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					Advanced Financing and
 Leveraging Resources




                         1
                    Workshop Goals

 Build on the fundamentals provided
  in the Basic Course
 Explain additional financing,
  logistical complexities and solutions
 Analyze additional federal and
  private resources for Project
  Financing




                                      2
                   Overview of Agenda:

 Today
   Leveraging Concepts
   Credit Enhancements
   Title VI Authority
   Low Income Housing Tax Credit Equity
 Tomorrow
   Local funds
   Finish LIHTC
   Bonds
   Leveraging Inventory



                                           3
                          Introductions

 Presenters
  Patrick Curry
  Paul Corrington
 Participant Introductions
  Name, Tribe or Village, IHBG Size, Other
   financing sources used for housing
  What question about Financing and
   Leveraging Resources do you want to
   have answered in this workshop?


                                              4
  Leveraging Concepts




O.P.M.            Project

         Equity


                            5
     What Makes Affordable Housing
            Development Different?

 Lack of equity for up-front costs of
  development
 Target market may not be familiar with
  product.
 Subsidies may be required to reach target
  market or to create viable product.
 Longer time to package financing sources.
 Higher individual transaction costs.
 May require underwriting and public review


                                           6
           Steps to Manage Risk in
   Affordable Housing Development

 Prepare a written business plan that
  defines:
  Anticipated home buyers
  Anticipated volume
  Design, specification and rehab
   standards
  Required staffing and/or consultants
  Acquisition strategy
  Contingencies & reserve requirements
 Hire competent/capable staff
 Monitor performance to plan             7
         Financial Risk Analysis
                     Is the Project
Operations &           Feasible?
 Occupancy
                                 Development &
                                  Construction




Site Investigation
 and Acquisition

                                           8
                          Site Acquisition

 Activities               Lender’s Criteria
   Property cost            Property location
   Site evaluation          Title status
   Legal                    Liens, Easements
   Title and recording      Is site adequate?
   Back taxes/liens         Environmental
   Appraisal                 review
   Closing costs            Infrastructure
                              available?
                             If repossessed, is
                              there a market for
                              the property?


                                                   9
         Development & Construction

 Activities                    Lender’s Criteria
      Environmental               Experience of
      Architect/Engineer           developer/contractor
      Survey/Appraisal            Adequacy of funds to
      Legal/Insurance              complete project
      Supervision/Contract        Contingencies
       Admin.                       adequate
      Mobilization                New construction or
                                    Rehab
      Material/Labor/Equip.
                                   Payment
      Contingencies                schedules/funding
      Loan requirement             requirement
      Developer’s fee



                                                           10
               Operations & Occupancy

 Activities               Lender’s Criteria
    Fiscal management       Income projections
    Audit                       Rent levels
    Staffing                    Market study
    Management              Expenses adequate to
    Training/Technical       meet long-term needs
     assistance              Reserve levels
                             Funding reserves
                             Debt repayment
                             Management ability




                                                 11
               Contingency Analysis

 Contingency is a Budget Technique -
 Uncertainty Expressed in Dollars
 Types of Contingencies
  Hard Cost - Construction or Rehab
  Soft Cost - Non-construction related
  Variable Rate financing - Adjustable rate
   loans




                                           12
                              Reserves

 Contingencies that are Funded
  The Cost is Most Likely to Occur
  The Timing of the Cost is Uncertain
  Reserves are usually Restricted Funds
   and the Funding Requirements are In the
   Lending or Grant Agreements
     Usually funded out of operating cash
      flow
     May be required to fund from
      development resources

                                         13
                    Types of Reserves

 Replacement Reserve
   Not covered in operating budget (Appliances,
    Exterior Work, Carpet Replacement)
 Operating Reserve
   Usually a percent of one years Receipts, to be
    funded over a Certain Period
 Rent-Up Reserve
   Used when Lease-up Period is Uncertain
 Debt Service Reserve
   Used as savings for balloon payments
   Sometimes funded up-front


                                                14
Define and Evaluate the Market



                 Housing


        People




                                 15
                      Market Analysis

 Common Development Barriers
  History of Delinquent Rent Payments
  Low Income Levels
 Demand Characteristics
  Effective Demand - Incomes of potential
   market can support the development’s
   rent projections
  Ineffective Demand - Potential market
   per capita income will not support the
   rent projections

