January 1, 2015

Executive Director

Affiliate Name

Via email

Re: SHOP Site Visit on March 1, 2015

Dear______:

Community Frameworks is scheduling a routine on-site monitoring visit with your organization. There

are a number of reasons for doing Site Visits. The first is to assure that Affiliates are in compliance with both HUD and Community Frameworks (CF) SHOP requirements. But equally important is learning how the lives of the families served are being changed, how well your sweat equity homeownershipprogram is working for you, and how we might improve our SHOP processes and TA services to Affiliates.

Our visit will involve examining the administration of your sweat equity housing program, including your financial and homebuyer records,labor contributions and related value to the homebuyer, verifying your use of SHOP dollars, confirming how required policies are put into practice, and visiting one or more build sites.

Depending upon the size of your organization and the number of SHOP years being reviewed theSite Visit averages about four to five hours. The more prepared you are the quicker the process goes. We may be able to schedule additional time for technical assistance outside the context of the usual compliance audit, so please do consider your program’s needs and let us know in advance of our visit how we could best make use of this opportunity to be face-to-face with your staff.

Once the Site Visit is completed you should receive your Site Visit Report within three weeks of our visit. The report may contain findings that would require corrective action within 60 days of your receipt of the report, as well as our recommendation for further technical assistance we believe might help strengthen your sweat equity program.

Based upon our records we believe the project(s)to be reviewed and the corresponding SHOP year(s)are:

INSERT PROJECT NAME(S) AND SHOP YEAR(S)

Attached is the list of items we need to review and discuss. I am looking forward to our visit. If you have any questions about preparations, please contact me at ______.

Sincerely,

Insert Reviewer’s Name

Insert Reviewer’s Title

The ideal SHOP Site Visit is one where program, project, and finance staff meet with us as a group to go over the items listed below. We are sensitive to time needs and as a group we should determine where to start and to end so as to facilitate the needs of staff that cannot remain for the whole discussion. Generally we also need time to visit the neighborhood(s)wherethe pertinent SHOP funds were invested.

Having all items listed below readily available to us at the time of the interview will expedite the review process.

  1. Please have Signed Release forms available(attached)
  2. By the Executive Director allowing CF permission to use photos taken of your staff andthe project as well as quotes or testimonials by staff members.
  3. By at least twoHomebuyer Representativesfor each of the applicable projects allowing CF permission to conduct an interview with themduring the Site Visit or afterward by phone, and to share their photos and quotes or testimonials with the general public.
  1. We want to review the financial and legal documentation pertaining to land acquisition and/orinfrastructuredevelopment transactions applicable to each project and SHOP yearlisted above. Please also have the following available:
  2. HUD Settlement Statement for each land acquisition
  3. Property acquisition and/or land development budget for the project(s) as you provided in the SHOP Project Application
  4. Property acquisition and/or land development actual costs for each project
  5. We will want to have a discussion about how well this activity went
  1. We will want to review record keeping applicable to the sale of units for SHOP years and projects that are the subject of this review. Generally we will randomly pick two homebuyer files and related documentation from each project for each SHOP year. Please provide in advance of our visit the list of homebuyers subject to this review. We will inform you of the two selected so you can be prepared for us to specifically review:
  2. Income verification documenting buyerswere at or below 80% AMI
  3. HUD Settlement Statements for boththe buyer and seller (yours)
  4. Purchase and Sale Agreement
  5. Labor Agreement
  6. Executed Notes and Deeds of Trust if SHOP was used as gap financing
  7. Certificate of Occupancy
  8. The unit Cost Breakdownbudget as you provided in the Project Application, and as amended since if applicable
  9. The unit Cost Breakdown budget actual
  10. Appraisal
  11. Floor plan

We will want to discuss how the first mortgage and subsequent mortgage amounts, if any, were determined and how this matches up with your Subsidy Policy. We will also want to review how the value of the sweat equity labor contribution is determined and how that benefit aligns with the Purchase and Sale Agreement and Labor Agreement.

  1. Affiliates are required to track homebuyer and volunteer labor hours and task contributions. We will want to review the following:
  2. How homebuyer and volunteer labor hours were tracked, who approved those hours, and confirmation that the minimum requirements were met.
  3. How homebuyer and volunteer tasks were tracked and who approved that work

We will want to have some discussion around homebuyer and volunteer labor performance in general.

