Arkansas Administrative Code › Agency 109 - Arkansas Development Finance Authority › Division 04 - Multi-Family Housing › Rule 109.04.10-001 - 2010 Community Development Block Grant (CDBG) Disaster Program

Current through Register Vol. 49, No. 6, June, 2024
POLICIES AND PROCEDURES MANUAL
I.
Introduction
Pursuant to the 2008 Supplemental Appropriations Act
(
				Public Law
				110-252 )
approved by Congress June 30,
				2008 and the Consolidated Security, Disaster Assistance, and Continuing
				Appropriations Act of 2009
(
				Public
				Law 110-329 )
approved by Congress
				September 30, 2008, the State of Arkansas will receive $25,042,358 in
				supplemental Community Development Block Grant ("CDBG") funds for use in
				addressing the effects of five (5) Presidentially-Declared Disasters in
				Arkansas as follows:
FEMA #1744, declared on February 7, 2008 FEMA #1751, declared
				on March 26, 2008 FEMA #1758, declared on May 20, 2008 FEMA #1793, declared on
				September 18, 2008 FEMA #1804, declared on October 22, 2008
Of the $25,042,358 in Arkansas CDBG Supplemental Disaster
				Funding, the amount of
$10,134,098
is to be distributed for use in
				the
development or redevelopment of affordable rental housing related to
				the five (5) Presidentially-Declared Disaster areas. The CDBG Program is
				administered by the U.S. Department of Housing and Urban Development
				("HUD").
Arkansas Economic Development Commission ("AEDC"), as
				administrator of the State of Arkansas CDBG Program, and Arkansas Development
				Finance Authority ("ADFA") have executed a Memorandum of Understanding ("MOU"),
				effective 3/13/09, designating ADFA as the State agency responsible for
				implementing policies related to and administration of CDBG Disaster Funds
				reserved for affordable rental housing.
ADFA will administer the CDBG Supplemental Disaster Funding for
				the development or redevelopment of affordable rental housing effectively and
				efficiently for existing housing conditions in the State of Arkansas and with
				all practical safeguards against waste, fraud, and mismanagement. ADFA will use
				and encourage innovation, flexibility, and expansion of program design to
				address unmet rental housing needs in Arkansas. To further that goal, ADFA has
				developed this policy and procedures manual to provide an overview of ADFA
				policies and procedures as they relate to the CDBG Supplemental Disaster Funds
				for affordable rental housing.
This policies and procedures manual is intended as a technical
				assistance aid to access CDBG Disaster Funds for affordable rental housing, and
				is not meant to be a substitute for federal CDBG Disaster Fund regulations, but
				rather a supplement to the federal regulations. Every effort has been made to
				ensure the accuracy of information contained in this manual, but questions
				concerning CDBG Disaster Funds for affordable rental housing should be directed
				to ADFA Housing staff to ascertain correct interpretations of the applicable
				policies, procedures, and regulations. ADFA reserves the right to implement
				additional policies as needed to promote effective usage of the program and its
				resources.
II.
Purpose of the CDBG - Disaster Funds
The primary purpose of the CDBG - Disaster funds is to assist
				in the recovery in areas covered by a declaration of major disaster under title
				IV of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (
				42 U.S.C.
				5121
et seq.)
as a result of
				natural disasters that occurred in 2008. The $10,134,098 set aside for
				affordable rental housing is intended to support repair, rehabilitation, and
				reconstruction (including demolition, site clearance, and remediation) of the
				affordable rental housing stock (including public and other HUD-assisted
				housing) in the impacted areas where there is a demonstrated need.
All CDBG Disaster Funds must be used in the
71
				Presidentially-Declared disaster counties
of Arkansas.
The four
				(4) excluded counties are Columbia, Ouachita, Polk, and Sevier.
Each CDBG Disaster Program application MUST submit
				documentation from the Federal Emergency Management Agency ("FEMA") and/or the
				Arkansas Department of Emergency Management ("ADEM") documenting damage to
				residential buildings resulting from one of the specified
				disasters.
CDBG-Disaster funds may not be used for activities reimbursable
				by or for which funds are made available by the Federal Emergency Management
				Agency (FEMA), the Army Corps of Engineers, insurance proceeds, or other
				funding received as a result of the Presidentially-declared disaster specified
				in the CDBG Disaster fund application. CDBG-Disaster funds may not be used as
				the required match, share, or contribution for another federal program.
III.
General Requirements
			 of the CDBG - Disaster Program
The following General Requirements are provided to inform
				applicants of both federal and ADFA CDBG Disaster Program requirements. Each
				requirement is intended to facilitate access to CDBG Disaster Program funding,
				improve program implementation, prevent program duplication, ensure program
				goals are satisfactorily met, and prevent fraud, waste, mismanagement, and
				abuse of funds made available under the CDBG Disaster Program. The ADFA Board
				of Directors may, at its discretion, implement changes to ADFA program
				requirements at any time, grant waivers or exceptions to ADFA program
				requirements to facilitate program usage, satisfactory program implementation,
				and attainment of program goals, and to provide necessary flexibility to meet
				the intent and emergency nature of the CDBG Disaster Program.
A.
