Ohio Hub Connector Keeping HUD Partners Connected

DIRECTOR’S CORNER Summer 2012 “Breaking Ground – effectively and efficiently deal Columbus office, we ask for your with the dramatic increase in FHA patience. We anticipate that the Inside this issue: Delivering Results.” insured applications. impact on processing times for By Randolph Wilson “Breaking Ground – Delivering applications already in the queue Reducing Regula- 2 As many of our active FHA multi- Results” has been rolled out na- will be nominal and we believe tory Burden family lenders know, the Depart- tionally in “Waves”. Wave One that the long term benefit will far

ment took a critical look at its un- was rolled out in the San Antonio, outweigh any short term inconven- Energy Efficient 2 derwriting process last year and in Denver, and Greensboro, Balti- ience.

late FY 2011 and early FY 2012 more and Chicago offices in late Finally, for our industry partners Hopeton Village 3 rolled out new initiative known as FY 2011 and early FY 2012. Our that operate on the Department’s

“Breaking Ground – Delivering Cleveland Program Center was servicing side, do not feel left out. St. Paul Village 3 Results.” included in Wave 4 and completed Similar to the efforts occurring on

“Breaking Ground – Delivering the process earlier this our Production side, the Depart- Cleveland Grant Results” is a national redesigning 4 month. Wave 5, which includes ment has begun the initial roll out Opportunities of the Department’s underwriting the Columbus office, began on of a companion initiative to retool process to better meet the needs of th Paperwork Monday, May 14 . our Asset Management process and our customers and the public. The Breaking Ground is essentially a 4- procedures. That initiative, known Pitfalls 4 end goal being to provide faster 6 week process during which our as “Sustaining Our Investments”, turnaround times and higher pro- Production staff is required to is currently being piloted in a cou- New Guidance ductivity, fully engage our staff 202 Prepayment 5 spend intensive time learning, de- ple of HUD offices and is sched- and strengthen our risk manage- signing and implementing process uled to be rolled out in Columbus ment capacity. changes. Unfortunately, they are in September. We’ll have more PSH for the 5 Effectively, the purpose of this unable to devote the normal information for you on “Sustaining Homeless new initiative is to assist the De- amount of time to their everyday Our Investments” in our next edi- partment’s 17 Multifamily Hubs COAM Corner work items during this time. tion. 6 and 34 Program Centers to more So for those lenders active with the

Development 6 Cleveland Production Hits the “Wave” Personnel 7 By Pamela Ashby Development team in the process transition and moving forward the Cleveland HR 7 The Cleveland Multifamily Pro- of establishing protocols for their office has increased communica- gram Center recently completed its respective Breaking Ground initia- tion with customers and is making HUD Mailing roll-out of the HQ-driven tives. Each Design Council fo- more definitive decisions earlier Lists 8 Production Breaking Ground ini- cused on a separate area. These and more timely in the review tiative which initiated in 2011. included White Board Design, process. Also, we are focused on New Regulations The objective of the initiative, which will track the underwriting meeting mandated timeframes Final Rule 77 8 which is being introduced across review process from receipt to firm which is extremely important in FR5662 the country in “waves”, is to meet commitment issuance, Staging, the timing of negotiating mortgage the needs of our lending customers which establishes the various ar- terms. Excess Income and the public through faster turn- eas for application storage during Cleveland’s final product was re- Section 236 9 around times and higher productiv- the review phases, Standard cently presented to Associate DAS ity in our underwriting processes. Works, which is a living document Janet Golrick who visited the of- Upcoming Event 9 In addition, HUD is optimistic that that depicts each step in the devel- fice to see the implementation of this improved, streamlined ap- opment review process and is a Breaking Ground. Cleveland looks proach will minimize risk to the useful tool for training as well, and forward to improved successes in

taxpayer and to the FHA insurance finally Early Warning System the Development pipeline because Letters to the 10 fund. Cleveland, selected to par- (EWS), which allows the under- of this initiative. Editor ticipate in wave four, completed writing team to input certain appli- the majority of the transition by the cation data into a template for a Recent Issuances 10 end of April. snapshot of underwriting risk at the

The initiative is a specialized pro- early stage of the review process.

gram uniquely designed for HUD. As with every evolution in work Recent HUD 10 To ensure a smooth integration, process, there will be a learning Notices developers of the initiative spent curve, and we ask for your pa- the better part of almost two years tience. While going through the studying the HUD Multifamily process the lenders were advised underwriting process. Design that the development pipeline Councils comprised of staff mem- would be stalled during orienta- bers were formed to engage the tion. However, throughout the Reducing Regulatory Burden on Developers and Owners Page 2 By Vera Howard ties with multiple funding sources were -up on any compliance issues with subse- An interagency Rental Policy Working being subjected to duplicative physical in- quent agency-specific inspections or ac- Group (RPWG) consisting of the White spections each with its own unique physical tions, as permitted by loan or business Domestic Policy Council, the Na- inspection standards. In an effort to reduce agreements and Federal regulations. tional Economic Council, the Office of the redundancy and administrative burden It is the belief of the RPWG that having one Management and Budget, the Department of and protect ever dwindling Federal re- periodically scheduled physical inspection Housing and Urban Development, the De- sources, an alignment team was formed to performed by one agency for the benefit of partment of Agriculture and the Department see if the various Federal funding sources all Federal agencies with a vested financial of the Treasury is carrying out an initiative could reduce the frequency and number of interest in the property will create efficien- for coordinating efforts to reduce regulatory inspections to no more than one federally- cies for the government, for property own- burden on affordable housing developers sponsored visit to each property per year. ers, and for residents of affordable housing and owners. The RPWG also includes Ohio was chosen as one of only six states in whose are subject to inspection. State, local, and private-sector stakeholders the nation to participate in a pilot program The pilot program is expected to run for one all working together on administrative solu- for this purpose. Other states participating year at which time results will be compiled tions to improve coordination of Federal in the pilot program are Michigan, Minne- from each agency for a decision on moving rental policy. sota, Oregon, Washington and Wisconsin. forward. Many factors will be used to de- The Department of Housing and Urban De- A Memorandum of Understanding (MOU) termine if a permanent program is feasible velopment, the Department of Agriculture was drafted outlining the expectations of the such as: and the Department of Treasury all have pilot program. Each agency chose a list of - Is the use of the UPCS protocol appropri- Congressional authority to award funds to properties based on the date of their last ate for all properties? finance the development of and provide inspection for participation in the pilot pro- - Is there a statistically valid sample size subsidy for affordable housing. Developers gram and at the end of November 2011, the that would work for all assisted units in a and owners of affordable housing frequently MOU was executed. The MOU allowed for building on aligned properties? find it necessary to tap into funds from more any of the agencies performing an inspec- - Is an inspection once every one to three than one agency to obtain sufficient re- tion to share copies of the inspection results years an appropriate schedule for all proper- sources to complete a project. However, with the other participating agencies that ties? such multi-layered financing can create a had a common funding interest in the prop- - Are there sufficient costs savings and burden when having to deal with overlap- erty. HUD is the lead agency in Ohio so the reductions in administrative burdens to sup- ping administrative requirements associated majority of inspections are being performed port a permanent change? with the different federal housing programs. by HUD’s Real Estate Assessment Center in - Is there a standard approach for curing The programs have not always been de- accordance with Uniform Physical Condi- inspection related issues that would satisfy signed to work well with each other. tion Standards (UPCS) protocol. Each the various agency requirements? One of the overlapping requirements that agency continues to maintain different en- The Ohio Multifamily Hub contact for the initially appeared appropriate for a pilot forcement standards based on physical in- physical inspection pilot is Vera Howard. program designed to reduce administrative spection findings, and enforcement stan- Questions and/or concerns can be addressed burden and redundancy was the requirement dardization is not part of the pilot program. to Ms. Howard at (614) 469-5737, extension for multiple physical inspections. Proper- Each agency will retain the ability to follow 8043. Energy Efficient Multifamily Housing Roundtable

