLE OF CONTENTS

CHAPTER 1. OVERVIEW 5

1.1 Federal HOME Program 5

1.2 Eligible Applicants 5

1.3 Eligible Activities 5

1.4 Community Housing Development Organizations (CHDO’s) 5

1.5 Types of Awards 5

1.6 Beneficiary Income Limits 6

1.7 Funding Goals 6

1.8 Maximum Funding 6

1.9 The Department’s Role in the Program 7

1.10 The Applicants Role in the Program 7

1.11 Compliance with Federal and State Requirements 7

1.11.1 Accessibility Standards 7

1.11.2 Affirmative Marketing. 8

1.11.3 Audit Requirements. 8

1.11.4 Contracting and Procurement 8

1.11.5 Environmental Review 9

1.11.5.1 Purchase of Property after Environmental Review Process Completed 9

1.11.5.2 Applicant Uses a Predevelopment Loan to Purchase Property Prior to Application for HOME Funds 10

1.11.5.3 Applicant Purchases Property Prior to Application for HOME Funds 10

1.11.6 Equal Opportunity and Fair Housing 11

1.11.7 Flood Insurance. 11

1.11.8 Labor Requirements 11

1.11.9 Lead Safe Housing 12

1.11.9.1 Lead Hazard Evaluation 12

1.11.10 Minority and Women-Owned Business Outreach 13

1.11.11 Relocation 13

1.11.11.1 Displacement 14

1.11.11.2 Relocation Notice Requirements 15

1.11.11.3 Acquisition, Rehabilitation or Demolition of Real Property 17

1.11.12 Section 3 – 18

1.11.12.1 Section 3 - Overview 18

1.11.12.2 Section 3 - Applicability 19

1.11.12.3 Section 3 Reporting Instructions (Form HUD-60002) 21

1.11.12.4 Section 3 Obligations - HUD’s Suggestions 22

1.11.12.5 Section 3 Definitions 22

CHAPTER 2. PERMANENT,TRANSITIONAL and supportive RENTAL HOUSING 24

2.1 Eligible Activities 24

2.2 Eligible Beneficiaries 24

2.3 Eligible Ownership Interests (By The Owner) In The Property 24

2.4 Eligible Projects and Properties 24

2.5 Ineligible Properties 25

2.6 Acquisition of Renter-Occupied Land/Buildings 26

2.7 Required Property Standards 26

2.8 Eligible Expenses 26

2.8.1 General Contractors 27

2.9 Ineligible Expenses 27

2.10 Minimum and Maximum State Investments 28

2.11 Length of Commitment / Period of Affordability 28

2.12 HOME-Assisted Units 28

2.13 Rent and Occupancy Requirements 29

2.14 Initial Income and Rent Restrictions 29

2.15 Utility Allowances 29

2.16 Long-Term Compliance 29

2.16.1 Future Rents /Over-Income Tenants 30

2.16.2 Tenant Income Certification and Recertification Requirements 30

2.16.3 Floating HOME-Assisted Units 30

2.16.4 Lease Terms 30

2.16.5 Monitoring and Reporting 31

2.16.6 Match 32

2.17 Record Retention 32

2.18 Recipient Responsibilities 32

2.18.1 Adoption of Tenant Selection Policies and Criteria 32

2.18.2 Obtain Commitments for other Financing 33

2.19 Retainage 33

CHAPTER 3. APPLICATION 33

CHAPTER 4. HOME GP APPLICATION INSTRUCTIONS, FORMS AND REVIEW PROCEDURES 35

4.1 HOME GP Application Table of Contents and Checklist 35

4.2 HOME GP APPLICATION SUPPLEMENTAL QUESTIONS/FORMS 38

4.2.1 General Questions 38

4.2.2 Relocation Requirements 38

4.2.3 Calculating the minimum number of HOME assisted units 42

4.2.4 Calculating HOME match: (a 25% non-federal match is required) 43

4.2.5 Rents and numbers of HOME-assisted and HOME-like units: 45

CHAPTER 5. GLOSSARY 47

CHAPTER 6. APPENDICES 51

6.1 APPENDIX A – HOME Program Median Income Guidelines 52

6.2 APPENDIX B – HOME Program Rent Limits 52

6.3 APPENDIX C – HOME Program Maximum Per Unit 221(d)(3) Subsidy Limits 52

6.4 APPENDIX D – Sample Applicant Resolution 53

6.4 APPENDIX D – Sample Applicant Resolution 53

6.5 APPENDIX E – Lead-Safe Housing Rule (LSHR) – Applicability Form 54

6.6 APPENDIX F – Lead-Based Paint Hazard Disclosure Notice 55

6.7 APPENDIX G - Lead-Safe Housing Rule (LSHR) Checklist for General Compliance Documentation 56

6.8 APPENDIX H: Section 3 – Obligations Diagram, Forms 61

Washington State HOME GP Program: Guideline, Procedure and Application Handbook – Page 7

CHAPTER 1. OVERVIEW

The purpose of this Chapter is to provide potential applicants with guidance regarding the general requirements of the HOME General Purpose (GP) program.

