U.S. Department of Housing and Urban Development

Community Planning and Development

Special Attention of:

Notice: CPD 97-03

All Secretary\'s Representatives

All State/Area Coordinators Issued: March 27, 1997

All Regional Directors for CPD Expires: March 27, 1998

All CPD Division Directors

All HOME Coordinators

All HOME Participating Jurisdictions Cross Reference:

SUBJECT: HOME Program Match Guidance

I. Purpose

The purpose of this notice is to provide guidance to HOME Participating

Jurisdictions (PJs) in identifying eligible sources of matching
contributions,

calculating the value ofmatching contributions, determining the point at
which

a contribution may be recognized as match, and tracking matching
obligations

and contributions.

II\. Legislative and Regulatory History

Section 220 of the Cranston-Gonzalez National Affordable Housing Act

(NAHA) established the requirement that each HOME PJ make contributions
to its

HOME-assisted projects equal to a percentage of the HOME funds drawn
down

during each fiscal year. Initially, the percentage of the match
obligation

applied to each draw down of HOME funds varied according to the type of

activity that the PJ was undertaking (i.e., new construction, moderate

rehabilitation, substantial rehabilitation, acquisition or tenant-based
rental

assistance). Amendments to NAHA made in the Housing and Community
Development

Act of 1992 (HCDA) and the Multifamily Housing Property Disposition
Reform Act

of 1994 eliminated these variations and resulted in a standard 25
percent

DGHP: Distribution: W-3-1, Special (HOME Participating Jurisdictions)

Previous Editions are Obsolete HUD

21B (3-80)

match requirement for all HOME-eligible activities. Because the matching

contributions for Federal fiscal year 1994 must have been made by the

end of the fiscal year, HUD applied the standard 25% match to all match

liability incurred during fiscal year 1994.

The HUD\'s Fiscal Year 1992 Appropriation Act waived the matching

requirements for FY 1992 HOME funds. Consequently, PJs did not incur
match

obligation until they drew down FY 1993 HOME funds.

NAHA established a list of eligible forms of matching contributions.

However, the HCDA of 1992 added additional forms of eligible match.
Perhaps

most significantly, this law amended NAHA to permit certain
contributions to

housing that is not assisted with HOME funds, but which meets the HOME
Program

qualifications for affordable housing, to be counted toward a PJ\'s HOME
match

obligation. These legislative changes were implemented by an interim

regulation published on April 19, 1994 and were effective May 19, 1994.

On September 16,1996, the Department published a final rule for the HOME

program. This rule added sweat equity, homeownership counseling,
supportive

services and donation of rental construction and site preparation
equipment as

eligible forms of match.

III\. Applicability of the Matching Requirements

By establishing the HOME Program, Congress intended to establish a

partnership between the federal government and States, units of local

government and nonprofit organizations to expand the supply of
affordable,

standard housing for low-income families. In keeping with the concept of

partnership, each jurisdiction participating in the HOME Program is
required

to make contributions to qualified housing in an amount equal to 25
percent of

appropriated HOME funds drawn down for housing projects. These
contributions

are referred to as \"match.\"

A PJ incurs match obligation during each Federal fiscal year based on
the

amount of HOME funds drawn down from its U.S. Treasury account. In each

fiscal year, a PJ must make eligible matching contributions in an amount
that

equals the match obligation incurred during that fiscal year. Matching

contributions made in excess of match obligation may be carried forward
as

match credit toward meeting obligations incurred in future years.

Although PJs do not incur match obligation by expending FY 1992 HOME

funds, they may count eligible contributions made to HOME-assisted
projects

that were committed in the HOME Cash and Management Information System
(C/MI)

on or after October 1, 1992 as match credit. Contributions made to HOME

match-eligible projects after May 19, 1994 count as match. To be
considered

eligible match, these contributions must meet the requirements outlined
in

Section IV, B of this notice.

The HOME match requirements apply to:

HOME funds drawn from the U.S. Treasury for project costs eligible under

[24 CFR
92.206](http://www.hud.gov/offices/cpd/affordablehousing/lawsandregs/regs/home/sube/92206.cfm),
including related soft costs that are incurred to carry out the

project and are charged to the project, and for tenant-based rental
assistance

under [24 CFR
92.209](http://www.hud.gov/offices/cpd/affordablehousing/lawsandregs/regs/home/sube/92209.cfm).

State HOME funds provided to a local PJ to make up the shortfall between

its initial HOME allocation and the formula threshold amount.

The HOME matching requirements do not apply to:

Fiscal Year 1992 HOME funds

HOME administrative funds ([24 CFR
92.207](http://www.hud.gov/offices/cpd/affordablehousing/lawsandregs/regs/home/sube/92207.cfm))

CHDO operating expenses ([24 CFR
92.208](http://www.hud.gov/offices/cpd/affordablehousing/lawsandregs/regs/home/sube/92208.cfm))

CHDO capacity building funds (24 CFR 92.208)

CHDO site control, technical assistance and seed money loans for
projects

that do not go forward ([24 CFR
92.301](http://www.hud.gov/offices/cpd/affordablehousing/lawsandregs/regs/home/sube/92301.cfm))

Amounts provided from sources other than State HOME funds to make up the

shortfall between a local PJ\'s allocation and the threshold amount (24
CFR

[92.102](http://www.hud.gov/offices/cpd/affordablehousing/lawsandregs/regs/home/sube/92102.cfm)(b))

IV\. Recognition of Matching Contributions in HOME-Assisted Projects and

Non-Assisted Affordable Housing as Match

To be counted as match, a contribution must be made to housing that

qualifies as affordable under Section 215 of NAHA. Such housing may be

either:

A\) housing that is assisted with HOME funds; or

B\) housing that is not HOME-assisted but meets the HOME affordability

requirements (hereafter referred to as HOME match-eligible housing).

A. Contributions to HOME-Assisted Projects

Contributions to HOME-assisted housing and tenants can be counted as

match under the following circumstances: is recognized as a matching

contribution if:

Tenants \-- Contributions to tenants who are assisted with HOME funds

can be counted as match. An example of such a contribution is nonfederal

funds added by a PJ in a HOME-funded tenant-based rental assistance
program

or, in certain instances, a State-funded tenant-based rental assistance

program. (This does not include a PJ\'s expenditures for administering a

federally or nonfederally funded tenant-based rental assistance
program.)

HOME-Assisted Units \-- Nonfederal contributions made to HOME-assisted

units can be counted as match.

Partially HOME-Assisted Projects \-- If more than 50 percent of the

units in a project are HOME-assisted, then the PJ\'s contribution to the

non-assisted units may be counted as match. If the match contribution is
made

to the portion of the project that is not HOME-assisted but those units
meet

the HOME affordability requirements, then the percentage requirement for
HOME-

assisted units does not apply.

(See Appendix A for examples illustrating this principle).

Mixed-Use Projects \-- If at least 51 percent of the floor space in a

HOME-assisted, mixed-use building is residential and at least 50% of

the residential dwelling units are HOME assisted, then the PJ\'s

contribution to the commercial space and the non-assisted units may

be counted as match. (See Appendix A for examples illustrating this

principle).

B. Contributions to HOME Match-Eligible Housing

The HCDA of 1992 amended the HOME statute to permit contributions to

housing that is not assisted with HOME funds, but which would qualify as

affordable under the HOME Program, to be counted as matching
contributions.

The HOME final rule permits nonfederal contributions to both housing
units and

tenant-based rental assistance to be counted as match. (Contributions to

nonaffordable units or to commercial space in HOME-match eligible
projects are

not an eligible match.) Section 92.219(b) lists the HOME requirements
that

the housing or rental assistance must meet if contributions are to be
eligible

match.

The table below summarizes these requirements.

