Arkansas Administrative Code › Agency 109 - Arkansas Development Finance Authority › Division 04 - Multi-Family Housing › Rule 109.04.11-002 - 2012 HOME Investment Partnership Program Policy and Operations Manual

Current through Register Vol. 49, No. 6, June, 2024
CHAPTER 1:
INTRODUCTION AND PURPOSE
CONGRATULATIONS!!
* Congratulations on your HOME Investment Partnerships Program
				(HOME) award!
* The Arkansas Development Finance Authority ("ADFA" or the
				"Authority") will work closely with the State Recipients, Subrecipients, owners
				and developers to ensure that eligible Arkansans have access to affordable,
				decent, safe, and sanitary housing. Together our commitment to affordable
				housing goes beyond the enforcement of administrative procedures and extends to
				the people and the communities being served.
PROGRAM FUNCTIONS AND BACKGROUND
* The Arkansas Development Finance Authority ("ADFA" or the
				"Authority"), a public body politic and corporate, with corporate succession,
				was created May 1, 1985, in part to assist low-income and under-served
				Arkansans in the financing, development and preservation of affordable
				housing.
* ADFA receives HOME Investment Partnerships Act funding from
				HUD (the HOME Act, Title II of the Cranston-Gonzalez National Affordable
				Housing Act) as a state Participating Jurisdiction (PJ), and then makes awards
				to eligible organizations who, in turn, disburse the HOME funds to qualified
				households in Arkansas communities.
* The HOME Investment Partnerships Program ("the HOME Program")
				was created to provide funds to expand the supply of affordable housing for
				very low-income and low-income persons.
* ADFA embraces its responsibility to administer the HOME
				Program that has been entrusted to it.
>
ADFA will administer the HOME Program
				creatively, effectively and efficiently under the housing conditions that exist
				in the State of Arkansas (the "State") and with all practical safeguards
				against waste or fraud.
>
ADFA will practice and advocate innovation,
				flexibility and expansion in program design to address unmet housing needs
				throughout the state.
USING THE ADFA HOME PROGRAM OPERATIONS
				MANUAL
* State Recipients, Subrecipients and funded entities should
				read this manual to learn the rules and requirements associated with ADFA's
				HOME Program. Different rules apply to different activities (homeowner, rental
				and TBRA), therefore readers should refer to relevant chapters as listed in
				Exhibit 1.1.
* Funding Recipients must follow procedures described in the
				ADFA HOME Program Operations Manual and use all referenced ADFA forms.
				Referenced appendices and accompanying resources provide additional information
				and instruction. ADFA's manual, forms, and appendices are available online
				at:
http://www.arkansas.gov/adfa/htm
EXHIBIT 1.1 Chapters to Reference for each
				Activity
Chapter Number
Chapter Name
Homeowner-Owner Occupied Rehab
Homebuyer
Rental
Tenant
Based Rental
Assistance
(TBRA)
2
Administrative Overview and Management
X
X
X
X
3
General Requirements of the HOME Program
X
X
X
X
4
Homeowner Occupied Rehabilitation/Reconstruction
X
5
Homeownership Development
X
6
Rental Housing Program
X
7
Tenant-Based Rental Assistance
X
8
Community Housing Development Organizations
X (if applicable)
X (if applicable)
9
Recordkeeping/Reporting
X
X
X
X
10
Procurement
X
X
X
11
Construction Management
X
X
X
12
Environmental Review
X
X
X
X
13
Other State/Federal Requirements
X
X
X
X
14
Match
X
X
X
X
DISCLAIMER
This manual is for ADFA HOME Recipients and/or any related
				parties as a support and practical guidance related to the HOME Program.
It is not intended to change, enlarge or restrict any
				requirement found in the contracts, Department of Housing and Urban Development
				(HUD) Final Rule, Arkansas Development Finance Authority (ADFA or Authority)
				rules and policies and/or any related federal or state rule governing this
				program.
This manual is not meant to be a substitute for HOME Program
				regulations, but as a supplement to them. It is not exhaustive regarding all
				considerations affecting the use of HOME Program funds. While careful
				consideration and due care has been used in developing the manual, HOME Program
				participants are encouraged to consult with ADFA HOME Program staff to ensure
				correct interpretation of policies and regulations. ADFA reserves the right to
				implement additional policies as needed.
CHAPTER 2:
ADMINISTRATIVE AND
			 MANAGEMENT OVERVIEW
Recipients of HOME funds are subject to a number of general
				administrative requirements and must manage their program to comply. Here we
				discuss these requirements and how to put in place proper systems and
				procedures to start up a solid program.
This chapter covers administrative requirements and management
				considerations that HOME fund Recipients should have in mind when they are
				successful in their application to ADFA and receive HOME funds. The first part
				of the chapter discusses how to get started - the agreements and systems that
				should be put in place, good practices for administering and managing HOME
				funds, and also how to complete draws for HOME funds. The second part of the
				chapter covers specific administrative requirements including HOME rules for
				administrative and planning costs, Federal uniform administrative requirements,
				HOME written agreements, conflict-of-interest provisions, prohibition against
				the use of HOME funds for inherently religious activities, HOME rules for
				program income, assisting with the Integrated Disbursement and Information
				System (IDIS) requirements, and other ADFA administrative requirements.
GETTING STARTED
* Certifications
. Applicants applying for HOME
				Program funds must successfully complete the following certification
				courses:
>
HOME Program Certification - Effective
				January
1, 2011
applicants applying for HOME Program funds must
				complete and successfully pass the HOME Program Certification Exam prior to
				receiving funding, exclusive of ADDI funds.
[TICK] The Certification course is a 2 ½ day training
				which will provide a thorough knowledge and understanding of the HOME Program
				rules and regulations.
[TICK] Applicants will be required to have at least one member
				of the development team who has successfully completed and passed the
				Certification Exam.