By Phyllis Mitchell strategy or plans. The focus of the presenta- Energy Star was highlighted as was the En- The local and national Emerald Cities Col- tion was to demonstrate the overarching en- ergy Innovation Fund. In addition, the pres- laborative along with regional stakeholders ergy efficiency/sustainability thrust through- entation highlighted HUD’s commitment to and national experts in affordable housing out HUD’s various program areas. The De- partnering and collaborating through both and energy efficiency were recently invited partment’s energy efficiency Goals/themes/ inter-agency, such as a Memorandum of Un- to discuss opportunities for collaboration, strategies and the Annual Program Goal derstanding (MOU) with the Department of funding, and program design. The goal of (APG)13 “Cost-effective Energy and Green Transportation and the Environmental Pro- the January event was to create a set of re- Retrofits” from the draft FY12 Management tections Agency, and intra-agency initiatives, gional policy priorities relating to creating Plan was discussed at length as an example such as expanded energy efficiency require- and sustaining affordable, efficient multifam- of HUD’s commitment to energy efficiency. ments in existing programs such as the CPD ily housing in Northeast Ohio. Specifically, Specifically discussed was the FY2012 En- HOME and CDBG programs and the Multi- Emerald Cities Collaborative goals are to ergy Efficiency Priority Goal Statement, in- family Housing 202/811 Capital Advance “Green our Cities”, “Build our Communi- cluding Goal Highlights, Key Measures by program. ties”, and “Strengthen our Democracy”. HUD Office (numeric targets for CPD., In conjunction with the presentation, Ms. HUD Project Manager Phyllis Mitchell rep- Housing, etc), and contributing Program Mitchell participated in the roundtable work- resented the Cleveland Field Office at the Strategies and Key Milestones. Funding ing lunch. During this all attendees identi- event. The presentation, held in downtown levels associated with the FY2012 APG13 fied challenges to energy efficiency and de- Cleveland provided examples of energy effi- were not available through the department. veloped challenge categories. The final ses- ciency efforts in several HUD program areas, The intent was not to list all strategies and sion of the day then presented opportunities including single and multifamily Housing, initiatives, but rather to highlight two or three that directly corresponded to the 5 challenge CPD, OHHLHC, and OAHP. Each of these mortgage or grant/loan programs that had a categories that were developed during the HUD program areas have specific strategies, very strong energy efficiency focus. There- working lunch. The event proved to be a initiatives or cross-cutting programs that con- fore, the FY 2010-11 202/811 NOFA which worthwhile success. tribute to HUD’s overall energy efficiency requires energy efficiency elements beyond Hopeton Village Assisted-Living Conversion Page 3 By Molly Logan ing units in the project into an Assisted Liv- room, exercise room, nursing offices, com- Aging is an irrevocable progression of life, ing Facility (ALF), designed to accommodate mercial and residential laundry, as well as but sometimes the progression is accompa- the frail elderly. Grant funding is awarded to updated lighting, hallway carpeting and other nied by the decline of health, wellness and cover the physical costs of converting units, physical components. To accommodate the the ability to live totally independently. Spe- common areas and service space, as well as needed space for all these new amenities, a cifically, while many seniors are able to live providing a central kitchen or dining facility, two-story addition was constructed at the rear somewhat independently, and do not yet need lounges, recreation and other multiple use of the building. a continuous care facility, they still need as- areas that will be available to all residents of Recently completed, Hopeton Village cele- sistance with one or more activities of daily the project. brated its “Grand Re-Opening” on May 17, living, otherwise known as ADLs. As the Hopeton Village in Chillicothe, was a Fiscal 2012, and is open to help those who may demand for sufficient living units catering to Year 2008 and 2009 ALCP Grant recipient, need assistance with activities of daily living. these needs becomes essential, the current converting a total of 41 residential units into For more information regarding the Assisted supply of housing appears inadequate to sup- assisted living units. The property is owned Living Conversion Grant, or to view the port it. Therefore, HUD created the Assisted- by National Church Residences of Ohio. The FY12 NOFA, please go to: Living Conversion Program (ALCP) Grant to amount of funds awarded totaled $6,108,153, http://portal.hud.gov/hudportal/HUD?src=/ provide the aid needed to make this assis- with an additional $1 million contribution program_offices/housing/mfh/progdesc/alcp tance possible. from the property’s Residual Receipts ac- or The ALCP Grant provides private nonprofit count. The project features assisted living http://portal.hud.gov/hudportal/HUD?src=/ owners of eligible developments the funds units on the 1st through 3rd floors, a new com- program_offices/administration/grants/ necessary to convert some or all of the dwell- mercial grade kitchen, dining room, therapy fundsavail/nofa12/alcp St. Paul Village By Bonnie Spurling thy Banks, a resident of St. Paul Village I. were engaged, including an M2M refinanc- St. Paul Village I, a HUD subsidized prop- Several made short presentations and helped ing, an IRP decoupling, City of Cincinnati erty for the elderly located in Cincinnati, cut the ribbon during the celebration. HOME funds, the Recovery Act Tax-Credit Ohio celebrated its grand re-opening with a The construction contractor, The Model Assistance Program, and a 231 FHA loan. ribbon cutting ceremony on May 1, 2012. Group, in partnership with ERH, coordinated These were combined with Low Income The property, managed and partly owned by the seven year process of bringing together Housing Tax Credits (LIHTCs) to capitalize Episcopal Retirement Homes (ERH), under- financing and completing the 14-month reno- the $13 million in renovations. HUD’s pro- went a dramatic transformation from a strug- vation to rejuvenate this senior community. ject based rental assistance and project based gling property to a sustainable, energy effi- Originally built in the mid-1970’s under the vouchers through the Cincinnati Metropoli- cient senior community. Many were present 236 program with efficiency and one bed- tan Housing Authority ensure that rents are to commemorate the day, including Cincin- room units, the community now boasts 96 affordable for low income senior residents. nati Mayor Mark Mallory, City Manager newly reconfigured and remodeled one bed- The property was renovated to LEED stan- Milton Dohoney, Jr., Doug Spitler, President room units and 7 efficiency units. Ten per- dards, including geothermal heating and and CEO of ERH, Hal Keller President of cent of the units are fully ADA accessible. cooling. The grand re-opening was covered Ohio Capital Corporation, Guy Ford, Direc- All units received new windows, carpeting, by the local media which included interviews tor of Legislative Affairs, Ohio Housing Fi- ceramic tile, and kitchens. The grounds now with several residents who expressed their nance Agency, James Cunningham, Field include picnic areas and walking trails. The gratitude and positive outlook toward living Office Director, Cincinnati Field Office, wellness/fitness center is furnished with do- in their newly renovated apartments. Steve Smith CEO, Model Group and Doro- nated equipment. Six HUD funding sources