Table 1: HOME Program Requirements Applicable to

Affordable Housing Counted as Match

Rental Housing Income determinations 92.203

Property standards 92.251

HOME rents 92.252

Project occupancy requirements 92.252

Periods of affordability 92.252(e)

Tenant protections 92.253(a) & (b)

Tenant-Based Income determinations 92.203

Rental Assistance Tenant-based rental assistance 92.209(a),(c),(f),

\(g\) & (i)

Owner-occupied Income determinations 92.203

Rehabilitation Property standards 92.251

After rehabilitation value limit 92.254(b) & (c)

Project occupancy requirements 92.254(b) & (c)

Homebuyer Income determinations 92.203

Assistance Property standards 92.251

Single-family housing limitation 92.254(a)(1)

Purchase-price limitation 92.254(a)(2)

Project occupancy requirements 92.254(a)(3)

Period of affordability 92.254(a)(4)

Resale/recapture provisions 92.254(a)(5)

The PJ is required to execute a written agreement with the owner of the

housing (or, if the PJ owns the housing, with the manager or developer)
that

enumerates and imposes the applicable requirements. The PJ must
establish

procedures to monitor these HOME match-eligible projects to ensure
continued

compliance with the requirements of §§ 92. 203 (income determinations),
92.252

(rental), 92.253(a) and (b) (tenant protections) and 92.254 (ownership)

throughout the period of affordability. Property standards and property

value limitations apply only at initial occupancy.

A PJ may find that an affordable housing project proposed as match does

not exactly match all of the regulatory requirements referenced above. A
PJ

may obtain a waiver of certain requirements for which some statutory

flexibility exists and for which it can demonstrate good cause.
Specifically,

a PJ may request a waiver to substitute another property standard for
the

standard that it has elected under the provisions of § 92.251 or to use
method

of determining income other than that it has elected under § 92.203. For

instance, a PJ may wish to count its contributions to a State-run
housing

program as match. If that housing program uses a different income
definition

than is permissible under the HOME Program, the PJ could request a
waiver to

permit it to use that definition for match purposes. PJs also may
propose

periods of affordability other than those outlined in the regulation,
provided

that the proposed periods meet the statutory requirement that the
property

remain affordable under legally binding agreements \"for the remaining
useful

life of the property . . . or for such other period that the Secretary

determines is the longest feasible period of time consistent with sound

economics . . . .\" Requests for waivers of any of these three
provisions

should be forwarded to the appropriate HUD Field Office for evaluation.

V. Eligible Forms of Match

To be considered eligible as match, a contribution must be made from

nonfederal sources and must be a permanent contribution to a HOME
project or

to HOME match-eligible housing. Eligible forms of match are established
in

NAHA and are limited to those forms outlined in [24 CFR
92.220](http://www.hud.gov/offices/cpd/affordablehousing/lawsandregs/regs/home/sube/92220.cfm).
A table

listing the eligible forms of match and indicating whether they must be
made

to HOME-assisted or HOME match-eligible housing is attached as Appendix
B

Eligible forms of match are:

A. Cash Contributions

Cash contributions must be made from nonfederal sources and be

permanently contributed to the HOME project or to the HOME
match-eligible

housing. Cash contributions may include donations made by individuals
(except

for owners or developers or prospective owners or developers of HOME

projects), private entities, the PJ or other public entities for the
express

purpose of providing affordable housing.

Cash contributions may include, but are not limited to:

State appropriations

State or local general revenues

Housing trust funds

Foundation grants and private donations

Housing finance agency reserves that are not federal funds

Program income from a Housing Development Action Grant (HODAG) or Urban

Development Action Grant (UDAG) after grant closeout

Program income from Rental Rehabilitation Program (RRP) grants after

program closeout (i.e., closeout of all program year grants)

Below-market interest rate loans from private lending institutions

Because owner equity is not an eligible form of match, the investment in

a project of a nonprofit organization\'s general funds will not count as
match.

However, funds that a nonprofit organization obtains from individuals or
other

entities through fundraising for a specific project are considered
private

donations and, thus, are eligible as match.

The PJ must document the source, form and value of the cash

contribution. For loans that will be counted as match, the documentation

should include the calculation used to determine the value of the match

contribution. To qualify as match, a cash contribution may be used only
for

costs eligible under §§ 92.206 or 92.209 or for the costs outlined in
Section

VII of this notice (page 20).

Cash contributions may be provided in the form of grants, deferred

payment loans or amortizing loans to a HOME project or program
beneficiary.

The match value of such donations depends upon the form of the
contribution

and the disposition of any repayment of principal or interest.

1\. Grants and Forgivable Deferred Payment Loans. If a PJ makes a grant
or

forgivable, deferred payment loan to a HOME-assisted or HOME match-

eligible project that will be counted as match, the amount of the match

contribution is the full face value of the grant or forgivable deferred

payment loan.

Example: A PJ makes a \$15,000, no-interest rehabilitation loan to a
low-

income homeowner with local funds. The loan is nonamortizing (deferred)

and will be forgiven at the end of 10 years, if the homeowner still

occupies the unit. If the homeowner sells the property at any time
during

the 10-year term of the loan, the entire loan amount must be repaid. The

property is used as a principal residence and will meet HOME property

standards after rehabilitation. Thus, it is HOME-eligible. For purposes

of determining the match contribution, the PJ may assume that the

homeowner will continue to occupy the property for the 10-year period.

The match credit for this loan is \$15,000.

2\. Loans Repaid to the HOME Account. If a PJ or other entity makes a
loan

with nonfederal funds to a HOME-assisted or HOME match-eligible project

and the loan amount is to be repaid to the local HOME account, the
amount

of the match contribution is the full face value of the loan,
irrespective

of the interest rate charged.

Example: A PJ makes a \$50,000 loan to a HOME-assisted project with

nonfederal funds. The term of the loan in 20 years and the interest rate

is 6%. The repayments will be deposited in the local HOME account rather

than the PJ\'s general fund. The amount of the match contribution is

\$50,000.

3\. Loans Repaid to Accounts Other than the HOME Account. If a PJ or
other

entity makes a below-market interest rate loan from nonfederal funds to
a

HOME-assisted or HOME match-eligible project and the proceeds of the
loan

will not be repaid to the HOME account, the grant equivalent of the
below-

market interest rate loan may be counted as match. The grant equivalent

is the present discounted value of the yield foregone by the lender.

Loans made from the proceeds of bonds not repaid with revenue from the

affordable housing projects (e.g., general obligation bonds) are
included

in this category.

a\) Borrowed Funds. If the PJ, public agency or corporation has borrowed

funds (other than through the issuance of housing bonds repaid with

revenue from the affordable housing project) to make a below-market

interest rate loan, the contribution is the present discounted value

of the difference between payments to be made on the borrowed funds

and payments to be received on the loan to the project, based on a

discount rate equal to the interest rate on the borrowed funds. (See

Example #1, Appendix C)

b\) Non-Borrowed Funds. If the loan is made from funds other than funds

borrowed by the PJ, public agency or corporation, the contribution is

the present discounted cash value of the yield foregone (i.e., the

difference between payments received on the below-market interest

rate loan and the payments that would have been received had the loan

been made at the market interest rate). In determining the yield

foregone, the PJ must use one of the following as the market interest

rate:

Single Family (1-4 unit) housing financed with a fixed rate loan:

10-year Treasury note plus 200 basis points;

Single Family (1-4 unit) housing financed with an adjustable rate loan:

1-year Treasury bill plus 250 basis points;

All Multifamily Project (5+ units): 10-year Treasury note plus 300

basis points.

(See Examples #2 through 6, Appendix C)

c\) Special Case: Nonamortizing Loans, Due on Sale. Nonamortizing loans

with principal or principal and interest due on sale of the property

and no maximum term present special problems in calculating match

contributions. If a loan will be repaid to the HOME account, the

full face value of the loan will count as match irrespective of the

loan terms. If the loan will be repaid to an account other than the

HOME account, a PJ would ordinarily count the present discounted cash

value of the yield foregone as its match contribution. However, in

the case of a nonamortizing loan that has no set term and is due on

sale, it is not possible to calculate the present value of the yield

foregone because neither the term of the loan nor the yield foregone

are known in advance.

