Multifamily Housing Program 2010 -2011 Funding Round 1

Multifamily Housing Program 2010 -2011 Funding Round 1 C-6 California Department of Housing and Community Development 1

Multifamily Housing Program (MHP) Proposition 1 C Summary n $1. 5 billion allocation for affordable housing approved in the 11/7/06 General Election n Bond funds included approximately: ¨ MHP General $345 million ¨ Supportive Housing $195 million ¨ Homeless Youth $50 million 2

MHP/HY/SH NOFA – June 14, 2011 n Funding Available ¨ $80 million (MHP General) ¨ $12 million (Homeless Youth) ¨ $65 million (Supportive Housing) n $10 million maximum loan amount per project ¨ Function of unit size, location and affordability level 3

MHP Program Changes Carried Over From 1 C-5 n AB 927: Senior unit set-aside (MHP NOFA Section S) n AB 1460: Priority points for projects which utilize sustainable building methods (MHP & SH NOFA Section C and D 7 in Scoring) n USDA RD loan commitment requirements (MHP NOFA Section C) n Elevated loan limits are available for Homeless Youth projects (SH & HY NOFA Section L) n Point scoring differences (SH NOFA Section V; HY NOFA Section U; MHP NOFA Section W) 4

MHP Program Changes Carried Over From 1 C-5 (cont’d) n n Scrutiny of rehabilitation projects Hard debt service on public agency financing 5

Timetable - MHP NOFA issued June 14, 2011 Application forms June 14, 2011 available Applications due August 31, 2011 (by 5 PM) Loan and Grant Committee Meeting December 2011 Awards issued January 2012 6

Timetable – HY & SH NOFA issued June 14, 2011 Application forms June 14, 2011 available HY: July 5, 2011 to 5 PM, April 6, Applications due 2012 – SH: August 10, 2011 to from 5 PM, May 11, 2012 Loan and Grant Committee As necessary due to OTC status Meeting Awards issued Month following L & G Meeting 7

MHP Program Overview 8

MHP Regulations n Governed by two sets of regulations: ¨ Multifamily Housing Program Specific Regulations (MHP Regulations) ¨ Uniform Multifamily Regulations (UMR) n Available at: ¨ http: //www. hcd. ca. gov/fa/mhp 9

Geographic Distribution (MHP) n Statute requires HCD to: ¨ “ensure a reasonable geographic distribution of funds” n To prevent award imbalance, distribution target of no less than approximately: ¨ 45 percent Southern California ¨ 30 percent Northern California ¨ 10 percent Rural Area 10

Eligible Sponsor n Non-profit, for-profit and local public agencies n Demonstrate: ¨ Experience developing, constructing, owning and operating affordable rental housing projects ¨ The entity that submits information for the award of the experience points (D 3) must be the named Sponsor on the Application ¨ Must demonstrate site control MHP Section 7303 and UMR Section 8303 11

Eligible Project n Multifamily rental and transitional housing projects of five or more units ¨ ¨ ¨ New construction Acquisition and rehabilitation Rehabilitation Conversion of nonresidential structures Must not have started construction as of the application due date MHP Section 7302 12

MHP Emphasis n Emphasis on units for: ¨ “Deeply” targeted incomes (MHP A, B or C) ¨ Large families (two or more bedrooms) ¨ Special Needs Populations 13

HY Emphasis n Emphasis on units for: o Homeless/at risk of homelessness, aged-out of foster care or ran away from home o Emancipated youth under age 18 o Persons who are at least age 18, but not older than age 24 14

SH Emphasis n Emphasis on units for: o Homeless/at risk of homelessness and disabled adult or disabled emancipated youth o Disabled: mental illness, HIV/AIDS, substance abuse, developmental disability or long-term chronic health condition 15

Eligible Use of Funds n Costs attributable to Restricted units for: ¨ Construction/rehabilitation ¨ Off-site/on-site improvements ¨ Capitalized operating and replacement reserves (replacement reserves can be funded from Operating Income) ¨ Child care facility and social service facility integrally linked to Project ¨ Developer fee MHP Section 7304 16

