Applying for AHP Competitive Funds
Federal Home Loan Bank of Atlanta
June 19, 2013
Joel Brockmann
Rental Production Manager
Community Investment Services
FHLBank Atlanta
Agenda
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What is the AHP Competitive Program?
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Focus statement
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What makes AHP different than other funders?
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Uses of AHP funds
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Eligible project types
Why apply for AHP funds?
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Sponsor
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Member
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How does the AHP Competitive Program work?
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Application Criteria
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Threshold
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Scoring
•
Underwriting
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Compliance / Risk Management
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Questions
FHLBank Atlanta
Focus Statement
The primary focus of the Bank’s AHP is to support the
community investment finance needs of our members. The
Bank’s AHP Competitive and AHP Set-aside programs
further the Bank’s Strategic Plan by delivering timely gap
funds that enable our members to better manage
transactional credit risk and enhance their extension of
credit to ready and viable affordable housing finance
opportunities. The AHP Competitive program scoring
guidelines and the AHP Set-aside program product
requirements herein further the Bank’s AHP focus statement
and promote the current priorities: very-low income,
increased supportive housing, and AHP leveraging.
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FHLBank Atlanta
What makes AHP different than other sources
of funds?
Equity-like funding
No interest accrues
No expectation of repayment
Secured with a note and security instrument to ensure
compliance through the affordability period
• 5 years for ownership
• 15 years for rental
• Maximum 80% of AMI
• Subsidized advances are also available
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FHLBank Atlanta
Uses of AHP funds
• Acquisition, rehabilitation, or
construction of eligible housing
• Residential only (not
commercial)
• AHP cannot be used for
capitalized reserves,
furnishings, or to provide
support services
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FHLBank Atlanta
Eligible project types
• Rental or ownership
• Rental projects: 20% of the units must be for Very Low Income
households (50% of AMI or below)
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New construction or rehabilitation
Single family or multifamily
Owner-occupied rehabilitation
Downpayment assistance
FHLBank Atlanta
Agenda
•
•
7
What is the AHP Competitive Program?
•
Focus statement
•
What makes AHP different than other funders?
•
Uses of AHP funds
•
Eligible project types
Why apply for AHP funds?
•
Sponsor
•
Member
•
How does the AHP Competitive Program work?
•
Application Criteria
•
Threshold
•
Scoring
•
Underwriting
•
Compliance / Risk Management
•
Questions
FHLBank Atlanta
Why apply for AHP funds?
Sponsors
• Enables the extension of credit
• Reduces loan risk
• Compatible with public or private debt
and equity
• Provides equity for difficult to develop /
critical need projects
• Magnet to create new relationships
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FHLBank Atlanta
Why apply for AHP funds?
Members
• Enables member to achieve their business
objectives
• Business opportunities
• Commercial / construction loans
• First mortgage originations
• Reduces loan risk
• Public perception / public relations
• CRA and compliance friendly
• Stimulates real estate activity and
economic development
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FHLBank Atlanta
Agenda
•
•
10
What is the AHP Competitive Program?
•
Focus statement
•
What makes AHP different than other funders?
•
Uses of AHP funds
•
Eligible project types
Why apply for AHP funds?
•
Sponsor
•
Member
•
How does the AHP Competitive Program work?
•
Application Criteria
•
Threshold
•
Scoring
•
Underwriting
•
Compliance / Risk Management
•
Questions
FHLBank Atlanta
How does the AHP Competitive Program
work?
Overview
• One round per year
• Opening approximately 30 days prior to the application deadline
• Submitted through AHP Online, the web-based
application intake, underwriting, and scoring system
accessed through the FHLBank Atlanta website
• All applications are submitted at the same time
• Scored competitively on a 100 point scale
• All applications include a Sponsor and a Member
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FHLBank Atlanta
How does the AHP Competitive Program
work?
Schedule
• Underwriting: 3-4 months
• Upon board of directors approval, awards are
announced and applicants are notified
• Milestone dates:
• 6 months – zoning documentation
• 12 months – other funding commitments
• 18 months – start construction / take down AHP funds*
• 36 months – complete the project
* Sponsors have 36 months to take down AHP funds for ownership
projects that are funded at homebuyer closing
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FHLBank Atlanta
Agenda
•
•
13
What is the AHP Competitive Program?