To permit such loans to count toward its matching contribution, a PJ may

assume that the term of the loan is equal to the period of affordability

associated with the housing units being assisted (i.e., 5, 10, 15 or 20

years). The calculation of the yield foregone and the present value of

the yield foregone must be based upon this assumed term and calculated

by the same method as other loans.

B. Foregone Taxes, Fees and Charges

PJs may count as match the value of State or local taxes, fees and other

charges normally and customarily imposed or charged on all projects in
the

jurisdiction, if it waives, forgives or defers those charges for
HOME-assisted

projects. Examples of taxes, fees and charges waived by a jurisdiction
that

may count as match include: local property taxes, transfer taxes, state
tax

credits, permit fees, recordation fees and impact fees.

On July 12, 1995, the HOME regulations were amended to permit fees or

charges normally and customarily imposed by public or private entities
and

associated with the transfer or development of real estate to be counted
as

match. Examples of fees or charges waived by a private or public
institution

that may count as match include: title insurance premiums and utility
hook-up

fees or surcharges. A waived developer\'s fee is not an eligible form of

match. The waiver of charges or fees for professional services
associated

with the transfer or development of real estate (e.g., architectural and

engineering fees or title search fees) is eligible as donated or
voluntary

labor rather than as a forgiven fee.

The value of foregone taxes, fees and charges may only be counted as

match for HOME-assisted projects. Such charges are not an eligible form
of

match for affordable housing that is not HOME-assisted.

The match credit for forgiven or deferred taxes, fees or charges must be

based on customary and reasonable means for establishing value. For
taxes,

fees or charges that are forgiven only for a single year, the match

contribution is the full amount forgiven or waived. The value of taxes,
fees

or charges that are forgiven for future years is the present discounted
cash

value of the amount forgiven, based on a rate equal to rate for the U.S.

Treasury security with a maturity closest to the number of years for
which the

taxes, fees, or charges are waived or foregone. Similarly, the value of

deferred taxes or charges is the present discounted cash value of the
amount

deferred, based on the appropriate U.S. Treasury security rate.

Documentation of contributions in the form of forgiven taxes, fees or

charges must include a letter from the entity granting forgiveness and,
where

appropriate, establishing the value of the contribution. (Note: For a
one-time or single year contribution, the donor may establish the value.
For

multi-year contributions, the PJ is required to establish the value by

calculating the present discounted value of the contribution).

Example: A PJ waives a \$750 annual special assessment for 5 years.

The total fee forgiven is \$3,750.

5-year t-note rate: 6.0%; assume annual compounding

Present value = \$3,694

The total match credit is \$3,694.

For the purposes of estimating real estate taxes or other taxes or fees

based on the value of the property, the estimate may be based on the
post-

improvement property value. To calculate the present discounted value of

taxes, fees or charges that are forgiven in future years and require an

estimate of the actual amount forgiven in future years, the PJ must
document

its assumptions and the basis upon which they were made.

While the PJ is free to make assumptions based on its local market
conditions

and expectations, it should be able to demonstrate that these
assumptions are

reasonable.

Example: A PJ forgives property taxes for a HOME-assisted homebuyer

for the 5-year affordability period, which begins in the second year

of its 3-year property tax assessment cycle. The PJ uses the

property\'s full market value as its taxable basis. The current tax

rate is \$10.10 per thousand of assessed value. The PJ establishes

the property\'s post-improvement value, applies the tax rate and

determines the tax assessed on the property for years 1 and 2. To

determine the likely tax assessment on the property in years 3

through 5, the PJ should make assumptions about any changes in

property value, tax basis, or tax rates. In this instance, it

assumes that the property value will increase at approximately the

rate of inflation (3%) per year in years 1 and 2, the basis of

valuation will remain the same (e.g., no capital improvements) and

the property tax rate will increase by \$.02 per thousand of assessed

value.

Assessed Property Value: Years 1 & 2: \$75,000

Year 3,4 & 5: \$79,000

5-year T-note rate: 6.0%; assume annual compounding

Tax Assessment PV of Taxes Foregone

Year 1: \$ 758 \$ 758

Year 2: \$ 758 \$ 675

Year 3: \$ 806 \$ 677

Year 4: \$ 806 \$ 638

Year 5: \$ 806 \$ 602

Total: \$3,934 \$3,350

Note: Because the amount of taxes foregone varies each year, the

present value is calculated separately for each year, rather than as

a single calculation. (In year 1, the present value is the full face

value of the taxes foregone). In each calculation, the taxes

foregone are designated as the future value (rather than as the

payment amount), the interest rate is 6% and the period corresponds

to the year of the tax forgiveness.

C. Donated Land or Other Real Property

Land or other real property permanently contributed to a HOME project or

to other affordable housing not assisted with HOME is an eligible match.
Such

contributions may be made by donating property to an affordable housing

project or by selling a property demonstrably below market value for use
in an

affordable housing project. For instance:

A PJ donates publicly-owned land for use as a HOME or affordable housing

project.

A property owner sells property below its market value to a nonprofit

expressly for the purpose of facilitating the development of affordable

housing.

A local bank sells a foreclosed property which it holds in its inventory

for an amount equal to back taxes owed.

Generally, the value of the contribution is the appraised value of the

donated land or other real property, before any HOME assistance is
provided,

minus any debt burden, lien or other encumbrance. Property must be
appraised

by an independent, certified appraiser, in conformance with established
and

generally recognized appraisal practices and procedures in common use by

professional appraisers. Opinions of value must be based upon the best

available data properly analyzed and interpreted. The appraisal of land
and

structures must be performed by an independent, certified appraiser.

Property Acquired with Nonfederal Resources. If the property is donated

to the HOME-assisted project or HOME match-eligible project that will be

counted as match, the contribution is 100% of property value, minus any
debt,

liens or encumbrances.

Property Acquired with Federal Resources. To qualify as match, property

that was purchased with federal resources must have been acquired
specifically

for HOME-assisted housing or other affordable housing that will be
counted as

match. The amount of the match contribution will be the difference
between

the appraised value of the property at acquisition and the acquisition
cost,

minus any debt, liens or encumbrances.

1). If a property is acquired by the owner of the HOME-assisted or HOME

match-eligible project, the amount of the contribution is the difference

between the appraised value at the time of acquisition with federal

assistance and the acquisition cost.

Example: A nonprofit organization purchases a property with

HOME funds for \$55,000. The appraised value of the property

is \$75,000 and the seller acknowledges the discounted sales

price as a donation to affordable housing. The PJ may count

the \$20,000 difference between the sales price and the

appraised value as match.

Example: A public housing authority purchases a property

appraised for \$75,000. The sales price is \$55,000. The

seller acknowledges the discounted sales price as a donation

to affordable housing. The PHA uses \$30,000 of its

(nonfederal) funds and \$25,000 of HOME funds. The match

contribution is \$50,000 (the difference between the sales

price and the appraised value (\$20,000) plus the contribution

of public funds (\$30,000)).

2). If the property is acquired with federal assistance by an entity

which donates the property to the owner of the HOME-assisted or HOME

match-eligible project, the match contribution is the difference between

the appraised value and the acquisition cost.

Example: A tract of vacant land has an appraised value of

\$100,000. A PJ purchases the property for \$75,000 with CDBG

funds and donates the property for use in a HOME-assisted

project. The seller acknowledges in writing that the \$25,000

discount on the property\'s purchase price is a donation to

affordable housing. The match contribution is \$25,000.

Example: A PJ purchases vacant land that is appraised for

\$100,000 at a sales price of \$75,000 and donates the land to

a CHDO. The seller acknowledges the discounted sales prices

as a donation to affordable housing. The PJ uses \$30,000 in

local funds and \$45,000 in HOME funds. The match is \$55,000

(\$30,000 PJ cash donation and \$25,000 donation by the

seller).