Permanent Only Loans n Loan Terms ¨ 55 year term ¨ 3 percent simple interest (principal and interest deferrable) ¨ First 30 years: mandatory debt service of. 42 percent of outstanding principal balance ¨ Next 25 years: adjusted to cover HCD’s monitoring costs ¨ Unpaid interest and principal due at end of term 17

Program Limitations n Payment of state prevailing wages to laborers working on MHP-financed projects is required n Sponsor distributions limited to 50 percent of cash flow (UMR Section 8314) n 9 percent tax credit projects are not eligible to apply for MHP General funds (HY and SH projects are permitted to use 9% credits though lower per unit loan limits and other restrictions apply) 18

Developer Fee Limits n Limit of $1. 2 million from funding sources (C 7) New construction and substantial rehabilitation projects: first 30 units, $23, 000 per unit. Each unit in excess of 30, $9, 500 per unit ¨ Acquisition and rehabilitation projects without substantial rehabilitation: first 30 units, $11, 000 per unit. Each unit in excess of 30, $5, 500 per unit ¨ n Land donations from local jurisdiction or master developer may not be counted as capital contribution n Cash contributions from master developer or other entities, which are contingent upon the development of the Project may not be counted as capital contribution 19

Developer Fee Limits (continued) Developer Fee Calculation ¨ Includes lease-up fees, incentive fees, or other property management fees, in excess of those customarily charged by property management firms for lease up activities, which are paid to the Sponsor, Co-Sponsor or affiliate of the Sponsor or Co-Sponsor 20

Application Overview 21

Application n Universal Application used by HCD, TCAC, CDLAC and Cal. HFA ¨ n MHP Application Attachment ¨ n http: //www. hcd. ca. gov/fa/mhp/Universal. Application. xls http: //www. hcd. ca. gov/fa/mhp/MHPApp 1 C_6 Attachment. xls Homeless Youth or Supportive Housing Project: Use Supportive Housing Application Attachment instead of the MHP Application Attachment ¨ http: //www. hcd. ca. gov/fa/mhp/MHPSH_App 1 C_6 attachment. xls 22

General Instructions n Submitting Application Three-ring binder with sleeve on the side ¨ Large lettered tabs and divide the binder into seven sections: Universal Application, Universal Application Attachments (1 -11), MHP or SH Attachments A, B, C, D, E ¨ Set up dividers with numbered tabs to correspond to the Universal Application and MHP Program Specific Checklist (A 1) ¨ For items that are not applicable to your application, place a sheet stating the item is “Not Applicable” behind the tab ¨ 23

General Instructions (continued) n COMPLETE original and one duplicate of application n No facsimiles, late, incomplete or revised applications will be accepted n Applications must meet all eligibility requirements upon submission n Applications with internal inconsistencies will not be rated and ranked 24

Organizing the Application Submit your application binders in this order: 1. Universal Application 2. Universal Application Attachments 1 - 11 3. MHP Attachments A, B, C, D, E 4. HY or SH: SH Attachments A, B, C, D, E 1 Remember: Once your MHP General application is received, it must stand on its own to represent your Project 25

Disclosure n Disclosure of Application ¨ Information becomes PUBLIC RECORD available for review by the public n Use Discretion ¨ Sponsor is waiving any claim of confidentiality and consents to the disclosure of all submitted material upon request 26

Project Evaluation ü Eligibility ü Feasibility ü Scoring 27

MHP/SH Attachments 28

A 1 Universal Application and MHP Checklist 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Proof of site control Current Preliminary Title Report Relocation Plan with estimated costs Utility Allowance Chart by unit size Org. charts for Borrower, Sponsor, Developer, Affiliates Legal Status Questionnaire Previous Participation Certifications Evidence of enforceable commitments - Construction Evidence of enforceable commitments - Permanent Market Study with Rent Comparability Matrix Current Appraisal 29

A 2 Eligibility Criteria 1. Other funding sources are insufficient to cover Project development cost 2. As of application due date, construction has not commenced (demolition is considered “construction” if cost of demolition is included in the development budget) 3. Application complete and on MHP approved forms 30