Cleveland Multifamily Program Center Presents Grant Opportunities Page 4

By Pamela Ashby tion, the U.S. Department of Health and Hu- were conveyed. Emphasis was placed on the Senior Project Manager, Phyllis Mitchell of the man Services, and the U.S. Department of need for applicants to read closely and follow Multifamily Program Center in Cleveland pre- Transportation. both the General NOFA and Program Specific sented information about formula and competi- Since HUD’s Fiscal Year 2013 appropriation NOFA to determine applicant eligibility, tive grants available for eligible local govern- budget had not been enacted by Congress as of threshold and submission requirements, and ments and non-profit corporations at a Grants the date of the forum, participants were shown responsiveness to various application exhibits. Resource Forum sponsored by Congress- how to locate future competitive grant Notice Finally, a matrix of cross cutting post award women Marcia Fudge, 11th Congressional Dis- of Fund Availability (NOFA) opportunities regulations and OMB Circulars was provided trict. Congresswoman Fudge extended the across all of the HUD’s program areas by ac- which must be followed throughout the grant invitation for participation to Field Office Di- cessing the “Available Funds” link on the front term in addition to the various reports that must rector Douglas Shelby and Ms. Mitchell repre- page of HUD’s external website. This was be filed periodically and timely if an award of sented the Office on his behalf. The Forum demonstrated using a “live” internet connec- funding is received. was held at Cuyahoga Community College’s tion. Participants were also shown how to By presenting information not only about Corporate College May 1, 2012. More than access the archive link to HUD’s competitive HUD’s Multifamily competitive grant pro- eighty persons participated in the event which grants that were previously awarded for Fiscal grams but also those of the Department’s other included representatives from small govern- Year 1997-2012. In addition, the critical re- program areas at this Congressional forum, the mental jurisdictions and non-profit organiza- quirement to obtain a DUNs number and a ability of non-profit organizations and small tions. Among the organizations presenting Central Contractor Registration well in ad- government jurisdictions to increase local ca- grants information were the Cleveland Founda- vance of submitting a grant application elec- pacity is advanced. Overcoming capacity tion, the oldest community foundation in the tronically thru Grants.Gov was highlighted, shortfalls is critical to the ability of govern- nation, and the Foundation Center which has a since these numbers are a Grants.Gov submis- mental agencies, non-profits, and other organi- library located in Cleveland. In addition to sion requirement. General tips enhancing the zations to leverage HUD resources, make ef- the U.S. Department of Housing and Urban likelihood that a submitted application meets fective use of HUD strategic goals, and create Development (HUD), five other Federal agen- minimum threshold requirements and achieves lasting change in the lives of individuals and cies provided grant information including maximum points for each of the five rating communities. Grants.Gov, the U. S. Department of Educa- factors typically included in HUD NOFA’s