                                         16
             Sources of Market Data

 Census data - www.census.gov
 Home Mortgage Disclosure Act Data -
  www.rtk.net and
  www.ffiec.gov
 Tribal/County Planning Department studies
 Community Surveys
 Indian Housing Plan
 Interviews with Consumer Credit Agency,
  bankers, tribal departments, social service
  agencies, real estate brokers, and (if relevant)
  local employers




                                                     17
           Study the Market - People
 What is the geographic area for your
  market?
 Who (demographics) are the possible
  home owners?
 typically renters with sufficient income
 and decent credit, who are interested in
 purchasing in your target area
   Household size and composition
   Income
   Commute time to work
   Current knowledge of mortgages and home
    ownership
   typical credit history
   Amount they currently pay for housing     18
        Study the Market - People

 Based on expected market, what are
  their housing preferences?
  Rent, Buy or Rent to Own?
  Size of home
  Design issues for home
  Amenities in home
  Amenities in community
  Amount of yard/play/parking space
  Cost of home
  Clustered Vs. Scattered Site

                                       19
        Study the Market - Housing

 What is the vacancy rate?
 What are typical home prices and rents?
 What is the time for sales?
 Who are the home buyers?
 Who are the owners of vacant land and
  buildings?
 Are there issues related to acquisition
  such as cloudy titles or trust status?
 Is Infrastructure Available - Water Sewer,
  Power and Roads?

                                               20
        Study the Market - Housing

 If you are looking to do acquisition
  rehab or resale
  Who are the current renters in single
   family homes?
  What do they pay in rent?
  What do they earn?
 Rehab may be needed to meet
  housing code or federal funds
  requirements

                                           21
                    Program Income

 Net income generated from the
  disbursement or use of IHBG funds
 If there is program income, then the
  program income must be used as an
  offset to the next LOCCS draw
 Calculate Program Income
 Track non-program income



                                     22
                Why the Attention?

 Non-Program Income can be a
  source of non-federal money for
  housing programs
 Seems Complicated
 Record keeping Authorities
  24 CFR §85.25 (n/a)
  24 CFR §1000.62
  Notice PIH 2000-18 (TDHEs)
  NAHASDA Guidance No. 20001-03T


                                    23
                             Definition

 Program Income – Any income
  directly realized or generated by a
  recipient, subrecipient, or its agents
  from the disbursement or use of
  IHBG funds.
 Refinement - $25,000 or less in total
  income; none of it is considered
  program income [1000.62(b)].



                                       24
                        IHBG Assisted

 In whole:
  All net income is considered program
   income.
 In part:
  All prorated net income is considered
   program income.




                                           25
              ’37 Housing Act Units

 “Program income does not include
  any amounts generated from the
  operation of 1937 Act units unless
  the units are assisted with grant
  amounts and the income is
  attributable to such assistance.”
  [1000.62(a)]




                                       26
                ’37 Housing Act Units

 Mutual Help:
  If administrative fees exceeds operating
   costs, Then surplus is program income.
  If rehabilitation/capital expenditures are
   40% or more of the DC&E, Then
   “proceeds of sale” are program income.




                                            27
              ’37 Housing Act Units

 Rental: If maintained/operated with
  IHBG funds Then receipts exceeding
  46% of the AEL are program income.
 If rehabilitation/capital expenditures
  are 40% or more of the DC&E, Then
  all receipts are program income.




                                       28
       Debt Vs. Equity Analysis




               Ours                 Theirs


Analyzing the financial feasibility of a proposed project
                is essential for success.
                                                        29
              Objective of Analysis

 What is the most desirable mix of
  leveraging for each phase of the
  project?
 Which resources are best and
  affordable?