[TICK] Development team may include:
.
Owners, Developers, Sponsors of the
				project
.
Consultants
.
Management Company
.
Community Housing Development Organizations
				(CHDO)
.
Subrecipients - Project Administer
>
Certified HOME Program Administrators and
				Consultants will be required to obtain annual HOME Program continuing
				education.
[TICK] Continuing education may be obtained by attending at
				least one of the following classes:
.
ADFA sponsored continuing education
				classes.
.
Attendance at the annual ADFA Housing
				Forums
.
HOME Program Certification Classes (No exam
				required)
[TICK] If a Certified HOME Program Administrators or
				Consultant fails to obtain the HOME Program continuing education, the Certified
				HOME Program Administrator or Consultant will be required to take the HOME
				Program Certification Training and successful pass HOME Certification Exam
				prior to receiving funding, exclusive of ADDI funds.
>
Fair Housing Certification - Effective
January 1, 2012
applicants applying for HOME Program funds must
				successfully complete Fair Housing Training Course prior to receiving
				funding.
[TICK] The training course will provide a thorough knowledge
				and understanding of the Fair Housing Act.
[TICK] Applicants will be required to have the following
				members of the development team who have successfully completed the
				course:
.
Owners, Developers, Sponsors of the
				project
.
Consultants
.
Management Company
.
Architects
.
Community Housing Development Organizations
				(CHDO)
.
Subrecipients - Project Administer
* Capacity.
Applicants will be required to have at
				least one member of the development team who has one or more years of housing
				development experience and has successfully completed at least one affordable
				housing project.
Program Recipients will take several steps, upon receipt of the
				award and before any project work begins. These are described below.
*
Award notification.
Upon ADFA Board approval of
				the HOME Program application, ADFA will issue an Award Letter to a Recipient
				that specifies the award amount and any applicable conditions.
*
Agreement.
ADFA HOME agreements have to be
				executed to codify the details the ADFA HOME award upon satisfactory
				environmental review. The Recipient agreement will specify ADFA's expectations
				and requirements.
>
Written Agreements will include general
				requirements that are applicable across all ADFA HOME programs.
[TICK] General requirements are specified in detail in the
				Chapter 3: General Requirements.
>
Program specific details that are specified
				in written agreements will reflect the details of the approved application and
				ADFA HOME parameters.
[TICK] ADFA HOME parameters for specific programs are detailed
				in Chapter 4: Homeowner Rehabilitation Housing Program, Chapter 5: Homebuyer
				Housing Program, Chapter 6: Rental Housing Program, and Chapter 7: Tenant-Based
				Rental Assistance. Please review the appropriate chapter for your
				program.
*
Notice to proceed.
To ensure that all HOME
				Program requirements have been met, no work shall begin until all documentation
				has been executed, a preconstruction conference, and ADFA issues a Notice to
				Proceed.
*
Project set up.
ADFA expects that Recipients
				will complete IDIS Set Up Forms for each project and/or individual activity
				that is carried out within the scope of the administered program.
*
Pre-construction conference.
For all projects
				that involve construction (multi- and single-family development activities and
				homeowner rehabilitation), pre-construction conferences must be conducted prior
				to commencing construction.
>
For rental activities the pre-construction
				conference must be conducted with the development team and an ADFA
				representative.
>
For homeowner activities the pre-construction
				conference must be conducted with the applicant/consultant, the homeowner, the
				contractor, and an ADFA Inspector.
CRITICAL SUCCESS FACTORS
To be successful in the use of administration and management of
				HOME funds, Recipients should consider several factors that are critical to
				success. They include readiness to initiate the program and the ability to
				account for funds. There are also a number of sound management practices that
				support success.
*
Readiness.
ADFA expects that Recipients will
				initiate programs immediately upon receipt of Notice to Proceed.
>
Applicants applying for HOME Program funds
				must begin their program activities and/or developments within ninety (90) days
				of the Notice to Proceed.
>
Recipients that do not commence program
				activities and/or developments within ninety (90) days risk the loss of their
				award, unless otherwise approved by ADFA.
[TICK] ADFA realizes that there may be extenuating
				circumstances that may delay the beginning of a program/project. Such
				circumstances will be reviewed on a case-by-case basis.
>
Funds that are lost by Recipients will be
				reallocated to other eligible activities.
*
Accountability.
ADFA expects that Recipients
				will be accountable for all ADFA HOME funds distributed through their programs.
				To that end, Recipients are expected to:
>
Monitor beneficiaries and contracted/partner
				entities for appropriate expenditures.
[TICK] Please refer to ADFA's Compliance and Monitoring Manual
				for more guidance on monitoring requirements.
>
Provide accurate beneficiary and expenditure
				activity to ADFA.
[TICK] IDIS Set Up forms must be used for each project and/or
				activity within a program.
[TICK] IDIS Set Up forms must accurately reflect beneficiary
				information.
[TICK] Changes must be documented and reported to ADFA.
[TICK] IDIS Close Out reports must be completed and submitted
				to close out each project/activity.
[TICK] Please review the IDIS section of this chapter for
				further details.
*
Other good practices.
There are several key
				steps in the effective administration of a HOME program that will aid
				Recipients in running good ADFA HOME programs. ADFA strongly urges Recipients
				to consider these steps and implement them in the administration of all ADFA
				HOME program activities:
> Hire, organize, and staff key functions
: The
				core of an effective HOME program is its staff;
[TICK] Staff must be knowledgeable (or trained) to work well
				with clients, partners, and each other; and
[TICK] There must be systems in place to track and manage
				performance.
> Choose qualified partners:
Recipients should
				have systems for selecting partners that are:
[TICK] Easily understood and fair; and
[TICK] Capable of delivering projects that meet or exceed
				expectations and comply with requirements in the written agreement with
				ADFA.
[TICK] As noted above, Recipients must monitor the performance
				of their partners and take appropriate, timely action to correct
				problems.
