Arkansas Administrative Code › Agency 109 - Arkansas Development Finance Authority › Rule 109.00.10-001 - 2010 Assisted Living Incentive Fund

Current through Register Vol. 49, No. 6, June, 2024
ASSISTED LIVING INCENTIVE FUND
(For use in development or redevelopment of
			 affordable assisted living housing)
POLICIES AND PROCEDURES
As set forth in a Memorandum of Understanding between the
			 Arkansas Department of Human Services ("DHS") and Arkansas Development Finance
			 Authority ("ADFA") executed on March 30, 2010, DHS will make available to ADFA
			 the sum of five million dollars ($5,000,000) in DHS funds for use in
			 developing, implementing and administering an
Assisted Living Incentive
			 Fund ("ALIF")
. The ALIF will be used to incentivize development of
			 affordable Assisted Living housing in Arkansas and to strengthen the financial
			 feasibility of such developments. It is the goal of DHS and ADFA to increase
			 the number of affordable Assisted Living units in Arkansas for the benefit of
			 low-income, elderly Arkansans.
1. All
		  ALIF resources must be used on
affordable Assisted Living level II
developments located in the State of Arkansas. Affordable Assisted
		  Living Level II housing shall be defined as a standard housing unit(s) designed
		  for occupancy and use by elderly or disabled persons or families who are not
		  relatives of the owner or administrator, accompanied by supportive services,
		  including but not limited to, meals, laundry, social activities, assistance
		  with transportation, direct care services, 24-hour supervision and care, and
		  limited nursing services at rents no greater than thirty percent (30%) of a
		  person's or family's income at sixty percent (60%) of area median income for
		  the area where the Assisted Living housing is located or is to be located. The
		  tenants or occupants of affordable assisted living units must require an
		  intermediate level of care as determined by DHS Utilization Review personnel.
		  The required supportive services described herein must be personalized and
		  provide assistance to tenants / occupants who need help with activities of
		  daily living in a manner that promotes maximum independence for each resident.
		  Supportive services must be available twenty-four (24) hours per day to meet
		  both the scheduled and unscheduled needs of each resident.
2. To be eligible to receive ALIF resources:
* the applicant will be required to submit an approved
Certificate of Need or Permit of Approval ("POA") for Level II residents
			 issued by the State of Arkansas
. In addition, all affordable Assisted
			 Living developments receiving assistance from the ALIF shall comply at all
			 times with state and federal regulations for assisted living
			 developments.
* the applicant will be required to successfully apply to ADFA
			 for Low-Income Housing Tax Credits ("
LIHTC
"), HOME Investment
			 Partnerships Program ("
HOME
"), or
other ADFA housing
			 programs
and initiatives in conjunction with the requested ALIF
			 funds.
* the applicant must provide a
complete and accurate
			 application
to ADFA evidencing the financial feasibility of developing
			 or redeveloping and operating such housing units at affordable rents and
			 providing appropriate supportive services to tenants. The applicant must
			 provide satisfactory information evidencing the applicant (or the applicant's
			 consultant) has the necessary knowledge, skill, ability, and capacity to
			 develop affordable housing, as evidenced by examples of other affordable
			 housing successfully developed by the applicant (or applicant's consultant),
			 examples of successfully developed market-rate housing, examples of projects
			 benefitting low-income persons or families, etc.
* ALIF funds will be available for application by
eligible
			 applicants
, including but not limited to, cities, counties, for-profit
			 and non-profit developers, ADFA-designated Community Housing Development
			 Organizations ("CHDOs"), Planning and Development Districts ("PDDs"), Public
			 Housing Authorities ("PHAs"), cap agencies, and others demonstrating the
			 necessary capacity to successfully develop and operate affordable Assisted
			 Living housing in Arkansas.
3. All affordable Assisted Living units
		  utilizing ALIF funds must be made available to
tenants whose income does not exceed sixty percent (60%) of
			 area median income for the area in which the Assisted Living development is
			 located
, adjusted for family size, at affordable rents.
4. All ALIF-assisted housing units
		  will have
affordable rents
, defined as total monthly housing
		  expenses which do not exceed thirty percent (30%) of the income of a person or
		  family at sixty percent (60%) of area median income for the area in which the
		  Assisted Living development is located, adjusted for family size. ALIF
		  recipients will be required to use the most stringent rent requirements
		  required of any program or funding used in the financing of the Assisted Living
		  development.
5. All ALIF-assisted
		  housing units must have an approved
minimum affordability period
and remain affordable to and occupied by eligible tenants for the
		  minimum affordability period. The minimum applicable affordability period will
		  be the longest period required of any program used in the Assisted Living
		  development budget. The affordability period can be extended at the option of
		  the recipient of ALIF funds, with ADFA approval. Rent, occupancy, and
		  affordability requirements will be enforced through ADFA-approved covenants,
		  mortgages, or deed restrictions running with the property. Assisted Living
		  property owners/managers will be required to document that the required number
		  and percentage of units are occupied by eligible households for the entire,
		  applicable affordability period. The required number of ALIF-assisted units
		  will be calculated on a pro rata basis by calculating the percentage of ALIF
		  funds in relation to the total development budget. Income to establish tenant
		  eligibility must be determined and documented when an ALIF-assisted unit is
		  initially occupied and at unit turnover by a new tenant household.