                                      30
  Industry Comparability Ratios

Debt Coverage Ratio =
 Net Operating Income  Debt Service

Loan to Value Ratio =
 Loan Amount  Fair Market Value




                                       31
        Development Phase Funding
   Phase       Typical Expense                           Funding
A cquisition   Land, buildings, legal, appraisal,      Government funds
               closing costs                           Nonprofit lenders
                                                       Banks
Development    Soil tests, architect, option engineer, Government funds
               environmental, consultants, market      Foundations
               study                                   Nonprofit lenders
Construction   Pay-off Pre-development/ acquisition   Government funds
               financing, construction contract,      Nonprofit lenders
               architect, construction inspection,    Banks
               construction loan fees & interest,
               marketing, homebuyer counseling
Permanent      Pay all previous financing             Grants or Donations
               Closing costs on permanent loan        Guaranteed mortgage
               Operating expenses & Reserves          Homebuyers or rent
               Developer’s fee                        Down payments

                                                                           32
                      Major Sources of Funding
             Major Possible Leveraging Sources            Grant   Loan
HUD - Indian Housing Block Grant (IHBG) NAHASDA            
HUD - Indian Community Development Block Grants (ICDBG)    
HUD - Section 184 Indian Home Loan Guarantee Program               
HUD - Title VI Tribal Housing Loan Guarantee Program               
HUD – Rural Housing and Economic Development               
HUD – State HOME funds                                            
USDA – Direct Loan Program                                         
USDA – Loan Guarantee Program                                      
USDA – Home Repair Loan and Grant Program                         
USDA – Rural Rental Housing Program                                
USDA – Multi-Family Rental Assistance Program              
USDA – Mutual Self-Help Housing Program                    
USDA – Rural Rental Housing Guaranteed Loan                        
BIA - Housing Improvement Program (HIP)                    
Low-Income Housing Tax Credit (LIHTC)
Mortgage Revenue Bonds
Federal Home Loan Bank – Affordable Housing Program                
Private Lenders                                                    



                                                                   33
Credit Enhancements
         and
   Gap Financing




                      34
           Forms of Enhancements

 Loan Guarantees - An entity’s
  promise to pay in the event of a
  shortfall
 Loan Insurance - Insurer promise to
  pay upon default
 Letters of Credit - Promise to pay
  upon default by borrower
 Cross Collateralization - Pledged in
  addition to the mortgaged property
  to cover loan value
                                         35
                        Gap Financing
 Cash Flow Sufficiency - Increase revenue or
  reduce expenses
 Cash Flow Predictability - Stabilize cash
  flow and/or increase lender compensation
 Collateral Adequacy - Find equity grant,
  cross- collateralization and/or subordinated
  mortgage
 Management Ability - Technical assistance
  such as training or consultants
 High Transaction Costs - Analyze lenders for
  interest in project and match lenders’
  abilities
 Interest Rate Risk - Stay aware of the
  market. Use products with secondary
  markets (GNMA)
                                            36
              Project/LenderGap Analysis
              Viability Issues
                                                 GAP
                                                                                Enhancement
                                                                                  Program




                                                 Sufficiency
Insufficient cash to support development,                            Increase revenue




                                                   Cash
operations, reserve requirements or debt                             Reduce expenses
service. Additional cash sources need to                             Obtain equity investment
be identified.                                                       Grants and philanthropy

                                                                     Utilize income & expense




                                                 Predictability
                                                  Cash Flow
                                                                      enhancements
Sufficient cash for the project, but the
                                                                     Increase Lender’s compensation
timing of cash availability is uncertain.
                                                                     Utilize loan guarantees
Project cash flows need to be stabilized.
                                                                     Use reserve funding


The lender(s) may view the adequacy of




                                                 Adequacy
                                                 Collateral
the collateral pledged for the loan to be                            Increase contributed equity
insufficient. Additional collateral pledges                          Use subordinated mortgage financing
and/or loan guarantees should be                                     Utilize loan guarantees
considered.

                                                                     Obtain training in key areas requiring




                                                 Management
The lenders of investors may be concerned                             capacity development




                                                   Ability
with the ability of management to                                    Procure consultant services for
administrate the program. Capacity                                    specific one-time needs
building is necessary.                                               Utilize specific program training
                                                                      resources
                                                                     Analyze the market for transactions
                                                                      costs during preliminary planning
The projected costs of securing the loan or
                                                Transaction
                                                                      phase
investor may be higher than expected,
                                                   Costs
                                                                  
                                                   High


                                                                      Use RFP procurement process
thereby adversely impacting the project.
                                                                     Shift costs to agencies specializing in
Transaction costs must be shifted or
                                                                      financial services
reduced.
                                                                     Obtain loan cost information when
                                                                      possible
                                                                     When possible, obtain preliminary
                                                 Interest Rate