Paperwork Pitfalls According to Owners, Agents, and Lenders, with the other document for consistency. As Owner. If there is an IOI between the processing paperwork is one of the most an example, there are several areas of the owner and agent, the statement requires frustrating parts of dealing with HUD. It is Project Owner’s/Management Agent’s Certi- that the name(s) and services of the IOI often unclear what is being asked for fication that must correspond to the Manage- (s) be listed. Statement 12b and 12c are (required) in your response. Occasionally, ment Entity Profile. Item 12 discusses iden- independent statements. It is possible there is a request for change or correction to tities-of-interest (IOI)s. It begins with a for one or the other or both to be the submission. HUD wants to make sure statement that the owner and agent read and checked. that the documents are completed correctly understand HUD’s definition of “identity-of Please consider the following when complet- and orderly. Assurance that the documents -interest” (IOI) and that the statement(s) ing all HUD documents: are completed correctly also helps to ensure checked are true. There are three boxes that Consistently use the name of the entities that you understand what is expected from can be checked: on all documentation. you, and from HUD. a. is checked if no identity-of-interest ex- Confirm that the appropriate project What can be done to avoid calls or a letter ists among the Owner, the Agent and number is being used. Refinanced requesting corrected paperwork? any individuals or companies that regu- properties will have a new FHA Our recommendation is that, all documenta- larly do business with the project. number and uninsured properties tion and all accompanying citations be read b. refers to Section 11a of the Management will either use their HAP contract thoroughly. Make sure that you address Entity Profile and states that only indi- number or list “un-insured”. what is being asked of you in your response. viduals and companies listed in Section Have the appropriate individual sign the Although this sounds very basic, it really can 11a have an identity-of-interest with the document and provide signature be helpful. Forms and processes change, agent. If Statement b. on the Project authorities when necessary. and some terms and phrases may be different Owner’s/Management Agent’s Certifi- Finally, and most importantly, if you have than what they appear. Documentation or cation is checked, we will then examine any doubts about how to complete a form forms may have been accepted as complete section 11a of the Management Entity and the instructions are not clear, refer to the in a previous submission, but the documen- Profile. The profile should list any and applicable HUD handbook for guidance. tation may not have been completed cor- all IOI individuals and companies. It We look forward to working with you and rectly. If the documentation references an- should not say “none”. making the paperwork trail a smooth one. other document please verify the information c. refers to an identity-of-interest with the

New Guidance Regarding Section 202 Prepayment and Refinancing Page 5

By Bonitta Smith bilitation of related facilities as part of a prepay- the timing of the proposed use. The loan pro- On May 4, 2012, HUD issued new guidance ment and refinance. ceeds in excess of those required to pay off the with respect to the prepayment and refinancing - HUD may allow Residual Receipts over $500 202 loan or other HUD subordinated debt at of Section 202 Direct Loan projects (Notice H per unit and Reserve for Replacement over closing must be placed in a segregated account 2012-8). The amended guidance indicates that $1,000 per unit to be used for the cost of activi- and utilized within five years after closing if for projects under Section 202 of the Housing ties designed to increase the availability or pro- intended for rehabilitation, retrofits or construc- Act of 1959 for which the Secretary’s consent vision of supportive services or other purposes tion. for prepayment is required, the project sponsor beneficial to tenants. This guidance also addresses re-refinancing of must agree to operate the project for at least 20 - All prepayments must meet tenant involve- Section 202 properties. Some former 202 pro- years following the maturity date of the original ment requirements. jects have already refinanced either through loan under terms at least as advantageous to - An environmental review may be required. FHA or conventionally and an Owner may wish existing and future tenants as the terms required HUD may now approve a prepayment and refi- to refinance again to obtain a lower interest rate by the original loan or project based subsidy nance of a Section 202 project that results in and/or to complete repairs. These prepayments contract. The amendment also authorizes HUD increased debt service if the following is met: do not require the same HUD approval as other to approve the prepayment and refinancing for - If the original interest rate was six percent or projects referenced in this article. If the Owner 202 Direct Loans originally financed with inter- lower. re-refinances with conventional financing, the est rates of six percent or less where there is no - The proposed transaction may not result in project retains eligibility to renew under Option debt service savings anticipated if, as part of the higher rents for unassisted residents. HUD may 4 of the Renewal Guide at the next expiration refinancing, the ownership will address the provide rental assistance, subject to availability date of the HAP contact. However, if the physical needs of the project. of appropriations, or possibly vouchers, to those Owner re-refinances with an FHA insured loan, Some of the requirements regarding this new unassisted residents. the project will no longer be exempt from Mark guidance are as follows: - Rent increases may be needed to complete the -to-Market restructuring and will lose the ability - The Owner must execute a new Use Agree- refinance of such transactions in order to com- to renew under Option 4 when the HAP contract ment, which will ensure continued operation of plete the repairs. expires. Some prepaid/refinanced properties the project for at least 20 years past the maturity - The amount of the capital repairs must in- have already re-refinanced using FHA insured date of the original loan. clude substantial rehabilitation as defined by the loans. At the time of HAP contract expiration, - If there is a Section 8 project-based HAP con- MAP Guide. This rehabilitation may include these projects are ineligible for Option 4 HAP tract in place, the Owner must execute a Re- efficiency conversion in accordance with Hous- renewals. If the Section 8 rents are above mar- newal Contract with a 20-year term. ing Notice 11-03. ket, the Owner will be referred to Mark-to- - The Owner must consider the use of Energy - Any proceeds from the refinance in excess of Market restructuring unless the Owner refi- Star appliances and components. the cost to pay off the existing 202 Direct Loan nances again with a conventional loan prior to - When a Section 202 Direct Loan is prepaid must be approved for use. contract expiration. and the project is financed for the first time in For Section 202 Direct Loan prepayments Once the Ownership has submitted a package to accordance with this new guidance, the project where the refinancing will result in debt service the local HUD field office, the Project Manager is exempt from debt-restructuring under savings, the Owner must still demonstrate that has 30 days to process the application. After MAHRA, regardless if the financing is FHA or the prepayment and refinancing will result in a this period, if the application merits approval, conventional. When the HAP contract expires, reduction in debt service payments. The pack- the Hub Director will send an analysis and rec- the Owner may renew the HAP contract as an age submittal must include a Sources and Uses ommendation to HUD Headquarters for final “Exception” project under Option 4 of the Re- document and a summary of financial analysis. approval. newal Guide. Projects anticipating a reduction Debt service savings will no long be required to An Owner considering prepayment should con- in debt service costs as a result of a prepayment be escrowed. The Owner must still describe sult with their Project Manager before submit- may receive a Section 8 rent increase to fund how the savings will be utilized and it must be ting the prepayment request. A meeting will be operational needs other than increased debt advantageous to the residents. The Owner must scheduled to discuss the proposed transaction service if the rent increase can be justified under provide a narrative description of the proposed with appropriate HUD staff. a budget-based rent increase calculation. use of loan proceeds, including specific dollar - The Owner may consider the addition or reha- amounts to be used for specific purposes and Permanent (PSH) for the Homeless By Zena Farah During this period, they receive supportive off the street and into permanent housing. The Department of Housing and Urban De- services to prepare them for independent liv- The Department provided $46.2 million to velopment has developed Supportive Housing ing. agencies to supply permanent Programs (SHP) to provide housing and re- Permanent housing for persons with disabili- housing to 6,790 homeless veterans in Amer- lated supportive services to move people from ties is also available. The intent of this hous- ica. The Department will work with veterans to permanent independent hous- ing is to provide persons with disabilities with and the Department of Veterans Affairs (VA) ing. These programs assist in relocating indi- the supportive housing that will allow them to to provide permanent housing, case manage- viduals that are found sleeping in temporary live independently in a permanent setting. ment and supportive services so veterans may shelters or places not meant for human habita- Safe Havens are available for hard to reach retain their housing. tion (i.e. abandoned buildings and sidewalks) homeless persons with severe mental illness. The development of these various supportive to permanent housing. The programs are de- This housing provides a highly supportive housing programs is designed to create a com- signed to help participants obtain and remain environment with no immediate service de- prehensive solution to the country’s homeless in permanent housing, increase skills and/or mands. This allows the person to stabilize issues. The complex challenges faced by income and achieve greater self- and eventually participate in services, as well homeless persons will be overcome through determination. Following are examples of as accept referral and move to housing that is the supportive services associated with the available housing. more traditional. housing programs. These programs allow the Supportive housing programs include transi- Currently, there are over 10,000 homeless homeless to recover, and thus reduce the tional housing in which homeless individuals veterans. HUD developed the Veterans Affair overall cost of their care. In turn people are and families may reside for up to 24 months. Supportive Housing program to get veterans able to live more stable productive lives. CAOM’s Corner Page 6

