Contract to Purchase Vacant Land by nts67187


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									                             2010 AFFORDABLE HOUSING TRUST FUND ROUND 3
                                       QUESTIONS AND ANSWERS

SUBJECT     QUESTION                                                          ANSWER

 NSP        Does the foreclosure have to be a bank or can it be a private     It can be any legal foreclosing lender.
            financing entity?

            If your purchase price exceeds 100% of appraisal, can you cover   No
            the extra with another source?

            What is the maximum Loan Amount under NSP?                        $14 Million

            Where can I find HUD rules about the NSP program?       

8/16/2011 9:32 AM
            The proposed site is a vacant lot and a bank REO, located in the         The fact that it is an REO (even though vacant
            NSP2 target area. In addition, there are existing condo entitlements     land) indicates that it would need an appraisal
            on the site. We could adopt the existing entitlements with a small       by a State certified general appraiser and that
            change to the Q’s and would invest in this cost, and estimate we         the acquisition price can be no more than 99%
            could build 27 units on this site, but the bank is reluctant to accept   of the appraised value. The appraisal must be
            an offer that has a due diligence period beyond the end of the year.     completed within 60 days of the signing of the
                                                                                     purchase option contract. If the property was
            Our challenge is to obtain site control and use the NSP2 funds for       vacant land and not a REO, then no appraisal
            acquisition. I know if we buy the site with our own money, we            would be needed and no discount applied.
            cannot be reimbursed with NSP2 funds. However, we may be able
            to control the site with a purchase agreement depending on the           Please note that proposals will be accepted for
            answers to the following questions:                                      rental properties only; the AHTF will not accept
                                                                                     proposals for condominium developments.
            What kind of terms can we get into with a Purchase Agreement for
            this site? What are the timelines for due diligence (which would         The site can be purchased using the applicant's
            probably be from the start of NOFA until the winners are                 funds after being awarded NSP funds by the
            announced) and the timeline for escrow? Once the winners are             City Council and Mayor, and LAHD's receipt of
            announced, when will the NSP2 funds be able to close escrow?             NEPA clearance. LAHD can reimburse the
                                                                                     developer in this situation; however, since funds
                                                                                     will not be released until bonds are issued for
                                                                                     the project, the developer’s risk is if the bond
                                                                                     deal is not feasible or they can’t find a buyer for
                                                                                     the tax credits, then the developer owns the

 MIXED      If the project is an RSO is it eligible for the Mixed Income program? Yes, however the amount of the subsidy will be
INCOME                                                                            less because the value of the covenant is
                                                                                  reduced when the building is subject to the
                                                                                  RSO restrictions. Funding limits for these types
                                                                                  of projects will be 40% of the NOFA Maximum
                                                                                  Subsidy including eligible boosts, but not to
                                                                                  exceed the HOME Maximum Subsidy.

8/16/2011 9:32 AM
EECBG       Will LAHD pay for energy audits?                                        Non-profit developers selected for the EECBG
                                                                                    program will have energy audits paid for by
                                                                                    Enterprise Community Partners, if the
                                                                                    developer is in Enterprise's portfolio and has
                                                                                    been chosen by them. All other non-profit and
                                                                                    for-profit developers selected for the EECBG
                                                                                    will be expected to pay up front for the energy
                                                                                    audit; however, the cost of the audit is a
                                                                                    reimbursable expense of the Energy Efficiency
                                                                                    Retrofit loan.

            What are the affordability requirements for the Energy Efficiency       60% AMI
            Does this apply only to existing buildings or can this be applied for   EECBG funds are intended for retrofit work,
            sustainable building practices for new construction?                    therefore, proposals will only be accepted for
                                                                                    currently existing buildings. The funds cannot
                                                                                    be used for new construction.

GENERAL     The HUD 202 and 811 programs are soliciting applications in             If applying for NSP2 funds, the project may be
            October. Would LAHD consider funding those projects?                    considered if the following conditions are met:
                                                                                    the development meets all NSP requirements;
                                                                                    the 202/811 funding will be announced by
                                                                                    1/30/11; if not successful in the competition for
                                                                                    202/811 funds, the project will qualify for bond
                                                                                    funding; and the NSP funds will be spent by
                                                                                    12/31/11.                                           9/29/2010

8/16/2011 9:32 AM

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