Arkansas Administrative Code › Agency 109 - Arkansas Development Finance Authority › Division 04 - Multi-Family Housing › Rule 109.04.18-001 - National Housing Trust Fund Program Operations Manual

Current through Register Vol. 49, No. 6, June, 2024
ARKANSAS DEVELOPMENT FINANCE AUTHORITY
NATIONAL HOUSING TRUST FUND
OPERATIONS MANUAL
THE NATIONAL HOUSING TRUST FUND
*
The National Housing Trust Fund ("NHTF") is a
				new affordable housing production program that will complement existing
				federal, state and local efforts to increase and preserve the supply of decent,
				safe and sanitary affordable housing for extremely low-income ("ELI")
				households, which are those at or below 30% of area median income
				("AMI").
* Per 24 CFR
				93.250(a), in any fiscal
				year in which the total amount available for allocation of HTF funds is less
				than $1 billion, AD FA will use 100% of its HTF grant for the benefit of
> ELI families or
> Families with incomes at or below the poverty line
				(whichever is greater).
* As specified in its enabling legislation, Grantees, like the
				Arkansas Development Finance Authority ("ADFA") in its role as the designated
				administrator of NHTF funds for the State of Arkansas ("State"),
> Must use at least eighty (80) percent of each annual grant
				for rental housing,
> May use up to ten (10) percent of each annual grant for
				homeownership housing, and
> May use up to ten (10) percent of each annual grant for
				the grantee's reasonable administrative and planning costs.
* All applicable affordability periods must be followed:
> All NHTF-assisted rental housing must meet a minimum
				affordability period of thirty (30) years.
> All NHTF-assisted homeownership housing must meet the
				minimum affordability period of 10, 20 or 30 years based on the amount of NHTF
				invested in the unit.
ADFA'S SPECIFIC USE AND ALLOCATION OF NHTF
				FUNDS
*
ADFA will administer the NHTF program to provide
				funds to develop new construction of decent, safe, and sanitary rental housing,
				primarily targeting a specific underserved group:
The ELI Veteran
				population in Arkansas
.
* Preference will be given to ELI Veterans
> With special needs,
> Who are homeless or may become homeless,
> With mental health issues, and/or
> Who are leaving correctional facilities.
* Preference will also be given to surviving spouses of
				deceased Veterans.
GENERAL HOUSING TRUST FUNDS REQUIREMENTS
*
Where economically feasible, applicants will
				have an opportunity to compete for funding to address their unmet rental
				housing needs. ADFA has established certain basic housing requirements to be
				used in the allocation of NHTFs, which are found in the Scoring Matrix:
ELIGIBLE ACTIVITIES
*
Eligible activities must comply with the
				requirements of 24 CFR Parts 93.200, 93.201 and 93.301.
> Under 24 CFR 93.200, HTF funds may be
				used for the production of affordable housing and rental housing.
> Under 24 CFR 93.201, HTF funds may be
				used to pay eligible costs, such as development hard costs, refinancing costs,
				acquisition costs, and related costs.
> Under 24 CFR 93.301, new construction
				projects must meet all applicable state and local codes, ordinances, zoning
				requirements and ADFAs Minimum Design Standards ("MDS").
* ADFA permits and encourages applicants to exceed these MDS
				project standards.
>
http://adfa.arkansas.gov/Websites/adfa/images/LIHTC
Docuemnts/LIHTC 2016
/Multi- Family Housing Minimum Design Standards
				Final.pdf
ELIGIBLE RECIPIENTS
*
Under
				24 CFR §
									93.2, a Recipient is defined as an
				organization, agency, or other entity (including a public housing agency, or a
				for-profit entity or a nonprofit entity) that receives NHTF assistance from a
				grantee as an owner or developer to carry out an NHTF-assisted project.
* In order to qualify as a Recipient of NHTF funds under
				24 CFR
				93.2, the entity must meet four requirements.