                                                                      loan commitment letters which give
The market does not support the assumed                               maximum interest rate amounts at
                                                      Risk




interest rate. Unanticipated rise in interest                         closing
rates may harm cash sufficiency.                                     Use products that have secondary
                                                                      markets
                                                                     Use maturity-linked deposits              37
Use of Title VI Authority




                            38
                  Title VI Components

 Last resort - Only if financing can’t be
  completed without it
 Only Eligible and Allowable Activities in
  Sec. 202 of NAHASDA
 Maximum is five times the total IHBG less
  amount to support CAS
 Tribe is required to pledge as security for
  repayment all current and future NAHASDA
  grants including program income and
  insurance proceeds
 Funds obtained from private lenders

                                            39
                          Title VI Steps

 Step One - Letter of request to
  DPONAP
  Office of Loan Guarantee including:
  Detailed project description
  Demonstrated need for the project
  Description of administrative capacity
  Total cost estimate of the project
  Maximum commitment amount
  Estimate of the guarantee amount
                      OLG Toll Free (800) 561-5913

                                               40
                          Title VI Steps

 Step Two - DPONAP/OLG consults
  with Area ONAP to verify elements of
  letter of request
  Items include
     Open audit findings
     Borrower’s financial and
      administrative capacity
  IHP and APR review




                                       41
                         Title VI Steps

 Step Three - ONAP determines if
     Activity is eligible
     Borrower has experience with
      complex transactions
  ONAP makes decision
  Preliminary Letter of Acceptance (PLA)
   is issued if the decision is favorable




                                            42
                           Title VI Steps

 Step Four - Borrower selects lender
   Lender submits the application
    containing:
      Project description
      Certifications
      Tribal resolution authorizing note or
       obligation
      Contractual agreements between HUD
       and the lender and between HUD and
       the borrower
      Legal opinion about the validity of the
       contract between borrower and HUD 43
                             Title VI Steps

 Step Five - OLG sends copy of
  application package to AONAP for
  review
 Step Six - OLG reviews the package
  Ability to repay and furnish security
  Amount of debt service to IHBG
  Demonstrated need for the project
  Lender’s underwriting criteria
  Outstanding issues from AONAP, if any
        OLG review should take about 30 days
                                               44
                       Title VI Steps

 Step Seven - Upon approval of
  application, OLG will issue a Letter
  of Commitment to the lender.
 Step Eight - Lender closes the loan
  and submits documents to OLG
 Step Nine - OLG issues Certificate of
  Guarantee to lender




                                      45
                 Title VI Requirements

 IHP must include the Title VI transaction
    Revise current IHP, if necessary
 The most recent audit is required
 Environmental review required
 DC&E costs do not exceed limits
    New Total Development Cost coming soon
 Tribes must share repayment responsibilities if
  the TDHE serves more than one tribe or village
 Assistance limited to low-income Indian
  families
 Only NAHASDA eligible activities

                                               46
                   Title VI Remedies

 Delinquency - HUD with make
  payment through LOCCS and/or
  invested IHBG funds will be
  withdrawn to make payment
 Default - Obligation is accelerated
  and a claim is issued to HUD for the
  unpaid principal and accrued
  interest balance
  HUD will take future IHBG funds


                                         47
                        Title VI Strategy

  $200,000 IHBG Per Year


$100,000 Per Year                     10% = $80,000
 Title VI Eligibility             10% = $70,000
                            20% = $100,000



                                  $100,000 FCAS

                        1     2    3   4     5   6    7   8




                                                              48
Low Income Housing
    Tax Credits




                     49
          LIHTC Structure and Participants

    IRS                           Developer                    Syndicator                     Investors


                                          4. Sells Credits                Sells Credits

               2. Submit                  5. Provides Equity                  Equity
                  Project
                  Proposal
1. Allocates Tax
  Credits to                       6. Builds
                                      Project                  4. Sells Credits
  each State
                                      Includes
                                      Equity
                   3. Awards                      5. Provides Equity
                      Credits




     State                                                                        Investors
    Agency                      Project
                                                                                              50
 Low Income Housing Tax Credits

