HOME Overview
-
Upload
wvhdf -
Category
Government & Nonprofit
-
view
268 -
download
0
Transcript of HOME Overview
![Page 1: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/1.jpg)
The Big Four
HOME Investment Partnerships Program
![Page 2: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/2.jpg)
HOME ProgramHOME regulations are located in:Title 24 – Housing & Urban Development of the
Code of Federal RegulationsPart 92 – HOME Investment Partnerships
Program
The Big Is…….2
![Page 3: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/3.jpg)
24 CFR §92.250 (b)(2)1. An assessment, at minimum, of the current
market demand in the neighborhood in which the project will be located
2. The experience of the developer
3. The financial capacity of the developer
4. Firm written financial commitments for the project
AND…..
3
![Page 4: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/4.jpg)
24 CFR §92.250 (b)(2)
Let’s break it down.
4
![Page 5: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/5.jpg)
24 CFR §92.250 (b)(2)
An assessment, at minimum, of the
current market demand in the neighborhood in which the project will
be located . . .
5
![Page 6: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/6.jpg)
How can the market demand be proven?
6
![Page 7: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/7.jpg)
Submit a market assessment documenting the demand foradditional affordable rental housing in the location proposed, the
supply of affordable rental housing, and other pertinent informationsuch as the location of employment opportunities and schools. If
your organization maintains a waiting list of individuals interested inleasing a unit from your organization, indicate how many families are on the waiting list. Explain the marketing plan and indicate who will
be responsible for marketing and leasing the units.
For projects requesting HOME funds with 1 to 4 units:
7
![Page 8: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/8.jpg)
Suggested sites to aid in the determination of market demand:
8
![Page 9: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/9.jpg)
FFIEC (Federal Financial Institutions Examination Council)
Provides Census Tract information
https://geomap.ffiec.gov/FFIECGeocMap/GeocodeMap1.aspx
9
![Page 10: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/10.jpg)
10
![Page 11: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/11.jpg)
USA Location Information
Provides state, county, city statistical information
http://www.usa.com/west-virginia-state.htm
11
![Page 12: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/12.jpg)
12
![Page 13: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/13.jpg)
West Virginia Statewide Housing Needs Assessment
Provides State statistical informationhttp://www.wvhdf.com/Housing-Needs-Study
13
![Page 14: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/14.jpg)
14
![Page 15: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/15.jpg)
The burden of proof is on the developer.
Do not copy and paste statistical information to prove the market demand.Assimilate the statistical information in a logical format to prove the project will achieve full occupancy in a timely manner.
15
![Page 16: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/16.jpg)
How can the market demand be proven?
For projects requesting HOME funds with 5 or more units:
Submit a professionally prepared, Project specific market analysis.
16
![Page 17: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/17.jpg)
Why prove market demand?§92.252. . . If the housing is not occupied by eligible tenants
within six months following the date of project completion, HUD will require the participating jurisdiction to submit marketing information and, if appropriate, submit a marketing plan. HUD will require the participating jurisdiction to repay HOME funds invested in any housing unit that has not been rented to eligible tenants 18 months after the date of project completion.
17
![Page 18: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/18.jpg)
24 CFR §92.250 (b)(2)
. . . the experience of the developer
18
![Page 19: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/19.jpg)
92.300(a)(3) . . . To be the “developer,” the CHDO must be in sole charge of all aspects of the development process, including obtaining zoning, securing non-HOME financing, selecting architects, engineers and general contractors, overseeing the progress of the work and determining the reasonableness of costs. At a minimum, the CHDO must own the housing during development and for a period at least equal to the period of affordability in §92.252.
19
![Page 20: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/20.jpg)
92.252 Rental Housing Activity
Rehabilitation or acquisition of existing Housing per unit amount of HOME funds:
AFFORDABILITY PERIODS
Under $15,0005 years
$15,000 to $40,00010 years
Over $40,000 or rehabilitation involving Refinancing15 years
New construction or acquisition of newly Constructed housing20 years
20
![Page 21: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/21.jpg)
Does the Developer have the bandwidth to see the project from application to completion and through the affordability period?
Does the Developer have paid employees with housing development experience who work on projects assisted with HOME funds?
