Louisiana Housing Finance Agency
CDBG FAQ
Q: When are CDBG gap financing funds received?
A: At the closing of the permanent loan, unless OCD agrees otherwise in advance
Q: Would OCD agree to fund a gap loan during the construction period?
A: Yes, if there is a construction lender whose inspection and draw-approval processes are acceptable to OCD.
OCD would be willing to fund a percentage of each draw. For example, if there is a $6 million construction loan and
a $4 million gap loan and $10 million construction costs, OCD would fund 40% of each draw ($4 million CDBG
gap loan divided by $10 million total construction cost).
Q: Is there a preferred format for the portfolio list that must be submitted to qualify as a Substantial Developer?
A: The format below will satisfy this requirement. Any alternative format that includes at least the same information
will also satisfy the requirement.
Q: Is there any additional guidance for sponsors of Mixed Income projects, for completing the required narrative?
A: Yes. Sponsors should:
1. Respond to each of the factors discussed in the QAP (Sections I.D and Section V.B.i): affordability,
mixed income plan, quality, and other public purposes.
2. Within each factor, respond to each of the key points mentioned in the QAP. For example, in
Affordability, say whether you are proposing a rent restriction on the market-rate units, and if so for
how many of the market rate units, at what level, and for how long.
3. Regarding sponsor experience, submit the Schedule of Real Estate Owned in the format included in
the preceding Q&A or in an equivalent format that includes at least the same information (does not
count toward the 15 page limit). Ensure that the schedule includes all real estate owned by the sponsor
as well as the general partner(s) or managing member(s), and other affiliates, of the sponsor. Delivery
of this schedule satisfies the requirement (to submit a chart) noted in the definition of “Substantial
Developer” contained in the QAP.
4. Include statements from the developer, property manager, first mortgage lender, and syndicator that,
for underwriting purposes, they used the economic assumptions (market rents, LIHTC rents, rent loss,
operating expenses, development costs, …) reflected in your QAP application. For each economic
assumption not used, the statement must include the alternate assumption that was used, and provide
the reason(s).
5. If your QAP application proposes rents for the market-rate units that are lower than the maximum
market rents from your market study, or a level of rent loss that exceeds the QAP minimum 7.0%,
discuss the differences and why you believe they are justified.
6. If your QAP application includes additional operating expenses attributable to the Mixed Income
approach, discuss those additional operating expenses and why you believe they are justified.
7. Say why you selected the particular mix of units and levels of affordability. Say how your selected
mix is consistent with long-term viability. Point out any public-purpose benefits of your selected mix.
8. If you expect that your proposed Mixed Income development will make positive impacts on its
neighborhood (e.g., elimination of blight, likely stimulation of additional future development, likely
economic impacts in addition to the planned construction and operation of the property itself), discuss
those impacts and why you believe they will occur.
9. If your project’s architectural design follows the Louisiana Speaks: Pattern Book, discuss how those
design elements are included in your project’s design.
10. Discuss the physical quality of the proposed Mixed Income development, in comparison to the
existing market-rate rental housing selected by your Market Study analyst as rent comparables.
Emphasize objectively verifiable factors, such as unit size / features / amenities / finishes, design
elements that should result in lower long-term costs, and design elements that are consistent with
existing architecture in the neighborhood. Sponsors may submit an assessment prepared by the Market
Study analyst, or the sponsor’s own assessment.
11. Discuss the extent to which the proposed project is consistent with “smart growth” principles.
12. When discussing the level of public support for the proposed Mixed Income development, emphasize
objectively verifiable indicators of support such as support letters and resolutions (which may be
attached and do not count toward the 15 page limit).