				These requirements state that a Recipient must
> Make acceptable assurances to the grantee that it will
				comply with the requirements of the NHTF program during the entire period that
				begins upon selection of the recipient to receive NHTF funds, and ending upon
				the conclusion of all NHTF-funded activities,
> Demonstrate the ability and financial capacity to
				undertake, comply, and manage the eligible activity,
> Demonstrate its familiarity with the requirements of other
				Federal, State, or local housing programs that may be used in conjunction
				with
NHTF funds to ensure compliance with all applicable
				requirements and regulations of such programs, and
> Have demonstrated experience and capacity to conduct an
				eligible NHTF activity as evidenced by its ability to
. Own or construct, and manage and operate an affordable
				multifamily rental housing development; or
. Design or construct, and market affordable housing for
				homeownership.
. Provide forms of assistance, such as down payments, closing
				costs, or interest rate buydowns for purchasers.
* When selecting eligible recipients, ADFA will measure these
				requirements per methods listed in the Scoring Matrix and per documents
				submitted with the application (
http://adfa.arkansas.gov/lihtc-application
)
.
* No NHTF application will be processed for any applicant or
				related entity which is not in good standing with
> ADFA and any other State housing finance authority,
> The Arkansas Economic Development Commission
				("AEDC"),
> HUD and/or
> USDA Rural Development.
* An applicant can be denied consideration of the NHTF funds
				under Arkansas's NHTF Program if the applicant or its related parties have a
				history of payment delinquencies, bankruptcy, foreclosure or activities
				determined to be unsound or unlawful.
* ADFA will distribute NHTF by directly selecting applications
				submitted from eligible recipients and will not use sub-grantees.
* The Development Team is the applicant, consultant,
				contractor, architect, accountant, property manager, and attorney who will work
				to facilitate the construction of new rental housing (single family, assisted
				living units, or multi-family units) solely for ELI Veterans and their
				families.
* Under Title 38 of the Code of Federal Regulations, a Veteran
				is defined as a person who served in the active military, naval, or air
				service, and who was discharged or released therefrom under conditions other
				than dishonorable.
* An "eligible applicant" consists of the Development Team and
				a Non-Profit which specializes in support services for Veterans.
* 24 CFR
				93.350 requires that the recipient put
				affirmative marketing in place to attract eligible persons (here, ELI Veterans
				and their families) "without regard to race, color, national origin, sex,
				religion, family status, or disability." ADFA will ensure the recipient's
				compliance with this regulation by requiring that each application package to
				ADFA include the HUD Form 935.2A, which outlines the Development Team's
				Affirmative Fair Marketing Plan and their staffs Fair Housing training
				accomplishments.
>
http://adfa.arkansas.gov/Websites/adfa/images/HOME
Program/Documents/Af firmative Fair Housing Marketing Plan - Single
				Family.pdf
* The Development Team's property manager will ensure
				compliance with 24 CFR
				93.303(d)(3), which requires
				that the nondiscrimination provisions of
				24 CFR
				93.350 (listed above) be followed.
* ADFA will award NHTF funds as forgivable grants to recipients
				whose proposed developments are approved for funding. The NHTF grant will
				remain a forgivable grant, as long as the development remains in compliance
				with NHTF and ADFA requirements for the entire affordability period of thirty
				(30) years.
MAXIMUM PER-UNIT DEVELOPMENT SUBSIDY LIMITS
*
As the administrator of the Low-Income Housing
				Tax Credit and HOME funds, ADFA determines the "Reasonableness of Project
				Costs"-both hard and soft costs-annually by comparing aggregate cost data based
				on all applications received compared to historical cost certification data of
				completed projects and current cost data provided by ADFA third-party
				construction consultant reports. ADFA has used the same methodology in
				determining the maximum per-unit development subsidy limit for housing assisted
				with NHTF funds for all areas of State.
* No single recipient may receive more than $1,000,000.00;
				however, ADFA has the right to waive this per-recipient allocation cap.
* Per Unit Costs is calculated by dividing the total
				development costs by the total number of units. The maximum Per Unit
				Development Subsidy Limit is adjusted every two years through ADFA's
				Administrative Procedures Act, Arkansas Code Annotated Sections
				25-15-201 et seq., also known as
				the "APA" process. ADFA's maximum costs limits are deemed reasonable, based on
				actual costs, and adjusted at time of staff underwriting for the number of
				bedrooms and geographic location of the project.