21
![Page 22: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/22.jpg)
Assessment of Developer Experience
• Performance of previous projects
• Timeliness of submissions
• Accuracy of submissions
• Includes review of CHDO Operating Expense Grant performance
22
![Page 23: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/23.jpg)
• Tenure and experience of development staff
• Time organization has been established
• Time Executive Director has been with the organization
• Time Executive Director has served in current position
23
![Page 24: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/24.jpg)
• Number of programs organization operates
• Successfully completed projects?
24
![Page 25: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/25.jpg)
Why confirm developer experience?92.205(e)(2)If a participating jurisdiction does not complete
a project within 4 years of the date of commitment of funds, the project is considered to be terminated and the participating jurisdiction must repay all funds invested in the project to the participating jurisdiction's HOME Investment Trust Fund in accordance with §92.503(b).
25
![Page 26: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/26.jpg)
24 CFR §92.250 (b)(2)
. . . the financial capacity of the developer
26
![Page 27: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/27.jpg)
General considerations forfinancial capacity include
27
![Page 28: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/28.jpg)
Budgeting: Theorganization should
conduct annualbudgeting of its
operations, all activities,and programs. It should
track report budgetversus actual income and
expenses.28
![Page 29: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/29.jpg)
Reporting: Financial reporting should be regular, current and sufficient for the board to forecast and monitor the financial status of the organization.
29
![Page 30: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/30.jpg)
Cash Flow Management: The organization should know its current cash position and maintain controls over expenditures.
30
![Page 31: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/31.jpg)
Internal Controls: The organization should have adequate internal controls to ensure separation of duties and safeguarding of its assets. There should be sufficient oversight of all financial activities.
31
![Page 32: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/32.jpg)
Procurement/Conflict of Interest: The organization should have a conflict of interest policy governing board members, employees, and development activities, particularly in the procurement of contract services and the award of housing units for occupancy.
32
![Page 33: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/33.jpg)
Insurance: The organization should maintain adequate insurance, including liability, fidelity, bond, workers’ compensation, property hazard, and project.
33
![Page 34: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/34.jpg)
Financial Stability: The current balance sheet and budget should indicate a sufficient, diversified, and stable funding base to support essential operations.
34
![Page 35: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/35.jpg)
Portfolio Financial Condition: If the organization has a portfolio of properties, they should be in stable physical and financial condition.
35
![Page 36: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/36.jpg)
Strategic Plan: The developer needs to provide the 3-5 year strategic plan.
36
![Page 37: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/37.jpg)
Will the proposed project add to the financial stability of the Developer?
37
![Page 38: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/38.jpg)
Liquidity: Consideration is given to:• Are there liquid assets available to cover
current expenses?• Are funds available for predevelopment
expenses?
38
![Page 39: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/39.jpg)
Audited Financial Statement Review
The Fund will evaluate financial capacity by reviewing the three most recent annual audited financial statements, which must include 2 CFR 200, if required.
39
![Page 40: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/40.jpg)
An ongoing concern or qualified opinion will automatically disqualify an organization from further consideration for funding until the financial situation is corrected and the organization obtains an unqualified opinion.
40
![Page 41: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/41.jpg)
Consideration will be given to the number and/or severity of findings. Significant weaknesses in internal controls relating to federal funds management that remain uncorrected will disqualify an organization from further consideration until all findings have been corrected.
41
![Page 42: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/42.jpg)
Trends in financial statements will be reviewed, and a request may be made to explain any fluctuations.
42
![Page 43: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/43.jpg)
Review of Debt Service Coverage RatioMinimum DSCR of 1.20 = Fiscal SoundnessDSCR < 1.20 = Can a reasonable explanation be
provided?
43
![Page 44: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/44.jpg)
Financial Ratios will be calculated to provide insight of the Developer’s Financial Capacity.
Do the ratios indicate a healthy capacity?How are the ratios trending?
44
![Page 45: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/45.jpg)
Financial Ratios
Current Ratio Return on SalesDays Cash on Hand Return on AssetsDebt to Equity Ratio Return on EquityAcid Ratio
45
![Page 46: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/46.jpg)
Financial Capacity of DeveloperCurrent Ratio
Current Assets / Current Liabilities
Ratio indicates amount of current assets for every $1 of current liabilities.
