CHAPTER 120
LOCAL HOUSING REHABILITATION PROGRAM: PROGRAM GUIDELINES (REPEALED)

Part I
Purpose

13VAC5-120-10. Purpose. (Repealed.)

The Local Housing Rehabilitation Program under the Virginia Housing Partnership Fund allows an approved local government, nonprofit organization, or housing authority to reserve a pool of funds in order to make low-interest loans to residential property owners within their service area for the improvement of their properties. The purpose is to increase the supply and availability of decent and affordable housing for low and moderate income Virginians through preservation of existing housing stock.

Part II
General Provisions

13VAC5-120-20. Definitions. (Repealed.)

The following words and terms, when used in these guidelines have the following meaning unless the context clearly indicates otherwise:

"Acquisition" means the purchase of real property.

"Administrative agreement" means a contract between DHCD and the local administrator setting forth the terms and conditions for the operation of the program.

"Application" is the written request for a loan or grant funding under this program.

"Appraised value" means the value assigned to the property as determined by an independent fee appraiser.

"Area median income" means the median income established by HUD for counties, cities or multijurisdictional areas of the Commonwealth.

"Assessed value" is the value assigned to a property as determined by the real estate assessment office of the local government where the same is located for tax purposes. (The applicable assessed value shall be that value in effect as of the date of the application.)

"Borrower" means the individual, for-profit, nonprofit or government entity that has applied and received commitment under this program.

"Commitment fee" means the amount charged by a local administrator to cover the cost of processing a loan. This fee is collected at the closing.

"DHCD" means the Department of Housing and Community Development.

"Energy grant" means a grant, available as a result of federal energy litigation, which may be awarded to pay for certain energy-related improvements in rehabilitation projects.

"Energy-related improvements" means physical improvements to structures which are being rehabilitated which contribute to fuel cost savings and overall less energy consumption, and which have been so designated by this department.

"Fund" or "VHPF" means the Virginia Housing Partnership Fund.

"General improvements" means permanent additions, alterations, renovations, or repairs made for the purpose of making housing more habitable and more desirable to live in.

"Gross income" is the total income from all sources, before taxes or withholdings, of all residents residing in a housing unit, age 18 or older.

"HQS" means the Housing and Urban Development Section 8 Housing Quality Standards.

"Household" means all persons related or unrelated living together as one economic unit.

"HUD" means the U.S. Department of Housing and Urban Development.

"LMI" means low and moderate income person or persons that have income levels not exceeding 80% of the area's median income.

"Loan" means funds provided to program recipients under the Virginia Housing Partnership Fund wherein repayment is required at rates and terms as established by DHCD.

"Local administrator" is the nonprofit, for-profit, incorporated organization or PHA unit of local government that enters into a contract/agreement with DHCD for undertaking project activities.

"Locality" means a city, county or town.

"Multifamily" means property with two or more complete dwelling units.

"Nonprofit" means an organization certified by the Internal Revenue Service as having § 501(c)(3) nonprofit status.

"Rehabilitation" means substantial physical improvements/repairs to a facility which will secure it structurally, correct building, health or fire safety code related defects, increase energy efficiency, assure safe and sanitary occupancy including general improvements.

"Reservation" means funds set aside for a project prior to negotiation of an administrative agreement or commitment.

"Service area" means the geographic area/jurisdiction which the applicant intends to serve.

"Single family" means a structure with one complete dwelling unit.

"Stripper oil well funds" are United States Department of Energy moneys awarded to the Commonwealth for specific purposes to resolve alleged pricing violations in effect between 1973 and 1981 by crude oil providers.

"Substandard" means does not meet HQS.

"VHDA" means the Virginia Housing Development Authority.

Part III
Eligibility

13VAC5-120-30. Eligible applicants. (Repealed.)

1. Units of local government.

2. Housing authorities.

3. Nonprofit organizations incorporated under the Commonwealth of Virginia.

Part IV
Fund Reservation

13VAC5-120-40. Fund reservation. (Repealed.)

A. Funds will be made available initially on a competitive basis to eligible applications that meet the minimum requirements, as set forth in Part VI of these guidelines. DHCD may reduce the amount of funds requested upon review of the application.

B. Approved local administrators, in good standing, may apply for funds at any time once 80% of existing funds are committed.

C. Any funds remaining after the competitive awards will be available to applicants on a first come/first serve basis. This will include new applicants as well as existing local administrators who have committed 80% of their previous allocation.

D. Upon selection as a local administrator, a reservation will be made for up to a three-month period to allow time for program start-up and administrative agreement negotiation. The reservation may be divided into two portions:

1. Loan funds; and

2. Grant funds for energy-related improvements.

Local administrators who have not entered into an administrative agreement within the three-month reservation period may lose all or a portion of their reservation.

E. Applicants will propose a timeframe for the operation of their program. The maximum term for completion of the program will be 24 months. ALL FUNDS SHALL BE COMMITTED AND ALL WORK COMPLETED DURING THE APPROVED PROJECT PERIOD.

F. The Department may approve an administrative fee equivalent to not more than 5.0% of funds allocated based on project performance.

13VAC5-120-50. Maximum reservation amounts. (Repealed.)