3). Similarly, if the property is acquired with federal assistance by

an entity which sells the property to the HOME-assisted or HOME match-

eligible project owner at a price equal to or less than the amount of

federal assistance used for the acquisition, the contribution is the

difference between the sales price paid by the entity using the federal

assistance and the appraised value at the time of acquisition by the

entity.

Example: A PJ uses HOME funds to purchase a property with an

appraised value of \$100,000 for a sales price of \$90,000.

The seller acknowledges that the discounted price is a

donation to affordable housing. The PJ sells the property to

a CHDO for \$60,000. The match contribution is \$10,000.

Example: A PJ uses HOME funds to purchase a property with an

appraised value of \$100,000 for a sales price of \$90,000.

The seller acknowledges that the discounted price is a

donation to affordable housing. The PJ sells the property to

a CHDO for \$90,000. The match contribution is \$10,000.

To be recognized as match, the acquisition cost paid with the federal

assistance must be demonstrably below the appraised value and must be

acknowledged in writing by the seller as a donation to affordable
housing at

the time of the acquisition with the federal assistance. This
requirement

distinguishes between a true contribution to affordable housing and a
\"good

buy\" obtained in the open market using federal assistance.

D. On-site and Off-site Infrastructure

The cost of on-site and off-site infrastructure is an eligible match,

provided that the cost was not paid with federal resources and the PJ

documents that the infrastructure is directly required for a
HOME-assisted

project. Examples of infrastructure directly required for a
HOME-assisted

project include: streets, sidewalks, and streetlights located on or

immediately adjacent to the project site, and utility lines and
connections

serving the project. Infrastructure that does not directly facilitate
the

occupancy of a HOME project such as neighborhood parks or bridges are
not

eligible matching contributions. Infrastructure that serves both
HOME-assisted and non-assisted housing may be counted on a pro rata
basis. The PJ

must document the cost of the infrastructure and the value of the match

contribution based upon the number of HOME-assisted units it serves.

The infrastructure need not have been specifically identified as serving

a HOME-assisted project at the time that it was installed. However, to
count

as match, the infrastructure investment must have been completed no
earlier

than 12 months before HOME funds were committed to a HOME-assisted
project.

Example: A PJ installs sidewalks and a street that will serve

20 houses using non-Federal funds. Ten of the houses are

HOME-assisted units. The PJ may count 50% of the cost of

installing the infrastructure toward its matching liability.

Example: A PJ installs sidewalks and a street to serve a

HOME-assisted multifamily rental project. Sixty-percent of

the units in the building are HOME-assisted. The PJ may

count 60% of the cost of installing the infrastructure toward

its matching contribution.

The cost of on-site or off-site infrastructure is eligible match only if

the infrastructure is directly related to a HOME-assisted project. The
cost

of infrastructure related to affordable housing that is not
HOME-assisted is

not an eligible form of match.

E. Proceeds from Affordable Housing Bonds

The HCDA of 1992 amended the HOME statute to establish a separate match

category for the proceeds of bonds issued by a State, local government,
or

agency, instrumentality, or political subdivision of a State for
multi-family

or single family affordable housing and repayable with revenues from the

housing project (e.g., mortgage revenue bonds). To be eligible as match,
the

bond proceeds must be loaned or granted to a HOME-assisted or HOME
match-

eligible project.

The HCDA of 1992 limited the amount of match credit a PJ may earn

through the loans made from affordable housing bond proceeds. Loans made
to a

HOME-assisted or HOME match-eligible project from the proceeds of
affordable

housing bonds, which will not be repaid to the local HOME account, may
count

as match as follows:

Single-family (1-4 units): 25% of the face value of each loan made for

HOME-assisted or HOME match-eligible housing, credited as match at the

time of loan closing.

Multifamily (5+ units): 50% of the face value of each loan made for
HOME-

assisted or HOME match-eligible housing, credited as match at the time
of

loan closing.

Total match credit from loans made from affordable housing bond proceeds

may not constitute more than 25% of a PJ\'s total annual contribution
toward

its match obligation. Match credit from loans made in excess of 25% of a
PJ\'s

total annual match obligation may be carried over to subsequent fiscal
years

and applied to the following year\'s 25% annual contribution.

The PJ must maintain documentation that establishes the eligibility as

match and match value of loans made with the proceeds of affordable
housing

bonds. This documentation should include the PJ\'s calculation of the
value of

the loan.

Proceeds of bonds that are not repaid with revenue from the affordable

housing projects (e.g., general obligation bonds) and that are loaned or

granted to a HOME-assisted or HOME match-eligible project constitute a
cash

contribution under \'92.220(a)(1). Such contributions are subject to the
same

rules and calculated in the same manner as other cash contributions.
(See

Cash Contributions, Borrowed Funds, page 8 and Example 1, Appendix C).
There

is no limit on the total amount of match credit a PJ may earn by making
such

loans.

F. Donated Site Preparation and Construction Materials

The HCDA of 1992 amended the HOME statute to make donated site

preparation and construction materials eligible forms of match. PJs may
count

the value of site-preparation and construction materials donated to
HOME-

assisted projects or HOME match-eligible housing, provided that the
materials

were not acquired with federal resources. The PJ must determine the
value of

the site-preparation and construction materials in accordance with its
cost

estimate procedures and must document the determination.

G. Donated Use of Site Preparation and Construction Equipment

The PJ may count the reasonable value of the use of site preparation and

construction equipment donated to HOME-assisted and HOME match-eligible

housing. The PJ may count the full value of the contribution (i.e., the

rental rate multiplied by the number of hours for which the equipment is

donated). Documentation of this contribution must include a letter from
the

owner of the equipment acknowledging the donation of a certain number of
hours

of use and establishing the usual hourly or daily rate for rental of the

equipment.

H. Donated or Voluntary Labor and Professional Services

The HCDA of 1992 amended the HOME statute to make donated or voluntary

labor an eligible form of match. PJs may count the value of any donated
or

voluntary labor, including professional services, in connection with a
HOME-

assisted project or HOME match-eligible housing.

A single rate will be applicable for determining the value of any

unskilled donated or voluntary labor. The current rate established

by HUD is \$10.

The value of skilled labor or professional services shall be

determined by the rate that the individual or entity performing the

labor or service normally charges. Documentation of this

contribution must include a letter from the individual or entity

establishing the usual periodic rate or flat fee for the labor or

services and stating the value of the labor or services provided.

I. Sweat Equity

The HOME final rule added sweat equity to the list of eligible forms of

match. PJs may count the value of sweat equity provided to a
HOME-assisted or

HOME match-eligible homeownership project as match. The labor must be

contributed under an established sweat equity component of the PJ\'s
program.

Only sweat equity contributed up until the point of project completion
(e.g.,

for a HOME-assisted project, submission of a Cash and Management
Information

System project completion form or entry of completion data in the
Integrated

Data and Information System) may be counted. The value of sweat equity
shall

be computed using the rate established by HUD for unskilled labor.

J. Supportive Services

The HOME final rule made the direct cost of supportive services provided

to families residing in HOME-assisted units during the period of
affordability

or to recipients of HOME-funded tenant-based rental assistance during
the term

of the tenant-based rental assistance contract an eligible form of
match. The

supportive services must be necessary to facilitate independent living
or be

required as part of a self-sufficiency program. Examples of eligible

supportive services include: case management, mental health services,

assistance with the tasks of daily living, substance abuse treatment and

counseling, day care, and job training and counseling. The PJ may only
count

the cost of supportive services provided to families residing in
HOME-assisted

units or receiving HOME tenant-based rental assistance as match.

The cost of supportive services provided to families residing in non-

assisted units in HOME projects or in HOME match-eligible projects or

recipients of tenant-based rental assistance funded by a source other
than

HOME is not an eligible match.

