2008 Affordable Housing Program (AHP) “How to Apply” Presenter: Louis Freeman 1 Affordable Housing Program History and Overview • Established in 1990 as part of FIRREA • Since 1990, FHLBank Atlanta has awarded more than $330 million in AHP subsidy to help create or preserve more than 61,000 units of affordable housing. • More than $50 million awarded in 2007 2 Implementation Plan The most recent revisions to the AHP Implementation Plan became effective as of November 29, 2007. – Copies of the Plan are available at www.fhlbatl.com under Documents & Forms and Community Programs. – Includes scoring & financial feasibility guidelines 3 AHP Overview • For owner or rental housing • Benefits residents at or below 80% of Area Median Income • Application deadline: June 16, 2008 • Direct Subsidy (forgivable loan) – Maximum subsidy of $1,000,000 • Subsidized Loan - Fixed rate, up to 30 years • Owner - 5 year retention period • Rental - 15 year retention period – 20% of units at or below 50% AMI 4 AHP Eligible Activities • • • • • • • New construction or rehabilitation financing Acquisition Permanent financing Principal reduction Down-payment and closing-cost assistance Lease / purchase Cannot be combined with First-time Homebuyer Program (FHP) 5 Member Bank Participation • Project must be underwritten by a member financial institution before application is submitted to FHLBank Atlanta. • Identify and begin working with member early in the process • Project sponsors should submit application to member bank at least 15 days before application deadline. – Check with member for their deadline. 6 How to Apply • Log on to FHLBank Atlanta website to register www.fhlbatl.com – One-time registration – Obtain a Bank-issued “master” User ID and Password • Internet browser software requirements – Must use Internet Explorer - version 5.0 or higher 7 8 Registrants are classified as: • Sponsor - primary project sponsor only, not developer • Sponsor / Developer - primary project sponsor and developer • Developer - developer only • Consultant – AHP application consultant only – Note to sponsors: Do not share User ID and Password (Think long-term … what will be your role in future projects?) 9 Sponsor FHLBAccess Agreements • Resolution Authorizing Participation – Signed by Corporate Secretary of Sponsor’s BOD • Certificate of Incumbency – Identifies officers authorized to execute agreements signed by BOD’s Corporate Secretary • Access Form for Sponsor Web System Access – Signed by an authorized officer identified in Certificate • Terms and Conditions for Sponsor Web System Access 10 Non-member’s channel to FHLBAccess. Check Portal periodically for communications pertaining to your projects. 11 Click here to: Start a new Application Continue an Application Check Application Status Buttons provides additional information or further clarification. Project Type and Dwelling Type cannot be edited once saved. Features selected here will appear in General Information section. 12 Do not use “BACK” key on browser. Address all technical questions to Help Desk. Summary updates after each section is completed. Shows project type. 13 Responses are linked to the “start an application” section. Changes cannot be made. You must start new application, if changes are needed. Help buttons provides additional information or further clarification. Use of AHP funds selected here will determine AHP line items in Development Budget. All non-related line items will be disabled. 14 Primary contact Enter Ownership % upon completion. 15 Selecting a member enrolled for FHLBAccess Select contact person for this application. If the person you are working with is NOT listed, contact one of the persons shown to determine who should be listed. Upon submission of application, member’s contact person will be sent an email. Contact selected may/may not be the authorized reviewer using FHLBAccess. 16 Enter amount of direct subsidy and/or provide details of subsidized advance (loan). 17 Project Targeting • Income Targeting: – List the income level of the targeted residents – Points are given based on the percentage of total units for each income level - the lower the incomes, the more points awarded – Rental projects must have at least 20% of total units for very low-income tenants • Rent Targeting: – List the proposed rent for the targeted residents – Exclude utilities – Rent levels cannot exceed 30% of the targeted population's income 18 Additional Project Requirements • Project Readiness – All AHP funding must be used within 24 months – Site Control – Evidence of Satisfactory Phase I Environmental • Fair Housing Statement – Must comply with Federal and State laws on fair housing and equal opportunity • Market Feasibility – Demonstrate demand for units 19 Application Submission & Approval • Eligibility Requirements – All projects are now required to have obtained site control, evidence of a satisfactory Phase I Environmental Site Assessment, and evidence of a satisfactory Phase II Site Assessment, if applicable. • The executive summary section of the site assessment report is required as evidence of the environmental study. • The only exception to this requirement is projects requesting AHP funds for post development activities. 20 Application Submission & Approval • Eligibility Requirements (cont’d.) – Acceptable warranty deeds, sales contracts and purchase options may adequately demonstrate site control. – All approved projects must submit evidence of proper zoning and land use within six months of the Bank’s approval. Zoning may be evidenced in the form of a letter, ordinance, or other documentation from the zoning body of the local government. – All supporting documentation is due on or before the application deadline. 21 AHP funding information is linked to a previous section. All other funding sources must be added. Click here to add funding sources and details. 22 Development Budget Total development cost must equal the total funding sources Must hit “calculate budget” to get the correct total, then save. 23 Financial Feasibility Guidelines • Builder’s Overhead, Profit and General Requirements – A maximum cost guideline has been added for builder’s overhead, profit and general requirements of 16% of project hard costs, net of builder’s overhead, profit and general requirements. • Operating Reserves – All capitalized reserves, with the exception of replacement reserves and lease-up reserves, are considered operating reserves when calculating the maximum allowable capitalized operating reserve. • Zero Debt Rental Projects – Projects with no hard debt will undergo an AHP needs analysis based on the following: 1) The direct subsidy requested is converted to hard debt at current market rates with a 15year amortization. 