Maximum Cost Per-Unit and Minimum Area
				Requirements
Property Type
#Bedrooms
#Baths
Min. Bedroom Net Area
MAX
Cost
Per- Unit
Rental Unit
3-4
2
120 sq. ft.
$151,000
Rental Unit
1-2
1-2
120 sq. ft.
$120,000
SFD
3-4
2
120 sq. ft.
$162,000
SFD
2
1-2
120 sq. ft.
$140,000
Assisted Living
1
1
120 sq. ft.
$179,000
Unit areas do not include outside storage, covered porches,
				patios, balconies, etc.
* At time of AD FA underwriting of each application, the costs
				are thoroughly reviewed and adjusted for under-estimates or excessive costs.
				ADFA uses discretion to determine reasonableness of all costs stated in the
				proposed development budget regardless of whether the costs per-unit comply
				with the maximum costs per-unit limitation set forth above. ADFA may, within
				its discretion, deny applications based upon the unreasonableness of costs,
				regardless of whether the costs per-unit complies with the maximum costs
				per-unit limitation set forth above. Upon request by ADFA staff, applicants may
				provide justification and supporting documentation of costs. ADFA will review
				the items submitted and make a final determination. ADFAs determination will be
				set forth in writing as to whether the application will be further considered
				or rejected.
* Based on the example below, approximately 17 units could be
				developed through allocation of $3,000,000.00 by ADFA:
MINIMUM NUMBER OF PROPOSED UNITS
*
A single proposed multi-family development may
				not contain less than four (4) units designated and reserved for ELI Veterans'
				households.
APPLICATION PROCESS
*
ADFA will evaluate each application to determine
				which projects should receive an award of NHTF funds. All applicants must
				submit an application, with supporting documentation, including evidence
				sufficient to ADFA that the applicant's proposed project at minimum meets all
				of the housing priority factors in order to be considered for funding.
> Link for application is at:
http://adfa.arkansas.gov/lihtc-application
* ADFA may conduct a site visit(s) to inspect the proposed
				project site(s) and/or consult with a third party for professional services in
				evaluating each application requesting NHTF funds. To facilitate the evaluation
				process, all applicants must complete the following basic steps:
* All required ADFA-provided forms may be found at
http://adfa.arkansas.gov/lihtc-
application
. All ADFA-provided forms should be submitted with
				original signatures, legible and all applicable spaces fully completed, and
				with all required third-party documents. ADFA will post the NHTF application
				checklist and instructions for the complete list of required documents as
				provided at
www.ADFA.arkansas.gov
prior to the
				beginning of the application cycle.
* All applicants must comply in all respects with ASTM E1527-13
				(the "ASTM Standards") as to content and adhere to ADFAs Environmental
				Policy
Requirements for purposes of determining whether the property
				is environmentally suitable for construction of residential housing.
* After the initial review, each applicant will be contacted
				via e-mail regarding any missing or incomplete items or documents. Upon notice,
				applicants must submit all missing and/or incomplete items or documents in
				order to be considered for funding.
* The application must demonstrate that the project is an
				eligible activity under this NHTF plan and meets basic occupancy and rent
				restrictions required of NHTF regulations. The rental housing units must be
				under common ownership, deed, financing and property management.
* The application must also demonstrate that the project is
				financially feasible and is sustainable for the thirty (30) year affordability
				period with ADFA's requirements and the NHTF Regulations.
ADFA HOUSING PRIORITIES AND SCORING
				CRITERIA
*
Funds will be awarded based on the application
				(at a minimum) meeting the general NHTF requirements listed above and the total
				score of the application. Once ADFA has determined that the application meets
				or exceeds all requirements, ADFA will award funds to highest-scoring project
				until all NHTF funds have been allocated. There is no minimum score.
