Virginia Regulatory Town Hall

Final Text

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Action:
Repeal the Congregate Housing Program Guidelines Regulation
Stage: Final
 
13VAC5-140

CHAPTER 140
CONGREGATE HOUSING PROGRAM GUIDELINES (REPEALED)

13VAC5-140-10

Part I
Purpose of the Program

13VAC5-140-10. Purpose of the program. (Repealed.)

Responding to critical housing problems facing the Commonwealth, as documented in the 1987 Annual Report of the Virginia Housing Study Commission, the Governor and the General Assembly established the Virginia Housing Partnership Revolving Loan Fund. The purpose of the fund is to create and increase the availability of decent and affordable housing for low and moderate Virginia residents. The primary purpose of the Congregate Housing Program is to provide decent, affordable housing opportunities and to expand the number of congregate housing units available for special needs population throughout the Commonwealth of Virginia.

13VAC5-140-20

Part II
Definitions

13VAC5-140-20. Definitions. (Repealed.)

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

"Accessibility improvement" means a modification to a property to make more accessible to individuals with physical impairments.

"Acquisition" means the purchase of real property.

"Applicant" means an incorporated nonprofit, for-profit, or government entity that makes application for funds under the Virginia Housing Partnership Fund.

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

"Appraised value" means the monetary worth of property as determined by an appraiser.

"Area median income" means the median income established by HUD for various areas or the state median income, as established by the University of Virginia Center for Public Service.

"Assessed value" is the monetary worth of the facility/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 application date.

"Borrower" means the individual, for-profit, or nonprofit or government entity that has been approved for funding this program.

"Congregate housing" means a building or facility with a central food preparation and eating area which houses persons with special needs who must live in a supervised environment, but do not require medical treatment or institutional care.

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

"Disabled person" means an individual who has a physical or mental condition which limits his activities or functions either temporarily or permanently.

"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.

"Fire protection system" means a system including devices and equipment to detect a fire or actuate an alarm or suppress or control a fire or any combination thereof.

"Fund" means the Housing Partnership Revolving Loan Fund.

"General improvements" means additions, alterations, renovations or repairs made for the purpose of making housing more habitable or more desirable to live in. These improvements must be permanent. Improvements shall not include materials, fixtures, or landscapes of a type or quality which exceed that customarily used in the locality for the properties of the same general type as the property to be improved.

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

"HQS" means the HUD Section 8 Housing Quality Standard.

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

"Loan application" means the request for funding for purposes as defined in the program guidelines.

"Loan application date" is the date on which a completed application is received by DHCD.

"Lower-income" means 80% of median income for the service area as established by the U.S. Department of Housing and Urban Development also referred to as LMI.

"Oil Overcharge Expenditure Trust Fund" are United States Department of Energy moneys awarded to the Commonwealth for specific purposes to resolve alleged pricing violations in effect between 1983 and 1981 by crude oil providers.

"Program" means the Congregate Housing Program.

"SHARE" means State Homeless Housing Assistance Resources.

"Site control" means the possession of or authorization to use real property by means of ownership, lease or option.

"VHDA" means the Virginia Housing Development Authority.

"VHPF" means the Virginia Housing Partnership Fund.

13VAC5-140-30

Part III
Eligibility

13VAC5-140-30. Eligible applicants. (Repealed.)

A. Nonprofit organizations incorporated under the laws of the Commonwealth of Virginia;

B. Governmental entities including Public Housing Authorities; or

C. For-profit individuals and organizations.

13VAC5-140-40

13VAC5-140-40. Eligible properties. (Repealed.)

A. Eligible properties shall provide a central food preparation and eating area even if individual units have kitchen facilities.

B. The Congregate Housing Program is intended to create permanent housing; however, transitional housing projects are permitted if they are not eligible for DHCD's SHARE (homeless) programs.

C. All projects that are required to be licensed by the government must be licensed prior to closing.

13VAC5-140-50

13VAC5-140-50. Eligible use of funds. (Repealed.)

Loan funds may be used for the residential living portion of any project and for other facilities which are an integral part of the entire congregate housing facility. Examples of such facilities include cafeterias and recreational areas that are part of a total residential project. The type of construction activities which are eligible include the following:

A. Acquisition /rehabilitation. Loan funds may be used to rehabilitate or acquire and rehabilitate existing properties to appropriately serve special needs population.

B. Rehabilitation.

1. Funds shall be used to bring the property up to the applicable Uniform Statewide Building Code.

2. Energy improvements which exceed the Uniform Statewide Building Code are encouraged. Such improvements should comply with special energy guidelines established by the Commonwealth and may be eligible to be funded with grant funds from the Oil Overcharge Expenditure Trust Fund. Energy grant funds will only be made available for projects involving rehabilitation.

3. Remaining funds may be used for general improvements.

4. Luxury improvements are prohibited.

5. Upon completion of the rehabilitation the property must comply with zoning and other local requirements for planned use.

C. New construction. Loan funds may also be used for the construction of new congregate housing. Oil Overcharge Expenditure funds may not be used for energy improvements for new construction.

D. Installation of fire protection. Systems loan funds may be used to install fire protection systems such as sprinkler systems as part of rehabilitation or as a sole activity.

13VAC5-140-60

Part IV
Target Group and Occupancy Requirements

13VAC5-140-60. Target populations. (Repealed.)