Allocation of Funds:
ADFA anticipates allocating up to $9,627,394 (or 95% of all
				CDBG Disaster Funds for rental housing) to eligible applicants. The remaining
				five percent (5%) will be reserved for administrative and planning
				expenses.
ADFA will review, score, and rank applications based on the
				Proposal Scoring Criteria, outlined herein, which includes the scoring
				categories of need, capacity, financing, overall quality of plan, and time of
				performance.
All CDBG Disaster Funds must meet one of the three national
				objectives of the CDBG Program, as follows:
* Benefit for low to moderate income persons (LMI)
* Elimination of conditions of slum or blight
* To address an "imminent threat to the health and welfare of
				the community"
All CDBG Disaster Funds must be used on
affordable rental
				housing
developments.
All CDBG Disaster Funds must be fully expended with all
				activities satisfactorily completed within time frames to be specified in the
				agreement executed between ADFA and the recipient. Additional details on
				agreement requirements are addressed in Section H of this document.
Any requests for CDBG Disaster Funds must be made in
				conjunction with an application for other available ADFA housing funds
(LIHTC, HOME, FAF, BMIR, Tax-exempt or taxable bonds, and others.).
In order to access CDBG Disaster Funds, the applicant must be approved
				for all ADFA resources requested in the application.
All requests for CDBG Disaster Funds must
clearly connect
				the planned activities to the
community need
as a result of the five (5)
				Presidentially-Declared disaster events. Federal Register Notice FR-5256-N-01
				requires that any activities funded under this Notice must also be necessary
				expenses related to disaster relief, long-term recovery, and restoration of
				housing in areas affected by hurricanes, flooding, and other natural disasters
				that occurred in 2008 as a result of the specific disaster or disasters for
				which the state received funding.
All affordable rental units utilizing CDBG Disaster Funds must
				be made available to
tenants whose income does not exceed sixty percent
				(60%) of area median income,
adjusted for family size, at affordable
				rents. At a minimum, the applicable rents for the CDBG Disaster Program will be
				those applicable for the Low-Income Housing Tax Credit Program (LIHTC), but the
				most stringent rents of any program used in the development financing will
				apply.
All
cross-cutting federal requirements
will be
				applicable to the use of CDBG Disaster Funds (procurement, FH/EO, Section 3,
				Davis-Bacon, Environmental Review, etc.) unless specifically waived by
				HUD.
B.
Amount of
			 Per Development Cap on Assistance:
Each eligible applicant for CDBG Disaster funds must apply for
				a minimum of one hundred thousand dollars ($100,000). The maximum amount of
				CDBG Disaster funds available to any development shall be nine hundred thousand
				dollars ($900,000), regardless of number of units or other leveraged funds or
				such other maximum amounts as may be approved by the ADFA Board of Directors.
				The maximum amount that may be requested for a developer's fee is ten percent
				(10%) of the final allocation amount. Any CDBG Disaster fund allocation is
				generally intended to be used as gap financing and is not intended to fund an
				entire development. The CDBG Disaster Fund application must provide
				satisfactory justification and clearly establish significant need for the
				amount of CDBG Disaster funds requested.
C.
Eligible Applicants:
CDBG Disaster Funds are available to
cities (including
				entitlement cities), counties, for-profit and non-profit developers,
				ADFA-designated Community Housing Development Organizations ("CHDOs"), Planning
				and Development Districts, Public Housing Authorities, cap agencies, and other
				entities having the necessary capacity to successfully develop affordable
				rental housing in Arkansas. Each applying entity must be in good standing with
				ADFA, the State of Arkansas, and the applicants' respective regulating
				agencies.
The eligible applicant shall be the entity responsible for the
				respective CDBG Disaster Fund application to ADFA, project development, project
				implementation, and accountability for all uses of all CDBG Disaster Funds
				allocated. The eligible applicant must abide by all required compliance and
				monitoring of all CDBG Disaster Fund activities for the full applicable
				affordability period. Each eligible applicant allocated CDBG Disaster Funds
				will be required to execute a CDBG Disaster Program funding agreement, which
				will specify all required actions and compliance requirements.
Each applicant must provide with its application, at the
				time of application submission, a letter of support from the chief elected
				official (CEO) of the applicable local jurisdiction where housing is to be
				developed or assisted.
D.
Application Selection
			 Criteria:
ADFA will allocate all CDBG Disaster Program funds based on
				established need, capacity of the applying entity, quality and content of
				complete application received by ADFA by the application deadline. ADFA
				reserves the right in its sole and absolute discretion to determine if
				submitted applications are complete at the time of submission. Late
				applications or partial submissions submitted after application deadline will
				not be considered for CDBG Disaster Program funding.
ADFA will review, score, and rank applications based on the
				Proposal Scoring Criteria, outlined herein, which includes the scoring
				categories of need, capacity, financing, quality of plan, specific activities
				to be completed, and time of performance.
The Proposal Scoring Criteria includes but is not limited
				to:
Need
-
(30 points)
The application must clearly demonstrate the specific areas and
				structures to be assisted and the rationale for why the damaged housing is to
				be rehabilitated, demolished, and/or reconstructed.
Each
				applicant must identify by ownership and address any single-family or
				multi-family housing for low to moderate-income households directly impacted by
				one or more of the federally-declared natural disasters.