  1. We will review current financial data(Assets and Liabilities) and supporting documentationverifyingnew and revolved SHOP dollar amountsare represented in the following categories. This will not be reviewed at Site Visit if the Affiliate submitted this satisfactorily within the past three months via either a Re-Certification or Project Application:
  2. Landby project name and dollar amount
  3. Mortgage Receivablesby borrowers name and total due
  4. Cash in the bankby dollar amount, and evidence of a dedicated account
  5. Interest earned (bank and mortgages)by amount earned in each activity
  6. Long-term Liabilities and/or Restricted Net Income
  1. We need to verify you have followed procedures to affirmatively market your sweat equity housing program in accordance with yourproject-specific Affirmative Fair Housing Marketing Plan (Form HUD 935.2B), and that you have used the Equal Housing Opportunity logo on promotional materials.
  1. We need to verify that applicants with disabilities including hearing impaired have full access to your sweat equity housing program(s) from first contact through occupancy, and that each is aware that accommodations for home specifications and materials as well as labor contribution are available. Please share with us your approach that supports full access for those with disabilities.
  1. We will want to review your practices related to the following written policies:
  2. Policy (non-employee) against discrimination based on a protected class.
  3. Policy (employee) that assures employment activities, including job announcements, recruitment, interviews, hiring, work assignments, and promotions, do not discriminate on the basis of a protected class.
  4. Policy on providing access to program benefits and information to Limited English Proficiency (LEP) through translation and interpretive services
  5. Policy regarding homebuyer financial contributions (Homebuyers may not make up-front financial contributions toward a unit other than cash contributed for down payment and or closing costs at the time of acquisition)
  1. Your loan agreement requires that any and all press releases to do with this project(s) include reference to HUD and Community Frameworks. Please provide a copy of the press release(s). Additionally any copy of news coverage you can provide would be great.
  1. We will want to discuss and clear up any outstanding Site Visit Report, Re-Certification, or Project Application issues.
  1. Each of the following topics will be addressed:
  2. Eligible uses of new SHOP funds
  3. Eligible uses of Revolved SHOP funds
  4. Include when SHOP is considered to be revolved
  5. Application process required to allow SHOP Re-Use
  6. Loan to Grant Conversion – criteria, cost, benefits, logistics, and subsequent characteristics/financial reporting of SHOP funds
  7. Record keeping for three years after SHOP closeout and final disposition
  8. Accessing the Affiliate Connection Portal on the Community Frameworks website
  9. Your sweat equity program’s biggest struggles over the last year that might include lack of families, turnover, learning curve, community, funders, cost overruns, etc.
  10. Any pending technical assistance needs to be addressed
  11. Review of other services available through Community Frameworks

(e.g. Development Services, Next Step Plus, Elder Cottage)

  1. Site Visit Report – next steps
  1. We will want to verify evidence that homebuyers have been provided guidance on the proper use and maintenance of the energy and water conservation features, appliances, and products that have been installed in their units (required beginning SHOP 12).
  1. We will want to verify evidence that you have followed your policy and the HUD/EPA rules for Lead-Based Paint assessment and lead safe work practices for rehabilitated unitsthat were built before 1978, if applicable to the project under review.
  1. A visual inspection of the build site(s) is also on the agenda at which time we will review the following:
  2. Quality of construction
  3. The interior of at least two homes (where possible)
  4. Curb appeal – exterior design and landscaping
  5. Accommodation: Universal, Accessible, Visitable
  6. Energy Star Certification for new constructionand gut rehabs (required beginning SHOP 08) – verified online by CF at occupancy
  7. Energy Star replacement products installed in minor rehabs (required beginning SHOP 08) – verified at Site Visit visually, or via invoices and product packaging
  8. Evidence of exceeding minimum Energy Star standards (if applicable)
  9. Evidence of installation of WaterSense products, i.e.toilets, bathroom faucets, and showerheads (required beginning SHOP 10for new construction and as replacement products in rehabs) – verified at Site Visit visually, or via invoices with make and model numbers, or product packaging/spec sheets
  10. Green Building Certification; Other Energy Efficiency and Green components and approaches
  11. Other innovative practices in sweat equity housing development
  12. Signage with theEqual Housing Opportunity logo
  13. Signage with HUDSHOP and Community Frameworkslisted if other project sponsors or financers are listed (HUD logo may no longer be used, but okay to use CF logo)

Rev 3.2.15