Janice O’Dell amended Exhibit A of the contract. This on implementation. Published Notices: information is mailed to the owner. Management and Occupancy Reviews Notice H 2012-06, April 25, 2012: Reissu- 2. Upon receipt the Owner either: (MOR) schedule for the Performance Based ance of the Notice Requiring Owners with - Accepts the OCAF calculation by return- Contract Administrators (PBCA). Project-Based Section 8 Rental Assistance ing completed/signed rent schedules to Many of you are aware that the PBCA con- Contracts, Section 202 or 811 Project Rental PBCA/HUD within 10 calendar days of re- tract was re-advertised under a second No- Assistance Contracts to obtain Dun and ceipt; or, tice of Fund Availability (NOFA) in 42 Bradstreet Numbers (DUNS) and to register - Declines the OCAF calculation and alter- states, including Ohio on March 9, 2012. in the Central Contractor Registration natively submits a budget to increase con- The anticipated announcement for award is (CCR). Compliance with the Notice is re- tract rents or a zero percent budget to keep August 2012. Subsequent to selection, it is quired within 60 days of the publication date rents at current levels. This submission must anticipated that contracts will go into effect or by no later than June 25, 2012. also be made to the PBCA/HUD within 10 December 1, 2012 for a two-year term. A Failure to comply may delay receipt of calendar days of receipt. major change with the contract that will voucher payments. A couple of additional items related to the affect Owners and Agents is the proposed Notice H 2012-08, May 4, 2012: Updated Auto OCAF process: MOR schedule. As currently proposed, that requirements for Prepayment and Refinance - The Owner will have the opportunity to schedule is as follows: of Section 202 Direct Loan. Owners who address concerns regarding the amount of Mark-to-Market properties (M2M): refinance for the second time with FHA debt service used in the calculation prior to MORs will be performed annually Insurance will no longer be eligible for an submitting the required rent schedules. for projects that have completed Option 4 at the time of HAP renewal. Infor- - All other remaining processes associated OHAP restructuring and have a mation relating to this specific topic can be with a rent increase remain unchanged. For MAHRA contract regardless of the found on page 17 of the Notice. example, if the property has a Utility Allow- rating on the last MOR; Amend Rents for Section 8 HAP Con- ance (UA), a usage analysis is still required MORs will be also performed annually tracts: to be included along with an Amend Rents for projects that received a On March 1, 2012, Ohio, along with many request. Below Average or Unsatisfactory other States, implemented the Auto- Finally, owners who are in long term con- rating on their last MOR; Operating Cost Adjustment Factor (OCAF) tracts (HAP term beyond 5 years), who re- MORs will be performed once process. The purpose of the Auto OCAF is newed under an Option 1 or 2; the fifth year within the two year PBCA Contract to streamline processing by eliminating du- adjustment will be to the new RCS amount, period for projects that received a plicative rent calculations and reducing pa- as required by the Contract and Statute. Satisfactory rating on their last per work. The Auto OCAF is only applica- Auto OCAF will not be applied for the fifth MOR; and, ble for Amend Rents, not Contract Renew- year adjustment. MORs will not be performed within als. Upcoming Changes: the two year PBCA Contract period The process for the Auto OCAF is generally HUD Form 9834; for projects that received an Above as follows: Look for the new HUD-9834 form, Manage- Average or Superior rating on their 1. 150 days prior to the Amend Rents anni- ment Reviews of Multifamily Projects to be last MOR. versary, the PBCA/HUD generates a letter published soon on HUD Clips. Additionally, reflecting an OCAF increase and an look for a RHIIP Listserv with instruction