A 2 Eligibility Criteria (continued) 4. Project site must be free from environmental conditions which are infeasible to correct 5. Site is reasonably accessible to: o Public transportation, shopping, medical services, recreation, schools and employment 6. Must demonstrate Article XXXIV authority 7. New construction projects with demolition: o Number of bedrooms in new Project must be at least equal to the number of bedrooms demolished 31

A 2 Eligibility Criteria (continued) Relocation Eligibility Requirements n Application must contain a preliminary Relocation Plan n Developmental budget must contain funding for Relocation Expenses n Final Relocation Plan must be approved by the Department prior to funding MHP Section 7315 32

A 2 Eligibility Criteria (continued) Site Control Requirements n Must be in the name of the Sponsor n Documents showing site control: ¨ Lease ¨ Contract of Sale ¨ Disposition and Development Agreement ¨ Preliminary Title Report ¨ Option to Purchase or Lease n Preliminary Title Report required in all cases ¨ Not older than six months UMR Section 8303 33

A 2 Eligibility Criteria (continued) Proof of Site Control n Can take any of the forms indicated, but must: ¨ Be fully executed and unilateral ¨ Name seller and purchaser or lessee ¨ Include dollar amount and terms of agreement ¨ Be signed by all parties ¨ Not have expired 34

A 3 Recycling Program Narrative n In an effort to encourage all projects to implement as many environmentally friendly options as possible, the MHP application will require a narrative describing how the Project will implement and encourage residents to utilize project-based recycling programs 35

MHP/SH Attachments Section B - Eligibility 36

B 1 Tenant Selection Criteria n Provide description of your tenant selection criteria and describe rationale n Senior Projects (B 1 a): Provide evidence of Fair Housing Compliance (legal opinion) 37

B 2 Organizational Documents n n n Sponsor and Ultimate Borrower (if formed) Articles of Incorporation By-laws Partnership Agreements If organized under laws of different state: Submit Certificate of Good Standing for Foreign LP/Corp/LLC plus Certificate of Registration 38

B 3 Governing Board Resolution n Authorizes application submission n Specifies authorized signatory n Must reference the NOFA date and the amount of loan request n Must state that the entity is authorized to do business in California n Sample resolutions are provided 39

B 4 Names of Officers and Board Members Be certain not to disclose personal data (addresses, phone numbers, etc. ) unless the board members have authorized the release of such information – keep in mind that the application is a public document n 40

B 5 Environmental Reports n Phase I Environmental Site Assessment n Other Environmental Reports (i. e. Phase II, Asbestos, Lead-based paint) n Mitigation information (if applicable) n Do not attach database records search 41

B 6 Maps n Parcel map showing site location n Scaled Distance Map ¨ Two mile radius of site ¨ Indicate amenities 42

B 7 Article XXXIV of the California Constitution requires voter approval authorizing development of low-income housing n Provide evidence that Article 34 authority exists for this Project; or n Provide a legal opinion letter explaining why this Project is exempt from Article 34 requirements 43

MHP Attachments Section C - Feasibility 44

C 1 Insert the Development Timetable 45

Maximum Allowable Loan Amount n C 2 Worksheet to Determine Maximum Allowable Loan Amount n C 3 Loan Limit Worksheet n C 4 Shared Cost Calculation Worksheet n C 5 MHP Loan Calculation Worksheet 46

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Loan Limits n MHP (see pages 31 -45): http: //www. hcd. ca. gov/fa/mhp/2010 Income. Rents. Loan. Limits. pdf n Homeless Youth or Supportive Housing Units (see pages 46 -75: Chart A for 9% credits, Chart B without 9% credits): http: //www. hcd. ca. gov/fa/mhp/2010 Income. Rents. Loan. Limits. pdf 48

In the Supportive Housing Application, see Item C 5 b 49

In the Supportive Housing Application, see Item C 5 b 50

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C 6 n This item (evidence of commitment status for development funding) has been replaced by Universal Application Attachments 8 and 9 See MHP or SH Application Attachment Instructions for what constitutes evidence of commitment 54