> Develop effective policies and procedures:
Policies and procedures are the backbone to the operations of a program.
				ADFA expects that Recipients will have policies and procedures in place to
				guide staff and partners.
[TICK] Policies and procedures must be clear and easily
				understood.
[TICK] Policies and procedures must be current and
				reflect:
* What must be done;
* Who should do the work; and
* When it should be done.
[TICK] They must be followed and performance should be
				monitored to ensure compliance.
> Advertise the program appropriately:
Recipients are expected to identify and serve appropriate beneficiaries,
				especially under-served populations.
> Make strategic project investments:
Recipients are expected to have the capacity to underwrite and fund
				projects that meet local goals and the intent of the HOME program.
[TICK] In particular, this means that projects that are
				ill-conceived, under-funded, or are not consistent with program goals do not
				get awarded HOME funds.
> Use ADFA prepared closing documents and template
				agreements:
Written Agreements set the parameters for measuring and
				monitoring performance.
[TICK] They must be complete, and clearly describe the project,
				roles of the Recipient and the partner involved.
[TICK] They must set realistic, achievable milestones for
				achievement and describe consequences for failure to meet them.
> Oversee construction effectively:
Good
				construction management is essential to the HOME program's success. Please see
				Chapter 11: Construction Management for details.
[TICK] It begins with a pre-construction conference and follows
				with regular progress and a final inspection.
* The HOME program has a number of property standards that must
				be understood and followed.
* Inspection reports will cover compliance with applicable
				property codes and standards.
[TICK] Costs to develop or preserve housing must be reasonable,
				and budgets and invoices must be reviewed by knowledgeable staff persons prior
				to approval.
[TICK] It also includes reporting that is taken seriously by
				both the PJ and its partner, and tracks information that is useful and
				accurate.
> Manage affordability period compliance:
The
				Recipient is responsible for ensuring that beneficiaries are income eligible
				and contractors and/or partners involved in the process are adequately
				verifying incomes.
[TICK] In addition, rental projects must be effectively managed
				during the affordability period. This includes managing rents, unit quality,
				and re-certifying incomes.
> Ensure effective financial management:
Recipients are subject to the Federal Uniform Administrative
				Requirements which are detailed in a later section in this chapter. In
				addition, Recipients must be able to evaluate budgets and proposals from
				contractors and/or partners to determine if they appear to be financially
				sound.
[TICK] Recipients must be able to anticipate the need for HOME
				funds and budget accordingly. This is particularly important when running a
				Tenant Based Rental Assistance (TBRA) program.
[TICK] They also must have the capacity to train (if needed)
				and monitor their partners to ensure that their financial management systems
				can provide sufficient information to prevent fraud or waste, make informed
				budgeting decisions, and track source documentation of expenditures.
> Keep records and monitor:
Again, Recipients
				are required to monitor their own program and the performance of their
				partners.
[TICK] They must keep records sufficient to demonstrate to ADFA
				that HOME funds have been spent appropriately and within the intent of the
				program and compliant with its regulations.
[TICK] Recipients must provide information regarding their
				annual performance in annually administering HOME funds to ADFA so that ADFA
				can report the information and make it available to HUD and the public for
				review.
[TICK] ADFA may require additional information upon request for
				presentations or information from members of its governing body and the public
				to demonstrate performance and outcomes of the ADFA HOME program.
> Evaluate program effectiveness:
ADFA must, as
				part of its annual monitoring requirement, look at internal operations.
HOME PROGRAM DRAWS
* Disbursement of HOME Program funds will occur only when all
				of the following conditions have been met:
>
Required environmental review process has
				been satisfactorily completed.
>
Project closing documents are finalized. The
				written HOME Program Agreement will reflect the following:
[TICK] A project completion date acceptable to ADFA and the
				Recipient of the HOME Program funds;
[TICK] Payment of the HOME Program funds (e.g., how the funds
				will be disbursed: at the beginning of the project or on a prorata basis, or as
				final funds are disbursed); and
[TICK] Provisions for the timing of HOME Program fund
				disbursements.
>
Complete IDIS set up information has been
				submitted to ADFA staff and ADFA staff has completed IDIS activity set up. See
				section on (IDIS) below for additional details.
>
ADFA issues a Notice to Proceed. To ensure
				that all HOME Program requirements have been met, no work shall begin until all
				documentation has been executed and a Notice to Proceed is issued by
				ADFA.
>
A pre-construction conference is held.
[TICK] For rental activities the pre-construction conference
				must be conducted with the development team and an ADFA representative.
[TICK] For homeowner activities the pre-construction conference
				must be conducted with the applicant/consultant, the homeowner, the contractor,
				and an ADFA Inspector.
* Payment details including timeline for reimbursement will be
				outlined in the project closing documents, specifically the HOME Written
				Agreement.
* General ADFA requirements regarding reimbursement of costs
				include:
>
Cost incurred prior to HOME Program fund
				allocation shall not be reimbursed (except in the case of an eligible soft cost
				or an interim construction loan approved by ADFA).
>
Retainage will be released thirty (30) days
				after the final inspection is approved and upon ADFA's receipt of pay request
				and all completion documentation.