* ADFA's selection of Eligible Recipients will be based upon
				those applicants achieving the highest scores, and awarded in that order, until
				funds are depleted. The reviewing underwriter will score each application,
				using the Scoring Matrix.
* ADFA reserves the right to deny an NHTF allocation to any
				applicant or project, regardless of that applicant's point ranking if, in
				ADFA's sole determination, the applicant's proposed project is not financially
				feasible or viable. Regardless of strict numerical ranking, the scoring does
				not operate to vest in an applicant or project any right of allocation in NHTF
				funds in any amount. ADFA will in all instances reserve and allocate NHTF funds
				consistent with sound and reasonable judgment, prudent business practices and
				the exercise of its inherent discretion.
BARRIERS TO ADDRESSING THE ELI AND VETERAN ELI
				POPULATION
*
Various obstacles to addressing the targeted ELI
				Veterans population exist across Arkansas. In the rural counties,
				transportation is a major issue. The shortage of affordable permanent housing,
				job loss, unemployment, lack of education, and the lack of affordable
				healthcare are all barriers to the ELI population to access affordable
				housing.
* It will be very challenging for developments to be successful
				in reaching specific ELI populations, areas of extremely high ELI households
				and remain economically feasible for thirty (30) years. ADFA will work with
				every applicant and respective stakeholder (mental health and physical health
				service providers, Veterans advocates and groups, non-profits and local
				governments) to be proactive toward providing additional funding sources and
				incentives as available; helping to remove regulatory and discriminatory
				barriers; and seeking experienced development partners to assist in creating
				housing solutions for Arkansas Veterans. Our multi-family and HOME underwriters
				are open to calls to assist with the application, and our compliance department
				holds regular technical assistance trainings.
COMPLIANCE WITH NHTF REGULATIONS
*
Each eligible recipient must certify that
				housing units assisted with NHTF funds will comply with all NHTF requirements.
				The certification must include:
> The number of units in an NHTF-assisted project by income
				group: ELI, VLI, moderate income and above moderate income; and
> A Statement declaring that all tenants of an NHTF-assisted
				development meet the income limits as required by relevant program guidelines;
				and
> A Statement declaring that recipient will comply with rent
				limits, determined to be no more than thirty percent (30%) of the area median
				income.
* ADFA staff will monitor each NHTF project on-site at least
				once prior to the completion of the project and at least once every three years
				through the entire affordability period. ADFA will review for compliance with
				the NHTF Plan, eligibility requirements, housing construction standards (
				24 CFR
				93.301 ), rent reasonableness, affirmative
				outreach ( 24 CFR
				93.350 ), tenant protections and selection (
				24 CFR
				93.303 ), fair housing and financial
				management. ADFA Project Compliance Guidelines may be found at:
http://adfa.publishpath.com/Websites/adfa/images/Compliance
Monitoring/2014 -2015 Compliance Montioring Policies and Procedures Manual for
				the LIHTC Program .pdf
and
http://adfa.publishpath.com/compliance-and-monitoring-forms
* After each monitoring visit, written correspondence will be
				sent to the NHTF recipient describing the results of the review in sufficient
				detail to clearly describe the areas that were covered and the basis for any
				conclusions reached. Monitoring determinations will range from "acceptable" to
				"findings" with appropriate corrective measures imposed. Corrective measures
				may include certifications that inadequacies will be resolved, documentary
				evidence that corrective actions have been instituted or reimbursement of
				disallowed costs.
PERFORMANCE GOALS
*
ADFA's goal in administering the NHTF program is
				the new construction of decent, safe, and sanitary rental housing, primarily
				targeting a specific underserved group:
The ELI Veteran population
				in Arkansas
.
* Preference will be given to ELI Veterans
> With special needs,
> Who are homeless or may become homeless,
> With mental health issues, and/or
> Who are leaving correctional facilities.
* Preference will also be given to surviving spouses of
				deceased Veterans.
* Recipients will develop performance goals that best quantify
				the NHTF developments' impact for their local areas' ELI Veterans. Performance
				goals specific to the specific geographic area will be evaluated to determine
				if the NHTF goals have been achieved.