C 7 Developer Fee Calculation n Not a required application attachment n Tool to assist Sponsor in calculating allowable amount of developer fees 55

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C 8 Unit Mix and Income Information n Complete the Unit Mix and Income Information chart n For rental assistance, operating, project based and other subsidies attach evidence of commitment If not available, attach other documentation such as Reservation or third-party letter stating the following: n Annual subsidy amount n Date or expected date of award n Term n Number of subsidized units 2. If not available, attach Voucher Payment Standard and Fair Market Rents from Housing Authority 1. 57

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C 9 Transition Reserves n If Project depends on project-based rental subsidy, attach calculation of Required Transition Reserve funding 59

C 10 Non-Special Needs Population Justification of Services Coordinator n Attach narrative description of tenant needs and the role of the resident Services Coordinator in linking tenants to services 60

C 11 Estimate of Construction Cost Based on Prevailing Wage n Complete C 11 based on prevailing wages 61

Insert the Following Documents n C 12 Copies of Planning Approvals n C 13 Copies of Resumes for Project Contractor and Architect n C 14 Copies of Schematic Drawings 62

Rehabilitation Projects n C 15 Provide a narrative description of current condition of structures n C 16 Provide a detailed narrative description of the intended scope of work n C 17 Provide a copy of current roll including household composition and income 63

C 18 Letter to Local Government n Statutory requirement to notify local government jurisdiction that application is being submitted n Must be addressed to the City Council or County Board of Supervisors (whichever is applicable) THIS IS AN ELIGIBILITY THRESHOLD REQUIREMENT 64

C 19 Operating Expense Comparables n Minimum three comparables n One market rate; one affordable housing n Same primary market area n Similar size, number of units and amenities 65

MHP Attachments Section D - Scoring 66

D 1 Extent Project Serves Households at the Lowest Income Levels - 35 points n Enter total number of Restricted Units n Enter number of units for MHP A, B, or C n Scoring sheet will auto calculate 67

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D 2 Extent Project Addresses the Most Serious Identified Local Housing Needs 15 points (A) 5 points for either: 1. Letter from City or County ¨ Local need identified in local housing policy document ¨ The local housing policy document in which the need is identified ¨ A statement that the Project meets the need ¨ Must specifically name the Project 69

D 2 Extent Project Addresses the Most Serious Housing Needs (continued) Or: 2. If 70 percent of Project units are reserved for Special Needs Populations: ¨ Letter from local government department stating that the Project will address a serious local housing need as it relates to Special Needs Populations 70

D 2 Extent Project Addresses the Most Serious Housing Needs (continued) AND Choose option B, C or D - 5 or 10 points (B) - 10 points 1. 2. At least 70 percent of units reserved for Special Needs Populations or At least 70 percent of units have two or more bedrooms and located in Alameda, Contra Costa, Los Angeles, Marin, Monterey, Napa, Orange, San Diego, San Francisco, San Luis Obispo, San Mateo, Santa Barbara, Santa Clara, Santa Cruz, Solano, Sonoma, or Ventura counties 71

D 2 Extent Project Addresses the Most Serious Housing Needs (continued) (C) - 5 or 10 points Comparable Market Rental Data Forms n At least the five nearest comparable projects n Senior projects - limit comparables to this population n One rental data form for each comparable n If weighted vacancy rate is < 3 percent = 10 points n If weighted vacancy rate is < 5 percent = 5 points 72

D 2 Extent Project Addresses the Most Serious Housing Needs (continued) (D) - 5 or 10 points Vacancy Rate Determined by Market Study n Performed by qualified third party per TCAC guidelines n Senior projects - limited to this population n Vacancy rate < 3 percent = 10 points n Vacancy rate < 5 percent = 5 points 73

D 3 Development and Ownership Experience of Project Sponsor - 20 points n Affordable housing developments completed in the five years preceding application due date n Minimum ten units n Exception: If proposed project has < 15 units, and 70 percent of units reserved for Special Needs Populations, a completed project may have five units 74