DEVELOPMENT CORNER

By Chris Cook

Production Notes

Fiscal Year 2012 Production Activity for the Ohio Hub The Ohio Multifamily Hub is on pace for another successful year in terms of production/development. As of March 31, 2012, the halfway point of HUD’s fiscal year, initial endorsements (closings) for the entire state totaled 49 projects. These 49 projects con- sisted of 5,431 units and a combined $226,777,100 in insured mortgages and Capital Advances. This Hub activity contributed

greatly to HUD's mission of increasing the availability of safe, decent and sanitary housing. The following information reflects the number of closed projects for each Section of the National Housing Act: Section 221(d)(4) New Construction/Substantial Rehabilitation of Apartments: 4 Section 223(f) Refinance/Purchase of Apartments: 20 Section 223(a)(7) Streamline Refinance: 11 Section 223(a)(7) Streamline Refinance (with Office of Affordable Housing Preservation restructuring): 6 Section 202 Capital Advance: 4 Section 811 Capital Advance: 4

Personnel Page 7

Columbus HR Updates: Steve Colony – Staff Architect, Multifamily Will Wahler- Project Manager, Multifamily Leslie McDaniel – Project Manager, Multi- Housing Production Asset Management family Asset Management Steve is a registered architect in the Multifam- Will joined HUD from National Affordable Leslie comes to us from Assisted Housing ily Production Branch, and came to HUD in Housing Trust in September 2011. He spent Services Corporation in September 2011 and the fall of 2011. Previously, he worked for 31 the last eight years working with non-profits in brings with her thirteen years experience in the years in Grand Junction, CO for the private the development, syndication and asset man- housing industry. Most of her years were spent sector performing architectural design, design/ agement of Tax Credit properties throughout conducting management reviews throughout build and construction management pro- the country. Will received his degree in Ac- the State of Ohio as well as managing proper- jects. He is a native of Fargo, ND and a 1979 counting from the Ohio State University and ties assigned to the PBCA in Ohio. graduate of North Dakota State University Masters in Business Administration Finance with a Bachelor of Architecture degree. from Franklin University.

Cleveland HR Updates: Mary Bolmgren- Project Manager, Multifamily Kimberly Horton - Project Manager, Multifamily Asset Management (pictured right) Asset Management Ms. Bolmgren joined the Starting September 26, 2011, Kimberly is the Cleveland HUD Office on February 28, 2011. She newest addition to the Asset Management Divi- came to the Department from Assisted Housing sion of Multifamily Housing in the Cleveland Services Corporation. Her outside interests in- Field Office. She joins us after eleven years of clude the study of Quantum Physics and Energy employment with the Michigan State Housing Transference through light and sound. She be- Development Authority. There, she performed as lieves that the most enjoyable part of working for an Asset Manager- a position that is almost iden- HUD is the ability to provide valuable services to clients, including maintaining the availability of tical to HUD's Project Manager. Joining her on this new endeavor from Michigan to Ohio, are affordable housing for those in need. her three children: Kayla, Kyra, and Kobe Hor- ton. The family looks forward to exploring their Departures new surroundings this spring and summer. What Marilyn Jarvis, Mortgage Credit Analyst, Cleve- Kimberly enjoys most about working for HUD is land Program Center, retired May 2, 2012. the opportunity to continue to be a public servant and a housing advocate for those that need a Yvonne Kozak, Construction Analyst, Cleveland place that they can call home. Program Center, retired May 3, 2012.

How to join Listserv HUD Multifamily Housing Mailing Lists Page 8 By Al Minotti of their content and scope: local mailings are not derived from the HUD maintains several mailing lists to - http://portal.hud.gov/hudportal/HUD? aforementioned national lists, but from which you may subscribe to keep informed src=/subscribe/mailinglist HUD systems, such as iREMS (Integrated of what's happening at HUD and with its To subscribe to any of these lists, click on Real Estate Management System) and APPS housing programs and activities. the name link of the list. That will take you (Active Partners Performance System). First, there is a Multifamily Housing Indus- to the sign-up for that particular list. Sub- Property owners, agents and staff are en- try Partners list for information of a national scriptions may be cancelled at any time. couraged to update their information in scope of interest to partners and stake- These HUD lists present an easy way to stay APPS and notify their HUD Project Man- holders. You may subscribe to this mailing informed, ask questions and share ideas. ager whenever staff, email, or other address list at the following link (just copy and paste Your participation is appreciated! information changes. Please be aware that the link into your browser address box): In addition to the nationally maintained lists, the main email address associated with the - http://www.hud.gov/subscribe/ HUD local offices occasionally send out tax ID number of each ownership entity and signup.cfm?listname=Multifamily% mass mailings to multifamily property own- management agent working with HUD can- 20Housing%20Industry% ers, management agents, and site managers not be updated by HUD. This must be done 20Partners&LIST=JAX-ORL-MF-HSG-L for properties within their office jurisdic- by a representative of the entity through In addition to the Multifamily Housing In- tions. These mailings typically pertain to APPS. dustry Partners list, there are a number of local items of interest, such as newsletters, Finally, the mass mailings that go out from other lists pertaining to specific topical in- local events, training opportunities, etc. and the Columbus Multifamily Hub office are formation and forums organized under four critical information such as regulatory sent from a box named multifam- categories -- Homes, Communities, Busi- changes and notices of funding availability. ily_massmailbox_01. These mailings are ness, and Research and Report. In addition The latter information may be duplicated on one-way only and no responses can be ac- to specific topical information of national the national lists; however, they are often cepted by this mailbox. If you have any scope, these lists are provided for informa- additionally sent out locally to help ensure questions related to our mass mailings, tion specific to particular states. The follow- that owners and agents receive the critical please contact your assigned HUD project ing link will take you to the complete topical information. manager. breakdown of these lists and an explanation Please note that the mailing lists for these

