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									Compliance Gold in the Wild Wild West!
Round 2-Compliance Manuals

                      Thursday April 23rd
                         1:45-3:15pm
What are Compliance Manuals


     Also Known As
      –   Deal Books
      –   Project Manuals
      –   Taking those messy, old closing documents and
          making sense of them
Why create one for my properties?


     –   The effort up front will save you time overall.
     –   Organization keeps you on top of deadlines and
         compliance requirements
     –   Transparency, easy to train new staff
     –   Easy answers, spending more time analyzing, less
         time digging around
     –   A great starting point to communicate with your
         development team
     –   Succession plan
                        How Do I get started?


   New Project? Meet with your development
    team throughout the entire development
    phase.



   Old Project? Hunt down your closing books-
    this is the collection of documents that was
    pulled together at the closing table.
                   Table of Contents


   Create a format to fit your needs
    –   Property Summary
    –   Reporting Schedule
    –   Financing Structure
    –   Financial Summary
    –   What are those items that you wish you had
        organized and ready-to-go that would make your life
        easier?
                             Sample

1.        Property Summary
2.        Prevailing Lender Requirements
3.        Reporting Schedule- Property Specific
4.        Financing Structure
5.        Financing Summaries
     1.      Community Investment Corporation
     2.      City DOH HOME Funds
     3.      IHDA Trust Fund Loan
     4.      Federal Home Loan Bank Affordable Housing Program (LaSalle)
     5.      IHDA Trust Fund Grant
     6.      CIC/LaSalle
     7.      Chicago Low-Income Housing Trust Fund
     8.      Tax Exemption
   From the closing books, pull out all relevant
    info
    –   Regulatory Agreements
    –   Partnership Agreements
    –   Marketing Plan
    –   Tenant Selection Plan
    –   Management Plan and Agreement
    –   Mortgage Notes
    –   Loan Agreements
    –   Purchase/Sale Agreement
    –   Social Service Agreements
                         Start Reading!
   Other relevant information you’ll need
    –   8609s
    –   Underwriting/Proforma
    –   Warranties
    –   In-place Contracts (laundry, trash, exterminator,
        cable, phone)
    –   What else?
                             Property Summary


   Name
   Ownership Entity
   Address
   Contact Info
   FEIN
   PIN
   BIN
   # of Units and Type
   Utilities-who pays for what
   Accessible Units- any adaptable?
                    Property Summary Cont…


   Square Footage-Unit and Total
   Other Notes
   Acquisition Date
   Date of Closing
   Date of Rehab/Constriction Began:
   Date Rehab/Construction Completed
   Date Lease Up Completed
   Acquisition/Construction Information
   Project Summary (marketing purposes)
   What else would be helpful to have at your
    fingertips?
                                Property Summary Cont…


   Ownership Structure Diagram

                                1218 West Highland
                                   Avenue, LLC


                         Highland MM, LLC                 NEF
                        (Managing Member)               Investor
                               0.01%                    Member
                                                         99.99%


              Guest House          Heartland Housing
              Highland, LLC          Highland, LLC
                (Member)           (Member/Manager)
                   30%                    70%

           The Guest House         Heartland Housing,
           of Milwaukee, Inc.              Inc.
                  (Sole           (Sole Member/Owner)
            Member/Owner)                 100%
                 100%
   Organize documents by each “piece” of financing:
    –   Tax Credits
    –   Grants
    –   Subsidy
    –   Equity
    –   Loans
    –   How many different pieces of financing did your development team
        pull together to make this project work?




                           Lasagna Financing!
                                    Financing Structure


   Look back at your “lasagna financing”, what are the
    different layers?
   Do you have
    –   Tax Credits?
    –   Grants?
    –   Operating Subsidies?
    –   Tax Exemptions/Deductions?
    –   Loans?
    –   Equity?
    –   Contributions from your organization?
    –   Tax Increment Financing
                                Financing Structure


   For each piece of financing
    –   Determine how much money it brought to the table
    –   Is it development money or operating funds?
    –   Is their any compliance related to taking that money
        (a simple yes or no, we’ll get to the details later)
    –   Determine if the funds apply to all units or only a
        portion

    In the end your Financing Structure should just look
      like this:
                        Financing Summaries


   For each piece of financing your will create a
    Financing Summary.
   Some properties may only have 1-2 pieces,
    others may have over 10. (13 is my personal
    record!)
   When you bought your house you had two
    pieces- Debt (your mortgage) and Equity (your
    down payment). Affordable Housing is much
    more complex and takes many more layers to
    get the job done.
                              Financing Summaries


   For each piece, you will want to record:
    –   Source
    –   Type
    –   Contact Info
    –   Initial Funding Date
    –   Term
    –   Maturity or End Date
    –   Interest Rate
    –   Variable Rate
    –   Monthly Payment
    –   Deferred Payment
    –   Balloon Payment and Amount
    –   Extension Option
                    Financing Summaries cont…