1.1  Federal HOME Program

The HOME Investment Partnerships (HOME) Program was created by the National Affordable Housing Act of 1990 (NAHA). The statutory purpose of the HOME program is, " . .to increase the number of families served with decent, safe, sanitary, and affordable housing and expand the long-term supply of affordable housing . . .". Regulations governing the HOME Program are published at 24 CFR Part 92 (Final Rule, published September 16, 1996 and updated through December 22, 2004). Applicants are encouraged to become familiar with Federal regulations. The regulations and corresponding clarification notices can be found at HOME Program Regulations. Applicants should keep in mind that the HOME regulations allow the development of policies and procedures by the Participating Jurisdiction (PJ). The PJ for the HOME funds referenced in this document is the State of Washington. The Department of Commerce (Department) is the entity of the State responsible for the administration of the state HOME funds.

1.2  Eligible Applicants

Eligible applicants are limited to:

·  Units of local government, including cities, towns and counties;

·  Federally-recognized Indian tribes in Washington state;

·  Public Housing Authorities;

·  Non-profit community, neighborhood, regional, or state-wide organizations, including Community Housing Development Organizations (CHDO’s); all must be both state and federally certified as non-profits;

·  Regional support networks established under RCW Chapter 71.24

1.3  Eligible Activities

Eligible activities include the following:

·  Permanent rental housing

·  Transitional and/or supportive housing

1.4  Community Housing Development Organizations (CHDO’s)

CHDOs are non-profit organizations established pursuant to HOME regulations and certified by the Department. The Department is required to set aside 15% of its annual HOME allocation for projects owned, sponsored and/or developed by CHDOs. CHDO designation applications and information are available on request.

1.5  Types of Awards

Applicants who receive an award of HOME funds will receive such funds as either a deferred loan or recoverable grant or combination thereof. An award may include both a loan and a grant if, for example, the project serves multiple target populations. Award terms and conditions are determined on a project-by-project basis based upon: the proposed target population, acquisition and construction costs, affordability of the project overall, and other appropriate criteria.

·  Deferred Loans

Deferred loans will be structured based on the project’s operating pro forma. Deferred loans include all loans that have a principal amount plus any potential interest due and payable in full at a date certain. The following conditions will apply:

o  Interest, if any, will accrue during the deferral period, but will include a one-year non-accruing period.

o  Interest rates will vary from 0-3% interest, compounded quarterly.

o  Payments will be made quarterly.

o  All deferred loans will include at least a one-year deferral period with 0% interest with the balance amortized for no more than 39 years, except when otherwise approved by the Department.

o  The State’s interest will be secured by appropriate documents.

·  Recoverable Grants

Recoverable grants are funds awarded with no expectation of monetary return, unless the conditions of the grant are not met.

o  Recoverable grants may also be used for very low-income projects, with little to no rental income and large operating subsidies, including but not limited to special needs housing;

o  Funds are recoverable if there is a change of use, change of ownership, refinance, sale of property, or for non-compliance of contract terms.

o  The State’s interest will be secured by appropriate documents.

All awards are secured by a lien on the property. A Covenant Running with the Land is also recorded for all rental housing projects and remains in place throughout the required length of commitment regardless of the status of the loan or changes in ownership. Sample copies of the documents are available upon request.

NOTE: The Department does not charge loan fees for the award of HOME GP funds.

1.6  Beneficiary Income Limits

Households assisted with HOME GP funds shall have incomes that do not exceed 50% of the local median income. The funds are prioritized for award to projects serving households at or below 30% of the local median income.

1.7  Funding Goals

For FY2011 the Department’s funding goals, as more fully described in its 2011 Action Plan, include the:

1. Distribution of funds statewide
2. Prioritization of activities targeted to households with incomes at or below 30% of local median income
3. Targeting funds to projects that provide permanent, transitional, and/or supportive housing to people who are homeless or have special needs.

