DAR File No. 28402

Community and Culture, Olene Walker Housing Trust Fund

R235-1

Olene Walker Housing Loan Fund (OWHLF)

NOTICE OF PROPOSED RULE

DAR File No.: 28402
Filed: 12/12/2005, 04:18
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

Pursuant to Section 9-4-704, this rule will "establish the criteria ... by which loans and grants will be made."

Summary of the rule or change:

This rule details applicant and project eligibility, application requirements, project selection process, funding approval, project reporting, administration fees, financial subsidy review, and sharing of information and portfolio management for the Olene Walker Housing Loan Fund (OWHLF). The legislature provides $2,500,000 dollars per year with a HUD match.

State statutory or constitutional authorization for this rule:

Section 9-4-701 et seq.

Anticipated cost or savings to:

the state budget:

The legislature appropriates separate funds for this program. This rule does not effect the amount of the appropriation.

local governments:

The OWHLF does not affect local government. Therefore, there is no cost or savings to local government.

other persons:

This rule governs the application process that an individual uses to apply for loan funds. There are no loan application fees.

Compliance costs for affected persons:

There are no compliance costs. The rule outlines the procedures that the Board follows to govern the Loan Fund. There are no application fees.

Comments by the department head on the fiscal impact the rule may have on businesses:

Housing industry experts say one dollar spent on affordable housing generates $10 in economic impact including jobs, earnings, and state and local taxes. Yvette Diaz, Executive Director

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Direct questions regarding this rule to:

Shelli Goble at the above address, by phone at 801-538-8653, by FAX at 801-538-8888, or by Internet E-mail at SHGOBLE@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

01/31/2006

Interested persons may attend a public hearing regarding this rule:

12/21/2005 at 11:00 AM, 324 S State Street, Ste 500, Salt Lake City, UT

This rule may become effective on:

02/01/2006

Authorized by:

Yvette Diaz, Executive Director

RULE TEXT

R235. Community and Culture, Olene Walker Housing Loan Fund.

R235-1. Olene Walker Housing Loan Fund (OWHLF).

R235-1-1. Authority.

(1) Pursuant to Section 9-4-701 et seq., Utah Code, the Olene Walker Housing Loan Fund Board (OWHLF) determines how federal and state monies deposited to the fund shall be allocated and distributed.

(2) An Allocation Plan governs the allocation and distribution of funds. The Allocation Plan may be amended from time to time as new guidelines and regulations are issued or as the Board deems necessary to carry out the goals of the OWHLF.

R235-1-2. Purpose.

(1) Pursuant to Subsection 9-4-702(1)(a), the Division of Housing and Community Development (HCD) shall administer the OWHLF as the designee of the executive director of the Department of Community and Culture (DCC).

(2) The objective of the OWHLF is to develop housing that is affordable to very low, low and moderate-income persons through a fair and competitive process.

(3) In administering this fund, this rule incorporates by reference 24 CFR 84-85 as authorized under Utah Code Annotated Section 9-4-703 through 708.

R235-1-3. Definitions.

In addition to terms defined in Section 9-4-701:

(1) "Application" means the form provided and required by HCD to be submitted to request funds from the OWHLF.

(2) "BRC" means a Board Review Committee(s), consisting of members selected by the Board.

(3) "Consolidated Plan" means a plan of up to five years in length that describes community needs, resources, priorities and proposed activities to be undertaken under certain HUD programs, including Community Development Block Grant (CDBG), HOME, Emergency Shelter Grant and Housing Opportunities for Persons with AIDS (HOPWA).

(4) "Subsidy-layering" means an evaluation on the project conducted by HCD staff to ensure that no unnecessary HOME funds are invested in the project than are necessary to provide affordable housing.

(5) "HOME, CDBG, or HOPWA" means HUD programs that provide funds for housing and community needs.

(6) "Affordable Housing" means assisting persons at or below 80% of area median income (as defined by HUD) to find decent, and safe housing at a reasonable cost.

(7) "Loan" means funds provided with the requirement of repayment of principal and interest over a fixed period of time.

(8) "Grant" means funds provided with no requirement or expectation of repayment.

(9) "Local Agency" means public housing authorities, counties, cities, towns, and association of governments.

(10) "Funding Cycle" means period of time in which OWHLF funds are allocated.

(11) "Allocation Plan" means an annual plan that describes housing needs, priorities, funding sources, and the process and policies to request funds from the OWHLF.

R235-1-4. Applicant and Project Eligibility.

(1) The Board shall consider for funding, only those applications submitted by an eligible applicant as defined in Section 9-4-706, Utah Code.

(2) The Board shall consider for funding only those eligible projects as defined in Section 9-4-705, Utah Code and meet one or more of the following priorities established by the Board:

(a) Through cost containment and resource leveraging, efficiently utilize funds,

(b) Provide that largest numbers of units shall charge the lowest monthly rental amount/levels that is attainable over the longest periods of time,

(c) Provide the most equitable geographic distribution of resources,

(d) Provide housing for special-needs populations including: (i) transitional housing, (ii) elderly and frail elderly housing, and (iii) housing for physically and mentally disabled persons,

(e) Strengthen and expand the abilities of local governments, non-profits organizations,

(f) Assist various Community Housing Development Organizations (CHDO) in designing and implementing strategies to create affordable housing, and

(g) Promote partnerships among local government, non-profit and for-profit organizations, and CHDO.

(h) Meet the goals of the Utah Consolidated Plan and any local area plans.

R235-1-5. Application Requirements.

(1) OWHLF funds shall be distributed in accordance with an application process defined in this rule. Funds shall be issued during a scheduled funding cycle. The Board conducts four cycles during a calendar year.