   Project Numbers
   Maximum Entry Income Eligibility Limits
   Maximum Recertification Income Levels
   Maximum Rent Levels
   Maximum Rent Increase
   Minimum Lease Term
   Operating Reserves
   Replacement Reserves
   Special Socio-Economic Conditions for Applicants (formerly
    homeless, grand family, etc)
   Insurance Coverage
   Other comments that help the special nature of a property
       In the end your Financing Summary should look like this:
              Prevailing Lender Requirements


   Get out your Financing Summaries
   For each requirement, determine which piece
    has the most RESTRICTIVE requirement
   Report on only the MOST STRICT
    requirement.
    –   For example, if Lender A says all units must be 50%
        AMI, and Lender B says 20 units are 50% AMI and
        20 units are 80% AMI, you only care about Lender A
    Prevailing Lender Requirements


   When would you use this document?
    –   Who can we lease to? Who can’t we lease to?
    –   How much can I increase rent this year and who do I notify?
    –   What happens if a tenant goes over income?
    –   How much do I have to budget this year for reserves?
    –   Tax Credit rules say one thing, but my HOME requirements
        say another. Which one do I follow?

    This is where you interpret all the rules and regulations of your
      property.
         Prevailing Lender Requirements


Requirement           Controlling     Requirement
                      Program/ Source
Maximum Rent Levels   1) City DOH HOME Loan        1)Rent for all units shall not
                                                        exceed the lesser of 1)
                                                        FMR or 2) 30% of
                                                        adjusted income of a
                                                        family whose gross
                                                        income equals 65% of
                                                        AMI.
Minimum Lease Term    1)IHDA Trust Fund Loan and   1) Must follow rent schedule or
                            Grant                  request a change.
                      2) City DOH HOME Funds       2) Needs to be pre-approved by
                                                   DOH. Reviewed annually. Must
                                                   give residents a 30 day notice
         Prevailing Lender Requirements


Requirement            Controlling     Requirement
                       Program/ Source
Maximum Income Limit   1) IHDA Trust Fund and Grant   1) 50% AMI for all 71 units
(entry)                2) CLIHTF                      2) 30% AMI on 6 units
                                                           (Inspiration Corporation
                                                           will monitor this).
Maximum Income Limit   1)City DOH HOME Loan           1) If a resident’s income goes
(recert)                                              over income limit after the initial
                                                      move-in and all vacancies are
                                                      filled with low income residents,
                                                      we remain in compliance.
                                                      Tenants who no longer qualify
                                                      as low income (80% AMI) shall
                                                      pay as rent the lesser of 1) 30%
                                                      of income 2) amount payable by
                                                      state/ local law.
    Prevailing Lender Requirements


   Other Items to Include:
    –   Minimum Lease Term
    –   Operating Reserves Requirements
    –   Replacement Reserves Requirements
    –   Any other requirements for applicants?
        (formerly homeless, single mother, grandfamily
        etc). How to verify?
    –   Insurance Coverage
    –   Eviction Conditions
    –   Security Deposit Limits
    –   Blue Moon situations, keep notes here
    In the end your Prevailing Lender Requirements should look
                                like this:
                         Reporting Schedule


   Review all reporting requirements of your
    monitoring agencies, syndicators,
    governmental agencies, banks
   What is needed? Audit, Tax Return, Weekly
    Report, Monthly Rent Roll, Quarterly
    Finances?
   Excel is the easiest way to track this
   Possibly add to Outlook
                     Reporting Schedule Cont…


   Suggested Start Date
   Due Date
   What other departments are involved?
    Finance? Development? Social Services?
   Report Name (“monthly report”)
   Data Needed (“rent roll and operating
    statement”)
   Source document (“audit, monthly financials,
    resident file”)
   Frequency
      Your Reporting Schedule could look something like this:
                                                           Review


1.    Property Summary
2.    Prevailing Lender Requirements
3.    Reporting Schedule- Property Specific
4.    Financing Structure
5.    Financing Summaries
     1.   Community Investment Corporation
     2.   City DOH HOME Funds
     3.   IHDA Trust Fund Loan
     4.   Federal Home Loan Bank Affordable Housing Program (LaSalle)
     5.   IHDA Trust Fund Grant
     6.   CIC/LaSalle
     7.   Chicago Low-Income Housing Trust Fund
     8.   Tax Exemption
                                   Other Issues


   Electronic VS Hard copy
   Training current and new staff
   Keeping it updated annually with income limits,
    FMRs, etc. If you keep it generic, you won’t
    have to. For example, state “50% AMI”, instead
    of “50% AMI=$26,400”.
   Sample is included on your thumb drive from
    Neighborworks
   Contact me with any questions you have after you get
                     back to your desk:

Erica Champer , CHAM ®
Director of Quality and Compliance
Heartland Housing, Inc. A partner of Heartland Alliance
312.660.1338
208 S LaSalle Suite 1818
Chicago, Il 60604
echamper@heartlandalliance.org
Thank You and
Enjoy Your Day!

								
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