Loading...
HomeMy WebLinkAboutExhibit-SUBEXHIBIT "A" AFFORDABLE HOUSING GUIDELINES BACKGROUND OF THE AFFORDABLE HOUSING TRUST FUND A housing trust fund is a distinct fund established by legislation, ordinance or resolution to receive dedicated revenues, which can only be spent on affordable housing. Generally, affordable housing trust funds are established to provide financial resources to facilitate the development of housing for low to moderate income households. Affordable Housing Trust funds have proven to be an effective tool in many municipalities throughout the United States for producing affordable housing. The City of Miami Affordable Housing Trust fund was established to receive financial contributions from private developers who desire to take advantage of the floor area bonus provisions allowed in the City of Miami Zoning Ordinance in exchange for financial contributions to the Affordable Housing Trust fund. The Zoning Ordinance allows for an increase in the floor area permitted uses for new developments located in special districts provided that the developer contributes an approved specified amount to the Affordable Housing Trust fund for every square foot of increase. STUDY ON AFFORDABLE HOUSING TRUST FUNDS In an effort to effectively develop local policy and strategies that address the demand for affordable housing as well as, to establish a program management system for its Affordable Housing Trust Fund, the City of Miami Department of Community Development requested a study conducted by Florida International University. The purpose of the Study was to provide program guidelines and recommendations based on best practice case study examples. The study included an assessment of fourteen (14) cities housing trust fund programs from across the country that had been in operation for many years and have proven successful in producing and preserving affordable housing. The study focused on three specific areas of program management: (1) target market (2) program administration and (3) program revenue. TARGET MARKET The Studies' affordability gap analysis concluded the following: (1) Homeownership Housing: Homeownership becomes more feasible with the support of manageable levels of gap financing for individuals with household income up to 150% of the area median income. (2) Rental Housing: The high proportion of the workforce that fall below 80 percent of the AMI will require the formulation and design of rental housing production and preservation programs. The affordability gap for this large segment of the local workforce is extreme. Clearly, given the current shortage of affordable rental housing in the City and the persistent lack of production, there is a need to target the Affordable Housing Trust fund and other public and private resources to meet this pressing need. EXHIBIT "A" PROGRAM ADMINISTRATION Administrative staff capacity is essential for the effective management of housing trust funds. The Study found that the administrative costs associated with a City's management of the Affordable Housing Trust fund range from 5%- 10%. Based on this recommendation, the City will utilize 10% of the Affordable Housing Trust Fund for administrative costs. Administrative staff is responsible for: developing request for proposals (RFPs), document preparation, loan underwriting, determining eligibility and affordability, loan monitoring, and servicing, marketing and providing education to developers and beneficiaries of the trust funds. The Administrative staff will work closely with local banking institutions, as well as for- profit and not -for -profit developers in the implementation of the Affordable Housing Trust Fund program. PROGRAM REVENUE In order to ensure the on -going solvency of the fund, Affordable Housing Trust funds receive revenue from dedicated sources including but not limited to fees from developers associated with Floor Area increases, interest paid on loans and any other appropriations as determined by legislation action of the City Commission. PURPOSE AND USE OF AFFORDABLE HOUSING TRUST FUND MONIES The Affordable Housing Trust fund shall be used solely for housing programs and the Trust's administrative support, to meet the housing needs of the community. Housing programs will include providing assistance to for -profit and not -for -profit developers, existing homeowners and first time homebuyers. All projects requesting Affordable Housing Trust Fund funding assistance must be approved by the Housing and Commercial Loan Committee (HCLC). HCLC recommendations can be appealed to the City of Miami Commission. In an appeal process the City Commission will make the final determination. PROCESS OF APPLYING FOR AFFORDABLE HOUSING TRUST FUNDS The City of Miami Department of Community Development will award Affordable Housing Trust funds through one of the following two processes: 1. Through the issuance of a request for proposal (RFP); or 2. Through Commission directive Regardless of the process, all project funding must obtain approval by the Housing and Commercial Loan Committee as to the terms and conditions of the loan. A project presented to the Housing and Commercial Loan Committee can be appealed to the City Commission as to the terms and conditions imposed by the HCLC. In an appeal process the City Commission will make the final determination. The Administration will provide a report to the City Commission on annually basis. 