New Regulations regarding Equal Access to Housing in HUD Programs Regardless of Sexual Orientation or Gender Identity -. Final Rule 77 F.R. 5662 By Jimmie Thomas II 2007). HUD proposed to prohibit inquires insured housing must be made without re- On February 3, 2012, HUD published the regarding sexual orientation or gender iden- gard to actual or perceived sexual orienta- Final Notice on Equal Access to Housing in tity. As proposed, the prohibition precludes tion, gender identity, or marital status. HUD Programs regardless of Sexual Orien- owners and operators of HUD-Assisted Finally, it should be noted that inquires con- tation or Gender Identity - Final Rule 77 housing or housing whose financing is in- cerning sexual orientation are permissible F.R. 5662. This new regulation ensures that sured by HUD from inquiring about the sex- under certain specific situations, specifically HUD’s core programs are open to all eligi- ual orientation or gender identity of an ap- where the accommodations provided in- ble individuals and families regardless of plicant for, or occupant of, the dwelling, volve shared sleeping and bathing areas, sexual orientation, gender identity, or mari- whether renter or owner occupied. HUD is such as emergency shelters and like facili- tal status. This rule follows a January 24, instituting this regulation in its rental assis- ties. In these instances HUD clarifies that 2011 proposed rule which noted evidence tance and homeownership programs, which lawful inquiries as to sexual orientation suggesting lesbian, gay, bisexual, and trans- includes community development programs, would be permitted. This temporary hous- gender (LGBT) individuals and families are and public and assisted housing programs. ing, unlike other HUD , being arbitrarily excluded from housing While this rule prohibits inquiries regarding and unlike housing insured by the FHA pro- opportunities in the private sector. HUD, as sexual orientation or gender identity, noth- gram, involves no application process to the nation’s housing agency, has a unique ing in the rule proposes to prohibit any indi- obtain housing, but rather involves immedi- charge to promote the federal goal of pro- vidual from voluntarily self-identifying his ate provision of temporary, short-term shel- viding decent housing and a suitable living or her own sexual orientation or gender ter for homeless individuals. environment for all. identity. It should be noted that this regula- These additional regulations are a reminder Included in the published notice are study tion for HUD’s Native American programs and clarification regarding HUD’s responsi- results that indicate that 20 states, the Dis- will be undertaken by separate rulemaking. bility to make the provision of decent, safe trict of Columbia, and over 200 localities Although HUD’s multifamily programming and sanitary housing available for all. have enacted laws prohibiting discrimina- already interprets the term “family” broadly, tion based on sexual orientation or gender the rule clarifies that those families who are identity against any individual or family otherwise eligible for HUD programs may otherwise eligible for HUD-assisted or HUD not be excluded because one or more mem- -insured housing. (Laws Prohibiting Dis- bers of the family are LGBT or perceived to crimination based on Sexual Orientation and be LGBT. New revisions to 24 CFR 5.105 Gender Identity, Institute of Real Estate (a) (2) explicitly states that eligibility deter- Management (IREM) legislative Staff July minations for HUD-assisted or HUD-

Excess Income Receivable of Section 236 Projects Page 9 By Tashara McCain rent from the residents by the owner, on a Field Office. This article provides a general overview of unit-by-unit basis, that is in excess of either For project use only, the Owner must briefly HUD’s policy regarding the retention of Ex- the HUD-approved unassisted Basic Rent or describe the purposed use of Excess Income, cess Income generated in Section 236 pro- the New Authorized Rent under the Section 8 the period Excess Income is being retained jects. For full guidance, regarding applicabil- mark-up-to-market program. The unit-by- and the amount or percentage requested. ity and the requirements of Owners and HUD unit requirement necessitates that, if a unit Field Office Response staff, please reference the notices abovemen- has Excess Income, it must be returned to HUD staff must review the request and issue tioned. HUD. There is no Excess Income associated a letter of permission or denial. Background with units where Section 8 is available or Approval Letter: Must state, at minimum, the The FHA Section 236 program was estab- utilized. five requirements outlined in Notice H01-07; lished to facilitate the construction and sub- Use of Excess Income please note: retention cannot extend beyond stantial rehabilitation of affordable multifam- Project Use: Excess Income may be used for the current Fiscal Year. ily rental housing for lower-income house- any project purpose. Examples include oper- Denial Letter: Must cite the specific reasons holds. Under the Section 236 program, HUD ating shortfalls, repair costs and the retention for denial and state what would be required to provides a long-term interest subsidy (known of Service Coordinators receive HUD’s permission. as Interest Reduction Payments or IRP) and Non-Project Use: Most owners are allowed to Owner Reporting Requirements mortgage insurance to project owners to re- retain Excess Income for non-project use. All Excess Income that owners are not au- duce the interest rate on the owner's mortgage However, there are circumstances under thorized to keep must be remitted to HUD and help the owner maintain the affordability which retention is not allowed. These situa- monthly. of the rental project. tions, which are outlined in notice H 01-07, The collection and retention of Excess In- Policy include having an underfunded Reserve for come must be reported in the required Annual All Section 236 projects, where the owner is Replacement account, engaging in material Financial Statements. On an annual basis, current with its mortgage obligation, are eli- adverse financial or managerial actions, or owners must provide two copies of a brief gible for consideration to retain Excess In- failing to maintain the project in decent, safe narrative description of the amount of Excess come generated on or after October 1, 2000 and sanitary condition and in good repair. In Income retained during the prior year and for project and non-project proposes unless addition, excess Income retained by nonprofit what the retained Excess Income was used the owners owes HUD Excess Income from owners is limited to activities that carry out for. The narrative description must contain prior periods. If excess Income is owed, the the nonprofit purpose. the required certification outlined in Notice H owner is no longer eligible for retention of Requesting Approval 01-07. Excess Income unless it has a Workout or Owners must submit a written request to the In closing, HUD’s intentions are to continue Repayment Agreement acceptable to HUD local Field Office. to work with owners and to provide valuable and is current in payments under such Agree- Upon Field Office approval, the Owner must resources to make certain that HUD’s assets ment. submit Form HUD-93104, (Monthly Report are sustained and owners are able to invest in Definition of Income) via Pay.gov (https://Pay.gov), and communities by providing decent, safe and Excess Income consists of cash collected as send a copy of the e-Form HUD-93104 to the sanitary environments. Upcoming Event Midwest Affordable Housing Summit – September 24-25 in Chicago Link: http://summit.mahma.com/ It’s that time again! We’re gearing up for another Midwest Affordable Housing Summit in Chicago and hope you are excited to make this year’s conference an even bigger success! MAHMA members and guests will be treated to a comprehensive conference, featuring news, information and updates surrounding the afford- able housing industry. The Details: September 24 – 25 Renaissance 1 West Wacker Drive Chicago, IL 60601 Register for the Summit and save! There are several ways to save when you register for the Midwest Affordable Housing Summit! Join MAHMA prior to the Summit and send four or more people and get the member rate and the fifth attendee free (must join and make pay- ment prior to September 1, 2012). Register four or more people from one company and be eligible to win $100 off future MAHMA training. Register seven or more people from your company and be eligible to win one of 2 $100 vouchers for future MAHMA training. Register 10 or more people from your company and be eligible to win one of 3 $100 vouchers for future MAHMA training.