D 3 Development and Ownership Experience of Project Sponsor (continued) Experience points awarded if: n Project Sponsor or affiliate was sole developer n Project Sponsor or affiliate in partnership with another entity if: ¨ Controlled key aspects ¨ Had sufficient staff to manage the development process ¨ Received majority share of developer fee 75

D 3 Development and Ownership Experience of Project Sponsor (continued) n Projects were developed by staff (or a principal) currently employed by Sponsor if: ¨ Staff had primary responsibility for the development process ¨ Staff will serve as Project Manager, or directly supervise the Project Manager and have primary responsibility for managing the development process 76

D 3 Development and Ownership Experience of Project Sponsor (continued) n Only experience of one entity counted n Experienced entity must have controlling interest in partnership, primary responsibility for development, ongoing control of operations and sufficient staff n Must receive majority share of developer fee 77

D 4 Percentage of Units for Families, Supportive Housing or Special Need Populations or At-risk Rental Housing Developments - 35 points n Scoring sheet will auto-calculate for unit size and Special Needs Population designated units n At-risk Rental Housing must meet TCAC definition. Attach completed checklist and supporting documentation 78

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D 5 Leverage of Other Funds - 20 points n Developer fee is not included n Value of donated land may be included if supported by an appraisal n Rural, Non-rural: As defined by TCAC n Attachment D 5 will auto-calculate 80

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D 6 Project Readiness - 15 points Enforceable commitments - construction B. Enforceable commitments - deferred C. Environmental n Have all clearances (NEPA & CEQA) o If NEPA Responsible Entity is not the locality: Submit form to appropriate NEPA Responsible Entity n Phase I Environmental Site Assessment A. 82

D 6 Project Readiness - (continued) Local design review approval E. Public land use approvals (not to include building permits and ministerial approvals) F. Either: n Fee Title or long-term leasehold (attach PTR or documentation of lease agreement) D. n Working drawings at least 50 percent complete (attach architect certification) 83

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D 7 Adaptive Reuse, Infill, Proximity to Site Amenity or Sustainable Building Methods - 10 points n Infill: Vacant or soon to be vacant lot in established or developed area n Adaptive Reuse: Rehabilitation of vacant commercial or industrial buildings in developed areas n Proximity to Site Amenity: Must qualify for any points under TCAC n Sustainable Building Methods: Must qualify for any points under TCAC 85

Homeless Youth or Supportive Housing Projects: D 8 Commitments for Operating Subsidy or Services Funding - 5 points § A commitment for the operating subsidies, sufficient to sustain project operations for five years or longer from the local government. § A commitment for services funding, sufficient to make available services adequate to meet the needs of the tenants housed in the Supportive Housing Units, for five years or longer. Must include: § Project name, description of services to be funded or provided, dollar value of funds or in-kind services (if cash is to be provided, state the source of funds), term of funding or service provision and a brief description and history of the agency/organization providing the funding or services. 86

D 8 a Catalyst Program Projects that have received an award from the Department’s Housing Policy Development Division via the Catalyst Projects for California Sustainable Strategies Pilot Program will receive five bonus points in the application scoring process. More information is available on the Department’s website at: http: //www. hcd. ca. gov/hpd/cpcsspp. html 87

Service Plan Requirements 88

Index and Checklist (Application Item B 14) n n n Part 1. Part 2. Part 3. Part 4. Populations to be served Supportive Services Plan Supportive Services Budget Project Sponsor and Service Provider Experience Part 5. Property Management Experience 89

Tenant Selection Narrative Part 1, Section 3 ¨ Must conclusively document occupancy will be limited to eligible households n Occupancy by Homeless Youth or Supportive Housing households must be documented for the greater of 5 units OR 35% of the total units 90

Occupancy Standards, Exit Strategies, and Rent Subsidies Part 1, Section 4 n n n Describe policies related to duration of stay Describe strategies to ensure viable housing options for Homeless Youth exiting the project – or reassigning units Describe subsidies which will allow for project feasibility. Describe how the subsidies may function (be reduced) in the event tenant income increases 91