[TICK] Completion documentation required for release of
				retainage on rental activities include:
*
Final completed Project Breakdown Pay Estimate
				Itemization (ADFA Form 2011)
*
HOME Disbursement Certification Form (ADFA Form
				2012)
*
Owners Completion Certificate and Authorization
				of Payment to Contractors - (ADFA 10000)
*
Project Completion Form (HUD Form 40097)
*
Final Inspection Report by ADFA Inspector
*
Plumbing Certification
*
HVAC Certification
*
Electrical Certification
*
Certificate of occupancy (s) (for all buildings
				comprising the property)
*
Certificate and Release of Liens (ADFA
				Form)
*
Certification of Final Inspection (ADFA
				Form)
*
Placed in Service Form (ADFA Form)
*
Section 3 Compliance Report and
				Documentation
Advertisement/Flyers/and any additional efforts to hire low and
				very low income county residents)
*
Names, address, telephone number, and type of
				work for all subcontractors
*
Release of Liens by Contractor
*
Cost Certification
*
Warranty Information for all Products
*
Copy of Tenant Selection Criteria
*
Affirmative Fair Housing Marketing Plan
				Documentation
Proof of advertisement, flyers, proof of community contact
				letters being mailed photo of project sign, waitlist and any other lease up
				marketing efforts)
*
Proof of current Hazard/Liability Insurance
				naming ADFA as additional insured
*
Management agreement between owner and
				agent
* Match supporting documentation to reconcile with original
				application * Evidence of Operating Reserve requirements have been satisfied
				per application (Bank Statements)
*
Completion of project information in the ADFA
				Housing Registry Database
*
Any additional information and/or documentation
				which ADFA staff may deem necessary and appropriate to ensure compliance
[TICK] Completion documentation required for release of
				retainage on homeowner activities include:
*
Pay Estimate Itemization Form
*
ADFA Inspection Report
*
HOME Disbursement Certification Form (ADFA
				2012)
*
Owners Completion Certificate and Authorization
				of Payment to Contractors - (ADFA 10000)
*
Certification of Final Inspection - (ADFA
				Form)
*
Electrical Certification
*
HVAC Certification
*
Plumbing Certification
*
Certificate and Release of Liens - Notarized
				with valid notary stamp
*
Homeowner Rehab Set Up Completion Form (HUD
				40096)
*
Lead Base Paint Clearance Letter - Required for
				all housing built prior to 1978
*
Proof of Homeowner Insurance - ADFA listed as
				additional insured
*
Completion of project information in the ADFA
				Housing Registry Database
*
Any additional information and/or documentation
				which ADFA staff may deem necessary and appropriate to ensure compliance
[TICK] Completion documentation required for release of
				delivery costs on homeowner activities include:
*
Certification of Delivery Costs
*
Acknowledgement Page - Notarized with valid
				notary stamp
*
Audit
(Section "Y" of ADFA Policy &
				Procedures Manual)
*
Any additional information and/or documentation
				which ADFA staff may deem necessary and appropriate to ensure compliance
[TICK] If any HOME Program funded project has an available
				balance after development completion and release of retainage, ADFA will
				de-obligate those funds and reallocate such balance of HOME Program funds to
				other eligible activities according to ADFA's adopted HOME Program allocation
				process.
ELIGIBLE ADMINISTRATIVE AND PLANNING COSTS
ADFA allows Recipients a maximum of 10% of their allocation for
				reasonable administrative and planning costs. These include staff costs as well
				as other administrative costs. Details on how to determine what is eligible and
				reasonable are in the subsections below.
* The 10% cap includes certain soft costs incurred by
				Recipients are project-related. Again, see the details on how to determine what
				is eligible as a project-related soft cost below.
* To understand how the 10% is calculated, it is important to
				note the following.
[TICK] For most activities, the 10% is in addition to the
				requested HOME Program allocation amount.
[TICK] For TBRA, administration funds are based on an estimate
				of the number of new and continuing tenants served by the Recipient's TBRA
				program. Please refer to the section on Program Administration Funds versus
				Annual Subsidy Requirements in Chapter 7: Tenant-Based Rental Assistance for
				details regarding TBRA administration funds.
[TICK] Applicants who choose to use a consultant must include
				the consultant fee, if any, in an amount not to exceed ten percent (10%) of the
				requested HOME Program allocation in the proposed development budget.
[TICK] Applicants who choose not to use a consultant may apply
				for an amount not to exceed ten percent (10%) of the requested HOME Program
				allocation as reimbursement of project delivery costs.
[TICK] The HOME Program allocation may not include both a
				consultant fee and a project delivery cost reimbursement.
Staff Costs for Administering ADFA HOME
				Programs
* Eligible administrative and planning costs include
				expenditures for salaries, wages and related costs of Recipient staff
				responsible for HOME Program administration.
* Recipients have two alternatives for determining the amount
				of staff costs to charge to HOME Program administration.
Option 1: Include the
entire
salary, wages and related costs of each person whose
primary
responsibility involves program administration assignments.
OR
Option
			 2: Determine the
pro rata share
of salary, wages
			 and related costs of each person whose job includes
any
program administration assignments for each person.
* A Recipient may choose
only one
of these two methods each program year.
Example
: Smithville's HOME
				Program director spends approximately 90 percent of her time on HOME Program
				management, oversight and coordination, while the budget analyst spends only 30
				percent of his time on HOME Program management and coordination. Under Option
				1, all of the HOME Program director's salary could be charged to HOME
				administrative/planning costs, but none of the budget analyst's salary could be
				charged. Under Option 2, 90 percent of the HOME Program administrator's salary
				and related costs and 30 percent of the budget analyst's salary and other costs
				could be charged to HOME Program administrative/planning costs.
*
Assignments as a factor:
For the purpose of
				determining whether all or a portion of a staff person's salary and related
				costs may be charged to HOME, Recipients must analyze the types of assignments
				carried out by each individual.
* HOME Program administrative assignments that should be
				considered in making this determination include:
>
Developing systems and schedules for ensuring
				compliance with HOME Program requirements;
>
Finalizing HOME agreements;
>
Monitoring HOME-assisted housing and housing
				with designated matching funds;
>
Preparing reports and other documents;
>
Coordinating the resolution of monitoring and
				audit findings; and
>
Managing or supervising persons whose primary
				responsibilities include those previously listed.