A. The maximum request per application shall be $500,000.

B. The maximum amount of energy grant funds for each project shall not exceed 25% of the total amount of the request. The energy grant funds shall be used to cover the costs of eligible energy improvements only.

13VAC5-120-60. Coordination. (Repealed.)

DHCD will ensure delivery of the program based on geographic distribution and service area. In cases where there may be more than one applicant serving the same jurisdiction, DHCD will work to coordinate the programs with the applicants regarding their service area or population.

Part V
Program Design

13VAC5-120-70. Eligible borrowers. (Repealed.)

1. LMI owner/occupants of single family dwellings; or

2. Owners of rental property that house LMI persons.

13VAC5-120-80. Eligible properties. (Repealed.)

A. Substandard single family properties, owner-occupied or rental, that house LMI persons.

B. Substandard multifamily properties containing 10 or fewer units, that house LMI persons.

C. Properties must be feasible for rehabilitation. Building permits must be obtained, and upon completion the properties must comply with HQS as well as local zoning and code requirements.

13VAC5-120-90. Eligible activities. (Repealed.)

A. Rehabilitation including general improvements and energy-related improvements.

B. Replacement housing when rehabilitation is not economically feasible. GRANT FUNDS MAY NOT BE USED ON REPLACEMENT HOUSING.

C. Acquisition when rehabilitation is also being done may be approved by the state on a case-by-case basis upon verification of need. Evidence of need must be documented for all improvements undertaken. LUXURY IMPROVEMENTS ARE PROHIBITED.

13VAC5-120-100. Loan terms and conditions. (Repealed.)

A. Maximum loan amounts.

1. Single family properties may use up to $25,000 in VHPF funds per property. This amount shall include energy grants for eligible energy improvements.

2. The following per unit maximum loans/grants will apply to rental property. These amounts shall include energy grants for eligible energy improvements.

B. Interest rate. All loans will be at a fixed rate of interest. Interest rates may range from 0.0% to 8.0% at the discretion of the local administrator. The local administrator must describe the method of establishing rates in the program application. The local administrator must ensure an average return of 4.0% for the entire portfolio.

C. Term of loans. The maximum term of loans shall not be more than 15 years (180 months). Loan terms should be adjusted so that payments are not less than $25 per month.

D. Term of grants. The grant portion of funds shall be secured along with the loan portion. The grant will be deferred for the first three years and forgiven at a rate of 25% for the next four years, provided that any grant amount remaining on June 30, 1998, will be forgiven in full.

E. Requirements of securing the loan grant. On owner/occupied property the applicant/borrower must have the majority ownership (at least 51%) interest in the property. All owners must sign the deed of trust. For investor owned property, all owners must be applicant/borrowers. Liens will be recorded on the property secured by a deed of trust. The liens shall be divided between loan proceeds and grant proceeds. Title insurance shall be required on all loans and loan/grant combinations exceeding $7,500. DHCD will accept a subordinate position to an existing mortgage or when primary rehabilitation financing is provided by another source.

F. Loan-to-value ratio. The loan-to-value ratio shall be based on the appraised value of the property after repairs and improvements. In general the loan-to-value shall not exceed 90% of the appraised value. However, for single family properties, the assessed value may be used providing the loan-to-value does not exceed 100% of the pre-rehabilitation assessed value. ALL ENCUMBRANCES AGAINST THE PROPERTY WHICH ARE SUPERIOR TO THE VHPF DEBT MUST BE CALCULATED IN THE LOAN-TO-VALUE RATIO.

G. Sale or transfer restrictions. A loan or loan/grant may be assumed by a subsequent purchaser if the purchaser meets the income requirements or will rent to tenants that meet the income requirements. Approval of DHCD will be required for any such assumptions.

H. Waivers. DHCD will accept requests for waivers to one or more of the program requirements on a case-by-case basis. In granting any such waiver, DHCD will look at the merits of each case relative to need, benefits, and intent of the program.

Part VI
Evaluation Criteria

13VAC5-120-110. Application evaluation criteria. (Repealed.)

A. Project need. The application shall address the need and demand for rehabilitation activities in the service area for low and moderate income persons. AT A MINIMUM THIS NEED MUST BE DOCUMENTED BY A HOUSING SURVEY IN A FORM AS MAY BE PRESCRIBED BY THE STATE. Census data may be used as references but will not be accepted as a needs assessment.

B. Program design. The program design shall address all phases of the operation of the program to include outreach, application intake, underwriting, project management, cost estimating and any other aspects of the local rehabilitation program. THE PROGRAM DESIGN SHALL BE CONSISTENT WITH THE REQUIREMENTS SET FORTH IN THESE GUIDELINES. The application shall include the proposed timeframe and the number of units proposed for the program period.

C. Leveraging. The amount of other program funds will be used to determine leverage ratios. These ratios will be considered in ranking proposals. OTHER FUNDS MAY INCLUDE HOUSING AND OTHER NEIGHBORHOOD IMPROVEMENTS WHICH ARE A PART OF THE PROPOSED PROJECT.

D. Administrative capacity. The application shall include information on staff expertise in all areas of program administration and project management. Plans for hiring any additional staff should be noted. Applications will be evaluated on staff expertise and ability to implement the program in a timely manner. Percentages should be given to represent each staff person's time directly related to this program.