(2) An applicant seeking to obtain funds shall submit a completed application form furnished by the Division of HCD prior to the cycle's deadline.

(3) All completed applications will be reviewed by staff, which will present the application to the Board Review Committee (BRC) during the cycle in which the application is received. Applications will be ranked and scored according to how completely each one meets the criteria.

(4) Applicants submitting incomplete applications will be notified of deficiencies. Each incomplete request(s) will be held in a file, pending submission of all required information by the applicant.

(5) A decision on each application will generally be made no later than the award notification date for each cycle. The Board may delay final decisions in order to accommodate scheduling and processing problems peculiar to each cycle.

(6) The Board may modify a given reservation cycle and change submission deadlines to dates other than those previously scheduled. In doing so, the Board will make reasonable efforts to inform interested parties of such modifications.

(7) For Single-Family Program applicants, the Board may delegate responsibilities to local agencies for application intake, processing, approval, project development, construction oversight, and management. Local agencies will be governed by policies and procedures approved by the Board.

R235-1-6. Project Selection Process.

(1) The BRC shall select applications for funding according to the following process and requirements as outlined in the Allocation Plan:

(a) Project underwriting and threshold review,

(b) Scoring and documentation review,

(c) Market study and project reasonableness review,

(d) Calculation of OWHLF subsidy amount.

R235-1-7. Funding Approval.

(1) After each application has been processed and the funding amount has been determined for a given cycle, staff will present projects to the BRC at its next regularly scheduled meeting. The BRC shall hear comments from applicants at the committee meeting and obtain sufficient information to inform the full board about the project, its financial structure, and related general.

(2) A copy of the BRC recommendation, including all conditional requirements imposed by the BRC and staff, shall become a part of the permanent record and placed in the applicant's file. Recommendations will be presented at the next regularly scheduled quarterly Board meetings. The board will approve, deny, or delay the application.

(3) An applicant may request a change in the terms as outlined in the original motion of the board by reapplying to HCD, with all updated, applicable financial information included, in subsequent funding rounds.

R235-1-8. Project Reporting.

(1) All projects receiving funding approval will be required to provide status reports at a scheduled frequency, in a format prescribed by the staff, and approved by the Board.

(2) Projects that have not begun construction within one year from the date of approval for funding must submit to staff a summary of significant progress made to date and an explanation of why the project is behind schedule. Staff will present this information to the BRC.

(3) The BRC may choose to extend the period of the project, to rescind the approval, or require the project to re-apply in accordance with current parameters.

R235-1-9. Compliance Monitoring.

(1) Monitoring of the project by HCD staff will be completed to ensure program compliance. Unresponsive or non-compliance will be reported to the HCD administration, the Board, HUD, and the Attorney General's Office as deemed necessary.

R235-1-10. Administration Fees.

(1) For some types of projects, certain local agencies may use previously designated funds for project administration costs. Such projects are still subject to on-site administrative supervision, staff oversight, or monitoring by HDC. The agencies include:

(a) Public Housing Authorities.

(b) Counties, cities and towns.

(c) Associations of Governments.

(2) The agencies shall be expected to demonstrate a significant level of business management and administrative experience and ability in order to receive administrative funds. They shall also demonstrate an acceptable level of background and experience to perform housing rehabilitation/reconstruction and implementation functions.

R235-1-11. Financial Subsidy Review.

(1) HCD staff shall conduct "subsidy layering" reviews on projects that directly or indirectly receive financial assistance from the U.S. Department of Agriculture Rural Development Service ("RD or RDS"), or the U.S. Department of Housing and Urban Development ("HUD") exclusive of HOME, CDBG, or HOPWA assistance, (i.e., the "Subsidy Layering Review").

(2) Subsidy Layering Reviews shall be conducted in accordance with guidelines established by RD and HUD with respect to the review of any financial assistance provided by or through these agencies to the project and shall include a review of:

(a) The amount of equity capital contributed to a project by investors,

(b) The project costs including developer fees, and

(c) The contractor's profit, syndication costs and rates.

(3) In the course of conducting the review, the staff may disclose or provide a copy of the application to RD or HUD for their review and comments and shall take any other action deemed necessary to satisfy its obligations under the respective review requirements. HCD staff will accept a review completed by Utah Housing Corporation (UHC).

R235-1-12. Sharing of Information.

(1) Application information may be shared with interested parties and financially interested parties upon request. These include participating lenders, IRS, UHC, investors and others as determined by the staff in evaluating and tracking the progress of the project.

(2) In administering this program, the HCD staff shall conduct all functions in accordance with the provisions of the state GRAMA statute and the federal Freedom of Information Act.

R235-1-13. Portfolio Management.

(1) HCD staff will track the status of the OWHLF portfolio to assess any problem loans needing special loan servicing. Staff will recommend any special instructions to the BRC for review, changes, and approvals.

(2) HCD staff will work with the board and the Attorney General's office to develop policies and procedures to govern special portfolio management issues such as loan restructuring, bankruptcies, and asset disposal.

KEY: Olene Walker Housing Loan Fund, affordable housing, housing development

2006

9-4-704(5)(a)

ADDITIONAL INFORMATION

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For questions regarding the content or application of this rule, please contact Shelli Goble at the above address, by phone at 801-538-8653, by FAX at 801-538-8888, or by Internet E-mail at SHGOBLE@utah.gov

For questions about the rulemaking process, please contact the Division of Administrative Rules (801-538-3764). Please Note: The Division of Administrative Rules is NOT able to answer questions about the content or application of these administrative rules.