HOPE VI MAIN STREET NOFA

FREQUENTLY ASKED QUESTIONS, SET 2

Q-1. The NOFA states that the applicant or its developer must have site
control of the properties where the affordable housing units will be
located. Does this mean that the city has to own the properties?

A-1. No, the local government that is applying for a grant through this
NOFA does not have to own the properties that will be part of the Main
Street Affordable Housing Project. Section III.C.1.f. of the NOFA, on
page 42153, first column, states, "The applicant, or recognized
developer entity of the project, must have site control of all
properties where affordable housing will be developed on or before the
application submission date." This means that the applicant city, or
some entity that has signed a developer agreement with the applicant
city, has the legal authority to commit the owner of the property to the
rehabilitation that will be performed with HOPE VI Main Street grant
funds. Some examples of site control are: 1) The local government owns
the property outright; 2) The private-owner of the property and the
applicant have signed a developer agreement and the private-owner is the
developer; 3) The government- or private-owner has signed a developer
agreement with a separate developer and the agreement gives the
developer control; 4) The applicant or developer has an option to
purchase on the property that covers a reasonable time period (grant
funds cannot be used to purchase a property, but leverage funds can); 5)
An owner-entity partnership was formed between the original owner and
the applicant or the developer (or both) and possibly a third-party
investor (Tax Credits) and the developer is the General Partner; etc.

Note that site control is required, "on or before the application
submission date." It is expected that an agreement that furnishes site
control to the applicant, or its developer, may not have existed before
the HOPE VI Main Street NOFA was published, and that such agreements
have to be put in place after the publication date.

Q-2. My city wants to use the grant funds to rehabilitate two privately
owned buildings. As the applicant, we will get the grant funds. How do
we transfer the funds to the private-owners?

A-2. The NOFA is silent on this point. The means of transferring funds
from the grantee city to the owner is up to the grantee. The grantee may
subgrant the funds to the owner, may loan the funds to the owner through
a hard or soft loan, or may use other legal ways to transfer the funds.
The transfer method must be properly documented and pass independent
audits that are required of the city and of all Federal grantees. See
the General Section of the SuperNOFA for related OMB Circulars and other
requirements. There are no unusual audit requirements imposed by the
NOFA.

Note that if neither the grantee nor the owner/developer has used
Federal grant funds before, Federal procurement (if the city is the
developer) and audit requirements should be reviewed by all interested
parties for effects on development costs and the program schedule.

Q-3. I want to increase my leverage in the housing project. Can I use
the grant funds to secure a private mortgage loan?

A-3. No. Grant funds cannot be pledged as security for a loan or bond
issue without HUD's prior approval. However, the applicant or developer
may include in their rehabilitation plan a private mortgage loan based
on the post-rehabilitation cash flow of the property. A loan application
for such a loan would probably include several required parts of this
application, including the form HUD-52861, "HOPE VI Main Street
Application Data Sheet," and the 5-year proforma.

Note that a construction loan that is fully replaced by permanent
financing will not be counted towards leverage. If, however, a bank
donates a portion of the cost of construction, and does not require full
replacement with permanent financing, the amount donated (not replaced)
may be counted as leverage.

**Q-4. My city has been working to rejuvenate our downtown for several
years. But, we have never put together a Master Plan that has been
accepted by the State or the National Trust for Historic Preservation.
Is it too late to write a Master Plan?**

A-4. A Master Plan, or summary of a Master Plan, must be included in the
application to meet the Master Plan threshold. However, the Master Plan
does not need to consist of one document that strategically explains all
of the aspects of a Main Street rejuvenation effort. It can be a
collection of many documents that provide evidence of activity related
to a revitalization effort within the applicant's downtown area.

Section III.C.2.c. of the NOFA, page 42154, first column, lists six
requirements that a document, or group of documents taken together, must
meet in order to be considered a Master Plan by HUD. At least one
document must be dated at least 3 years prior to the NOFA's publication
date, and some part of the plan (or one of the included documents) must
have been prepared by an architect, land planner, or qualified planning
professional. A multi-document Master Plan may include, but is not
limited to, minutes from City Council meetings, proposals from a
non-profit or property owner to the applicant requesting support for
some downtown revitalization effort, lists of expenditures for Main
Street related work that has been done, or other documentation that
demonstrates Main Street related activity within the applicant's
jurisdiction. Note that affordable housing had to be included in the
plan before the NOFA was published, but the exact locations of that
housing could be determined any time before the application submission
date.

Section I.D.13. of the NOFA, page 42151, middle column, states the
definition of a Master Plan. The section lists seven areas that a Master
Plan would cover, plus the requirement that the above HOPE VI Main
Street program requirements be met.