The direct costs that may be counted as match are limited to salary

costs (including benefits) directly attributable to the provision of the

supportive services to residents of HOME units and the cost of materials

directly related to the provision of these services (e.g., food, medical

supplies). The actual cost of providing these services must be supported
by

invoices, time cards or similar documents. For match purposes, the
provider\'s

overhead costs (e.g., rent, office equipment and supplies, etc.) are not

considered direct costs of the supportive service.

K. Homebuyer Counseling Services

The HOME final rule made the direct cost of certain homebuyer counseling

services an eligible form of match. To count as match, the homebuyer

counseling services must have been provided to families that acquire

properties with HOME funds under the provisions of \' 92.254(a). Ongoing

counseling provided to such families during the period of affordability
as

well as pre-purchase counseling are eligible.

These services may be provided as part of a homebuyer counseling program
that

is not specific to the HOME Program, but only the cost of services
provided to

families that complete purchases with HOME assistance may be counted as
match.

Similarly, for a homebuyer counseling program that is limited to the
HOME

Program, only the value of services provided to families that complete
the

purchase with HOME assistance can be counted as match. (If the homebuyer

counseling program is limited to the HOME Program, the PJ may charge the
cost

of services provided to families who do not complete purchases to the
HOME

Program as an administrative cost under

\' 92.207(b).

The direct costs that may be counted as match are limited to salary

costs (including benefits) directly attributable to the provision of
homebuyer

counseling services to families that acquire properties with HOME funds
and

the cost of any materials directly related to the provision of these
services

(e.g., pamphlets, tool kits for new homeowners, etc.). The actual cost
of

providing these services must be supported by invoices, time cards or
similar

documents. For match purposes, the provider\'s overhead costs (e.g.,
rent,

office equipment and supplies, etc.) are not considered direct costs of
the

homebuyer counseling service.

VI\. Ineligible Forms of Match

The following are not eligible match contributions:

Contributions made with or derived from federal resources or funds,

regardless of when the federal resources or funds were received or

expended. The HOME statute prohibits the use of CDBG funds for HOME

match.

The interest rate subsidy attributable to the federal tax-exemption on

financing (e.g., bonds issued by States or local governments) or the

value attributable to federal tax credits (e.g., Low Income Housing Tax

Credits).

Owner equity or investment in the project, except for sweat equity.

This is not a permanent contribution to the affordable housing project,

but rather value contributed by and accruing to the owner.

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 under the HOME Program. (This

provision does not prohibit contractors who do not own any HOME project

from contributing professional services in accordance with \'

92.220(a)(8) or prohibit persons from contributing sweat equity in

accordance with \' 92.220(a)(9).)

A PJ\'s cost of administering HOME-assisted or HOME match-eligible

affordable housing projects or rental assistance.

Contributions counted as a matching contribution toward any other

federally-funded program may not also be counted as a matching

contribution for the HOME Program.

The above are specifically prohibited in the HOME final rule. Other

forms of contributions that do not meet the requirements of [24 CFR
92.220](http://www.hud.gov/offices/cpd/affordablehousing/lawsandregs/regs/home/sube/92220.cfm)
also

are ineligible.

VII\. Eligible Matching Contributions that are Ineligible HOME

Costs

Nonfederal cash match contributions to HOME-assisted or HOME match-

eligible projects may be expended for activities that are eligible costs
under

[24 CFR
92.206](http://www.hud.gov/offices/cpd/affordablehousing/lawsandregs/regs/home/sube/92206.cfm)
(eligible project costs), as well as for the following which are

not eligible HOME costs.

Project-based rental assistance

Capitalization of or payments to a project reserve account for

replacements or increases in operating costs for rehabilitation or new

construction projects beyond 18 months. (Capitalization of an initial

operating reserve for an 18-month rent-up period is an eligible HOME

cost).

Operating subsidies

For HOME-assisted projects, the costs associated with the non-affordable

units in a building in which more than 50% of the units are
HOME-assisted.

For HOME-assisted projects, the costs associated with the commercial

portion of a mixed-use building in which at least 51% of the floor space

is residential.

For elder cottage housing opportunity (ECHO) units, the cost of

removing and relocating a unit to accommodate an eligible tenant.

VIII\. Timing of Match Credit

Match contributions are credited at the time that the contribution is

made. Specifically:

A cash contribution is credited when the funds are expended.

The grant equivalent of a below-market interest rate loan is credited at

the time of the loan closing.

The value of state or local taxes, fees, or other charges that are

normally or customarily imposed but are waived, foregone, or deferred is

credited at the time the state or local government or public or private

entity officially waives, forgoes, or defers the taxes, fees, or other

charges and notifies the project owner.

The value of donated land or other real property is credited at the time

ownership of the property is transferred.

The cost of investment in infrastructure directly required for a HOME-

assisted project is credited at the time funds are expended for the

infrastructure or at the time the HOME funds are committed to the HOME-

assisted project if the infrastructure was completed before commitment

of the HOME funds.

The value of donated materials is credited as match at the time it is

used for affordable housing.

The value of the donated use of site preparation or construction

equipment is credited as match at the time the equipment is used for

affordable housing.

The value of donated or voluntary labor or professional services is

credited at the time the work is performed.

A loan made with the proceeds of affordable housing bonds is credited at

the time of the loan closing.

The direct cost of social services provided to residents of
HOME-assisted

units is credited at the time that the social services are

provided during the period of affordability. (NOTE: For administrative

simplicity, PJs should consider establishing a process by which the

value of these services is calculated and credited at regular intervals,

e.g., quarterly).

The direct cost of homebuyer counseling services provided to families

that purchase HOME-assisted units is credited at the time that the

homebuyer purchases the unit or, for post-purchase counseling, at the

time the counseling services are provided.

Match obligation is incurred and match contributions are credited on a

federal fiscal year basis, rather than on a program year basis. In each

fiscal year, a PJ must make eligible match contributions in an amount at
least

equal to the match obligation incurred through the expenditure of HOME
funds.

Contributions made within a fiscal year in excess of a PJ\'s match
obligation

are carried forward and applied as credit toward its next fiscal year\'s
match

obligation. Match credit from loans made from the proceeds of affordable

housing bonds in excess of the statutory 25% limit on the amount of
credit

from this source that may be applied toward match in each fiscal year
also may

be carried over to subsequent fiscal years.

IX\. Distribution of Match Credit

Generally, the PJ that makes a match contribution to a HOME-assisted or

HOME match-eligible project that is counted as match (including
tenant-based

rental assistance) is the PJ that receives the match credit. The
following

rules apply to special situations:

For HOME-assisted projects involving more than one PJ, the PJ that

makes the match contribution may decide to retain the match credit or

permit the other PJ to claim the credit.

For HOME match-eligible projects involving more than one PJ, the PJ

that makes the match contribution receives the match credit.

A State that provides funding to a local PJ to be used for a

contribution to HOME-assisted or HOME match-eligible housing or

rental assistance may take the match credit for itself or permit the

local PJ to receive the match credit.

For HOME-assisted and HOME match-eligible projects, if a jurisdiction

that is not a PJ provides a match contribution to a project being

undertaken by a PJ, the PJ may claim the contribution as match.

Example: A city that is a HOME PJ is undertaking new construction

of a HOME-assisted project. The PJ is located in a county that

charges impact fees on a new construction, but will forgo them on

this project. If the county is not a HOME PJ, the city receives

the match credit. If, however, the county is a HOME PJ (i.e., an

urban county or a member of a consortium), the county can claim

the match credit or permit the City to claim the match credit.

Example: Two PJs are undertaking a jointly-funded HOME project.

In addition to its HOME funds, PJ \"A\" contributes funds from a

dedicated revenue source to the project. PJ \"A\" may claim the

match credit or permit PJ \"B\" to claim the credit.

Example: A local PJ is undertaking a HOME-eligible rental project.

The State allocates housing trust fund dollars to the locality for

the project. The State may claim the match credit or permit the

local PJ to claim the credit.