2) This amount will then be incorporated into a cash flow analysis. 3) If the analysis reveals a debt coverage ratio greater than 1.30, the project will be deemed ineligible based on its inability to demonstrate a need for the requested subsidy. 24 Financial Feasibility Guidelines • Operating Expenses – The maximum annual operating expense feasibility guideline is $4,000 per unit. • Replacement Reserves – The acceptable range of replacement reserves per unit per year is $200 - $350. • Low-Income Housing Tax Credits – The sales price minimum for Low-Income Housing Tax Credits is $.90 per dollar. The development budget will create a request for a variance explanation if the tax credit sales price is below the FHLBank Atlanta minimum sales price. 25 Proforma • Gross residential rent calculations are derived from the Project Targeting section. – Income targeting – Rent targeting • Debt service is calculated in the development budget (hard debt). • Review AHP Feasibility Guidelines for industry trending limits. • Social services budget – Affirmation must be complete for projects with or without a social services budget 26 Miscellaneous Information • Commercial space • Consultant information – AHP Application Consultant Additional Information • Enter requested information- mostly “yes” or “no” questions • Answers will be reviewed for conflicts with other areas of the application 27 AHP Scoring Criteria Scoring Item Points Donated Government-Owned or Other Property 5 Nonprofit Government Sponsor 5 Empowerment • Homebuyer Education • Employment • Transportation • Tenant Counseling • Homeownership Counseling • Training 10 • • • • • • Resident Involvement in Decision-Making Youth Programs for Children 12 and Under Onsite Health Services Daycare (Child or Adult) Workforce Development Initiative Education Housing for Homeless Households 5 1st District Priority Rural First-time Homebuyers Disaster Areas 10 10 10 2nd District Priority Owner-occupied Rehab 10 Income Targeting 20 AHP Subsidy Per Unit 10 Community Stability 5 28 Review and Finalize • All supporting documentation must be submitted by COB on June 16, 2008. • New Application Certification required from Sponsor as part of supporting documentation for each project. – Check website for document (April) • Evidence of Donated Property Transfer – documents the property was donated prior to application submission at a cost of $10.00 or less plus modest conveyance fees (e.g. recorded deed of gift; HUD-1 statement). • Proof of Non-Profit Sponsor Ownership – documents that a nonprofit organization will have a stated percentage of ownership interest upon completion (e.g., partnership agreement, warranty deed). 29 Review and Finalize • Empowerment Activities – Memorandum of Understanding (MOU) is signed by the sponsor or sponsor and third-party provider when services are delivered by a third party. – Empowerment Activity Questionnaire for each activity • Rural Housing Area Certification – documents the project is located in an area currently designated by USDA Rural Development as eligible for Rural Development Housing Programs. • FEMA Major Disaster Declaration – identifies eligible disaster counties, the disaster declaration date, and type of assistance. Visit www.fema.gov • Verification of Neighborhood Stabilization – documents that the project is located in a neighborhood that is targeted in a stabilization plan to receive funding or supportive services. 30 Member Review, Approval, & Submission • Member receives e-mail notification of application submitted via FHLBAccess for review and approval. • Member cannot edit the application. • Each member has an FHLBAccess Administrator that maintains user IDs and passwords. • Member may approve or reject application. Approve - member will complete electronic signature section and submit to FHLBank Atlanta; authorized “signer” must be signer on record at FHLBank Atlanta. Reject – member may require changes and request sponsor to resubmit (prior to deadline) or member may reject application (explanation is required). 31 Member Review, Approval, & Submission • If member rejects and requires changes to application: – e-mail is sent to sponsor with explanation for rejection or request for changes. • Sponsor can choose to: – make changes and resubmit, or – withdraw application. • Member will repeat steps to approve application. • Member and sponsor will receive confirmation e-mail when application is approved by member and submitted to FHLBank Atlanta. 32 FHLBank Atlanta’s Process • Application underwriting and evaluation period – Questions sent to sponsor and member • Approval by Board of Directors in late 4th Qtr. • Letter of notification sent to member, copy to sponsor • Commitment Letter & AHP Agreement follow within 60 days of approval – Agreement must be signed by all parties and returned to the FHLBank within 30 days 33 Additional FHLBank Atlanta Products • Participate in: – First-time Homebuyer Program (FHP) – Community Investment Program (CIP) – Economic Development Program (EDP) 34 First-time Homebuyer Program (FHP) • Provides down-payment and closing-cost assistance – First-come, first-served – 5 to 1 match – Homebuyer must contribute at least $500 – $10,000 maximum per homebuyer from FHP • Registered members eligible for up to $1 million in FHP funding per year • Available only in the 8 states in the Bank’s district 35 FHP Example Household Income (family of 3) Property Sales Price $ $ Closing Costs 31,620 102,000 1,726 Total Costs 103,726 Seller Contribution (2,000 ) Buyer Contribution (1,726) FHP Match (8,630) Total Mortgage Amount $ 91,370 First Mortgage: "Your" Bank $ 91,370 Monthly Principal and Interest $ 570 Value to Member • First mortgage loan opportunity – interest income • Magnet for new retail customer acquisition • Opportunity to reach untapped customer market – “bank the un-banked” 36 Community Investment Program (CIP) • Reduced rate advances to fund mortgage loans – Homeownership or rental housing • Can be used to pool existing loans • Can be used with FHP or AHP 37 Economic Development Program (EDP) • Reduced rate advances to fund economic development loans such as – Small business loans – Retail centers – Hotels – Restaurants • Flexible terms – Fixed-rate advance with maturities up to 20 years • Eligibility requirements – Income/neighborhood – Jobs/Services 38 Q&A To contact CIS, call 1-800-536-9650, ext. 8436 39