# Presentation: 923300

## U.S. Department of Housing & 

**U.S. Department of Housing & **
**Urban Development **
**CFFP Overview**
**Field Office Conference Call  March, 2008**
**Todd Wendorf**
**Office of Capital Improvements**
**	****	**

**Notes:**
 Kevin

## Field Office has a prominent role
We have made this a major element of our implementation of the program.
Field is our ears and eyes.  
Reality Check 
FO provides front line assessment of capacity of PHAs, and needs of their PH Portfolio 
Difficult to do from D.C. alone
CFFP Web Site provides background/forms, etc. http://www.hud.gov/offices/pih/programs/ph/capfund/ cffp.cfm

- We have made this a major element of our implementation of the program.
- Field is our ears and eyes.
- Reality Check
- FO provides front line assessment of capacity of PHAs, and needs of their PH Portfolio
- Difficult to do from D.C. alone
- CFFP Web Site provides background/forms, etc. http://www.hud.gov/offices/pih/programs/ph/capfund/ cffp.cfm

**Role of the Field Office**

**Notes:**
Kevin

## Prior to Submittal of a CFFP Proposal
The role of the Field Office centers around PHA Plan, LOCCS, and Physical Needs Assessment

During the Review of the CFFP Proposal
Field Offices have closest relationship with PHAs
We rely upon Field Offices to provide us feedback on capacity of PHAs and evaluation of the proposed use of the proceeds.  
Request FO Counsel to review DOTs and ensure that documentation satisfactorily establishes that DOTs are effective and in first position.

- The role of the Field Office centers around PHA Plan, LOCCS, and Physical Needs Assessment
- During the Review of the CFFP Proposal
- Field Offices have closest relationship with PHAs
- We rely upon Field Offices to provide us feedback on capacity of PHAs and evaluation of the proposed use of the proceeds.
- Request FO Counsel to review DOTs and ensure that documentation satisfactorily establishes that DOTs are effective and in first position.

**Role of the Field Office**

**Notes:**
Kevin

## After approval of the CFFP Proposal
Receive and Review Quarterly Reports on the use of the CFFP Proceeds
Close – Out – as you would any Capital Fund Grant
Ongoing 
Annually, on a timely basis, review and approve PHA Plan showing use of CF for debt service 
Annually, and on a timely basis, execute Capital Fund Amendment to the ACC

- Receive and Review Quarterly Reports on the use of the CFFP Proceeds
- Close – Out – as you would any Capital Fund Grant
- Ongoing
- Annually, on a timely basis, review and approve PHA Plan showing use of CF for debt service
- Annually, and on a timely basis, execute Capital Fund Amendment to the ACC

**Role of the Field Office**

**Notes:**
Kevin

## Physical Need Assessment Requirements

Submit as part of PHA Plan
Must Cover Entire Portfolio
Must span the term of the financing – usually 20 years
Must Take Into Account Life Cycle Replacement Costs of All Major Building Systems
Survey a statistically valid sampling of units.  No less than 10% of the units at each project.
CFFP PNA Form – designed to help PHAs meet these requirements

- Submit as part of PHA Plan
- Must Cover Entire Portfolio
- Must span the term of the financing – usually 20 years
- Must Take Into Account Life Cycle Replacement Costs of All Major Building Systems
- Survey a statistically valid sampling of units.  No less than 10% of the units at each project.
- CFFP PNA Form – designed to help PHAs meet these requirements

**Role of the Field Office Pre-Submittal**

**Notes:**
Kevin

## Physical Needs Assessment
Role of the FO in reviewing the PNA Form
Is there a PNA form included for all projects in the PHAs inventory including PHA wide nondwelling spaces?
Are all areas of the form properly filled out?
Was the PNA included in an approved PHA Plan (See Field Office Certification Section)
Was there a representative sample of units inspected in accordance with the Modernization Handbook?
Do the life cycle replacement periods appear reasonable? Are there life cycle replacement periods for all building systems?
Does the PNA contain items that are not eligible under the CFP?  Luxury items such as Jacuzzis.

**Role of the FO in reviewing the PNA Form**
- Is there a PNA form included for all projects in the PHAs inventory including PHA wide nondwelling spaces?
- Are all areas of the form properly filled out?
- Was the PNA included in an approved PHA Plan (See Field Office Certification Section)
- Was there a representative sample of units inspected in accordance with the Modernization Handbook?
- Do the life cycle replacement periods appear reasonable? Are there life cycle replacement periods for all building systems?
- Does the PNA contain items that are not eligible under the CFP?  Luxury items such as Jacuzzis.