Example: A State uses its own funds for a TBRA program that meets

the HOMe eligibility requirements. The funds are provided to a

local PJ which assists families selected from a local waiting

list. The State may claim the match credit or permit the local PJ

to claim the credit.

X. Match Reduction

The HOME Program statute provides for a reduction of the matching

contribution requirement under the following two circumstances:

A. Fiscal distress

HUD may grant a match reduction to State and local PJs if it finds that

the State or local government is in fiscal distress or severe fiscal
distress.

Match obligation for PJs in fiscal distress and severe fiscal distress
shall

be reduced by 50% and 100%, respectively, for the fiscal year in which
the

finding is made and the next fiscal year. The Department will publish a

separate notice that explains the match reduction procedures and the
criteria

used to determine fiscal distress for States and local governments.

B. Presidential Declaration of Major Disaster

If a PJ is located in an area in which a declaration of major disaster

pursuant to the Robert T. Stafford Disaster Relief and Emergency
Assistance

Act is made, HUD may reduce the PJ\'s matching requirement by up to 100%
for

the fiscal year in which the declaration of major disaster is made and
the

following fiscal year for a local PJ; for a State PJ during that same
period,

the matching requirement may be reduced by up to 100% with respect to
any

funds expended in the area to which the declaration of major disaster
applies.

PJs should submit requests for match reduction based on a declaration of
major

disaster to the local HUD Field Office.

XI\. Tracking Match Obligations and Contributions

The HOME statute requires that each PJ make matching contributions

throughout a federal fiscal year based upon the amount of funds drawn
from its

HOME Investment Trust Fund in that fiscal year. For planning purposes,
most

PJs will project anticipated match liability based on HOME commitments
and

expected expenditures of HOME funds. However, to ensure compliance with
the

statutory requirement that it make match contributions at least equal to
its

match obligation on a fiscal year basis, each PJ must establish a system
that

tracks match liability as it is incurred (based on expenditure of HOME
funds)

and match credit as it is made (based on the rules governing recognition
of

match contributions).

PJs are required to maintain a running log that demonstrates compliance

with the HOME Program matching requirements. This log must identify the
type

and amount of each match contribution. HUD suggests that PJs develop a
single

match log that simultaneously tracks both liability and credit and
provides

other pertinent information about the housing project and/or match

contribution. Appendix D illustrates the information that should be
included

in the log and a suggested format for presenting the necessary
information.

The sample log requires that separate entries be made for each drawdown
of

HOME funds or match contribution made within the fiscal year. The data

elements contained in the sample log include: project designation
number;

date of project commitment; project address; project type (HOME-assisted
or

other affordable housing); HOME funds expended; date of HOME
expenditure;

amount of match liability incurred; value of match contribution; type of

match; date match recognized; and any comments or explanatory
information. If

the PJ is using the proceeds of affordable housing bonds as match, it
should

develop a method of tracking the amount of match credit it earns for
such

loans in relation to the total match liability it incurs in the fiscal
year,

so that it does not exceed the 25% annual limitation on such match.

PJs should note that while compliance with the statutory matching

requirements is determined on a Federal fiscal year basis, reporting on
match

contributions will be based on a PJ\'s HOME program year.

The match log will serve as a management tool for the PJ. The match log

should serve as the basis for reporting match contributions as part of
the

Consolidated Annual Performance and Evaluation Report (which will
replace the

HOME Annual Performance Report).

The match log will also serve as a monitoring tool for HUD. The

Department will examine the PJ\'s log to determine whether it has met
its match

requirement for the fiscal year. The PJ is also required to maintain

documentation in its project files that establish that each contribution

claimed: a) is eligible; b) has been made with respect to a
HOME-assisted or

HOME match-eligible project; and c) has been valued in accordance with
the

HOME interim rule and with customary and reasonable means of
establishing

value. The PJ\'s match log and project files will be subject to
monitoring by

the local HUD Field Office.

Appendix A: Counting Match Contributions in Partially HOME-Assisted and
Mixed-

Use Projects

1\. A building consists of 100 units. Sixty of the units will be HOME-

assisted. Because more than 50% of the units in the project will be

HOME-assisted, the PJ can count its contribution to the 40 non-assisted

units as match. The contribution to these 40 non-assisted can be

counted as match regardless of whether the units qualify as affordable.

2\. A building consists of 100 units. Forty of the units will be HOME-

assisted. Because less than 50% of the units in the project are HOME-

assisted, the PJ cannot count its contribution to the non-assisted units

as match.

3\. A building consists of 100 units. Forty of the units will be HOME-

assisted. Twenty-five of the non-HOME units will be assisted under a

non-Federal housing program and will qualify as affordable housing for

purposes of the HOME Program (HOME match-eligible). The remaining 15

units will not qualify as affordable housing. Although less than 50% of

the units in the project are HOME-assisted, the PJ can count its

contribution to the 25 non-HOME units that will qualify as affordable as

match.

4\. The floor space of a mixed use building is 60% residential and 40%

commercial. The residential portion of the building consists of 10

units that will all be assisted with HOME funds. Because at least 51%

of the floor space is residential, the PJ\'s contribution to the

commercial portion of the building can be counted as match.

5\. The floor space of a mixed use building is 60% residential and 40%

commercial. The residential portion of the building consists of 10

units. Six of the units will be assisted with HOME funds. The

remaining 4 units will not meet the HOME affordability requirements.

Because at least 51% of the floor space is residential, the PJ\'s

contribution to the commercial portion of the building can be counted as

match. In addition, because more than 50% of the residential units will

be HOME-assisted, the PJ\'s contribution to the nonaffordable units can

be counted as match.

6\. The floor space of a mixed use building is 60% residential and 40%

commercial. The residential portion of the building consists of 10

units. Three of the units will be assisted with HOME funds. The

remaining 7 units will not meet the HOME affordability requirements.

Although more than 51% of the floor space is residential, the PJ\'s

contribution to the commercial portion of the building cannot be counted

as match because less than 50% of the residential units will be HOME-

assisted.

Appendix B: Eligibility of Contributions to HOME-Assisted and HOME

Match-Eligible Housing Eligibility of Contributions as Match

in HOME-Assisted Housing and HOME Match-Eligible Housing

Form of Match HOME-Assisted HOME Match-

Housing Eligible Housing

Cash X X

Foregone Taxes, Fees and Other

Charges X

Donated Land or Other Real

Property X X

On-site and Off-site Infrastructure X

Proceeds from Affordable Housing

Bonds X X

Donated Site Preparation and

Construction Materials X X

Donated Use of Site Preparation and

Construction Equipment X X

Donated or Voluntary Labor and

Professional Services X X

Sweat Equity X X

Supportive Services X

Homebuyer Counseling Services X

Appendix C: Calculating Match Contributions

Appendix C: Calculating Match Contributions

Example 1: Below-Market Interest Rate Loans For Borrowed Funds

(\'92.220(a)(1)(ii)(A))

Match contribution for loan made from borrowed funds (other than housing
bond

proceeds) = discounted present cash value of the difference between
payments

made and payments received, based on a discount rate equal to the
interest

rate on the borrowed funds.

Borrowing Terms: \$100,000 @ 8% amortizing monthly over 15 years.

Lending Terms: \$100,000 @ 5% amortizing monthly over 15 years

Calculate PJ\'s monthly payments @ 8%: \$955.65

Calculate monthly payments to PJ @ 5%: \$790.79

Monthly interest foregone \$164.86

Method 1: Using Compound Interest Tables

Use the monthly compound interest table for the interest rate at which

the PJ has borrowed funds (8%). Locate the factor at the intersection

of the column for the present value (or worth) of one per period and the

row that corresponds to the term of the loan. The factor in this

example is 104.640592.

Multiply the monthly interest foregone by the present value factor:

\$164.86 x 104.640592 = \$17,251.05

The PJ\'s match contribution for this loan is \$17,251.

Method 2: Using a Financial Calculator (Texas Instruments Business Anal-

yst) Enter the monthly interest foregone and touch the payment PMT key.