6. ALIF funds may be used for the
eligible activities
of all usual, customary, and reasonable
		  development and redevelopment activities, including but not limited to,
		  acquisition,
rehabilitation, new construction, financing, relocation,
			 demolition, developer's fees, project activity costs, and ancillary costs of
			 appraisal, market study, construction interest, and closing costs, etc.
7. Applications for ALIF funds
		  shall be submitted on
ADFA's standard Multi-Family application form
(available online at ADFA's web site [
www.arkansas.gov/adfa
] and fillable)
		  and will be accepted at any time, contingent upon any application submission
		  deadlines for other ADFA housing programs for which the applicant may be
		  applying in conjunction with the ALIF funds.
* Each applicant applying for ALIF funds must apply to develop or
			 redevelop a
minimum of five (5) Assisted Living housing
			 units.
* Each applicant must submit with the ALIF application an
			 approved
Certificate of Need or POA for Level II residents
issued
			 by the State of Arkansas.
* Each applicant applying for ALIF funds must submit at the time
			 of application submission, a
letter of support
from the chief
			 elected official (CEO) of the applicable local jurisdiction where the assisted
			 living housing is to be developed or redeveloped.
* Each applicant must submit with the ALIF application a
current Market Study,
completed by a market study provider on
			 ADFA's Approved Market Study Provider list (the list may be found at
www.arkansas.gov/adfa
), which
			 evidences the need for Assisted Living housing units at the location planned
			 for the development.
8.
		  ADFA will use the following
selection criteria
when reviewing and
		  evaluating any ALIF applications submitted including but not limited to:
* The
threshold requirements
, including but not
			 limited to, an approved POA, local support letter, market study evidencing the
			 need for Assisted Living units in the area targeted for development, criminal
			 background check, and any other documentation or information designated by ADFA
			 as a threshold requirement.
* The
selection criteria adopted for the ADFA Housing
			 program
for which the applicant is applying in conjunction with the ALIF
			 funds.
* The
amount of ALIF funding requested
, the total
			 development budget, firm financial commitments, per unit costs, and the
			 reasonableness of all development costs associated with the Assisted Living
			 housing to be developed or redeveloped.
* The
capacity of the applying entity
to
			 satisfactorily complete all development activities within established time
			 frames and within budgetary limitations.
* The scope and quality of supportive services to be provided and
			 the level of commitment and capacity of the entity that will provide any
			 supportive services associated with the Assisted Living housing units.
*
Other criteria
specific to the site, housing need,
			 applying entity, or other facets of the ALIF application.
9. ALIF resources will be provided to
		  approved recipients in a
manner consistent with fund distribution of
		  other ADFA housing resources
approved for the affordable Assisted Living
		  housing development. This requirement includes meeting the following
		  conditions, at a minimum, prior to fund disbursement:
* Satisfactory completion of the
environmental review
			 process.
* Satisfactory
execution of agreements, closing documents
			 and filing
of the applicable documents as required, including the filing
			 of a mortgage and note in favor of ADFA for the full amount of ALIF funds
			 allocated.
* A
pre-construction conference
is conducted with
			 the development team and ADFA representatives present.
* ADFA will issue one (1)
Notice to Proceed
applicable to ALL ADFA housing programs approved for the Assisted Living
			 development. It is imperative the developer does not begin construction until
			 the Notice to Proceed is issued by ADFA and received by the developer.
10. Compliance with all
cross-cutting federal requirements
applicable to the ADFA housing
		  program selected for use in conjunction with the ALIF funds in financing the
		  affordable Assisted Living housing will be required, including but not limited
		  to, Procurement, Fair Housing/Equal Opportunity, Section 3, Davis-Bacon,
		  Environmental Review, Lead-Based Paint, Debarment and Suspension, Relocation,
		  and Audit, etc.
11. The ALIF will
		  provide two (2) forms of financing assistance:
*
a forgivable loan
, forgiven over the development's
			 affordability period (based on the longest affordability period required by any
			 financing component of the development budget but no less than ten (10) years)
			 for developments evidencing a debt coverage ratio of 1.1 or less but which may
			 be increased to 1.2 or higher by means of the forgivable loan described
			 herein.
*
a repayable loan
, repayable over a term which
			 coincides with the longest applicable affordability or compliance period of any
			 financing component of the development budget at an
annual interest rate
			 of one percent (1%)
. All income generated from ALIF loan repayments will
			 be utilized to incentivize additional Assisted Living housing. Applications
			 utilizing the repayable loan option will be reviewed more favorably than
			 applications selecting the forgivable loan option.