 Investor receives tax benefits in
  exchange for equity investment in
  qualified housing
 Low Income Housing Tax Credit
  income limits and maximum rents
 At least 20% of units must serve
  income at 50% or below of area
  median income; or, 40% of the units
  at 60% area median income
 Application to state agency for
  LIHTC competitive allocation        51
 Low Income Housing Tax Credits

 New construction or rehabilitation of
  rental projects
 Investor becomes a limited partner
  for 15 years
 Discretionary selection of investor
 Investor may provide
  predevelopment, bridge, operation or
  other loans as well as investment
  capital

                                      52
      LIHTC Federal Requirements

 Treasury Department Administered
  (IRS)
 Section 42 of the Internal Revenue
  Code
  9% Annual Tax Credits for 10 years, or
  4% Annual Tax Credits for 10 Years




                                            53
 Low Income Housing Tax Credits

 15 Year Mandatory Compliance Period
 15 Year Extended Use Period, except
  Lease-Purchase Provision (Sec. 42, I,7)
 10% Test and 10 Year Look-Back Rule
 Limited Partnerships
 Investor Equity @ 73¢ - 76 ¢ on the 10
  Year Credit Total
 “Soft” or “Hard” Debt form NAHASDA



                                        54
                          LIHTC Values

 Two types of credits
  4% credit for new building that are
   placed in service during 1987 or existing
   buildings
  9% credit which is 70% present value
   credit for new buildings that are not
   federally subsidized
 Each credit is calculated as a
  percentage of capital costs that
  qualify for the LIHTC
 If Project is in QCT, the 130% boost
  in basis                                 55
                   LIHTC Calculation


                 9% Credit 4% Credit
Eligible Costs      $ 2,412,477      $
  2,412,477
QCT/DDA Boost      x 130%               x
  130%
LIHTC Basis           3,136,220
  3,136,220
Credit                       x 9%
  x 4%
LIHTC per Year   $ 282,260          $
  125,449
                                            56
                          Selling LIHTC

 Syndication - Process of selling ownership in
  a project to secure money from investors.
 Market issues
   The timing of the investor’s capital
    contribution
   The amount an investor will pay for the
    tax credits.
        Allocation               $282,260
        Market Rate                x 70%
        Cost per Year             197,582
        Number of Years               x 10
        Capital Contribution   $1,975,820
                                           57
         LIHTC Tribal Advantages

 Lower Land Cost
 Usually in Qualified Census Tracts
 Have the Lowest Income Families in
  most States
 Most Tribes are in Rural Areas
 Have Access to “Soft” Money
  through NAHASDA
 Have Very High Demand/Waiting
  Lists
 Prefer Lease-Purchase Projects
                                   58
                        LIHTC State’s Role

 Tax Credits are Allocated by States on
  Competitive Basis
   $1.75 per capita in Total Credits
      Adjusted for inflation for future years
 Qualified Census Tract /DDA
 Qualified Allocation Plan
   Must Serve Lowest Income People
   Serves Needs for the Longest Period of Time
   Must be Geographically Distributed
   Give great consideration to “Readiness to
    Proceed”


                                                  59
                          Steps in LIHTC

 Step 1 - Predevelopment work including:
   Project Definition & Assumptions
   Market analysis
   Development cost & pro-forma
 Step 2 - Obtain copy of the state tax credit
  application kit.
   Define your project in terms of the state
    QAP
      Allocation process, Project
       requirements, Scoring, Underwriting
       requirements, and Project compliance
   Application Fees                         74
                         Steps in LIHTC

 Step 3 - Analyze the LIHTC for fit
  with your needs.
  Determine if the project meets minimum
   requirements
  Project falls within cost caps
  Estimate score based on the QAP
 Step 4 - Conduct independent market
  study
  Be sure to include the entire market
   area - not just tribal area or population

                                               75
76
77
78
79
                      Steps in LIHTC

 Step 14 - Build the project
 Step 15 - Place units in service
  Manage operations, occupancy and
   finances according to the management
   plan




                                          80
Tax-Exempt Bonds




                   81
                      Basic Elements

 Tax Equity Finance Reform Act 1982
  Not subject to Alternative Minimum Tax
     501 c3 or Private Activity
 Issued by State or political
  subdivision
 Public Hearing and approved by
  public vote
 Must be residential units and
  maintained as a rental project
 95% of proceeds must be for the
  project.                              82
                    Bond Stakeholders
      Issuer                                   Bond Counsel
   governing                                   Issues bond opinion
        body                                   Basis for bond issue
                                               Draft bond docs.
                             Bond
        Trustee
Protects interest
                             Issue         Credit Enhancer
                                           Applies guarantees or
 of bondholders                            secondary markets