Convert the interest rate to match the compounding periods (in this

case, divide 8 by 12 to obtain the monthly rate); enter the interest

rate and touch the %i key. Enter the number of compounding periods

\(180\) and touch the N key. Touch the compute CPT key, followed by

the present value PV key.

The figure displayed on the register (\$17,251.05) is the PJ\'s match

contribution.

Guide to Calculating Grant Equivalent of Below-Market Interest Rate
Loans

Non-Borrowed Funds (\'92.220(a)(1)(ii)(B))

Match contribution for BMIR loan = discounted present cash value of the
yield

foregone

Step 1: Determining the market rate

The PJ must obtain the applicable average U.S. Treasury Note or Bill

rate for the week in which the loan closed. The Federal Reserve Board

makes these rates available on the following Monday afternoon in a

publication entitled Federal Reserve Weekly Statistical Release H.15.

(Subscriptions cost \$15 for 52 weeks, call 202-452-3244 for

information.) These rates also are printed in the Tuesday edition of

the Wall Street Journal and other major newspapers.

For purposes of the HOME Program, the market rate is determined as

follows:

1-4 units, fixed rate loan: 10-year T-note plus 200 basis points;

1-4 units, adjustable rate loan: 1-year T-bill plus 250 points;

Multifamily projects: 10-year T-note plus 300 basis points.

100 basis points = 1 percentage point

Example: A PJ makes loan to a multifamily project that closed on

March 10, 1994. The average 10 year T-note rate for that week was

6.4%.

Market rate = 6.4% + 3.0% = 9.4%

Step 2: Determining Yield Foregone

Yield Foregone = Potential Yield - Expected Yield,

where the potential yield = the amount the PJ would have realized had it

made that sum of money available through a market rate loan, amortized

over the term of the loan and the expected yield = the amount that the

PJ will actually realize through repayments on the BMIR loan.

Step 3: Calculating the Present Value of the Yield Foregone

PJs must use either financial calculators or compound interest tables to

determine the discounted present value of the yield foregone on a BMIR
loan.

If the BMIR is an amortizing loan with monthly payments:

use the present value (or worth) of 1 per period

use the monthly compound interest table

If the BMIR is an amortizing loan with annual payments:

use the present value (or worth) of 1 per period

use the annual compound interest table

If the BMIR is a nonamortizing loan and payments of principal and/or

interest will be deferred for the term of the loan:

use the present value (or worth) of 1

use the annual compound interest table

To calculate the present value of the yield foregone:

use the compound interest table for the market interest rate or

enter the market interest rate on the financial calculator.

Example 2: BMIR, principal and interest amortized monthly

Multifamily Project

Loan Terms: \$100,000 to a multifamily project @ 4% interest,

amortizing monthly over 15 year period.

Step 1: Determine the Market Rate

10-year T-note rate = 6.5%

Market rate = 6.5% + 3% = 9.5%

Step 2: Calculate the Yield Foregone

Monthly payment @ 9.5% = \$1044.22

Monthly payment @ 4.0% = \$739.68

Monthly Yield Foregone = \$304.54

Step 3: Calculate Present Discounted Value of Yield Foregone

Method 1: Using Compound Interest Tables

Find the compound interest table for the appropriate interest rate and

amortization schedule (in this case, the monthly compound interest table

for a 9.5% rate). Locate the column for the present value of one per

period and the row that corresponds to the term of the loan (15 years).

The figure at the intersection of this column and row is the present

value factor (95.764831).

Multiply the yield foregone by the present value factor:

\$304.54 x 95.764831 = \$29,164.22

The PJ\'s match contribution for this loan is \$29,164.

Method 2: Using a Financial Calculator (Texas Instruments Business

Analyst)

Enter the amount of the yield foregone (see Step 2, above) and touch the

payment PMT key. Enter the number of compounding periods (in this

example, 180 months) and touch the N key. Convert the interest rate

to match the compounding periods (Divide 9.5% by 12 = .7916667 monthly

percentage rate); enter the appropriate interest rate and touch the %i

key. Next touch the compute CPT key followed by the present value PV

key.

The figure displayed on the register (\$29,164.22) is the PJ\'s match

contribution.

Example 3: BMIR, principal only amortizing monthly

Loan Terms: \$100,000 to a multifamily project @ 0% interest,

amortizing monthly over 15 year period.

Step 1: Determine the Market Rate

10-year T-note rate = 6.5%

Market rate = 6.5% + 3% = 9.5%

Step 2: Calculate the Yield Foregone

Monthly payment @ 9.5% = \$1044.22

Monthly payment @ 0% = \$ 555.55

Monthly Yield Foregone = \$ 488.67

Step 3: Calculate Present Discounted Value of Yield Foregone

Method 1: Using Compound Interest Tables

Find the compound interest table for the appropriate interest rate and

amortization schedule (in this case, the monthly compound interest table

for a 9.5% rate). Locate the column for the present value of one per

period and the row that corresponds to the term of the loan (15 years).

The figure at the intersection of this column and row is the present

value factor (95.764831).

Multiply the yield foregone by the present value factor:

\$488.67 x 95.764831 = \$46,797.40

The PJ\'s match contribution for this loan is \$46,797.

Method 2: Using a Financial Calculator (Texas Instruments Business

Analyst)

Enter the amount of the yield foregone (see Step 2, above) and touch the

payment PMT key. Enter the number of compounding periods (in this

example, 180 months) and touch the N key. Convert the interest rate

to match the compounding periods (Divide 9.5% by 12 = .7916667 monthly

percentage rate); enter the appropriate interest rate and touch the %i

key. Next touch the compute CPT key followed by the present value PV

key.

The figure displayed on the register (\$46,797.40) is the PJ\'s match

contribution.

Example 4: BMIR, principal and interest amortized annually

Multifamily Project

Loan Terms: \$100,000 to a multifamily project @ 4% interest,

amortizing annually over 15 year period.

Step 1: Determine the Market Rate

10-year T-note rate = 6.5%

Market rate = 6.5% + 3% = 9.5%

Step 2: Calculate the Yield Foregone

Annual payment @ 9.5% = \$12,774.37

Annual payment @ 4.0% = \$8994.11

Yield Foregone = \$3780.26

Step 3: Calculate Present Discounted Value of Yield Foregone

Method 1: Using Compound Interest Tables

Find the compound interest table for the appropriate interest rate and

amortization schedule (in this case, the annual compound interest table

for a 9.5% rate). Locate the column for the present value of one per

period and the row that corresponds to the term of the loan (15 years).

The figure at the intersection of this column and row is the present

value factor (7.828175).

Multiply the yield foregone by the present value factor:

\$3780.26 x 7.828175 = \$29,592.54

The PJ\'s match contribution for this loan is \$29,593.

Method 2: Using a Financial Calculator (Texas Instruments Business

Analyst)

Enter the amount of the yield foregone (see Step 2, above) and touch the

payment PMT key. Enter the number of compounding periods (in this

example, 15 years) and touch the N key. Enter the appropriate

interest rate (9.5%) and touch the %i key. Next touch the compute

CPT key followed by the present value PV key.

The figure displayed on the register (\$29,592.54) is the PJ\'s match

contribution.

Example 5: Deferred Payment BMIR, principal and interest due at

term

Loan Terms: \$100,000 to a multifamily project @ 4% interest,

Payments deferred, balloon payment at close of year 15.

Step 1: Determine the Market Rate

10-year T-note rate = 6.5%

Market rate = 6.5% + 3% = 9.5%

Step 2: Calculate the Yield Foregone

Potential Yield = the future value of the principal and market rate

interest compounded annually over the term of the loan.

Expected Yield = the future value of the principal and actual interest

compounded annually over the term of the loan.

Example of future value computation for potential yield on a Texas

Instruments Business Analyst: Enter principal amount (\$100,000) and

touch present value PV key. Enter interest rate (9.5%) and touch %i

key. Enter compounding period (15 years) and touch the N key. Touch

the compute CPT key, followed by the future value FV key. The

result is the potential yield. Follow the same procedure for expected

yield.