Service Plan Summary Part 2, Section 1 n Narrative Summary of Services Plan ¨ Service Needs of Population ¨ Lead Service Provider ¨ Key Services available ¨ Staffing 92

Characteristics of Permanent Homeless Youth Housing n n n Tenant holds a lease and is responsible for rent (not required) Tenant has own room or apartment and is individually responsible for arranging any shared tenancy (not required) Tenant may stay as long rent is paid and the terms of lease complied with Unit subject to applicable state and federal landlord tenant laws Tenant’s participation in service(s) shall not be required as a condition of tenancy 93

Verification from Funding Agency Part 2, Section 3 n n n Agency shall be knowledgeable of the supportive service needs of the Target Population Agency shall endorse the services plan and the Project Sponsor as a known provider of Supportive Services similar to those proposed Use Supportive Service Verification Form 94

Supportive Services Chart Part 2, Section 4 n n n n Record in chart: Each Support Service separately Population to be served Short Description of the Service Name of Service Provider Relationship to Sponsor Type of Agreement (i. e. , MOU or letter of commitment) Service Location – on or off Project site 95

Services Delivery Chart Part 2, Section 5 n n n List each Staff Position separately Describe the roles and duties of each position Indicate percentage of full-time equivalent staff Name the employer organization of the position Specify Location work will be performed 96

Staffing Level Table Part 2, Section 5 b n Indicate staffing level by completing calculation: ¨ Total SH or HY Units ¨ Total FTE Support Service Staff ¨ Number of SH or HY Units per FTE Staff Person n If Staff level differs from HCD’s historical averages [10 – 15 households per staff for intensive services or 15 – 25 households per staff for less service intensive], provide a narrative explanation. 97

Tenant Engagement Part 2, Section 6 n n Provide narrative of tenant engagement plan Explain how the Sponsor will elicit tenant participation in the services 98

Collaboration Part 2, Section 7 n n Provide a Narrative Description of the Collaboration Relationship (Section 7 A) Provide Collaborative Relationship Documentation such as a Contract, MOU or Letter of Intent (Section 7 B) 99

Measurable Outcomes and Plan for Evaluation - Part 2, Section 8 a n n Applicants must establish reasonable outcomes and outcome measures for: ¨ Residential Stability ¨ Increased Skills or income ¨ Greater Self-determination Applicants must reasonably describe the proposed system for tracking the data and agree to report on the data annually 100

Service Utilization Part 2, Section 8 b n Applicant must describe plan for collecting and analyzing service utilization data: ¨ Prior to tenancy ¨ During tenancy ¨ Which systems of care will provide the data (i. e. health, mental health, substance abuse, criminal justice) ¨ How data will be collected analyzed 101

Supportive Services Budget – Part 3, Section 1 102

Supportive Services Cost Per Unit Part 3, Section 2 n Indicate supportive services cost per unit by completing calculation: ¨ Total SH or HY Units ¨ Total Supportive Services Costs ¨ Total Supportive Service Costs per Unit n If supportive service cost per unit differs from a range of $5, 000 - $10, 000 per unit, provide narrative explanation 103

Funding and Service Commitments Part 3, Section 3 n n A minimum of 25% of total Service Budget must be committed at the application stage Letters of Commitment or Intent to Fund must provide the following on organization letterhead: ¨ Project name ¨ Description of services to be funded or provided ¨ Value of funds or in-kind services ¨ Term of funding or service provision ¨ History of organization providing funds or services 104

Experience Part 4, Section 1 n n n Document 24 months experience in ownership or operation of one special needs or supportive housing project containing 5 or more dwelling units Document 24 months experience in providing services to the target population Property manager must have 24 months experience in managing a supportive housing or special needs housing project containing 5 or more dwelling units This is a threshold requirement 105

Service Funding History Part 4, Section 2 B n n n Document the funding history of the qualifying service provider Document that the provider will be able to access funds from the programs that fund the services identified in the Supportive Services Plan List only funding obtained in last 5 years 106

THE END Thanks for your attention. We will now answer any remaining questions that you may have. 107