•
Focus statement
•
What makes AHP different than other funders?
•
Uses of AHP funds
•
Eligible project types
Why apply for AHP funds?
•
Sponsor
•
Member
•
How does the AHP Competitive Program work?
•
Application Criteria
•
Threshold
•
Scoring
•
Underwriting
•
Compliance / Risk Management
•
Questions
FHLBank Atlanta
Application Criteria
2013
Threshold Criteria
• Application Certification
• Include signatures, disclosures, and history / experience
• Sponsor Qualified and Able
• Nobody on the development team is on the AHP
suspension list
• Site control
• By the sponsor or the project owner
• Sponsor must have an ownership interest in the project
throughout the compliance period
• Except for owner-occupied rehabilitation, downpayment
assistance, and foreclosure recovery projects
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FHLBank Atlanta
Application Criteria
2013
Threshold Criteria (cont.)
• 20% of funding sources must be committed by an
unrelated third party
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Permanent debt
Construction debt
First mortgage loan
Line of Credit
Equity commitments
LIHTC allocation
Bond inducement
Capital campaigns
Outstanding debt
FHLBank Atlanta
Application Criteria
2013
Threshold Criteria (cont.)
• Committed funding does not include:
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AHP subsidies
Deferred developer fee
Sponsor equity
Sponsor loans, including sponsor-provided first mortgages
• Construction cost form completed
• Physical Needs Assessment (PNA) information
• Construction type, scope, quality and location
• Replacement reserves analysis
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FHLBank Atlanta
Application Criteria
2013
Threshold Criteria (cont.)
• Changes of location are generally not allowed
• Changes of sponsor are generally not allowed
• Organizations or individuals that have received FHLBank
Atlanta sponsorships or charitable contributions within the
past 12 months are not eligible to receive AHP funds
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FHLBank Atlanta
Application Criteria
2013
Scoring Criteria: Donated Government Owned or Other
Property
5 points / variable
• Government property sold for a project, or
• Property donated by a private party at a nominal price
• At least 25% of the units, land, or land lots
• Owner projects:
• 5 points x % of donated lots
• Rental Projects
• 5 points x % of donated units or 5 points x % of total land donated
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FHLBank Atlanta
Application Criteria
2013
Scoring Criteria: Non-profit or Government Sponsor
5 points / variable
• Rental Projects
• 1 point when the non-profit sponsor has an ownership interest
through the retention period
• 4 additional points when the non-profit sponsor has a controlling
interest through the retention period
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FHLBank Atlanta
Application Criteria
2013
Scoring Criteria: Non-profit or Government Sponsor (cont.)
5 points / variable
• Ownership projects – 1 point each for a maximum of 5
points
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Marketing and Outreach
Property acquisition
Pre-development
Construction / rehabilitation
Qualifying borrowers for home mortgages
Providing or arranging permanent mortgage financing
FHLBank Atlanta
Application Criteria
2013
Scoring Criteria: Targeting
20 points / variable
• Weighted average
• Cannot be self-scored
• Rental compared to rental,
ownership compared to ownership
• Income categories:
• Moderate: >65%-80% of AMI
• Low: >50%-65%
• Very Low: 50% or less of AMI
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Targeting
Points
FHLBank Atlanta
Application Criteria
2013
Scoring Criteria: Housing for Homeless Households
5 points / fixed
• 20% of the units are reserved for minimum of six month
occupancy
• HUD definition of “homeless households”
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FHLBank Atlanta
Application Criteria
2013
Scoring Criteria: Empowerment Activities
5 points / variable
Empowerment
Activities
Homeownership
Education Program
Pre-closing
Counseling
Employment
Readiness Program
On-Site Daycare
(Child or Adult)
Training and
Education Program
Owner / Resident
Involvement
Program
Counseling Program
(Homeowners &
Tenants)
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Owner
(Non-OORehab)
5 Points
Owner (OORehab
Only)
N/A
Rental
N/A
N/A
2.5 Points
N/A
N/A
2.5 Points
N/A
2.5 Points
2.5 Points
N/A
2.5 Points
2.5 Points
N/A
2.5 Points
2.5 Points
N/A
FHLBank Atlanta
Application Criteria
2013
Scoring Criteria: Member Financial Participation
15 points / fixed
• Minimum 5% of total development costs
• Permanent or construction financing
• Debt or equity
• Credit must be extended / closed
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FHLBank Atlanta
Application Criteria
2013
Scoring Criteria: Project Readiness
10 points / fixed
• Rental (non-LIHTC)
• 100% of non-AHP permanent sources committed
• Rental (9% LIHTC or 4% LIHTC without bonds)
• Tax credits awarded by state allocating agency
• Rental (4% LIHTC with or without bonds)
• Bond inducement resolution or equivalent
• Ownership (new construction / rehabilitation with sale)
• 75% of units presold; for DPA 100% of the homebuyers identified
and income qualified
• Owner-Occupied Rehabilitation (with no sale)
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• 75% of the units identified, including cost specifications / cost
breakdown / owners income eligible
FHLBank Atlanta
Application Criteria
2013
Scoring Criteria: Supportive Housing / Special Needs
5 points / fixed
• 50% increase in supply and 100% of units reserved for
special needs populations
• Mentally or physically disabled, persons recovering from
physical or substance abuse, people with AIDS
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FHLBank Atlanta
Application Criteria
2013
Scoring Criteria: Foreclosure Recovery
5 points / fixed
• 75% of the units in the project are foreclosed
• Not application to non-residential properties
• Site control not required at applicable for ownership
projects only
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FHLBank Atlanta
Application Criteria
2013
Scoring Criteria: Leveraging
10 points / fixed
• Projects in which AHP funds are less than or equal to 10%
or less of total permanent sources
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FHLBank Atlanta
Application Criteria
2013
Scoring Criteria: Subsidy per Unit
10 points / variable
• Weighted average
• Cannot be self-scored
• >=$30,000 per unit = 0 points
Subsidy
Per Unit
Points
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FHLBank Atlanta
Application Criteria
2013
Scoring Criteria: Community Stability
5 points / variable
• 2 points for the rehabilitation of vacant or abandoned
properties
• Minimum 60% of units are vacant or abandoned
• 2 points x % of vacant or abandoned units
• Does not include vacant land
• 2 points for projects located in a neighborhood targeted
for stabilization
• Neighborhood stabilization plan approved by a unit of state or
local government
• Targeted for receipt of state or local government funding or
support services
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FHLBank Atlanta
Application Criteria
2013
Scoring Criteria: Community Stability (cont.)
• 1 point for projects that do not displace existing low- to
moderate-income households
• Displacement may be allowed if the sponsor has a
relocation plan for the residents
• Does not apply to new construction projects on
previously undeveloped properties
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FHLBank Atlanta
Application Criteria
2013
Underwriting
• Reasonable Cost
• Based on Marshall & Swift, RS Means or other industry construction
cost data
• Including remaining useful life / replacement reserves analysis
• Developer Fee
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• Max. 15% of total development cost net of:
• Acquisition costs
• Capitalized reserves
• Developer fee
• Includes fees paid to consultants for activities normally done by
the developer
• No fees allowed if no transfer of ownership
• AHP cannot replace owner equity or deferred developer fee if
construction financing has closed
FHLBank Atlanta
Application Criteria
2013
Underwriting (cont.)
• Builder overhead, profit and general requirement
• Maximum 16% of hard cost, net of builder overhead, profit and
general requirements
• Capitalized Reserves
• Maximum 9 months operating expenses (net of reserves in
operating expenses) plus 9 months of hard debt service
• Not allowed unless lender or LIHTC investor required
• Can defer to published guidelines for projects using state
administered funding
• Soft Costs
• Maximum 28% for rental projects, 25% for ownership projects, 20%
for owner-occupied rehabilitation
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FHLBank Atlanta
Application Criteria
2013
Underwriting (cont.)
• Debt coverage ratio
• 1.15 - 1.45
• Alternate need for subsidy test for projects with no hard debt or
outside these parameters
• Net cash flow
• Max. 15%
• Management Fees
• 5% - 9% of gross revenue
• Replacement Reserves
• $200-$350 per unit per year
• Not allowed unless lender or LIHTC investor required
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FHLBank Atlanta
Application Criteria
2013
Underwriting (cont.)
• Market feasibility
• Defer to market feasibility approved by the state if using stateadministered funding
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FHLBank Atlanta
Agenda
•
•
36
What is the AHP Competitive Program?
•
Focus statement
•
What makes AHP different than other funders?
•
Uses of AHP funds
•
Eligible project types
Why apply for AHP funds?
•
Sponsor
•
Member
•
How does the AHP Competitive Program work?
•
How do I apply for AHP funds?
•
Threshold criteria
•
Scoring
•
Underwriting
•
Compliance / Risk Management
•
Questions
Compliance / Risk Management
Key Provisions
FHLBank Atlanta
Business Objectives
Compliance and Monitoring Requirements
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Fully executed and recorded AHP retention agreement
meeting the Bank’s retention requirements for all owneroccupied units and rental projects (see Appendix D of the
AHP Implementation Plan)
•Ensure project meets regulatory
compliance period of 5-years for
ownership projects and 15-years
for rental projects
Project Sponsors must complete required initial monitoring
review (IMR) training for each project after being reported
complete. Failure to complete the monitoring training will
result in the project being placed on the Watch List
•Enhance customer service
Documentation is required at project completion
demonstrating that the project was completed as
committed in the application (e.g., rent rolls, income
verification documents, documentation of final funding
sources, implementation of empowerment activities)
•Ensure project feasibility and
affordability throughout the
compliance period
Project Owners must complete required LTM training for
each project as it enters the long-term monitoring period.
Failure to complete the monitoring training will result in the
project being placed on the Watch List
•Enhance customer service;
Promote Project Owner
accountability
•Promote Project Sponsor and
Member accountability
FHLBank Atlanta
Compliance/ Risk Management
• Members must know the borrower (sponsor / homeowner /
homebuyer) and must conduct their own due diligence
• Members and Project Sponsors shall establish and maintain
adequate and efficient internal controls, policies and procedures, to
assure an effective system for the prevention, detection and
reporting of fraud or abuse in connection with any element of the
AHP Competitive transaction including but not limited to the
appropriate countersignatures and notarization of documents.
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• Members and Project Sponsors shall notify the Bank promptly after
discovery or notice of any material change, either positive or
negative, in the financial condition, operations, properties or
prospects of any material party associated with the transaction
(including whether any material party to the unit has lost their
requisite license or been suspended by any applicable government
agency, or has otherwise been barred from participation in any
affordable housing program), or any event which has or may have a
material impact on the transaction.
FHLBank Atlanta
Compliance/ Risk Management
• Members and Project Sponsors represent and warrant that all
documents and other information delivered to the Bank are and will
be true, complete and correct in all material respects at the time of
delivery to the Bank, and such documentation is materially consistent
with corresponding documentation and information provided to
other funding sources.
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FHLBank Atlanta
Compliance/ Risk Management
Non-compliance to program requirements results may
lead to:
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Placement on FHLBank Atlanta’s Watch List
Restrictions on future applications
Recapture of AHP Competitive funds
Suspension from FHLBank Atlanta’s community investment programs
FHLBank Atlanta
2014 AHP Competitive Round
• Look for an announcement for the 2014 AHP Competitive
Round shortly after the conclusion of the 2013 round
• Schedule
• Any scoring or underwriting updates
• Please provide a business card if you want to be on the
announcement mailing list
FHLBank Atlanta
Helpful Resources
FHLBank Atlanta website:
www.fhlbatl.com
Affordable Housing Program Implementation Plan
www.fhlbatl.com/docs/cis/ahp-implementationplan.pdf
Project Sponsor Registration Instructions
www.fhlbatl.com/docs/cis/ahp-sponsor-registration.pdf
Affordable Housing Program Retention Agreement Rider and
Instructions
www.fhlbatl.com/docs/cis/ahp-retention.pdf
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FHLBank Atlanta
Questions?
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FHLBank Atlanta
What Can We Do to
Help Advance Your
Success Story?
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