ADFA will give priority to those applications proposing to
				assist the greatest number of impacted low to moderate-income rental units. For
				this purpose, low-income rental units will be defined to include those
				properties whose rents at the time of the disaster would be considered
				affordable under either the Low-Income Housing Tax Credit (LIHTC) or HOME
				Investment Partnerships Program (HOME).
Capacity
-
(25
				points)
The application must provide substantial information on the
				identity, location, and capacity of ALL persons who will be participating in
				CDBG-funded activities. The application must also demonstrate the ability of
				the applicant(s) to satisfactorily complete all planned activities associated
				with the CDBG Disaster Fund application. The applicant must provide specific
				examples of successful completion of similar activities using CDBG, HOME, or
				other federal housing resources and programs.
Financing
- (20 points)
The application must clearly delineate the TOTAL resources expected to
				be used to complete the CDBG-funded activities proposed, including the EXACT
				amount of CDBG Disaster Funds requested. All funding sources must be documented
				by firm financial commitments of the proposed amounts and uses of the funds.
				The extent to which CDBG Disaster Funds will be leveraged by additional
				financial resources will be favorably considered under the Financing scoring
				criteria.
Overall Quality of Plan
- (15
				points)
The application must clearly demonstrate the reasonableness of
				the proposed activities and funding in accomplishing the stated mission for use
				of the CDBG Disaster funds. Each
CDBG Disaster Program application MUST
				submit documentation from the Federal Emergency Management Agency (FEMA) and/or
				the Arkansas Department of Emergency Management (ADEM) documenting damage to
				residential buildings resulting from one of the specified disasters. It is the
				responsibility of the applicant to provide justifications for the use of CDBG
				Disaster funds to alleviate negative affordable housing conditions caused by
				one of the Presidentially-declared disasters.
Time of Performance
- (10
				points)
The application must include a reasonable and realistic time
				line for implementation of all eligible activities, progress on those
				activities, and successful completion of ALL activities included in the
				application, including rental of affordable housing assisted by CDBG Disaster
				funds. Priority will be given to projects that can award contracts based on
				bids within 120 days from the date the CDBG Disaster Funds are made available
				to the recipient(s). Specific time lines for performance will be outlined in
				the agreement between ADFA and the recipient. Generally, recipients will be
				expected to satisfactorily complete all activities funded with CDBG Disaster
				Program funds within two (2) years from the Notice to Proceed.
E.
Application Time Frames:
ADFA will receive CDBG Disaster Program applications at any
				time subsequent to the effective date of the CDBG Disaster Program anticipated
				to be approximately mid-March. Applicants are urged to be aware of and consider
				application deadlines for other ADFA housing programs for which the applicant
				may also be applying. In cases where the applicant is applying for multiple
				ADFA housing programs, including the CDBG Disaster Program, the application
				submission should include all application requirements and requests for funding
				for all programs. ADFA staff will review, evaluate, score, and make
				recommendations for approval to ADFA's Board of Directors for consideration.
				ANY AND ALL APPLICATIONS OR PARTIAL SUBMISSIONS SUBMITTED AFTER AN ESTABLISHED
				PROGRAM DEADLINE FOR APPLICATIONS WILL NOT BE REVIEWED, SCORED, OR CONSIDERED
				FOR FUNDING.
In the event staff has questions or needs additional
				clarification concerning application submissions or related documentation,
				staff may contact the applicant designated as the contact person for that
				application. No other information or documentation may be submitted by the
				applicant, but clarifications of previously submitted information are allowed,
				contingent upon staffs assessment that the information is crucial to effective
				review and scoring of the application.
After an application for CDBG Disaster Program funds has been
				submitted to ADFA, the applicant may have no further contact with ADFA staff,
				ADFA's President or ADFA Board members concerning the application unless
				contacted by ADFA staff for clarification purposes. Dependent upon the demand
				and initial award of CDBG Disaster Funds, ADFA reserves the right to extend
				referenced time lines or establish additional funding rounds as necessary to
				fully utilize available CDBG Disaster funds.
F.
Application Technical
			 Assistance:
Applicants may request technical assistance on the CDBG
				Disaster Program and associated application processes by contacting ADFA staff
				and arranging a mutually convenient date, time, and venue. ADFA staff is
				prepared to provide technical assistance on CDBG Disaster Program requirements
				as well as ADFA guidelines and requirements for application submission.
G.
Amendments to
			 Applications:
Any material changes to any aspect of an approved CDBG Disaster
				Program application must be presented in writing as an amendment to the initial
				application for CDBG Disaster
Program funds. The request for amendment will go through the
				normal review and approval processes outlined in ADFA's "Application Process
				Path" included in this manual.
H.
ADFA/Recipient Agreement:
ADFA staff will be responsible for drafting the CDBG Disaster
				Program Recipient Agreement. The agreement, when executed by all parties, will
				serve as the commitment of CDBG Disaster Program funds by ADFA and provide all
				applicable requirements to be accomplished by the recipient.
I.
Form of CDBG Disaster Program
			 Assistance:
The form of assistance will be a
forgivable loan,
forgiven over the developments affordability period (based on the most
				restrictive affordability period required by any financing component of the
				development budget). The affordability periods applicable to the CDBG Disaster
				Program are addressed herein under Section O.
J.