  Financial Advisor                  Underwriter/
     Technical expertise             Investment Banker
    Coordinates activities           Markets the bonds
                                     May pledge to purchase issue
                                                              83
                      Bond Activity

       Bond              Bond Purchase Contract            Bond
     Underwriter      Official Statement                  Issuer

                                                  Indenture


                                          Deed of Trust
Bond         Payments of      Trustee                         Borrower
Holder   Principal & Interest           Loan Agreement

                                              Reimbursement
                                 Credit         Agreement
                              Enhancement                 Deed of Trust

                                             Credit
  Lender                                    Enhancer
                                                                   84
                Steps in Bond Issue

 Step 1 - Identify Need
  Based on project development methods
  Create committee to
     Review analysis of need
     Determine if a bond election is
      prudent
     Review project plan phases
     Invite community involvement
     Provide information to community


                                          85
                 Steps in Bond Issue

 Step 2 - Governing Body Approval
  Council formally votes to adopt Bond
   Committee Resolution
  Tribe selects two key consultants
     Bond Counsel
     Financial Advisor
 Step 3 - Resolution to Hold Bond
  Election
  FA and Bond Counsel reviews analysis
   and prepares alternative
  Council adopts resolution to hold bond
   election                                 86
                 Steps in Bond Issue
 Step 4 - Bond Questions Development
  Bond Counsel write the questions
  The Questions are put to vote
     The approved Questions are
      authorization for Council to issue bonds
     Sets maximum amount of bond
      proceeds that can be used to
      accomplish each goal in the bond
      questions
 Step 5 - Advertising the Bond Election
  The bond election must be advertised
  Bond Questions and opinions, both Pro
   and Con, are sent to the voters
                                          87
                  Steps in Bond Issue

 Step 6 - Bond Election
  Voters must agree to accept debt in
   exchange for benefits since the Tribe
   may be responsible for repayment
  Bond Counsel
     Oversees process including ballot
      counting, and election certification




                                             88
                 Steps in Bond Issue

 Step 7 - Sale of Bonds
  FA gives advice these decisions
     Council determines when to sell the
      bonds
     Bond Prospectus is prepared
     Coordination with bond rating
      agencies
     Details of actual transactions




                                            89
                 Steps in Bond Issue

 Step 8 - Closing Date
  Scheduled after purchaser is identified
  Documents are signed
  Funds are transferred and receipted
  Investment Plan for bond proceeds being
   aware of arbitrage requirements
  Registrar and Paying Agent identified in
   bond closing




                                         90
                  Steps in Bond Issue

 Step 9 - Servicing the Debt
  Debt Service (sinking) Fund is
   established in the Tribal financial
   system
     Revenues for debt service are
      identified and deposited into debt
      service fund
     Periodic transfers made from debt
      service fund
  Funds must be transferred to the
   paying agent on a timely basis
                                           91
                  Steps in Bond Issue

 Step 10 - Market
  Interest Rate Changes
  Monitor Bond Market
     The bonds could be
      refinanced at a better
      rate
                                Rate
     Tribal Financed
      Director monitors         Safety
      market

                               Principal
                                  Term
                                       92
        Indian Housing Block Grant

 NAHASDA - Amount Varies Annually
 Entitlement Formula
 Flexibility in designing housing programs
 Low income use restrictions: 80% of the
  higher of national or local area median
  income
 10% of IHBG can be used for moderate
  income (80-100% of median income)
 Can be used for related facilities
 Tribally determined priorities

                                              93
   Indian Community Development
             Block Grant (ICDBG)

 Housing rehabilitation - New housing
  construction - Land acquisition
 Homeownership opportunities
 Public facilities - Community facilities -
  Economic development
 Tribe makes decisions on how to spend
  funds
 Annual competition in response to HUD
  NOFA



                                               94
      Indian Home Loan Guarantee
             Program - Section 184

 Loan guarantee for construction, purchase,
  or rehabilitation of single family dwellings
  of one to four units
 Low down payment - as low as 1.25%
 Long term, fixed rate financing with loan to
  value ratios as high as 98.75%
 No income limits
 Loan funds originate from private lenders
 HUD guarantees lenders against losses



