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Rental Production Overview

The MHDC Rental Housing Production & Preservation Program provides funding for the development of: New construction, and/or Acquisition & rehabilitation of existing properties. Rental Production Overview.

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Rental Production Overview

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  1. The MHDC Rental Housing Production & Preservation Program provides funding for the development of: New construction, and/or Acquisition & rehabilitation of existing properties. Rental Production Overview

  2. These funds are typically combined with Low Income Housing Tax Credits (LIHTC) and offer below market interest rate. Rental Production Overview (cont’d)

  3. Typical funding sources include: HOME MHDC Fund Balance AHAP (Missouri Affordable Housing Assistance Program) Rental Production Overview (cont’d)

  4. The purpose of the QAP is to set forth the process that MHDC will use to administer: Federal & State LIHTC in Missouri Other MHDC Multifamily funding. Qualified Allocation Plan (QAP) Overview

  5. MHDC has created the Developer’s Guide to MHDC Multifamily Programs The Developer’s Guide is a supplement to the QAP and helps users gain more insight to the topics mentioned in the QAP. QAP Overview (cont’d)

  6. The NOFA describes: The types and amounts of funding available. Due date for applications. QAP Overview – Notice of Funding Availability (NOFA)

  7. For FY2014, MHDC funding is: $9,318,000 HOME Funds $1,279,000 HOME CHDO $75,000 CHDO Operating Grant Funds $12,649,000 MHDC Fund Balance NOFA (cont’d)

  8. For FY2014, MHDC LIHTC Funding is: $13,500,000 of Federal 9% LIHTC $13,500,000 of State 9% LIHTC $6,000,000 of State 4% LIHTC Deadline for receipt of application is 4:30 pm, CDT, Friday Sept. 6, 2013. NOFA (cont’d)

  9. Priorities Application Review Selection Criteria Application Underwriting Standards What’s New QAP Overview – Topics of Interest

  10. Priorities • Geographic Region • Non-Profit • Special Needs • Service Enriched Housing • Preservation • MBE/WBE Preference • 50% Priority

  11. Geographic Priority • St. Louis Region- 33% of 9% credits • Counties of Franklin, Jefferson, St. Charles, St. Louis City and St. Louis County. • Kansas City Region- 19% of 9% credits • Counties of Cass, Clay, Jackson, Platte and Ray. • Out-State Region- 48% of 9% credits - All other counties. • 4% Credits are not subject to Geographic Priority • Endeavor to set aside, outside of the Geographic priority, 33% of all Federal and State 9% & 4% LIHTC’s as Special Needs Priority.

  12. Non-Profit Priority At least 10% of 9% Credits will be allocated to developments involving a qualified non-profit. • 501(c)(3) or (4) that is: • Not controlled by a for-profit company • Who has an ownership interest in the development, • Materially participates, and, • Has an express purpose, stated in its bylaws, of fostering low-income housing.

  13. HOME/CHDO Set Aside • HOME Regulations require 15% of HOME funds be loaned or granted to qualified Community Housing Development Organizations (CHDO) • CHDO must be controlling general partner of ownership entity • CHDO recertification form is required

  14. Special Needs Priority • A person with special needs is a person who is: • Physically, emotionally or mentally impaired or suffers from mental illness; • Developmentally disabled; • Homeless; or • A youth aging out of foster care. • A development with a special needs set-aside may not give preference to potential residents based upon having a particular disability or condition to the exclusion of persons with other disabilities or conditions

  15. Special Needs Priority (cont’d) Applicants must submit documentation that demonstrates they have commitments from a Lead referral agency which will: • Refer special needs households qualified to lease targeted units and, • Have the ability to provide access to a network of local service agencies that will provide services capable of assisting each type of special needs population defined above.

  16. Special Needs Priority (cont’d) • A Lead Referral Agency is defined as a service provider agency that will provide tenants and services to the development through the 15-year compliance period. • The Lead Referral Agency should demonstrate the ability to serve the targeted Special Needs population.

  17. Special Needs Priority (cont’d) • Proposals that commit to a special needs set-aside of no less than 10% of total units up to a maximum of 100% of total units will receive priority consideration and an allowable basis boost of up to 30%.

  18. Special Needs Priority (cont’d)Rental Rate • Rents should be made as affordable as possible to special needs households. Affordability may be accomplished through project-based or tenant-based subsidies. • The lead referral agency is responsible for coordinating tenant-based rental assistance with service providers or governmental agencies whenever necessary and possible.

  19. Special Needs PriorityRental Rate (cont’d) • The proposal must identify the strategies that will be pursued for obtaining affordable rental rates through the following means: • 30% AMI rents with no additional rental or operating subsidy; • Shelter Plus Care rental assistance; • HUD Supportive Housing Program (Continuum of Care funds);

  20. Special Needs PriorityRental Rate (cont’d) • Missouri Department of Mental Health Supported Community Living rental assistance; • Missouri Department of Mental Health Rental Assistance Program funds; • Project-based rental assistance established through an AHAP-related donation to a qualified non-profit; • Section 8 vouchers;

  21. Special Needs PriorityRental Rate (cont’d) • HUD project-based Section 8 rental assistance; • USDA project-based rental assistance; or • Other identified sources.