Other Planning and Administrative
				Costs
* In addition to staff salaries and related costs, these
				include:
>
Goods and services necessary for
				administration (e.g., utilities, office supplies, etc.);
>
Administrative services under third party
				agreements (e.g., legal services);
>
Administering a tenant-based rental
				assistance (TBRA) program;
>
Providing public information;
>
Fair housing activities;
>
Indirect costs under a cost allocation plan
				prepared in accordance with applicable Office of Management and Budget (OMB)
				Circular requirements and approved by AFDA; and
>
Complying with other Federal requirements.
Administrative Costs Versus Project-Related Soft
				Costs
* Certain costs may be charged as either administrative and
				planning costs,
or
as project-related soft costs
				when they are incurred by Recipients. Project-related soft costs are not
				available to owners/developers/sponsors. Costs that are eligible as
				project-related soft costs are listed below.
> Staff and overhead costs
: These are staff and
				overhead costs incurred by the Recipient or third party contractor that are
				directly related to carrying out specific HOME projects. They include:
[TICK] Appraisals;
[TICK] Preparation of work specifications;
[TICK] Loan processing and underwriting;
[TICK] Construction inspections and oversight;
[TICK] Inspections for the presence of lead hazards or
				defective paint;
[TICK] Advisory and other relocation services;
[TICK] Project-specific environmental reviews; and
[TICK] Homebuyer and tenant counseling (if the buyer or tenant
				is HOME-assisted).
> Compliance costs
: These include the costs of
				complying with other Federal requirements directly related to a specific
				HOME-assisted project.
*
Implications of charging to a project:
Charging
				costs to a specific project has several implications.
>
Project costs count in the maximum per-unit
				subsidy limit calculation.
>
Administrative costs charged to the project
				should not be included in the loan to the project owner.
>
Project costs trigger 25 percent match (12.5%
				for the State of Arkansas).
>
If the project does not go forward, project
				costs must be charged as administrative costs.
*
Implications of charging as administrative and planning
				costs
:
>
Costs are subject to the 10 percent cap,
				and
>
Accounting and reporting requirements are
				simplified.
*
Exceptions
:
>
The cost of providing HOME-funded TBRA is an
				administrative cost and may not be charged as a project-related soft
				cost.
>
Project-related soft costs incurred by a
				property owner are considered project-specific and cannot be charged as
				administrative costs. (For example, if the property owner hires and pays for an
				appraisal.)
Note
: A Recipient may not charge a fee to a
				project for ongoing project monitoring and compliance reviews. Recipients also
				may not charge fees for origination or loan servicing.
*
For more information
: For further guidance,
				Recipients should refer to HUD Notice CPD 06-01 "Administrative Costs,
				Project-related Soft Costs, and Community Housing Development Organization
				(CHDO) Operating Expenses Under the HOME Program," which is available online at
				http://www.hud.gov/offices/cpd/affordablehousing/lawsandregs/notices/.
UNIFORM ADMINISTRATIVE REQUIREMENTS
Recipients must comply with certain administrative
				requirements, generally pertaining to the financial management and audit
				standards. These differ depending whether the Recipient is a government entity,
				a nonprofit, or a CHDO.
*
Government entities.
Governmental entities that
				are Recipients must comply with administrative requirements, generally
				pertaining to the financial management and audit standards. All government
				entities administering ADFA HOME programs or using ADFA HOME funds should be
				familiar with these requirements.
> OMB Circular A-87 "Cost Principles for State, Local
				and Indian Tribal Governments":
This circular establishes principles and
				standards to provide a uniform approach for determining allowable costs under
				Federal grants and other agreements with states and local governments and
				Indian tribal governments.
> Certain provisions in 24 CFR Part 85
: These
				regulations set forth uniform requirements for financial management systems,
				procurement, reports and records, and grant close-outs for Recipients of
				Federal grant funding. Attachment 3-1 lists the applicable provisions.
> OMB Circular A-133 (Audit Requirements)
: All
				Recipients are required to have audits. Audit thresholds and requirements are
				outlined in OMB Circular A-133.
*
Nonprofit organizations.
HOME-funded Recipients
				that are nonprofit organizations must also comply with certain uniform
				administrative requirements. These requirements are similar, but are not quite
				the same as those placed on Recipients that are governmental entities. All
				nonprofit HOME Recipients should be familiar with these requirements, as
				detailed below.
> OMB Circular A-122, "Cost Principles for Non-Profit
				Organizations,"
or, for institutions of higher education, OMB Circular
				A-21 "Cost Principles for Educational Institutions": This circular establishes
				principles for determining allowable costs under grants, contracts and other
				agreements with nonprofit organizations. OMB Circular A-122 is in the
				Appendix.
> Certain provisions of 24 CFR Part 84
: The
				regulations at 24 CFR Part 84 implement OMB Circular A-110 and set forth
				uniform requirements for nonprofit organizations, including financial
				management systems, property standards, procurement standards, reporting and
				record-keeping. Attachment 3-1 lists the applicable provisions.
*
CHDOs.
The requirements at
				24 CFR
				84.21, "Standards for Financial Management
				Systems" apply to CHDOs who are acting as an owner, developer or sponsor of
				HOME-assisted housing.
WRITTEN AGREEMENTS BETWEEN RECIPIENTS AND OTHER ENTITIES
				FOR ADFA HOME FUNDS
Written agreements are important legal documents that help ADFA
				and its Recipients protect their investment and enforce HOME Program
				rules.
* A written agreement must be entered into
before
				any HOME funds are committed or disbursed
by the Recipient to
				any entity.
>
ADFA will enter into an agreement with all
				Recipients of its HOME program before committing or disbursing funds.
>
Additionally, ADFA provides template
				consulting agreements that must be used by Recipients.
>
Upon request, ADFA can provide templates for
				agreements between a Recipient and a contractor.
* When properly written and executed, a written agreement can
				be:
>
A valuable management tool for verifying
				compliance and monitoring performance;
>
A training tool for all parties using HOME
				funds to learn about the rules and regulations of the HOME Program and other
				Federal regulations; and
>
A Recipient's method of enforcing program
				requirements and protecting its investment.