**Role of the Field Office Pre-Submittal**

**Notes:**
Kevin

## PHA Plan and CFFP
PHA must include CFFP in their PHA Plan
Must budget for d/s payments on regular annual statement under BLI 9000 and also in the 5 year action plan 
Must include a separate annual statement detailing the budgeted use of CFFP proceeds
Prior to CFFP submittal, must have approved PHA Plan with CFFP requirements
Field Office can specify in PHA Plan approval letter that undertaking financing requires written approval of DAS of OPHI.
PHA approves PHA plan with debt service included

- PHA must include CFFP in their PHA Plan
- Must budget for d/s payments on regular annual statement under BLI 9000 and also in the 5 year action plan
- Must include a separate annual statement detailing the budgeted use of CFFP proceeds
- Prior to CFFP submittal, must have approved PHA Plan with CFFP requirements
- Field Office can specify in PHA Plan approval letter that undertaking financing requires written approval of DAS of OPHI.
- PHA approves PHA plan with debt service included

**Role of the Field Office Pre-Submittal**

**Notes:**
Tom

## LOCCS Primer – Automatic Payments

Most CFFP transactions setup with Direct LOCCS Payments for Debt Service (HQ OCI sets up) 
Role of the Field Office
Open Grants – funds budgeted for BLI 9000 debt service payments in Annual Statement should be spread by the field into BLI 9000 upon approval of the PHA Plan.
The Field Office will not need to spread any funds for future debt service payments. 
Future Grants -  will be targeted for debt service payments when funds become available.  Debt service payments will be automatically spread in either BLI 9001 or 9002 just like BLI 0110 Initial Budget, 1410 Administration, and 1408 Management Improvements.

- Most CFFP transactions setup with Direct LOCCS Payments for Debt Service (HQ OCI sets up)
- Role of the Field Office
- Open Grants – funds budgeted for BLI 9000 debt service payments in Annual Statement should be spread by the field into BLI 9000 upon approval of the PHA Plan.
- The Field Office will not need to spread any funds for future debt service payments.
- Future Grants -  will be targeted for debt service payments when funds become available.  Debt service payments will be automatically spread in either BLI 9001 or 9002 just like BLI 0110 Initial Budget, 1410 Administration, and 1408 Management Improvements.

**Role of the Field Office Pre-Submittal**

**Notes:**
Tom

## Field Office Confirmations 
Received Proposal
PHA Capacity
LOCCS Obligation/Expenditure Compliance
Support Proposal
Approved PHA Plan includes 
use of proceeds, 
use of CFP for debt service, and
PNA
TDC 
FO completes analysis and confirms that each project upon which the proceeds are to be used is within TDC limits.

- Received Proposal
- PHA Capacity
- LOCCS Obligation/Expenditure Compliance
- Support Proposal
- Approved PHA Plan includes
- use of proceeds,
- use of CFP for debt service, and
- PNA
- TDC
- FO completes analysis and confirms that each project upon which the proceeds are to be used is within TDC limits.

**Role of the Field Office  - Proposal Review**

**Notes:**
Todd

## Declaration Of Trust (DOT) Confirmations
DOTs effective and in first position for each property proceeds will be used upon
PHA Counsel Certifies and submits DOTs
FO Counsel confirms that documentation satisfactorily demonstrates that an effective DOT is recorded in first position at each property.
This can be long lead term item.  
FO Director plays a prominent role in getting this work prioritized by the FO Counsel.  
Request to FO counsel should take place within 3 business days of notification to FO.  
Review by FO Counsel should be complete within one month

- DOTs effective and in first position for each property proceeds will be used upon
- PHA Counsel Certifies and submits DOTs
- FO Counsel confirms that documentation satisfactorily demonstrates that an effective DOT is recorded in first position at each property.
- This can be long lead term item.
- FO Director plays a prominent role in getting this work prioritized by the FO Counsel.
- Request to FO counsel should take place within 3 business days of notification to FO.
- Review by FO Counsel should be complete within one month

**Role of the Field Office  - Proposal Review**

**Notes:**
Todd

## Participation in Panel
PHA will have to live with impact of financing
Field Office will have to live with PHA
It is important to OPHI that the Field Office is as familiar with the details of the transaction as possible, and has a meaningful opportunity to surface issues or ask questions
OCI holds Panels, similar to a loan committee, where the details of the Proposal are reviewed.  
FO Directors and appropriate staff are invited and  encouraged to participate in Panels.