A. Target group. The primary target groups to benefit from loans made under this program will be special needs populations such as the elderly, mentally disabled, physically disabled persons, and substance abusers.

B. Occupancy requirements. Loans made under this program will be used only to provide residential facilities for low- and moderate-income persons.

A minimum of 50% of the units must be reserved and occupied by persons with incomes at 50% or less of the area median income as established by HUD.

13VAC5-140-70

Part V
Distribution of Funds

13VAC5-140-70. Loan reservations. (Repealed.)

A. Maximum dollar amount per project. The maximum program loan for developing an individual congregate housing facility is $250,000. The maximum grant amount shall not exceed 15% of the total rehabilitation costs of low and moderate income units.

B. Set aside period. Each successful applicant will receive a set aside of funds for an initial six-month period. This will allow time to complete project development activities including arranging for other financing and assistance from other local, state or federal housing programs. Extensions may be granted by DHCD, if applicable, but under no circumstances to exceed six additional months.

13VAC5-140-80

Part VI
Loan and Grant Terms and Conditions

13VAC5-140-80. Loan and grant terms and conditions. (Repealed.)

A. Interest rate. The interest rate will range from 2.0% to 8.0%, except the eligible energy items funded from Oil Overcharge Expenditure Funds, shall be in the form of a grant.

B. Term.

1. Loan requirements. The loan term shall not exceed 20 years. A longer amortization schedule may be permitted (not to exceed 30 years) if necessary for project feasibility. Each will be determined during underwriting at VHDA

2. Grant requirements. Grants are subject to repayment if the borrower violates program requirements. Repayment must be made in full if such violation occurs within a period determined by DHCD from the date the grant is closed. This repayment obligation is reduced at the rate of 25% per year based on a schedule established by DHCD. Notwithstanding the above, as of July 1, 1998, any remaining grant repayment obligations shall be forgiven.

C. Instrument for security.

1. General requirements. The borrower or borrowers shall be or have written permission from the sole owner or owners of the property which secures the debt. A title opinion, title insurance, and hazard insurance will be required for all loans.

2. Lien requirements. A lien will be recorded on every property for which a program loan is made. The lien shall be divided into the amount securing the general fund portion of the loan, and the amount securing the Oil Overcharge Expenditure Trust Fund portion of the loan grant. The general fund portion shall remain in effect until the loan is fully amortized. The energy related portion of the lien shall be deferred and forgiven as described in 13VAC5-140-80. The state will accept a subordinate position only to an existing mortgage or where the primary rehabilitation financing is being provided from another source.

D. Loan underwriting criteria. Specific underwriting criteria which are applicable to these loans will be established by DHCD. These will include an evaluation of the site, project design and amenities, the market for the project, the experience and financial capability of the sponsors and contractors, architectural and engineering studies, the value of the project, financial risks and other considerations. Each project will be evaluated to assess its potential cash flow to pay debt service and operating expenses.

Services which will be available to residents must be clearly defined and service providers must be identified. The Commonwealth reserves the right to have outside review of service proposals from appropriate community service agencies.

E. Loan servicing. VHDA will close the loans, conduct construction inspections, disburse loan proceeds, service the loans and provide ongoing management oversight.

F. Loan to value ratio. The loan-to-value ratio shall be based on the appraised value of the structure after repairs and improvements. A loan-to-value ratio of up to 100% will be considered for loans to nonprofit housing sponsors and up to 90% to other sponsors. The Commonwealth may permit a ratio to exceed 100% under special circumstances to be considered on a case-by-case basis. In no case shall the total fund assistance exceed 100% of cost as determined by DHCD.

G. Sale or transfer restrictions. Loans made under this program shall be assumable as long as the property use, income and occupancy restrictions, housing conditions and other state requirements are maintained by the new owner.

H. Prepayment of loans. Prepayment of loans under this program is prohibited unless approved by DHCD.

I. Assumptions. Loans under the program are assumable as long as the property use, income and occupancy restrictions, housing conditions and other state requirements are maintained by the new owner.

13VAC5-140-90

Part VII
Evaluation Criteria

13VAC5-140-90. Evaluation criteria. (Repealed.)

Due to the limited funds available and the expected high demand for these loans, a competitive system will be used in deciding which projects will receive loans. Criteria to rank the applications are described below:

A. Public purpose. Projects will be evaluated on project need, income level served, and the creation of new beds. A needs assessment must be provided and will be used to determine the demand for the proposed facility and to indicate the impact on the community for the proposed project. Projects that do not demonstrate a need will not be funded. Projects which serve a higher proportion of lower income households than the minimum required or which create beds shall be given higher priority.

B. Program design. Program design will examine support services, intake procedures, case management plans, licensure, and fire protection.

C. Leveraging. Leveraging will be evaluated using documented support from sources other than VHPF programs by commitments, letters of intent, grant agreements or other appropriate documentation. Leveraging will only be applied to the percentage of total development costs related to LMI person served.

D. Administrative capacity. Project sponsors will be evaluated on development/construction experience, property management experience, congregate care experience, organizational structure, and completeness of application.

E. Project readiness and project feasibility. Project sponsor will be evaluated by site control, status of zoning, tenant displacement, firmness of financial commitments, developed final plans and specifications, project timing, and project financial feasibility. A minimum source points is required to be considered for funding.