Contents of
				Written Agreements
* A written agreement should serve as a concise statement of
				the relationship between the Recipient and a funded entity/beneficiary of HOME
				funds. It should also clearly state the conditions under which the HOME funds
				are provided.
* The discussion below is intended to educate Recipients
				regarding the required provisions in ADFA HOME written agreements.
* Note that for all development activities, ADFA will select
				and/or approve a closing entity to provide closing services for all HOME
				Program transactions using ADFA-approved documents.
>
The services will be available and required
				in the county where the development is located.
>
ADFA HOME Program staff will provide closing
				instructions for all HOME Program funded transactions to the closing
				entity.
>
ADFA will be responsible for payment of costs
				associated with closing the HOME Program portion of the transaction on both
				homeowner and rental activities.
*
Required provisions
. The specific contents of
				agreements will vary. The Final Rule (24 CFR Part 92) details the specific HOME
				provisions that must be included in written agreements between program
				administrating Recipients and the various entities that may receive HOME funds.
				These provisions are listed below.
> Use of funds
: Description of tasks to be
				performed, schedule for completing tasks, a budget in sufficient detail to
				effectively monitor performance and the period of the agreement. (For nonprofit
				and for-profit housing owner, sponsor or developers, the duration of the
				agreement will be in a separate clause.)
> Reversion of assets/program income
				requirements
: States whether program income, unexpended funds or other
				assets will be returned to the Recipient.
> Uniform administrative requirements
:
				Compliance with applicable Federal administrative requirements (OMB Circular
				A-87 and applicable provisions of 24 CFR Part 85 for governmental entities, or
				OMB Circular A-122 and applicable provisions of 24 CFR Part 84 for non-profit
				entities).
> Other Federal requirements
: Requirements
				regarding: non-discrimination and equal opportunity; affirmative marketing and
				minority outreach; environmental review; displacement, relocation and
				acquisition; labor standards; lead-based paint; and
				conflict-of-interest.
> Affirmative marketing
: Requirements for
				affirmative marketing in projects of five or more HOME-assisted units.
> Requests for disbursements of funds
:
Requirement that HOME funds may not be requested until funds
				are needed for payment of eligible costs. The amount of each request must be
				limited to the amount
More on Agreement Provisions
Exhibit 2-1 summarizes which of the minimum required provisions
				must be included in the various types of written agreements.
needed. Program income must be returned to ADFA before any new
				funding requests will be provided.
> Records and reports
: Enumeration of records
				that must be maintained, and information and reports that must be
				submitted.
> Enforcement of the agreement
: This provision
				is in the agreement with all parties, including owners, and is the means of
				enforcing the provisions of the written agreement.
*
Template agreements
. Recipients must use ADFA
				template contracts, agreements and other legal documents as provided by ADFA's
				HOME Program staff.
*
Duration of agreements
. The agreement must
				specify the duration of the agreement. If the housing assisted under the
				agreement is rental housing, the agreement must be in effect through the
				affordability period required by the ADFA. If the housing assisted under this
				agreement is homeownership housing, the agreement must be in effect at least
				until the completion of the project and transfer of ownership to a low-income
				family.
*
Amending the documents
. Written agreements may
				be amended by mutual agreement of the parties when regulations and requirements
				change, or when adjustments to funding levels or other conditions related to a
				specific project are needed.
Click here
				to view image
CONFLICT-OF-INTEREST
The HOME Program regulations require Recipients to comply with
				two different sets of conflict-of-interest provisions. The first set of
				provisions comes from 24 CFR Parts 84 and 85. The second, which applies only in
				cases not covered by 24 CFR Parts 84 and 85, is set forth in the HOME
				regulations. Additionally, the HOME regulations include conflict of interest
				provisions for nonprofit, for-profit owners/developers/sponsors and
				CHDOs.
Additionally, Arkansas Governor's Executive Order 98-04,
				Governor's Policy Directive #8, and ACA §
									21-8-304 have established
				mandatory guidelines and procedures that are intended to prevent waste, abuse
				or the appearance of impropriety and to create clearing house for grants and
				contracts.
Recipient Activities Covered by CFR
				Provisions
* In the procurement of property and services by Recipients,
				the conflict-of-interest provisions at
				24 CFR
				85.36 and 24 CFR 84.42 apply. These
				regulations require Recipients to maintain written standards governing the
				performance of their employees engaged in awarding and administering contracts.
				At a minimum, these standards must:
>
Require that no employee, officer, agent of
				the Recipient shall participate in the selection, award or administration of a
				contract supported by HOME if a conflict-of-interest, either real or apparent,
				would be involved;
>
Require that Recipient employees, officers
				and agents not accept gratuities, favors or anything of monetary value from
				contractors, potential contractors or parties to subagreements; and
>
Stipulate provisions for penalties, sanctions
				or other disciplinary actions for violations of standards.
* A conflict would arise when any of the following has a
financial or other interest
in a firm selected
				for award:
>
An employee, agent or officer of the
				Recipient;
>
Any member of an employee's, agent's or
				officer's immediate family;
>
An employee's, agent's or officer's partner;
				or
>
An organization that employs or is about to
				employ an employee, agent or officer of the Recipient.
Recipient Activities Covered by HOME
				Regulations
* In cases not covered by
				24 CFR
				85.36 and 24 CFR 84.42, the HOME regulations
				at 24 CFR
				92.356 governing conflict-of-interest apply.
				These provisions cover employees, agents, consultants, officers and elected or
				appointed officials of the Recipient. The HOME regulations state that no person
				covered who exercises or has exercised any functions or responsibilities with
				respect to HOME activities or who is in a position to participate in decisions
				or gain inside information:
>
May obtain a financial interest or benefit
				from a HOME activity; or
>
Have an interest in any contract, subcontract
				or agreement for themselves or for persons with business or family ties.