46
![Page 47: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/47.jpg)
Financial Capacity of DeveloperDays Cash on HandCash & Short-term Investments / Daily Cash
Required[DCR: (Total Expenses less depreciation, non-
cash expenses, and pass-through expenses) / 365]
Ratio indicates number of days that expenses can be paid out of current cash.
47
![Page 48: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/48.jpg)
Financial Capacity of DeveloperDebt to Equity Ratio
Total Liabilities / Total Unrestricted Net Assets
Ratio indicates amount of liabilities compared to unrestricted net assets.
48
![Page 49: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/49.jpg)
Financial Capacity of DeveloperAcid Ratio
Cash + A/R + Short-Term Investments / Current Liabilities
Ratio indicates amount of liquid assets (not inventory) compared to current liabilities.
49
![Page 50: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/50.jpg)
Financial Capacity of DeveloperReturn on Sales (aka Operating Profit Margin)
Net Income (add back interest expense & non-cash items) / Total Revenue
Ratio indicates percentage of profit that is being produced from total revenue.
50
![Page 51: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/51.jpg)
Financial Capacity of DeveloperReturn on Assets
Net Income (add back interest expense & non-cash items) / Total Assets
Ratio indicates amount of annual income compared to total company assets.
51
![Page 52: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/52.jpg)
Financial Capacity of DeveloperReturn on Equity
Net Income (add back interest expense & non-cash items) / Total Equity
Ratio indicates amount of annual income compared to total company equity.
52
![Page 53: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/53.jpg)
Financial Capacity of DeveloperMitigating Factors
There can be mitigating factors for a less than ideal financial statement.
The Developer has the burden of proof to provide mitigating factors and reasonable explanations.
53
![Page 54: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/54.jpg)
Financial Capacity of DeveloperWhy confirm Financial Capacity of Developer?Limited cash flow can be an indicator of limited
ability to successfully complete project.
54
![Page 55: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/55.jpg)
24 CFR §92.250 (b)(2)
. . . and firm written financial commitments for the project.
55
![Page 56: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/56.jpg)
There must be firm financial commitments – written – from all project funding sources prior to the commitment of HOME funds.
56
![Page 57: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/57.jpg)
AnticipatePlanIntendGoing toSubject toOr any word other than
NOTFirm financial commitments
FIRM57
![Page 58: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/58.jpg)
Firm financial commitments must be:• Fully executed • Dated
58
![Page 59: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/59.jpg)
Upon confirmation of Firm financial commitments, project underwriting will commence.
59
![Page 60: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/60.jpg)
Sources = Uses?Project Costing: Reasonable and necessary?Accurate Rent Restrictions?Accurate Utility Allowances?Net Tenant Paid Rent properly calculated?
Project underwriting involves:
60
![Page 61: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/61.jpg)
Project Annual Expenses: Reasonable and necessary?
Replacement Reserves: Adequate?Any debt service? Properly calculated?
61
![Page 62: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/62.jpg)
Pro forma will be completed for the HOME Affordability Period.
Does the project cash flow?On paper: Is the project viable?
62
![Page 63: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/63.jpg)
§92.210 Troubled HOME-assisted rental housing projects.
(a) The provisions of this section apply only to an existing HOME- assisted rental project that, within the HOME period of affordability, is no longer financially viable.
Why confirm Firm Financial Commitments?
63
![Page 64: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/64.jpg)
24 CFR §92.250 (b)(2)
An assessment, at minimum, of the current market demand in the neighborhood in which the project will be located, the experience of the developer, the financial capacity of the
developer, and firm written financial commitments for the project.
Reminder of the Big Four:
64
![Page 65: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/65.jpg)
24 CFR §92.250 (b)(2)The Big Four IS NOT a Fund
mandate.The Big Four IS NOT a HOME
Department directive.The Big Four IS NOT a
management rule.The Big Four IS a HUD
regulation.
65
![Page 66: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/66.jpg)
The Big FourComments?
Questions?
Discussion?
66
![Page 67: HOME Overview](https://reader036.fdocuments.us/reader036/viewer/2022070601/5881d4b71a28ab331a8b618d/html5/thumbnails/67.jpg)
The Big FourCathy ColbyManaging Director of the HOME Program
67