The maximum amount of ALIF funds available to any one (1)
			 affordable Assisted Living development shall be no more than
$500,000
, and no allocation of ALIF funds
			 may exceed
$12,500 per assisted living
			 unit
.
Under no circumstances will the ALIF allocation
			 be more than the minimum amount needed to make the affordable Assisted Living
			 development financially feasible at affordable rents using standard
			 underwriting criteria
.
12. All ALIF recipients will be required to
		  execute an
ALIF Agreement
drafted by ADFA staff. The agreement,
		  when executed by all parties, will serve as the commitment of ALIF funds by
		  ADFA and will outline all applicable requirements to be accomplished by the
		  recipient.
13. Any ALIF-funded
		  development which generates
program income
as a direct result of
		  ALIF-funded activities must immediately remit any and all program income
		  received from ALIF activities directly to ADFA. ADFA will reallocate any
		  program income received to eligible ALIF applicant (s) for eligible ALIF
		  activities. In addition, any program income generated from ALIF-funded
		  activities will be allocated and disbursed first, prior to committing and
		  disbursing original ALIF funds.
14.
		  ALIF recipients will be required to and are responsible for
reporting
		  information
related to the uses of ALIF to ADFA in a timely manner to
		  facilitate ADFA's reporting requirements. Specific reporting requirements will
		  be delineated in the agreement executed between ADFA and the
		  recipient.
15. All
contractors and sub-contractors
engaged to perform work on
		  affordable Assisted Living housing receiving ALIF funds
will be required
		  to have an active license issued by the Arkansas Contractor's Licensing
		  Board
, as applicable, and must meet all requirements of contractors in
		  the State of Arkansas, including securing Builder's Risk insurance, according
		  to ADFA policies on contractor requirements.
16. All construction performed using ALIF
		  Funds must conform to
Minimum Construction and Design Standards, as
		  adopted by ADFA
, upon completion,
including applicable Universal
		  Design Standards, UPCS (Uniform Physical Condition Standards), and Energy Star
		  requirements, certified by a HERS (Home Energy Rating System) rater.
The
		  requirements are those set forth in the Section 8 Housing Quality Standards and
		  the ADFA Construction Performance Manual Sections
		  I and
		  II, those set by the
		  International Code Council (ICC) (when applicable), and all applicable local,
		  state, and federal requirements. DHS and ADFA strongly encourage the recipient
		  to incorporate modern, green building, and energy-efficient materials and
		  methods to facilitate long-term affordability, increased sustainability, and
		  marketability of the Assisted Living housing developed using ALIF
		  funds.
17. DHS and ADFA reserve the
		  right, in their sole and absolute discretion, to allocate ALIF funds and to
		  refrain from making ALIF allocations based upon available funding, quality of
		  applications received and other criteria. DHS and ADFA may, at their
		  discretion,
implement changes to the ALIF Program at any time to ensure
			 compliance with federal law, grant waivers or exceptions to ALIF Program
			 requirements, and exhibit flexibility in their interpretation of ADFA policies
			 and procedures associated with ALIF funds to fully and more efficiently utilize
			 the ALIF funds for their intended purpose.
18. All activities funded with ALIF funds
		  will be periodically
monitored for compliance requirements
. During
		  construction, ADFA inspectors will inspect any work completed using ALIF funds.
		  The timing of such inspections will be addressed in the pre-construction
		  conference, but ADFA reserves the right to inspect any work completed with ALIF
		  funds at any time. This right extends to DHS and any other authorized entity
		  with oversight responsibilities of the ALIF Program. After the development is
		  placed-in-service, ADFA Compliance Monitoring staff will periodically perform
		  on-site property inspections, review of documentation, and monitor adherence to
		  all applicable DHS, ADFA, and ALIF Program requirements.
ADFA will perform
on-site compliance and monitoring
			 inspections
of all ALIF-financed developments during the applicable
			 period of affordability. The purpose of the monitoring inspections is to
			 determine and ultimately ensure compliance with all applicable regulations and
			 requirements contained in these policies and the regulations of any applicable
			 ADFA or DHS program used in the ALIF development. In the event non-compliance
			 occurs, ADFA staff will work with the property owner to re-establish
			 compliance. Should the non-compliance continue or be incapable of being brought
			 into compliance, ADFA will use any and all means at its disposal to recapture
			 the ALIF funds and re-allocate them to Assisted Living projects in need of such
			 assistance.
19. Failure to
		  adhere to ALL applicable requirements as contained in ALIF Program policies and
		  procedures and the ALIF Program agreement will be considered a
default
of the agreement and will be addressed by ADFA using any and all
		  available remedies, as provided by law. The intent of any remedies implemented
		  is to establish or re-establish program and agreement compliance. If full
		  compliance by the successful applicant is not possible, ADFA will take any and
		  all lawful actions necessary to ensure compliance with all applicable
		  requirements up to and including recapture of all ALIF funds.