* This requirement applies to covered persons during their
				tenure and for one year after leaving the Recipient entity.
*
Exceptions
. Upon written request by the
				Recipient to AFDA, exceptions to both sets of provisions may be granted by HUD
				on a case-by-case basis. After ADFA has completed the following an exception
				may be granted:
>
Disclosed the full nature of the conflict and
				submitted proof that the disclosure has been made public, and
>
Provided a legal opinion from ADFA stating
				that there would be no violation of state or local law if the exception were
				granted.
* To request that ADFA submit
a
written
				request for an exception, please contact your ADFA manager.
*
Executing and maintaining conflict-of-interest
				provisions.
While not specifically required in the HOME regulations,
				Recipients must include the conflict-of-interest provision in written
				agreements and other documents with owners, developers and sponsors. In
				addition, monitoring of projects should include necessary actions to ensure
				that this provision is adhered to.
HOME Provisions for Nonprofit and For-Profit
				Owners, Developers, CHDOs and Sponsors
* The HOME Final Rule includes conflict-of-interest provision
				applicable to for-profit and nonprofit owners, developers and sponsors of
				HOME-assisted housing. This provision states that no owner, developer or
				sponsor of HOME-assisted housing, including their officers, employees, agents,
				consultants or elected or appointed officials, may occupy a HOME-assisted unit
				in a development. This provision
does not
apply
				to:
>
An individual receiving HOME funds to acquire
				or rehabilitate his/her principal residence, or
>
An individual living in a HOME-assisted
				rental housing development where he/she is a project manager or a maintenance
				worker in that development.
*
Exceptions
. Exceptions to this
				conflict-of-interest provision (governing owners, developer and sponsors of
				HOME-assisted housing) may be granted by ADFA after obtaining a waiver from HUD
				on a case-by-case basis based on the following factors as set forth in the
				regulations:
>
Whether the person receiving the benefit is a
				member of a group or class of low-income persons intended to be the
				beneficiaries of assisted housing, and the exception will permit him or her to
				receive generally the same interests or benefits as are being made available or
				provided to the group as a whole;
>
Whether the person has withdrawn from his or
				her functions or responsibilities, or the decision-making process with respect
				to the specific assisted housing in question;
>
Whether the tenant protection requirements of
				CFR 92.253 (prohibited lease terms, termination of tenancy and tenant
				selection) are being observed;
>
Whether the affirmative marketing
				requirements are being observed and followed; and
>
Any other factor relevant to the PJ's
				determination, including the timing of the requested exception.
Mandatory Arkansas State Contract Disclosure
				and Certification Procedures
* In accordance with Arkansas Governor's Executive Order 98-04,
				Governor's Policy Directive #8, and ACA §
									21-8-304, Recipients are required
				to disclose whether any current or former: member of the general assembly,
				constitutional officer, board or commission member, state employee, or the
				spouse or immediate family member of any of the persons described in this
				sentence, or with any entity in which any such person holds
>
Any position of control or
>
Any ownership interest of 10% or
				greater.
* Additionally, Recipients must
>
Obtain disclosures from any subcontractor,
				sub-lessor, or other assignee and
>
Determine whether the third party is a
				current or former: member of the general assembly, constitutional officer,
				board or commission member, state employee, or the spouse or immediate family
				member of any of the persons described in this sentence, or if any of the
				persons described in this sentence hold
. Any position of control or
. Any ownership interest of 10% or greater in the Third
				Party,
>
Report any such disclosure by the Third Party
				to the agency.
* ADFA's Contract and Grant Disclosure and Certification Form
				should be used to obtain disclosures. The form also specifies that the
				following language that must be used in all written agreements with third
				parties:
* Failure to make any disclosure required by Governor's
				Executive Order 98-04, or any violation of any rule, regulation, or policy
				adopted pursuant to that Order, shall be a material breach of the terms of this
				subcontract. The party who fails to make the required disclosure or who
				violates any rule, regulation, or policy shall be subject to all legal remedies
				available to the contractor.
RELIGIOUS ORGANIZATIONS
* HOME funds
may
be provided to
				primarily religious organizations for any activity, excluding inherently
				religious activities.
>
As of the September 30, 2003 Final Rule for
				24 CFR Part 92, HUD (Attachment 1-4), HUD identified regulations for eight
				programs, including the HOME Program, to eliminate barriers and ensure that
				these programs are open to all qualified organizations regardless of their
				religious character.
HOME PROGRAM INCOME
* Program income is any revenue received by the Recipient
				directly generated from the use of HOME funds or matching contributions.
				Program income includes, but is not limited to:
>
Proceeds from the sale or long-term lease of
				real property acquired, rehabilitated or constructed with HOME funds or
				matching contributions;
>
Income from the use or rental of real
				property owned by a Recipient that was acquired, rehabilitated or constructed
				with HOME funds or matching contributions, minus the costs incidental to
				generating that income;
>
Payments of principal and interest on loans
				made with HOME or matching funds, and proceeds from the sale of loans or
				obligations secured by loans made with HOME or matching contributions;
>
Interest on program income; and
>
Any other interest or return on the
				investment of HOME and matching funds.
* ADFA requires that all program income is returned to the PJ
				(i.e., ADFA).
* A case study on program income is provided as Attachment 2-2
				to this chapter.
RECAPTURED FUNDS
* Any amount repaid as a result of a homebuyer property being
				sold within the affordability period. The recaptured provisions must be stated
				in written agreements between Recipients and the income of any eligible
				homebuyers.
* Recaptured funds are a return of the original HOME investment
				and are technically not program income. Therefore, unlike program income, 10
				percent of recaptured funds
cannot
be used for planning and
				administrative costs and must be returned to ADFA.