                                            95
       Rural Housing and Economic
                      Development

 Purpose: Build capacity for rural housing
  and economic development and to support
  innovative housing and economic activities
  in rural areas
 Capacity building grant for organizations
  operating in rural areas
 Maximum Grant: $150,000
   Hiring; supporting and training existing
     staff
   Purchasing software and other tools
   Seeking technical assistance
   Conducting needs assessments             96
      Rural Housing and Economic
                     Development

 Support for Innovative Activities
 Grant
  Maximum grant: $500,000
  Construction costs, architectural
   drawings and specifications
  Provision of infrastructure
  Leveraging projects
  Direct financing assistance to
   homeowners/businesses/developers
  Revolving loan funds

                                       97
      Rural Housing and Economic
                     Development

 Seed Support Grant
  Acquiring and training staff
  Administrative expenses
  Seeking technical assistance
  Other "business start-up" costs




                                     98
              Direct Loan Program
                       Section 502

 Homeownership loans at affordable
  interest rates
 Restricted to low and very low
  incomes
 Purchase of an existing home or new
  home construction




                                    99
         Loan Guarantee Program
                     Section 502

 No down payment required
 Limited to very low incomes
  individuals and families
 Can borrow up to 100% of appraised
  value
 Purchase of existing home or new
  home construction
 Private lender provides loan that
  USDA/RHS guarantees
 Housing Assistance Council
                                   100
      Home Repair Loan and Grant
           Program - Section 504

 Available to very low income families who
  own existing homes in need of repair
 Funds available to make a home
  accessible to someone with disabilities
 Homeowners 62 years and older eligible for
  home improvement grants
 Loans for other individuals and families
 Home improvement loans for non-elder
  homeowners receive loans at a 1% interest
  rate directly from RHS


                                          101
    Rural Rental Housing Program
                     Section 515

 Mortgage loans for affordable
  multifamily rentals
 Direct mortgage loan program from
  RHS
 Can include facilities such as water
  and waste facilities
 95% of residents must have very low
  incomes
 Up to 50 year loan
 1% effective interest rate
                                    102
       Rental Assistance Program

 Low-income individuals and families
  that receive rental assistance
 Qualified applicant pays no more
  than 30% of income for housing
 Can be used in conjunction with
  other USDA/RHS programs




                                    103
       Mutual Self-Help Technical
  Assistance Grants - Section 523

 Grants provided to nonprofit and local
  government organizations which supervise
  groups of 5 to 12 enrollees
 Grantees provide technical assistance to
  low- and very-low income families who are
  building homes in rural areas through the
  Mutual Self-Help Housing Program
 Grant funds can be used to pay salaries,
  rent, and office expenses of the nonprofit
  grantee
    www.ruralhome.org

                                          104
           Mutual Self-Help Housing
             Program - Section 523

 Homeowners work on their own homes or
  "sweat equity"
 Qualified application required to complete
  65% of the work to build home
 Nonprofit or local government
  organizations supervise groups of 5 to 12
  enrollee
 Move in can occur only when all homes are
  completed
 Each enrollee generally applies for Single-
  Family Housing Direct Loan (Section502)

                                           105
Rural Rental Housing Guaranteed
              Loan - Section 538

 Construction, acquisition or
  rehabilitation of multifamily units
 Occupancy restricted to 115% of
  area median income
 Loan guarantee protects lender
  against loss
 Private lender provides loan that
  USDA/RHS guarantees
 40 year fully amortizing loan

                                        106
          Rural Housing Site Loans
                 Section 523 & 524

 Made to provide financing for the
  purchase and development of
  housing sites for any low to
  moderate income family
  For acquisition and development of sites
   for construction by the self-help method




                                         107
  Home Investments Partnerships
          Program - HOME Funds

 Housing rehabilitation or new construction
 Tenant based assistance or assistance to
  first time homebuyers
 Income limits and maximum rents apply
 Restrictions on use of project and incomes
  of occupants
 $1 billion available annually
 HUD funds administered by State Agencies
 Nonprofit organizations only (CHODO)
 Applicants apply directly to state

                                          108
Evaluations




              109

				
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