Potential Yield = \$390,132

Expected Yield = \$180,094

Yield Foregone = \$210,038

Step 3: Calculate Present Discounted Value of Yield Foregone

Method 1: Using Compound Interest Tables

Find the compound interest table for the appropriate interest rate and

amortization schedule (in this case, the annual compound interest table

for a 9.5% rate). Locate the column for the present value of one and

the row that corresponds to the term of the loan (15 years). The figure

at the intersection of this column and row is the present value factor

(.256323).

Multiply the yield foregone by the present value factor:

\$210,038 x .256323 = \$53,837.57

The PJ\'s match contribution for this loan is \$53,838.

Method 2: Using a Financial Calculator (Texas Instruments Business

Analyst)

Enter the amount of the yield foregone (see Step 2, above) and touch the

future value FV key. Enter the annual interest rate (9.5%) and touch

the %i key. Enter the number of compounding periods (15) and touch the

N key. Touch the compute CPT key followed by the present value PV

key.

The figure displayed on the register (\$53,837.57) is the PJ\'s match

contribution.

Example 6: Deferred Payment BMIR, principal only due at term

Loan Terms: \$100,000 to a multifamily project @ 0 interest,

Payments deferred, balloon payment at close of year 15.

Step 1: Determine the Market Rate

10-year T-note rate = 6.5%

Market rate = 6.5% + 3% = 9.5%

Step 2: Calculate the Yield Foregone

Potential Yield = the value of the principal and market rate interest

compounded annually over the term of the loan

Expected Yield = the principal amount

Potential Yield = \$390,132

Expected Yield = \$100,000

Yield Foregone = \$290,132

Step 3: Calculate Present Discounted Value of Yield Foregone

Method 1: Using Compound Interest Tables

Find the compound interest table for the appropriate interest rate and

amortization schedule (in this case, the annual compound interest table

for a 9.5% rate). Locate the column for the present value of one and

the row that corresponds to the term of the loan (15 years). The figure

at the intersection of this column and row is the present value factor

(.256323).

Multiply the yield foregone by the present value factor:

\$290,132 x .256323 = \$74,367.51

The PJ\'s match contribution for this loan is \$74,368.

Method 2: Using a Financial Calculator (Texas Instruments Business

Analyst)

Enter the amount of the yield foregone (see Step 2, above) and touch the

future value FV key. Enter the annual interest rate (9.5%) and touch

the %i key. Enter the number of compounding periods (15) and touch the

N key. Touch the compute CPT key followed by the present value PV

key.

The figure displayed on the register (\$74,367.61) is the PJ\'s match

contribution.

HOME MATCH LOG FY 1994

Project Date Project Proj-HOME Date Amount Value Type Date Comments

Number Project Address ect Funds HOME \$ of of of Match

Commit- Type Expend- Expend- Match Match MatchRecog-

ted ed ed Liabil- Contr- nized

ity ibut-

Incurr- ion

ed

\(1\) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)

000019 10/2/93 20-36 H N/A N/A N/A \$24000 Infra-10/2/utility

Oakland struct- 93 lines

Rd ure street

insta-

lled

3/93

000015 7/30/93 2253 H \$20000 10/22/ \$5000 \$46540 BMIR 10/22 \$70000

Hill- 93 loan /93 Uni

crest Bank

Ave loan,

HOME

2nd

0MR38 10/30/93 16 O N/A N/A N/A \$12500 Loan,10/30 Face

Essex hous- /93 value

Ave ing \$50000

Bond

proc-

eeds

(SF)

000012 6/25/93 325 H \$12000 10/30 \$3,000 N/A N/A N/A N/A

Pros- /93

pect

St

0MR40 11/5/93 56 O N/A N/A N/A \$10000 Loan, 11/5 Face

Court- hous- /93 value

er Ave ing \$40000

bond

proc-

eeds

(SF)

000005 7/5/93 8 H \$15600 11/5/ \$3900 N/A N/A N/A N/A

Pros- 93

pect

Street

000042 11/17/93 3251 O N/A N/A N/A \$100000 Loan,11/17 Face

Parker housing/93 value

Ave bond 200000

(MF)

000019 12/2/93 20-36 H 740000 11/7/ \$185000 N/A N/A N/A Acqu-

Oak- 93 isition

land

Rd

Subtotal \$787600 \$196900 \$193040

Balance \-\-- \-\-- \-\--

Forward

Total \$787600 \$196900 \$193040

HOME MATCH LOG FY 1994

Project Date Project Proj-HOME Date Amount Value Type Date Comments

Number Project Address ect Funds HOME \$ of of of Match

Commit- Type Expend- Expend- Match Match MatchRecog-

ted ed ed Liabil- Contr- nized

ity ibut-

Incurr- ion

ed

\(1\) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11)

000041 6/5/93 8 H N/A N/A N/A \$4200 Forg-12/15 5 year

Prosp- iven /93 forgiv-

ect prop- eness

Street erty

tax

HCD86 7/1/93 127 O N/A N/A N/A \$17500 Don- 12/15 550 hrs

Crescent ated /93 labor,

Rd mater- plumb.

ials & &

labor

electr.

fixtur- es

000012 6/25/93 325 H \$16800 12/17/ \$4,200 N/A N/A N/A none

Prosp- 93

ect

St

000003 5/25/93 14 H \$36400 12/17/ \$9,100 N/A N/A N/A none

Mid- 93

land

Blvd

000026 12/1/93 1440 H 485000 12/20/ 121250 \$6,500 Waived 12/20/ State

West 93 fees 93 trans-

End fer

Rd tax &

record-

ation

fee

000028 12/7/93 85 H N/A N/A N/A \$23220 Donated 1/4/94 Pur-

Mont- land chased rose w/

Rd CDBG

below

apprai-

sed

value

000024 11/20/ 191 H \$12800 1/6/94 \$3,200 N/A N/A N/A Fees

93 Lenox (A&E,

Place credit

report,

cost

est.)

000024 11/20/ 191 H N/A N/A N/A 56452 BMIR 1/9/94 Court-

93 Lenox loan house

Place Sav-

ings

Face

value

\$90000

Subtotal 551000 137750 107872

Balance 787600 196900 193040

Forward

Total 1338600 334650 300912

Instructions:

The purpose of this log is to track HOME expenditures, match liability
and

match contributions on an ongoing basis. Thus, a separate entry should
be

made each time HOME funds are drawn down from the PJ\'s HOME Treasury
account

or a match contribution is made to a HOME-assisted or HOME-match
eligible

project.

\(1\) Enter project designation number, including C/MI or IDIS project
number

for HOME projects

\(2\) Enter date of HOME commitment or legal binding agreement for other

affordable housing.

\(3\) Enter project address(es)

\(4\) Enter H for HOME-assisted project or O for other affordable
housing that

will be counted as match.

\(5\) For HOME projects, enter the amount of HOME funds (excluding
program

income) drawn down for the project.

\(6\) For HOME projects, enter the date that the HOME funds were drawn
down

(i.e., the date that match obligation was incurred.

\(7\) For HOME projects, calculate the amount of match liability
incurred for

project (Column 5 multiplied by 0.25)

\(8\) Enter the amount of the match contribution being logged.

\(9\) Indicate the category of eligible match into which the
contribution

listed in Column 8 falls.

\(10\) Enter the date that the match contribution was recognized under
the HOME

rule.

\(11\) Note any descriptive or necessary information.

Subtotal: Sum the amounts entered in columns 5 (HOME funds expended), 7

(match liability incurred) and 8 (value of match contributions) made on
this

sheet.

Balance Forward: Carry forward and enter the total of all entries made
on

previous sheets for columns 5, 7 and 8.

Total: Enter the sum of the subtotal and the balance forward for columns
5,

7 and 8.