INTEGRATED DISBURSEMENT AND INFORMATION SYSTEM
				(IDIS)
* ADFA is required by HUD to use the IDIS system to accomplish
				two key objectives:
>
To manage and account for disbursements of
				HOME funds; and
>
To collect, consolidate and report
				information regarding HOME Program performance.
* The IDIS is like a "bank." ADFA has an account in the bank,
				and the account contains a deposit of HOME monies (and other HUD funds). ADFA
				can withdraw funds from the account by using a PC, much like computerized
				banking.
* Unlike a bank checking account, ADFA must maintain
				significant information regarding the purpose for each expenditure (that is,
				activity information). ADFA has to submit Activity Setup information and
				Activity Completion information.
>
All HOME Program Recipients must provide
				Set-up and Completion information for all ADFA funded activities.
>
The Set-up and Completion forms are available
				on ADFA's website. For details regarding the submission of completed forms,
				please see the relevant activity chapters (Chapters 4-7).
OTHER ADFA ADMINISTRATIVE REQUIREMENTS
In addition to the HOME administrative requirements listed in
				this chapter, ADFA has certain administrative requirements on Recipients
				related to criminal background checks, suspensions, and audits.
*
Criminal background check
. In addition to the
				Contract Disclosure and Certification described in the Conflict of Interest
				section above, ADFA requires Recipients to disclose if any of the following
				apply:
>
Conviction by State or Federal
				jurisdiction;
>
Suspension or debarment by any state or
				Federal agency;
>
Bankruptcy or Reorganization;
>
Outstanding, uncorrected noncompliance with a
				state or Federal housing agency;
>
Existing contracts or indebtedness with ADFA;
				and
>
Delinquent, defaulted or foreclosed contract,
				loan or indebtedness with ADFA.
*
Suspension policy.
Note that the Criminal
				Background Check works in conjunction with ADFA's Suspension Policy.
>
Per the Suspension Policy, ADFA requires
				participants in the HOME Program to certify that neither it nor its principals
				are presently debarred, suspended, proposed for debarment, declared ineligible
				or voluntarily excluded from any entity from a federally funded
				transaction.
>
Any participant that remains on a debarred or
				suspended condition shall be prohibited from participation in the ADFA HOME
				Program as long as they are classified in this manner.
*
Audit.
ADFA requires that Recipients have an
				audit conducted of Federal funds received in accordance with the
				following:
>
Generally Accepted Accounting Principals
				(GAAP) and the Single Audit Act Amendments of 1996 ( 31 U.S.C. 7501-7507 ) and
				revised OMB Circular A-133, "Audits of States, Local Governments, and
>
Non-Profit Organizations" as required in 24
				CFR Part 84 and 85 respectively.
LIST OF ADFA FORMS
ADFA has all required program administration and management
				forms on their website,
www.arkansas.gov/adfa
. These forms
				include:
* Contract and Grant Disclosure and Certification Form
* IDIS Activity Set Up Forms
* IDIS Activity Completion Forms
Attachment 2-1
Provisions of 24 CFR Part 85 Applicable to Other
				Governmental Entities Acting as Recipients or Sub-Recipients under the HOME
				Program
85.6 Additions and exceptions
85.12 Special grant or subgrant conditions for "high risk"
				grantees
85.20 Standards for financial management systems
85.22 Allowable costs
85.26 Non-Federal audit
85.32 Equipment
85.33 Supplies
85.34 Copyrights
85.36 Procurement
85.44 Termination for convenience
85.51 Later disallowances and adjustments
85.52 Collection of amounts due
Provisions of 24 CFR Part 84 Applicable to Nonprofit
				Organizations Acting as Recipients under the HOME Program
84.2 Definitions
84.5 Subawards
84.13 Debarment and suspension; Drug-Free Workplace
84.16 Resource Conservation and Recovery Act
84.21 Standards for financial management systems
84.22 Payment
84.26 Non-Federal audits
84.27 Allowable costs
84.28 Period of availability of funds
84.30 Purpose of property standards
84.31 Insurance coverage
84.34 Equipment
84.35 Supplies and other expendable property
84.36 Intangible property
84.37 Property trust relationship
84.40 Purpose of procurement standards
84.41 Recipient responsibilities
84.42 Codes of conduct
84.43 Competition
84.44 Procurement procedures
84.45 Cost and price analysis
84.46 Procurement records
84.47 Contract administration
84.48 Contract provisions
84.51 Monitoring and reporting program performance
84.60 Purpose of termination and enforcement
84.61 Termination
84.62 Enforcement
84.72 Subsequent adjustments and continuing
				responsibilities
84.73 Collection of amounts due
ATTACHMENT 2-2 PROGRAM INCOME CASE STUDY
Middle City received an allocation of $500,000 in HOME Program
				funds from HUD. Middle City allocated $200,000 of the funds to its homeowner
				rehabilitation program. This program provides direct loans with interest rates
				ranging from two to five percent, depending upon income to eligible owner
				occupants for the repair or rehabilitation of their homes. Through the
				repayment of principal and interest on the loans, this program generates
				approximately $25,000 in program income. In accordance with the HOME Program
				requirements, this program income is placed in the PJ's HOME Investment Trust
				account, and is used, prior to the drawdown of HOME funds from the U.S.
				Treasury, for other HOME-eligible housing activities.
Middle City also provided a total of $300,000 to two different
				CHDOs for eligible CHDO set-aside activities. The first project, which received
				$150,000 in HOME funds, was undertaken by Middle City Housing (MCH). This
				project involved the construction of a new multi-family rental property
				containing 25 apartments. Middle City -- the PJ -- provided the HOME funds to
				MCH in the form of a low-interest, deferred payment loan. The principal and
				interest on the loan would have to be repaid beginning in the third year of the
				project's operation. The loan repayments to the PJ would be considered program
				income, placed in the PJ's HOME Investment Trust account and expended for other
				HOME-eligible activities prior to the drawdown of additional HOME funds from
				the U.S. Treasury.