Letters to the Editor Page 10 We hope that you enjoy our Newsletter. We want it to be a positive way for us to communicate with our business partners, and facilitate more effective, efficient relationships with those we serve. If you have comments, questions, or suggestions for articles that you would like to see in future editions, please let us know. Send an email to the editor at [email protected]. We look forward to hearing from Recent Issuances Housing Notices published in 2012 may be found at: http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/notices/hsg Mortgagee Letters published in 2012 may be found at : http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/index.cfm Recent HUD Notices By Lavon Lockett 12-10 Guidelines for Assumption, Subordination, or Assignment of Mark-to-Market (M2M) Loans in Transfer of Physical Assets (TPA) and Refinance Transactions This Notice updates and restates HUD’s guidelines dated September 30, 2010, issued through Housing Notice 10-22, “Guidelines for As- sumption, Subordination, or Assignment of Mark-to-Market (M2M) Program Loans in Transfer of Physical Assets (TPA) and Refinance Transactions” (Guidelines). The Guidelines apply to any request (Request) to assume and/or subordinate a loan evidenced by a Note (defined below) originated under M2M, or its predecessor program, the Portfolio Reengineering Demonstration Program (Demonstration or Demo Program), and to waive the due on sale or refinance clause contained therein. The Guidelines also apply to any Request to provide Debt Re- lief (assignment, modification or forgiveness) with respect to a Note originated under the M2M program. 12-09 Supplemental Information to Application for Assistance Regarding Identification of Family Member, Friend or Other Persons or Organization Supportive of a Tenant for Occupancy in HUD Assisted Housing This Notice reinstates and extends the 2009 joint Notice issued by the Office of Housing (H) and the Office of Public and Indian Housing (PIH), identified as H 2009-13 or PIH 2009-36. That HUD Notice was issued to provide guidance to owners and management agents (O/As) and Public Housing Agencies (PHAs) on the implementation of the requirements of Section 644 of the Housing and Community Develop- ment Act of 1992 (Section 644). Under Section 644, O/As and PHAs must provide applicants as part of their application for housing, the option to include information on an individual or organization that may be contacted to assist in providing any delivery of services or special care to applicants who become tenants and to assist with resolving any tenancy issues arising during tenancy. 12-08 Updated Requirements for Prepayment and Refinance of Section 202 Direct Loans This Notice provides guidance for the prepayment and refinancing of Section 202 Direct Loan projects. This Notice supersedes all out- standing policy regarding Section 202 Direct Loan prepayments, including Housing Notice 02-16 and Housing Notice 10-14. 12-07 Annual Base City High Cost Percentage in High Cost Area Revisions for 2012 This is an annual publication for each base city and the information is used in the underwriting process. 12-06 Notice Requiring Owners with Project-Based Section 8 Rental Assistance Contracts or Section 202 or 811 Project Rental As- sistance Contracts or Rental Assistance Payments or Rent Supplement Contracts to Obtain Dun and Bradstreet Number System (DUNS) Numbers and to register in the Central Contractor Registration (CCR) Public Law 109-282, The Federal Funding Accountability and Transparency Act of 2006, requires the creation of a single, government-wide searchable website that is available to the general public. Rental assistance payments made under Project-Based Section 8 Housing Assis- tance Payments (HAP) Contracts or Section 202 or 811 Project Rental Assistance Contracts or Section 236 Projects with Rental Assistance Payments Contracts or Section 221(d)(3) Below Market Interest Rate, Section 231, Section 236 (insured and non-insured) Projects, and Sec- tion 202 Projects with Rent Supplement Contracts are covered by this reporting requirement. 12-05 Guidelines on Addressing Infestations in HUD-insured and Assisted Multifamily Housing This Notice supersedes Housing Notice 2011-20, ―Guidelines on Bed Bug Control and Prevention in HUD Insured and Assisted Multifam- ily Housing.‖ Readers seeking guidance on the subject of bed bug infestations should instead refer to this Notice, which provides updated information to prevent and address infestations, including but not limited to bed bugs, insects, and all manner of vermin. 12-04 Extension of Housing Notice H 2011-05, Policies and Procedures for the Deferred Repayment of Operating Assistance Flexible Subsidy Loans Housing Notice H 2011-05 was issued on February 14, 2011, with an expiration date of February 29, 2012. Housing Notice H 2011-05 is hereby extended for one year. 12-03 Guidance on Eligibility for Tenant Protection Vouchers Following Certain Housing Conversion Actions The Office of Multifamily Housing oversees thousands of properties supported by a range of insured and Direct Loans, including Section 236, Section 221(d)(3), Section 202, and Section 221(d)(4) mortgages. Many properties are reaching the end of their original mortgage term, and rental assistance contracts are also reaching expiration. Residents may be eligible for Tenant Protection Vouchers (TPVs) in certain scenarios related to mortgage prepayment, contract termination or expira- tion. 12-02 Collection Procedures for Excess Income Receivables and Form HUD-93104, Monthly Report of Excess Income This Notice describes the processes that must be followed to collect these receivables and ensure that all required monthly reports are filed and any required payment is made. 12-01 Multifamily Low Income Housing Tax Credit Pilot Program This Housing Notice (HN) launches a pilot program (the Tax Credit Pilot or Pilot), mandated by the Housing and Economic Recovery Act of 2008, Public Law 110-289, in subtitle B of Title VIII, cited as the Housing Tax Credit Coordination Act of 2008 (HERA), to streamline FHA mortgage insurance applications for projects with equity from the Low Income Housing Tax Credit (LIHTC) program.