Eligible Activities:
CDBG Disaster Funds may be
used for all eligible CDBG
				activities that are usual and customary affordable rental housing development
				activities
normally contained in ADFA program rental application
				development budgets. CDBG Disaster Funds may NOT be used for activities or
				items eligible for reimbursement by insurance or other funding sources, such as
				FEMA, SB A, the Army Corps of Engineers, or the Arkansas Department of
				Emergency Management (ADEM).
In order to apply for CDBG Disaster Program funding, an
				applicant must plan on assisting or producing a minimum of five (5) affordable
				rental housing units.
ADFA will allocate and distribute CDBG Disaster Program funds
				for the following eligible activities:
1. Acquisition of properties negatively
			 impacted by one of the five (5) Presidentially-declared disasters
NO
			 ACQUISITIOIN OF SINGLE-FAMILY DWELLINGS WILL BE ALLOWED FOR PROPERTY IN EXCESS
			 OF FEDERAL HOUSING ADMINISTRATION (FHA) LIMITS, CURRENTLY SET AT
$271,050.
For purposes of acquiring
				disaster-affected properties in a flood way or flood plain intended for
				assistance with CDBG Disaster Program funds, the allowable acquisition amounts
				will be based on post-flood appraisal or other post-flood method of
				establishing value. Any property proposed to be acquired must be identified by
				ownership and address. The application must provide for the rehabilitation of
				existing eligible properties or replacement of the units at an alternate
				site(s) within the same jurisdiction.
2. Relocation of tenants residing in
			 properties acquired for assistance with CDBG Disaster funds. Because properties
			 to be acquired to receive CDBG Disaster program assistance will have been
			 negatively impacted by one of the five (5) Presidentially-declared disasters,
			 it is expected there will be no existing tenants eligible for relocation
			 benefits. Should there be residents in any of the acquired properties,
			 potential awardees must follow the residential anti-displacement and relocation
			 plans in effect and outlined in the State's approved Consolidated Plan and all
			 applicable provisions of the Uniform Relocation Assistance and Real Property
			 Acquisition Act (URA) of 1970. These regulations may be found at 49 CFR Part
			 24.
3. Rehabilitation of properties
			 acquired for assistance under the CDBG Disaster Program.
4. Demolition of properties acquired for
			 assistance under the CDBG Disaster Program for the purpose of rehabilitation,
			 reconstruction, or new construction of affordable rental housing.
5. Reasonable developer's fees related to
			 CDBG Disaster Program-assisted housing rehabilitation or construction
			 activities. For purposes of the CDBG Disaster Program, "reasonable" shall be
			 defined as not exceeding ten percent (10%) of total CDBG Disaster funds
			 allocated.
6. New construction of
			 affordable housing for rental to eligible tenants.
7. Rental of residential properties acquired
			 or acquired/rehabilitated using CDBG Disaster funds.
8. General administration and planning
			 activities, provided the costs do not exceed five percent (5%) of total CDBG
			 Disaster funds allocated.
K.
Fund Disbursement:
CDBG Disaster Funds will be provided to approved recipients in
				a
manner consistent with fund distribution of other ADFA resources
approved for the affordable rental housing activity, with the following
				exceptions:
* Approved developer's fees may not exceed ten percent (10%) of
				the recipient's total CDBG Disaster Funds allocation, and
* Priority will be given to projects that can award contracts
				based on bids within 120 days from the date the CDBG Disaster Funds are made
				available to the recipient(s).
Following ADFA Board approval of CDBG Disaster Program funds,
				the following disbursement processes will apply:
* Disbursement of CDBG Disaster funds will occur only when ALL
				of the following conditions have been satisfactorily met:
* Required environmental review process must be satisfactorily
				completed.
* Project closing documents shall reflect a project completion
				date acceptable to ADFA and the recipient of the CDBG Disaster funds. The CDBG
				Disaster Agreement will outline the payment of the CDBG Disaster funds (e.g.,
				how the funds till be disbursed, i.e., pro rata share, etc.). The CDBG Disaster
				fund agreement must contain provisions for the timing of CDBG Disaster fund
				disbursements.
* ADFA staff must complete all Disaster Recovery and Grant
				Reporting ("DRGR") system set-up and draw down procedures.
* A pre-construction conference is conducted. The
				pre-construction conference must be conducted with the development team and an
				ADFA representative.
* ADFA must issue a Notice to Proceed. To ensure that all CDBG
				Disaster Program requirements have been met, no work shall begin until all
				documentation has been executed and distributed, and ADFA issues a Notice to
				Proceed to the applicant contact entity.
ADFA will issue ONE Notice to
				Proceed upon satisfaction of all program requirements for all ADFA housing
				programs included in the combined application.
NO APPLICATIONS WILL BE
				ACCEPTED ON A PROJECT WHERE CONSTRUCTION IS ALREADY UNDERWAY.
All amounts of retainage will be released thirty (30) days
				after:
1) the final inspection is
			 conducted and all work is found to be satisfactory and
2) upon ADFA's receipt of all completion
			 documentation. For purposes of the CDBG Disaster Program, completion
			 documentation shall include:
* A properly executed certification of release of all
				liens
* Proof hazard insurance is in force on the assisted property,
				with ADFA named as Additional Insured
* Certificate of Occupancy issued by the local jurisdiction, if
				applicable
* Certification of final inspection, plumbing certification,
				and electrical certification.
L.
Reimbursement of Pre-Award
			 Costs:
ADFA will allow CDBG Disaster Program funds to be used to
				reimburse eligible pre-award costs to entities approved for an award of CDBG
				Disaster Program funds, contingent upon the pre-award costs being included and
				documented in the applicant's application and adherence to all applicable
				requirements, such as environmental review and Uniform Relocation Act (URA). If
				the applicant is NOT approved for an award of CDBG Disaster Program funds, no
				reimbursement for pre-award costs will be allowed. Examples of allowable
				pre-award costs include, but are not limited to, appraisal fees, costs of a
				market study, costs of feasibility studies, and preparation of rehabilitation
				cost estimates. The most stringent requirements of any source of funds used in
				the development budget will apply to the project.
M.
Combining CDBG Disaster Program
			 funding with Other Forms of Funding Assistance:
CDBG Disaster Program funds are expected to be used
				efficiently, effectively, and encourage partnerships with other entities. ADFA
				anticipates that the CDBG Disaster Program funds will be used in conjunction
				with other affordable housing resources. To that end, ADFA requires that the
				CDBG Disaster Program funds be leveraged to the greatest extent possible with
				additional, firmly committed and available funding sources appropriate for use
				in the development or redevelopment of affordable housing. Following is contact
				information for three (3) possible sources of funding, which could be used with
				CDBG Disaster Program funds:
USDA Rural Development - Attention: Multi-Family Department,
				700 West Capitol Avenue, Little Rock, AR 72201
ADFA Low-Income Housing Tax Credit Program - ADFA, Attention:
				Multi-Family Department, 423 Main Street, Suite 500, Little Rock, AR
				72201
ADFA HOME Investment Partnerships Program - ADFA, Attention:
				HOME Program Manager, 423 Main Street, Suite 500, Little Rock, AR 72201.
N.
Applicable Rent
			 Limits:
All housing assisted with CDBG Disaster Program funds must have
				affordable rents. CDBG Disaster Program fund recipients must use the allowable
				LIHTC rents, at a minimum, but will be required to use the allowable rents of
				the most stringent rents required of any program used in the development
				financing. Applicable 2009 LIHTC and HOME Program rents are included herein,
				but will become obsolete as soon as HUD issues the 2010 LIHTC and HOME Program
				rents.
O.
Applicable
			 Project Affordability Requirements:
All CDBG Disaster Program-assisted rental units must remain
				affordable to and occupied by eligible tenants for a period of time that varies
				in accordance with the per unit level of CDBG Disaster Program assistance. The
				following amounts and minimum time periods will be used as the applicable
				affordability requirements for the CDBG Disaster Program:
CDBG Disaster Asst. Per Unit
Minimum Affordability Period
Under $15,000
5 Years
$15,000-$40,000
10 Years
Over $40,000
15 Years
New Construction or Acquisition of
Newly Constructed Rental Housing
20 Years
Affordability periods may be extended at the option of the
				recipient of CDBG Disaster Program funds, with ADFA approval. Rent, occupancy,
				and affordability requirements will be enforced through ADFA-approved
				covenants, mortgages, or deed restrictions running with the property. Rental
				property owners/managers will be required to document that the required
				percentage of units are occupied by eligible households for the entire,
				applicable affordability period. The required percentage of units will be
				calculated on a pro rata basis by the percentage of CDBG Disaster Program
				funding in relation to the total development budget. Income to establish tenant
				eligibility must be determined and documented when a CDBG Disaster
				Program-funded unit is initially occupied and at unit turnover by a new tenant
				household.
When CDBG Disaster Program funds are used in conjunction with
				other funds or financing programs, the more stringent rent and occupancy
				regulations will apply.
P.
Performance Standards and Recapture of Funds:
ADFA requires successful applicants to commence and complete
				funded activities within certain agreed-upon time frames. Using the time line
				information provided in the CDBG Disaster Program application as a starting
				point, the successful applicant and ADFA will reach agreement on what
				activities or percentage of activities must be completed by certain deadlines,
				which will affect disbursement of CDBG Disaster program funds. The established
				time frames and required actions to be completed will be outlined in the CDBG
				Disaster Program agreement, which shall be executed by both ADFA and the
				successful applicant.
Substantial progress must be made according to the established
				time frames. Failure to adhere to the established performance standards will be
				grounds for ADFA to take corrective and remedial actions designed to prevent a
				continuation of the noncompliance, mitigate, to the extent practicable, any
				adverse consequences of the noncompliance, and to prevent recurrence of the
				noncompliance. Such corrective or remedial actions may include adoption of
				plans with specific required actions and time frames to correct the
				noncompliance, canceling or revising noncompliant activities to ensure
				compliance, suspending disbursement of CDBG Disaster funds for activities
				affected by the noncompliance, rescinding part or all of the CDBG Disaster
				allocation, changing terms under which the CDBG Disaster funds were provided,
				and recapture of CDBG Disaster funds. ADFA reserves the right to take other
				remedies legally available to correct noncompliance and prevent its recurrence.
				Any recaptured CDBG Disaster funds will be available for reallocation to fund
				other eligible affordable housing activities. Recapture of CDBG Disaster funds
				from an approved applicant will be considered on any future requests for ADFA
				funding from the affected applicant.
Q.
Compliance Monitoring:
All activities funded with CDBG Disaster Program funds will be
				periodically monitored for compliance requirements. During construction, ADFA
				inspectors will inspect any work completed using CDBG Disaster 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 CDBG
				Disaster funds at any time. This right extends to HUD and any other authorized
				entity with oversight responsibilities of the CDBG Disaster 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 ADFA and CDBG Disaster Program
				requirements.
ADFA will perform on-site compliance and monitoring inspections
				of all CDBG Disaster Fund Program-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 this manual and CDBG Disaster Program regulations. 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 CDBG Disaster funds and re-allocate them to projects
				in need of such assistance.
Failure to adhere to ALL applicable requirements as contained
				in CDBG Disaster Program regulations and the CDBG Disaster program agreement
				will be considered a default of the agreement and will be addressed by ADFA
				using any and all available remedies. The intent of any remedies required 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 actions
				necessary to ensure compliance with all applicable requirements up to and
				including recapture of any unspent CDBG Disaster funds.
R.
CDBG and ADFA Reporting
			 Requirements:
CDBG Disaster Fund recipients will be required to and are
				responsible for reporting information related to the uses of CDBG Disaster
				Funds 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.
S.
Energy Efficiency:
To the extent feasible, ADFA strongly encourages applicants to
				incorporate modern, green building, and energy-efficient improvements in all
				CDBG Disaster-funded activities to facilitate long-term affordability,
				increased sustainability, and marketability of the assisted rental
				housing.
T.
Universal Design Standards Requirements:
The following building design criteria must be included in all
				construction for all CDBG Disaster Program-funded projects, in accordance with
				the Arkansas Department of Human Services'
Arkansas Usability
				Standards in Housing: Guidance Manual for constructing Inclusive Functional
				Dwellings
(A
USH).
1. Seven percent (7%) of all residential
			 rental units within the development must comply with the Level 5,
			 "All-Inclusive" usability criteria as set forth in the AUSH. The AUSH is
			 available on the internet at the following website address:
www.studioaid.org
. Under the
			 "Design" link, click on "standards."
2. Each unit that is required to meet the
			 Level 5, "All-Inclusive" usability criteria established in the AUSH must have
			 at least one bathroom with an "accessible roll-in" shower facility with minimum
			 dimensions of 60"x34," or 42"x42" if a corner shower facility.
3. All ground level residential rental units
			 in any building and all residential units with elevator access in any building
			 in the development must comply with the Level I, "Visitable" usability criteria
			 as set forth in the AUSH.
4. All
			 exterior and interior doors intended for passage must provide for a minimum
			 clear opening of 34."
5. All
			 residential units in the development will have "closed-fist" operability
			 throughout the unit (e.g. single handle door levers vs door knobs, push stick
			 lighting and environmental controls, cabinet doors can be opened with a closed
			 fist, single handle faucets in bathrooms and kitchens).
6. All environmental controls must provide
			 visual and tactile cues. For lighting, a "rocker" type switch is sufficient.
			 For thermostats, a programmable and digital device with raised buttons is
			 required.
7. All primary entries,
			 not in a breezeway, must have a minimum roof covering of 5' x 5'.
8. All primary entries must have an entry pad
			 measuring at least 5'x5'.
9. All
			 sidewalks must be at least 5' wide.
U.
Other Federal Requirements:
CDBG Disaster Program awardees and funded activities must
				adhere to all applicable Federal requirements, unless specifically waived by
				HUD. Key requirements are listed below, but awardees are encouraged to
				familiarize themselves with the specific requirements of each Federal statute
				so as to ensure full compliance at all times.
1)
Equal Opportunity and Fair
			 Housing:
The state shall not exclude any organization or individual from
				participation under any program funded in whole or in part by CDBG Disaster
				Program funds on the grounds of age, disability, race, creed, color, national
				origin, familial status, religion, or sex, In addition, all CDBG Disaster
				Program participants must ensure their Equal Opportunity and Fair Housing
				policies related to activities funded by CDBG Disaster funds are consistent
				with the current Consolidated Plan adopted by their respective jurisdiction or
				the current, approved State Consolidated Plan.
2)
Affirmative Marketing:
Any entity applying for CDBG Disaster Funds must adopt
				affirmative marketing procedures and requirements for all CDBG
				Disaster-assisted housing and submit such affirmative marketing plan with the
				CDBG Disaster Program application. The affirmative market plan and requirements
				for CDBG Disaster Program-assisted housing must be approved by ADFA prior to
				any CDBG Disaster Program funds being committed to a development. Affirmative
				marketing requirement and procedures must include ALL of the following:
* Methods for informing the public, owners, and potential
				tenants about fair housing laws and the policies of the local program
* A description of what CDBG Program-assisted housing owners
				will do to affirmatively market housing assisted with CDBG Disaster
				funds.
* A description of what owners will do to inform persons not
				likely to apply for housing without special outreach.
* Maintenance of records to document actions taken to
				affirmatively market CDBG Disaster Program-assisted units and to assess
				marketing effectiveness.
* A description of how efforts will be assessed and what
				corrective actions will be taken when requirements are not met.
3)
Environmental
			 Review:
For CDBG Disaster Program implementation purposes, the
				environmental effects of each activity must be assessed in accordance with the
				provisions of the National Environment Policy Act of 1969 and HUD's regulations
				at 24 CFR Part 58.
ADFA, as administrator of the CDBG Disaster Program, and the
				units of local government funded by ADFA will be responsible for carrying out
				environmental reviews for approved projects/programs. ADFA will approve the
				release of funds (ROF) for local governments and must request the release of
				funds (RROF) from HUD for any developments carried out by other types of
				entities. CDBG Disaster funds are approved as a conditional commitment until
				the environmental review process has been satisfactorily completed, with the
				option to proceed, modify, or cancel the project based upon the results of the
				review. ADFA reserves the right to require a Phase I Environmental Study as
				part of the environmental review process.
Awardees of CDBG Disaster funds may NOT execute contracts for
				purchase of properties that may be funded with CDBG Disaster funds until
				receiving written authorization from ADFA to do so.
4)
Flood Plains/Wetlands:
CDBG Disaster funds may generally not be invested in housing
				located in an area identified by the Federal Management Agency (FEMA) as having
				special flood hazards. ADFA discourages development located in special flood
				hazard areas, but in some instances and with written permission from ADFA,
				houses located in a designated flood plain may be assisted. It is the
				responsibility of the applicant to evaluate any remedies to remove any
				properties from the flood plain and ensure the feasibility of the proposed
				plan. ADFA is willing to consider the proposed remedy and must approve the
				proposal in writing prior to approval of any CDBG Disaster allocation. The
				community must be currently participating in the National Flood Insurance
				Program, and flood insurance must be obtained and maintained on the CDBG
				Disaster-assisted property for the full period of affordability.
5)
Lead-Based Paint
			 Requirements:
The Lead-Based Paint Regulations described in 24 CFR Part 35
				require that lead hazard evaluation and reduction activities be carried out for
				all development constructed before 1978 and receiving CDBG Disaster assistance.
				Application for rehabilitation funds for existing buildings constructed prior
				to 1978 must include a lead hazard evaluation, by appropriate lead-certified
				personnel. The application must also include a detailed lead hazard reduction
				plan, in accordance with the applicable regulations, and separately identify
				within the rehabilitation budget, the costs associated with reduction of lead
				hazards in accordance with the regulations and guidelines. All CDBG Disaster
				fund allocation will be contingent upon the applicant agreeing to complete lead
				hazard reduction, evidenced by a clearance report performed by appropriate
				lead-certified personnel. In a development where CDBG Disaster funds will be
				used on only a portion of the units, the lead-based paint requirement will
				apply to ALL units and common areas in the development.
6)
Labor Standards:
Davis-Bacon wage compliance and other federal laws and
				regulations pertaining to labor standards apply to all construction and
				rehabilitation contracts that are financed in whole or in par with CDBG
				Disaster funds for residential property consisting of eight (8) or more CDBG
				Disaster-assisted units.
Davis-Bacon and related laws include the following:
* Davis-Bacon and Related Acts ( 40 USC 276a-276a-7 )
* Contract Work Hours and Safety Standards Act ( 40 USC 327-333
				)
* Copeland (Anti-Kickback) Act (
				18 USC
				874;
				40 USC 276c)
* Fair Labor Standards Act of 193 8, as amended (
				29 USC
				201, et seq.)
The construction bids and contract for any CDBG
				Disaster-assisted activity must contain the applicable wage provision and labor
				standards. Davis-Bacon does not apply to projects using solely volunteer labor
				or to sweat equity projects. ADFA will monitor all developments subject to
				Davis-Bacon requirements to ensure compliance with all applicable
				regulations.
7)
Debarment and Suspension:
ADFA requires all development team members and contracted
				entities participating in lower-tier transactions covered by 24 CFR 24 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 in a
				debarred or suspended condition shall be prohibited from participation in the
				ADFA CDBG Disaster Project as long as they are classified in this
				manner.
Note: ADFA reserves the right to require criminal background
				checks for all program participants as part of the application process. Please
				refer to ADFA's agency policy requirements for information regarding this item
				(See ADFA's Qualified Allocation Plan (QAP) for the LIHTC Program and/or ADFA's
				HOME Policy and Procedures Manual).
8)
Relocation:
CDBG Disaster Program funds may be used to acquire properties
				intended for assistance with CDBG Disaster Program funding. Because properties
				to be acquired to receive CDBG Disaster Program assistance will have been
				negatively impacted by one of the five (5) Presidentially-declared disasters,
				it is expected there will be no existing tenants eligible for relocation
				benefits. Should there be residents in any of the properties acquired with CDBG
				Disaster funds, potential awardees must follow the residential
				anti-displacement and relocation plans in effect and outlined in the State's
				approved consolidated Plan and all applicable provisions of the Uniform
				Relocation Assistance and Real Property Acquisition Act (URA) of 1970. These
				regulations may be found at 49 CFR Part 24.
9)
Audit:
ADFA requires that local government and non-profit CDBG
				Disaster program recipients expending more than $500,000 in Federal awards in a
				given fiscal year have an audit conducted in accordance with 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." An audit of CDBG Disaster funds
				must be submitted to ADFA annually on or before June 30 of each year.
V.
Procurement:
Local governments, public agencies, and nonprofit organizations
				are required to adhere to all applicable procurement requirements in the
				selection and award of contracts for goods and services. Therefore, all
				solicitation of bids for goods and services to be paid with CDBG Disaster funds
				must be conducted openly and competitively in accordance with Arkansas State
				Procurement guidelines, as applicable.
Developers are not subject to procurement requirements, but
				costs must be considered reasonable to be eligible under the program.
W.
Contractor
			 Requirements:
All general contractors working on all CDBG Disaster
				Program-funded developments must have an active license issued by the Arkansas
				Contractor's Licensing Board (the "State Licensing Board") as applicable and
				meet all requirements of contractors in the state of Arkansas, including
				securing Builder's Risk insurance according to ADFA policies on contractor
				requirements. Contractors may not "share" a license. That is, ADFA will not
				allow one contractor to work from another contractor's license.
All ADFA CDBG Disaster Program-funded projects must have a
				general contractor that is properly licensed by the Arkansas State Contractor's
				Licensing Board. Any questions regarding licensing requirements, licensing
				issues, and a list of licensed contractors may be directed to the State
				Licensing Board at the following address:
Arkansas Contractor's Licensing Board 4100 Richards Road North
				Little Rock, AR 72117 (501) 372-4661
In addition, any subcontractor, plumber, electrician, or HVAC
				contractor must be licensed. The recipient must use only reputable workmen,
				material suppliers and agents acceptable to ADFA in the completion of any
				activities funded by CDBG Disaster Program funds.
Any contractor or subcontractor who has been debarred or
				suspended by any entity or had a contractor license suspended by any entity
				within the previous twelve (12) months will be prohibited from participating in
				the CDBG Disaster Program. All general contractors working on all CDBG
				Disaster-funded developments must obtain one of the following:
1) a payment and performance bond; or
2) an Irrevocable Letter of Credit
			 in the amount of the construction contract.
X.
Inspections:
Inspections are required with all activities that are funded
				through the CDBG Disaster Program. ADFA currently has inspectors under contract
				that will be available as needed. Applicants must notify ADFA a minimum of 48
				hours in advance to schedule inspections. ADFA staff will coordinate with
				recipients of CDBG Disaster funds and inspectors to schedule all
				inspections.
There are currently four (4) required inspections identified as
				follows:
Stage 1
Stage 2
Stage 3
Stage 4
Excavation
Plumbing top-out
Flooring systems
Final inspection
Metals
Electrical rough-in
Painting
Termite treatment
Framing
Doors
Rough-in plumbing
Roof
Cabinets
Earth work
Interior wall systems
HVAC
Water proofing (vapor
Exterior wall systems
Electrical top-out
barrier)
Ventilation
Special construction
Footing
Insulation
(elevators, etc.)
Slab
Appliances
Additional inspections may be scheduled, as warranted. The ADFA
				inspector must attend any pre-construction meetings for CDBG Disaster Fund
				Program developments. When draws of CDBG Disaster funds are planned, the
				property must be inspected and approved to verify that all work performed to
				date has been completed satisfactorily. ADFA will make payments only on work
				that has been satisfactorily completed, inspected, and approved by an ADFA
				inspector.
CDBG Disaster fund Program awardees may fax or mail their
				payment request, with all of the required documentation, to ADFA at the
				following address:
Arkansas Development Finance Authority
Attn: CDBG Disaster Fund Program
P. O. Box 8023
Little Rock, AR 72203-8023
Fax : (501) 682-5859
Y
Change Orders:
ADFA realizes that unplanned situations occur in development
				occasionally. In the event it becomes absolutely necessary to modify an
				existing contract, CDBG Disaster Program participants must submit a REQUEST for
				approval of any proposed change order to ADFA staff on the proper ADFA form.
				ALL CHANGE ORDERS MUST BE APPROVED BY ADFA PRIOR TO INITIATING THE PROPOSED
				WORK. No payment of CDBG Disaster Program funds will be made for work performed
				by a change order that has NOT been previously approved by
				ADFA.
Z.
Construction
			 Contingency:
ADFA allows up to ten percent (10%) of allocated CDBG Disaster
				funds to be set aside for construction contingencies. The total amount for all
				work on a CDBG Disaster Fund development (including any contingency amount) may
				not exceed the ADFA-established per unit limit in effect at that time.
AA.
Closing of
			 Transactions:
ADFA will select or approve a closing entity to provide closing
				services for all CDBG Disaster Program transactions using ADFA-approved
				documents. The services will be available and required in the county where the
				development is located. CDBG Disaster Program staff will provide closing
				instructions to the closing entity for all CDBG Disaster Program transactions.
				ADFA will be responsible for payment of costs associated with closing the CDBG
				Disaster Program portion of the transaction.
BB.
Program Income:
Any approved development receiving CDBG Disaster Program funds,
				which generates program income as a direct result of CDBG Disaster
				Program-funded activities must immediately remit any and all program income
				received from CDBG Disaster Program-funded activities directly to ADFA. ADFA
				will reallocate any program income received to eligible CDBG Disaster Program
				applicant(s) for eligible CDBG Disaster Program activities. In addition, any
				cash received as CDBG Disaster Program program income will be disbursed first,
				prior to making any further U.S. Treasury drawdown requests for additional CDBG
				Disaster Program funds.