- PHA will have to live with impact of financing
- Field Office will have to live with PHA
- It is important to OPHI that the Field Office is as familiar with the details of the transaction as possible, and has a meaningful opportunity to surface issues or ask questions
- OCI holds Panels, similar to a loan committee, where the details of the Proposal are reviewed.
- FO Directors and appropriate staff are invited and  encouraged to participate in Panels.

**Role of the Field Office  - Proposal Review**

**Notes:**
Todd

## Quarterly P&Es
CFFP Proceeds do not appear in LOCCS
As part of our Approval, we require PHA’s to submit P&Es both:
Annually as part of PHA Plan
Quarterly to FO PIH 
Role of the Field Office
Ensure that PHA is submitting P&E on a quarterly basis
Monitor Rate of Obligation and Expenditure
Bond/Loan documents and CFF Amendment to the ACC carry a provision that requires prepayment prior to a violation of the obligation and expenditure limits (see attached CFF Amendment to the ACC)

- CFFP Proceeds do not appear in LOCCS
- As part of our Approval, we require PHA’s to submit P&Es both:
- Annually as part of PHA Plan
- Quarterly to FO PIH
- Role of the Field Office
- Ensure that PHA is submitting P&E on a quarterly basis
- Monitor Rate of Obligation and Expenditure
- Bond/Loan documents and CFF Amendment to the ACC carry a provision that requires prepayment prior to a violation of the obligation and expenditure limits (see attached CFF Amendment to the ACC)

**Role of the Field Office  - Post Approval**

**Notes:**
Todd

## Changes to CFFP Proposal Post Approval
There are two levels of approval a PHA would need to obtain from the FO, depending upon the nature of the change
PHA Plan – up to certain limits, budget modifications are approved in the same manner a change in the use of Capital Funds would be handled, through an approval of the PHA Plan
Past Threshold, Additional Written Approval from the FO is required
A change in the type of activity (e.g., development verses modernization) being financed.
A change in the public housing project upon which the proceeds are being used.
A reduction of 20% or more in the number of public housing units the proceeds will be used upon.
An increase of 20% or more in the cost of non-dwelling space.
OCI will play consultative role

- There are two levels of approval a PHA would need to obtain from the FO, depending upon the nature of the change
- PHA Plan – up to certain limits, budget modifications are approved in the same manner a change in the use of Capital Funds would be handled, through an approval of the PHA Plan
- Past Threshold, Additional Written Approval from the FO is required
- A change in the type of activity (e.g., development verses modernization) being financed.
- A change in the public housing project upon which the proceeds are being used.
- A reduction of 20% or more in the number of public housing units the proceeds will be used upon.
- An increase of 20% or more in the cost of non-dwelling space.
- OCI will play consultative role

**Role of the Field Office  - Post Approval**

**Notes:**
Todd

## Removal From Inventory
Capital Funds are dependant upon the existence of public housing units
Capital Fund Financing – as its name implies – is dependant upon the continued receipt of Capital Funds by a PHA
As part of their financing documents – PHAs generally covenant against undertaking activities that would reduce the amount of Capital Funds they receive.
Reductions in inventory would harm the investors and the PHA
Reduced Debt Coverage Ratio
Reduced amount of Capital Funds to maintain remaining portfolio
If PHAs Remove Units from Inventory – generally they would be required to prepay a portion of the financing first – so as to maintain the existing Debt Coverage Ratio.

- Capital Funds are dependant upon the existence of public housing units
- Capital Fund Financing – as its name implies – is dependant upon the continued receipt of Capital Funds by a PHA
- As part of their financing documents – PHAs generally covenant against undertaking activities that would reduce the amount of Capital Funds they receive.
- Reductions in inventory would harm the investors and the PHA
- Reduced Debt Coverage Ratio
- Reduced amount of Capital Funds to maintain remaining portfolio
- If PHAs Remove Units from Inventory – generally they would be required to prepay a portion of the financing first – so as to maintain the existing Debt Coverage Ratio.

**Role of the Field Office  - Post Approval**

**Notes:**
Kevin