  22. Special Needs PrioritySpecial Needs Reserve • Requires $1,000 contribution per Special Needs Unit • Replaces all other “Operating” Special Needs Reserves • Available for All 2014 Projects and Beyond • Other Special Needs reserves, e.g. Supportive Services Reserves, will be evaluated on a case-by-case basis

  23. Service Enriched Housing Priority Preference may be given to developments that provide services which: • Are appropriate and adequate for the targeted population. • Have services that continue for the entire compliance period and have a dedicated source of funding and committed provider. • Provide a detailed service plan and budget. • Provide letters of intent from service providers. Note:Up to 30% basis boost is allowable under this priority.

  24. Preservation Priority • Must have: • Project-based rental or operating assistance or; • Have an existing pre-1985 loan from HUD: 202/811, 221(d)(3) or (4), 236, or USDA 515 loan or; • Received a previous allocation of LIHTCin which the first year of the credit period was 1997 or earlier, and has therefore completed the initial 15 year compliance period. • If receiving Federal or State Historic Credits must waive the right to opt out after 15 years. • Must have significant and immediate need for rehabilitation. Note:Up to 30% basis boost is allowable under this priority.

  25. MBE/WBE Initiative and Preference • Note that MBE/WBE initiative is a requirement, not a priority/preference, and it applies to all developments with more than 6 units. • Goal is to have a minimum participation of 10% MBE and 5% WBE for both hard and soft costs. • Firms must be certified MBE/WBE entities in order to be counted towards goals. • However, a preference/priority in funding will be given to an application that reflects:

  26. MBE/WBE Preference • A MBE/WBE Developer: A Developer group that includes a controlling MBE/WBE member, and/or a Developer Mentor/Protégé relationship; or • MBE/WBE participation percentages significantly greater than the MBE/WBE minimum participation goals of 10% for MBE and 5% for WBE for both hard and soft costs.

  27. 50% AMI Priority • At least 25% of units set aside for households earning 50% or less of AMI. • Rents for 50% AMI units must be at least 15% less than those for 60% AMI units.

  28. Application Review • All applications go through 5 review steps • Initial review for compliance • Primary documentation review • Secondary documentation review • Site Review • Competitive Review • Underwriter Review • Group Review

  29. Selection Criteria • Development Characteristics • Market Characteristics • Development Team Characteristics • Feasibility • Community Impact

  30. Development Characteristics • Evaluation of Team Members Developer General Partner Management Company Syndicator(s)/Investor(s) Contractor Architect Consultants • Track Record

  31. Development Characteristics (cont’d) • Tenant Population • Site • Design

  32. Market Characteristics • Development Location • Housing Needs

  33. Feasibility • Sources and Uses • Income and Expenses • Long-Term Viability • Construction Schedule

  34. Community Impact • Community Support • Catalytic Effect • Community Needs

  35. Application Underwriting Standards • Uses • Total Development Costs • Developer/Contractor Fees • Contingency • Income and Expenses

  36. What Else Is New?

  37. 1. Application Submission Applicants submitting an application must submit an electronic version of the application (link is on the MHDC website), as well as one tabbed three-ring binder with hard copies of the required documentation and one CD-R/Flash Drive with copies of all exhibits.

  38. 2. Public Official Notification The applicant must provide evidence that all local public officials in the local jurisdiction (for example: city council members) have been informed that the applicant has requested a letter of support from the chief executive officer of the local jurisdiction (for example: mayor).

  39. 3. Applicable Percentage MHDC will underwrite using the monthly applicable percentage for 9% developments unless federal legislation is passed prior to Commission approval of applications extending the HERA legislation.

  40. 4. Purchase Option • If requesting HOME funds or other HUD financing and applicant does not already have site control in a form of a DEED, please use an OPTION AGREEMENT instead of a PURCHASE CONTRACT.

  41. 5. Competition Under Priority Designation • An application submitted under the Special Needs, Service-Enriched, Preservation, or MBE/WBE Priority is not absolved from meeting other selection criteria and successfully competing against other applications.

  42. “Suggestion” • Based on the earlier discussions above concerning MHDC’s “Evaluation of Team Members” during the underwriting process, we encourage non-profit organizations and service providers who intend to become developers to team up with seasoned developers to develop a proposal rather than going solo.

  43. Remember • Applications for FY2014 are due September 6, 2013 by 4:30 CDT. • Must be received at the Kansas City office by the due date and time shown above. • The on-line application for one application must be completed by the above deadline. • Must provide one original binder of all required exhibits and electronic copies of required documents on a CD-ROM/Flash Drive.

  44. Resources • Web Site www.mhdc.com • QAP • Developer’s Guide • FAQ • Bill Ulm, Frank Quagraine or Gus Metz

  45. Questions?

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