G.O. Bond Proceeds & Publicly Owned Housing: Program Basics & Application Essentials July 10, 2012

G.O. Bond Proceeds & Publicly Owned Housing: Program

Basics & Application EssentialsJuly 10, 2012

Agenda

• G.O. Bond funding source• Funding priorities• Publicly Owned Housing Program (POHP) basics• Minnesota Housing funding process• Application and Selection• Due Diligence• Architectural considerations• Tips for putting together a competitive application

Welcome

• $5.5 million for public housing preservation• Joint effort among stakeholders

Jennifer BergmanPresident, MN NAHRO

• General Obligation (G.O.) bond proceeds• Bonds issued by State & repaid by state

resources• Minnesota Housing’s role is to select projects

for funding and close funding• G.O. bond funding requires bond-funded

property to serve a public purpose for indefinite period

• “B3” Minnesota Sustainable Building Guidelines

• Administered under POHP

Funding Source

Funding Priorities

• Improvements addressing health & safety issues

• Improvements that improve energy or water conservation and lower operating costs

• Proposals maximizing use of federal or local resources

• Proposals that are ready to proceed

• Development must be public housing owned by a local unit of government

• Public housing defined as housing for low-income persons and households financed by the federal government and owned/operated by public housing authorities and agencies formed by cities and counties

• All units must meet public housing income limits• Must have Public Housing Assessment System

(PHAS) rating of standard or above

POHP Eligibility

• 0% deferred loan forgivable after 20 years• No minimum or maximum loan amount• Can be used as a construction or end loan• Mortgage and Declaration filed on title• Subordinate to existing HUD restrictions• HUD approved streamlined subordination

process

Terms of Funding

Eligible Uses

• Limited to capital improvements• Add value/life to building & non-recurring in

nature• Eligible hard cost examples: major roof

reconstruction or replacement, major window replacements, major systems repair or replacement

• Eligible soft cost examples: architect’s, attorney’s, or accountant’s fees, environmental testing, title work

Ineligible Uses

• Ongoing or routine maintenance items such as light bulb replacement, regularly scheduled system maintenance, incomplete replacements (e.g. selective window replacement)

• Ineligible soft costs: operating expenses/costs, reserves, marketing expenses, hazard or liability insurance, relocation

Funding Process

Four Primary Stages

Application Stage

• Simplified application• Use Project Narratives to tell your story• Firm bids not needed at application, but

estimates should be as concrete as possible• Supporting documentation already prepared

for HUD• Deadline: 5:00 p.m. August 31, 2012

Selection Stage

Proposals reviewed on:• Alignment with funding source and program priorities• Cost reasonableness• Cost containment• Management capacity• Operational effectiveness• Stage involves Minnesota Housing underwriters &

architects for review/assessment of financial, design, & other project characteristics

Due Diligence Stage

• Time-intensive & iterative process• Necessary to ensure Minnesota Housing meets its

obligation as funding allocator/loan closer• Recorded documents (e.g. Mortgage, Declaration)

require a certain level of due diligence• Important to understand the time, money and effort

borrowers have to commit• Technical assistance available & plan ahead for

items that can be built into the mortgage

Due Diligence (cont.)

• Examples of Due Diligence required (see sample Loan Closing Checklist):» Scope of work» Environmental» Title/zoning» Organizational documents» Miscellaneous forms

Commitment or Loan Closing• Board commitment term is 20 months• Construction loan: more time-intensive

and more rigorous oversight by Minnesota Housing

• End loan: simpler for both borrower and Minnesota Housing but requires available interim capital financing

Architectural Considerations• Seek input early in the process

» Refer to Minnesota Housing’s Rental Housing Design/Construction Standards

• Submit new or most recent Physical Needs Assessment (PNA) prepared for HUD

• Firm bids not required at application• Iterative process as Scope of Work is

developed• Environmental considerations

B3 Requirements • Overseen statewide by the Center for Sustainable

Building Research (CSBR) at the U of M• CSBR processes variance requests (filed through

form P1d) and provides technical assistance in conjunction with MN Department of Administration» Variances available if improved area is less than

10,000 square feet or if project involves less than replacement of HVAC system

» If project must comply, CSBR can provide guidance directly and through an online planning/tracking tool

B3 Contacts and Information Patrick Smith, Center for Sustainable Building Research

612-626-9709, [email protected]

B3/Minnesota Sustainable Building Guidelineshttp://www.msbg.umn.edu/index.html

Form P1d (request for ruling on applicability/variance)http://www.msbg.umn.edu/downloads_v2_1/Form%20P1d-Applicability%20Form_V2-1.pdf

Putting Together the Application• Consider size of request compared with total

funding• Use narratives & submitted docs to demonstrate

need, readiness, capacity• Explain any variances from application

requirements• Think through the loan processing timeline and

readiness to proceed• Seek input early • Technical assistance is available

Key Dates & Materials

• RFP released: July 2, 2012• Applications due: August 31, 2012 by 5:00

p.m.• Minnesota Housing Board Selections:

November 15, 2012

Access the Application & RFP Guide at:http://www.mnhousing.gov/resources/apply/public-housing/index.htm

For More Information Contact

Jonathan Stanley, POHP Program Manager


Erika Arms, Architect


Bob Porter, Multifamily Underwriter


Julie Tarlizzo, Closing Department


400 Sibley Street, Suite 300

St. Paul, MN 55101

651-296-7608 * 800-657-3769 * TTY 651-297-2361www.mnhousing.gov

G.O. Bond Proceeds & Publicly Owned Housing: Program Basics & Application Essentials July 10, 2012

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