1.8  Maximum Funding

The amount of HOME GP funds that any one project may receive cannot exceed the HOME Program maximum per unit subsidy limits. During the review of prospective HOME GP applications, the Department will consult with applicants to ensure that each project funding package:

·  Addresses HOME requirements (i.e. 25% non-federal matching funds)

·  Addresses the need to leverage other public and private funds

·  Addresses the Department’s funding goals

·  Includes HOME GP funds in an amount appropriate to the scope of the proposed project and the needs and resources of the applicant

1.9  The Department’s Role in the Program

The Department will perform the following functions:

·  Design and administer the HOME GP program.

·  Establish guidelines and procedures, where applicable.

·  Make funding decisions.

·  Ensure recipients use funds in conformance with applicable State and Federal regulations, policies, and procedures.

·  Maintain proper records and ensure that recipients do the same.

·  Provide ongoing technical assistance to recipients.

·  Monitor projects for long-term compliance.

·  Prepare and submit reports and plans, as necessary, to HUD.

1.10  The Applicants Role in the Program

Applicants who become recipients of HOME GP funds must perform the following functions:

·  Design projects and programs that meet local, affordable housing needs.

·  Administer projects and programs in compliance with State and Federal regulations, policies and procedures, financial management policies and the written agreement with the Department.

·  Maintain proper records.

·  Comply with the terms of the contact entered into with the Department.

·  Request technical assistance from the Department when needed.

·  Maintain long-term compliance for length of commitment.

1.11  Compliance with Federal and State Requirements

HOME GP funds are subject to a variety of statutes, regulations, policies and procedures; many that must be considered prior to applying as the project or program cost, timeline or other key components may be impacted. The most notable of these requirements are:

1.11.1  Accessibility Standards

Recipients must adhere to the accessibility standards of the Americans with Disabilities Act, The Fair Housing Act and the Rehabilitation Act (including Section 504), as revised.

o  Design requirements include those noted in the Fair Housing Act and Section 504.

§  Fair Housing Act contains design requirements applicable to elevator-assisted multi-family projects of 4 or more units and all ground-floor units in other buildings with 4 or more units.

§  Section 504 contains design requirements applicable to federally-funded multi-family projects with 5 or more units:

·  New Construction – 5 percent of the units in the project (but not less than one) must be accessible to individuals with mobility impairments and an additional 2 percent of the units (but not less than one) must be accessible to individuals with hearing or visual impairments.

·  Substantial Rehabilitation – the new construction standards noted above apply to rehabilitation projects of 15 or more units, for which the rehabilitation costs will be 75 percent or more of the replacement costs.

·  NOTE: When rehabilitation less extensive than substantial rehabilitation occurs, alterations must make the unit accessible to and usable by individuals with handicaps to the maximum extent feasible, until 5 percent of the units are accessible to persons with mobility impairments. Alterations to common spaces must make the project accessible.

·  Accessible units must be distributed throughout the project and must be available in a sufficient range of sizes and amenities so as not to limit choices.

More information can be found at HUD - Fair Housing Laws

1.11.2  Affirmative Marketing.

Owners of assisted rental housing or homebuyer developments containing 5 or more HOME-assisted units must take actions to provide information and otherwise attract eligible persons from all racial, ethnic, and gender groups in the housing market area to the available housing. Affirmative marketing procedures are included in the state Consolidated Plan and annual Action Plans.

Affirmative marketing activities, at a minimum, shall include:

·  Insuring that advertised vacant units include the Equal Housing Opportunity logo or statement.

·  Posting the HUD Fair Housing poster in common area(s) of housing assisted with HOME funds.

·  Soliciting applications for vacant units from persons in the housing market who are least likely to apply for the HOME-assisted housing without the benefit of special outreach efforts.

·  Maintaining file records containing all marketing efforts (e.g., newspaper advertisements, file memorandums documenting phone inquiries, copies of inquiry letters and related responses, etc.) These records shall be made available to the Department staff for inspection during normal working hours.

·  Maintaining listings of all tenants residing in each unit at the time of application submittal through the end of the HOME compliance period.

More general information about affirmative marketing can be found at: Affirmative Marketing

1.11.3  Audit Requirements.

Audits are required of all recipients according to State and/or Federal guidelines, whichever applies. More information can be found in OMB Circulars A-110 and A-133. More information can be found at: OMB - Audit Requirements

1.11.4  Contracting and Procurement

The HOME Program is subject to certain federal procurement rules. In addition, PJ’s must take measures to avoid hiring debarred or suspended contractors or subrecipients and conflict-of-interest situations. Each is briefly discussed below: