Competitive Affordable Housing Program

1. Competitive Affordable Housing Program Application and Project Administration

2. Brandon Wiltgen Rental Housing Analyst III 800.544.3452, ext. 1136 bwiltgen@fhlbdm.com Contact Information 2

3. Agenda Introduction: FHLB Des Moines and the Competitive Affordable Housing Program (AHP) The AHP Application The Disbursement Process Initial Monitoring Long-term Monitoring Questions 3

4. What are the FHLBanks? • Authorized by Congress in 1932, the Federal Home Loan Bank System is a government sponsored enterprise comprised of 12 regional, independent Banks • Nearly 7,600 commercial banks, thrifts, insurance companies and credit unions are cooperative members of the Home Loan Banks (FHLB Des Moines currently has nearly 1,200 members) • The mission of the FHLBanks is to provide liquidity and stability to the nation’s financial system and promote housing and economic development in communities • Member financial institutions borrow funds from the Banks to finance housing, economic development, infrastructure and jobs • As part of their mission, the FHLBanks reserve 10% of net income each year for the Affordable Housing Program, making the Banks one of the nation’s largest private funders of affordable housing 4

5. FHLBank Regions • Des Moines district: • Iowa • Minnesota • Missouri • North Dakota • South Dakota

6. The Competitive Affordable Housing Program 6

7. Competitive Affordable Housing Program • Competitive subsidy program • Projects are scored in 9 priorities • Funds available for the purchase, constructionor rehabilitation of affordable housing units • Rental and homeownership projects are eligible • Maximum subsidy award of $500,000 per project or $30,000 per unit (lessor of) 7

8. AHP Projects Funded 1990-2013 8

9. REQUIREMENTS • Householdsmust be at or below 80% of the area median income (AMI) • Rental projects must reserve at least 20% of units for households at or below 50% AMI • AHP funds may not pay for costs of units above 80% AMI • Affordability must be maintained for 15 years (rental projects)

10. Who is the Sponsor? FHLB Des Moines • Sponsor organizations are typically non-profits, for-profits, governments, housing or economic development agencies, Native American tribes or tribal housing authorities • Sponsors must have controlling ownership interest in the project (rental) Member Sponsor 10

11. FHLB Des Moines Member Support • For a sponsor to apply and conduct a project, they must have the support of an FHLB Des Moines member financial institution • Sponsor-member partnerships are designed to strengthen community bonds 11

12. Membership Directorywww.fhlbdm.com/member-resources/ 12

13. The AHP Application 13

14. Application Process • Sponsor registers with FHLB Des Moines and obtains a Sponsor ID • Sponsor identifies an FHLB Des Moines member and requests their support • Member provides sponsor with User ID and Password for online AHP application • Sponsor completes online AHP application • Member “approves” AHP application • FHLB Des Moines awards funds after examining eligibility, score and feasibilityrequirements of the AHP Implementation Plan 14

15. Typical Round Schedule No applications will be accepted after the AHP deadline. The member must approve the application prior to the deadline to be considered complete. In addition, any applications with missing exhibits at the time of the deadline will be considered incomplete. 15

16. AHP Implementation Plan Project Feasibility Guidelines Program Guidelines Disbursement (Subsidy Transfer) Request • Eligibility standards • Project limits • Timing of subsidy use • Retention requirement • Development Budget • Development Cost Per Unit • Developer and Consultant Fees • General Requirements, Builder Overhead and Profit • Construction Contingency • Professional Fees • Capitalized Reserves • LIHTC Sales Price • Operating Budget • Stabilized Vacancy • Management Fees • Replacement Reserves • Operating Cost Per Unit • Cash Flow and DCR Modification and Extension Median Income Determination and Income Limits Project Monitoring Definitions and Acronyms Scoring Requirements 16

17. Three Legs of AHP • Eligibility • Scoring • Feasibility 17

18. AHP Online Application – The High Points Refer to the rental manual located on www.fhlbdm.com for complete instructions. 18

19. FHLB Des Moines Web Resources www.fhlbdm.com 19

20. Technical Assistance Dates to Remember AHP Implementation Plan Online Application Training Manuals Pre-application Registration and online application 20

21. AHP Online Application - Registration List of information needed to complete registration form Link to member directory. You must contact a member and request support for your project Click to go to the registration form 21

22. Registration Tips • Sponsors register (members do not) • Provide contact information for the Sponsor (not the consultant or grant writer) • Sponsors must register every year • No registration = NO application • Sponsors do not need member support to register • Be accurate when providing sponsor information, including contacts. This information will be automatically included in your AHP application. • Sponsors will be provided a sponsor ID after registration. Provide the ID to the member supporting your projectso that they can create the username and password. 22

23. Member Issues User ID & Password Member will assign an initial user ID and password. For security purposes, the sponsor will change their password when they first logon. The member will enter contact information for the sponsor user. Be sure to send this information to the member. This may be different from your sponsor contact at registration. Provide the Sponsor ID from registration. More than one sponsor user may be assigned. An authorization level needs to be assigned to each user. None = read only authority Data entry = data entry only Data entry and approval = at least one sponsor user must have authority to approve the application for delivery to the member and FHLB Des Moines. Members use a secure website to assign sponsor and member user IDs and passwords to access the application. 23

24. Sponsor Authority Tips • Data entry only users will not be able to submit the application • Data entry and approval rights should be issued to the person at the Sponsor organization that is able to sign on their behalf • If you forget your user ID and/or password, contact the member for new credentials • Both the sponsor and member need a person with data entry andapproval authority in order to complete the application. 24

25. Application Status • Each step must be completed • Steps may be accessed from the status page • A redbutton indicates the underlying form IS NOT complete • A green button indicates the underlying form IS complete • Gray numbers indicate that steps are not yet available • Steps 1-7 must be completed before steps 8-24 can be accessed • Click on the specific step to open the underlying input form • The status page may be accessed from each individual step 25

26. Completing Each Step The step will not turn GREEN on the status page until all required fields have been completed. Clicking on the “status” button will take you to the status page Save your application frequently! Note: All required fields will be highlighted in PALE YELLOW. A step is not complete unless all required fields are completed. Click on “Next Step” when all required information has been input 26

27. Step 7 - Rental Project Description ** IMPORTANT ** Information provided in this step automatically completes other parts of the application. Be sure to enter the project information correctly. • Select project type(s) • Input income targeting. • The subsidy per unit will automatically calculate if you have completed step 6. • Percentage of units below 50% AMI will automatically calculate. • Subsidy per unit greater than $30,000 and rental targeting that does not include 20% of units below 50% AMI are not eligible and will cause an error message. 27 NOTE: The system will not allow you to move on to Steps 8-24 if Step 7 is not complete.

28. Step 23 – Exhibits • The exhibits table will populate based on answers to questions throughout the application. • Only required and optional exhibits for your project description and type will be displayed. • Some exhibit forms are provided. Others are created by the sponsor. • Indicate whether exhibits will be mailed or submitted electronically with the application. • For the application to be accepted, mailed exhibits need to be received by the application deadline. Information about the exhibits requirement is provided in Description/Business Rules. Call the Bank with any questions. 28

29. Application Exhibits For all applications: • Feasibility Workbook • Sponsor Qualification Worksheet • Market Study, Needs Assessment or Occupancy History • Fair Housing Marketing Plan • Project Schedule Other exhibits are required based on project type or project design features Exhibits demonstrate feasibility and validate scoring 29

30. Tips and Tricks (Application) • Save often! Application sessions will automatically disconnect after 30 minutes of inactivity. Data that has not been saved will be lost. If you step away, remember to Save Application. • You may save and close the application at any time to complete it in multiple sessions. • When returning to the online application, select Manage Existing Applications to return to your saved application. • Use Word to create/edit long text descriptions. This will allow you to avoid losing work if the webpage times out. • At least one of the Sponsor users must have Data Approval rights (in order to submit the application). • Validation rules are include help texts to notify you of the issue by red highlighting. If you hover your pointer icon over the field you will receive an error message.

31. Scoring 31

32. AHP Scoring Criteria (2014) Points 5 10 20 5 5 18 17 10 10 Priority 1 – Donated property Priority 2 – Non-profit or Government Sponsorship Priority 3 – Income Targeting Priority 4 – Homeless Households Priority 5 – Promotion of Economic Empowerment Priority 6 – First District Priority (In-district, Special Needs) Priority 7 – Second District Priority (Native American, Acquisition/rehab) Priority 8 – Subsidy Per Unit Priority 9 – Community Stability (Adaptive Re-use, Vacant and Abandoned, New Construction, Non-displacement) 100 maximum points • Scoring priorities change from year-to-year. Keep up-to-date with the scoring criteria by reviewing the AHP Implementation Planeach year. 32

33. Priority 1 – Donated Property • 5 points if 100% of the units or land is donated by any entity(minimal conveyance price of $100 or less) • 4 points if less than 100% but at least 20% of the units or land is donated by any entity • 3 points if 100% of the units or land conveyed to the project is at a significant amount below FMV(50% or greater reduction from FMV) • 2 points if less than 100% but at least 20% of the units or land conveyed to the project is at a significant amount below FMV • 1 point for units or land conveyed at FMV by the Federal government or any agency or instrumentality thereof

34. Priority 2 – Non-profit Sponsorship • Sponsorship by a not-for-profit organization, a state or political subdivision of a state, a state housing agency, a local housing authority, a Native American Tribe, an Alaskan Native Village or the government entity for Native Hawaiian Home Lands • The nonprofit Sponsor must have a controlling ownership interest (51% or greater) in the corporation, the partnership or, in the case of a limited partnership, a controlling interest in the general partner. • The controlling interest must be for both governance in making decisions as well as the financial interest to participate in any returns provided by the project. The non-profit must be also be integrally involved in the project. • Sponsorship can include a not-for-profit organization that owns a for-profit entity that is the general partner in the partnership that owns an AHP eligible rental project.

35. Priority 3 – Targeting

36. Targeting Examples

37. Priority 4 – Homeless Housing • Properties that reserve at least 20% of the units for homeless households will be eligible for points • Overnight shelters do not qualify for scoring in this priority. A minimum of six months occupancy must be allowed. • A project must reserve units for occupancy by homeless households, not merely market to homeless persons or give priority to the homeless for waiting list purposes • Rental assistance contracts should be submitted as Exhibit R. If operations will be supported by fundraising or charitable contributions, attach three prior years of audited financial statements as Exhibit R to demonstrate the ability to fund future operations.

38. Priority 5 – Promotion of Empowerment • List of Services: • Case Management • Education GED • Education ESL or Literacy Programs • Employment Counseling or Referral • Employment Training • Family Self-sufficiency Programs • Financial Planning, Credit Counseling or Budgeting • Homebuyer Education • Homeownership Education • Home Employment Training • Job Placement • Life Skills Classes • Micro-business Lending Programs • Resident Involvement in decision-making affecting the creation or operation of the property • Self-help Programs • Training for Daycare Providers • Vaccination/Screening Programs • Welfare-to-work Initiatives • The provision of housing in combination with a program offering services that assist residents to move toward better economic opportunities will receive points in this priority • Only programs or services that promote economic empowerment of residents qualify for scoring • At least two services must be made available to residents to score • Recommend selecting at least three services in case one is removed from consideration during FHLB Des Moines review

39. Priority 6 – First District Priority • In-district Projects • Points will be awarded to the financing of housing located in Iowa, Minnesota, Missouri, North Dakota or South Dakota • Special Needs Units • Points will be awarded for the financing of housing in which at least 20 percent of the units are reserved for occupancy by households with special needs. • Elderly • Mentally or physically disabled persons • Persons recovering from physical abuse • Persons recovering from alcohol or drug abuse • Persons with AIDS • The financing of housing that is visitable by persons with physical disabilities who are not occupants of such housing. Sponsors must provide information to demonstrate that permanent improvements will be made to meet the Bank’s requirements.

40. Priority 7 – Second District Priority • Native American Housing Projects • Points will be awarded for Native American Housing Projects • An eligible project must include tribal funding in the sources of funding for the proposed project (Indian CDBG, Indian CSBG, Indian Health Service funds or NAHASDA funding), or • Projects that the Tribal Government, an agency of Tribal Government, a corporation or a limited liability entity incorporated under Tribal Ordinances will be the owner or the sponsor • Acquisition with Rehabilitation • Points will be awarded to projects in which 100% of the units are acquisition with rehabilitation • These projects must include a minimum of $3,000 per unit in rehabilitation expenses • For all projects, the acquisition must be an Arm’s Length Transaction in order to qualify to receive points

41. Priority 8 – AHP Subsidy Per Unit • Scoring is based on the extent to which a project proposes to use the least amount of AHP subsidy per AHP-targeted unit. • The project with the lowest subsidy per unit requested will receive 10 points. • The project with the highest subsidy per unit requested will receive 0 points. • Projects in between will receive points on a sliding scale from 0 to 10 pointsusing the following: • 10 - (10*(((Subsidy Request / Units Below 80) - Min SPU)/(Max SPU - Min SPU))))

42. Priority 9 – Community Stability • Up to a maximum of 10 points to applications promoting community stability on the following basis: • 5 points for projects in which 100% of the units are an adaptive reuse project • 5 points for projects in which 100% of the units are the rehabilitation of vacant or abandoned properties • 5 points for projects that are 100% new construction • 2 points awarded for not permanently displacing low- or moderate-income households who are subject to displacement. If such displacement will occur, assuring that such households will be assisted to minimize the impact of such displacement.

43. Feasibility 43

44. Feasibility Workbook • A copy of the workbook, labeled Rental Feasibility Workbook can be found on the FHLB Des Moines website http://www.fhlbdm.com/strong-communities-fund/housing-programs/competitive-affordable-housing-program/ahp-rental-forms-page

45. Feasibility Workbook • Sources and Uses of Funds • Cost Breakdown • Building Information • Rental Project Worksheet • Residential Pro Forma • Commercial Pro Forma • Feasibility Checklist

46. Feasibility Workbook • Critical element of the AHP application • Demonstrates that a project conforms to the Bank’s feasibility guidelines • Displays the project’s need for AHP subsidy • Costs or other project features that do not conform to guidelines could disqualify an application • Explain and justify all project costs and expenses • Incomplete or inconsistent workbooks could disqualify an application • The pre-application may be used to receive assistance with workbooks and feedback on project design 46

47. Feasibility Tips for Supportive Housing Building Information • Enter all supportive service and non-housing space in the property • Enter number of beds as SRO units Sources and Uses of Funds • Enter all costs associated with non-housing space in the appropriate column Rental Project Worksheet • Use weighted average tenant paid rent and rental assistance • Enter number of beds as SRO units Residential Pro Forma • Other Income can be used to enter project based operating assistance • If the property is designed to operate at breakeven cash flow, show it accordingly on the residential pro forma

48. Project Feasibility Guidelines • Costs that are not typical for the project’s type, size and location or that exceed feasibility guidelines may not be eligible for AHP funding • Costs, especially those that exceed feasibility guidelines, must be explained on the Rental Project Checklist worksheet • In order to justify costs, users must provide reasonable explanations for the unique aspects of the project • FHLB Des Moines staff may request additional information in order to justify the level of project costs

49. Post AHP AwardDisbursementProgress ReportingExtensionsInitial MonitoringLong-term Monitoring 49

50. AHP Rental Forms Rental Instructions and Forms 50