2 EXHIBIT "A" PROGRAMS DEFINITIONS 1. Forgivable Loan — Funds provided in the form of a loan that is forgiven when certain conditions are met. 2. Rent Regulatory Agreement — A written and recorded document limiting the borrower's rent levels by unit size and renter income. 3. Multifamily Project — A residential property containing five (5) or more dwelling units. 4. Loan Term and Interest Rate — Loans will be amortized for a period of up to thirty (30) years, with an interest rate of ©% to 3%. Terms will be negotiated individually by project as per the feasibility study of the project. 5, Available Cash Flow — The City will use the State of Florida's definition of Available Cash Flow which is defined as cash flow of a development as calculated in the statement of cash flows prepared in accordance with generally accepted accounting principles and as adjusted for items including but not limited to extraordinary fees and expenses, payments on debt subordinate to the superior loan(s) and capital expenditures. 6. Re -Sale Provision — The borrower is required to sell the unit to another income eligible borrower approved by the City. 7. Share on Gain- The City shall be entitled to a pro- rated share in any gain by a borrower when affordability restrictions are violated. The amount of gain is determined by the numbers of years the borrower resides in the unit which is a percentage pre approved by the City Commission through resolution. 8. 150 % of Area Median Income — Applicant's household income can not exceed the limits specified below: (See chart) # of persons in the household 1 2 3 4 150%© income limit $58,688 $67,031 $75,469 $83,813 * Households in excess of 4 members will be calculated using the same income limit as reflected in the table ** Income limits are established by HUD and are subject to change on a yearly basis 9. Maximum Subsidy- See chart below flet'b fr ng $541897 $66 755 $86;t358 Non- Elevator Building $52,470 $63,279 $80,998 3 EXHIBIT "A" ASSISTANCE FOR HOMEBUYERS Assisting low income homebuyers in the purchase of a home by providing down payment, closing costs and/ or second mortgage financial assistance for the purchase of a newly constructed or existing residential property within the City of Miami. First Time Homebuyers are eligible to receive this assistance in the form of a forgivable loan, after the affordability period of thirty (30) years. Resale restrictions apply. HOMEOWNERSHIP POLICY- BUYERS Repayment Requirements Minimum/ Maximum Subsidy In the case of sale or transfer of the property, the borrower will be required to. sell the. unit to an income eligible borrower approved by the City. [n the case of sale or transfer of the unit the City will share in. the gain realized by the borrower. a. 0 to 3 years- City receives 100% rata share of the gain generated.:: 3— 20 years.- Ort the 3`d year, City receives 85% of the City's pro rata share of the gain generated and borrower receives 15%. Thereafter, the borrower receives an additional 5% of the City's prorated share per year reducing the City's share by the same percentage until year 20. Year 20 and above: The borro the gain. The above gain staring proposal will terminate in foreclosure,; however, the city will require lenders to provide us a right of first:' refusal to purchase the loan at a negotiated price. 3. Forgivable loan after the affordability period of 30 y Affordability Period 0 Years Security Affordability period to be enforced by a restrictive covenant tha will run with the land as well as a mortgage. income Household inr nnot`exceed .:'150%o of median incom Minimum Down Payment Type of Assistance Maximum Purchase PriceNalue of Property Developers Down payment assistance and closing costs' Preference for Locai'Participation 4- EXHIBIT "A" ASSISTANCE FOR DEVELOPERS: (1) HOMEOWNERSHIP DEVELOPMENTS Assisting developers with the construction of new affordable homeownership units. Units can be condominiums, town homes or single family scattered site developments. The financial assistance will be a forgivable loan converted to a second mortgage for the buyers once project is completed. Second mortgage to buyers will have the same terms as the Homeownership Policy- Buyers, as approved by City Commission. There is a 30 year affordability period Resale restrictions and Share on Gain provisions apply. HOMEOWNERSHIP POLICY- DEVELOPER Repayment Requirements Forgivable Loan converted to a forgivable: second mortgages for the buyers once project is completed. In the case of a Developer default (incomplete payment of construction loan and accrued default interest at the maximum rate allowed by law.' in addition, the developer and all principals with a minimum of 10%a share in the development will be barred from participating in any Cit of Miami Housing programs for a minimum'. of five (5) years. Second mortgage to buyer will have the same terms as the Homeownership Policy- Buyers, as approved by the. City Commission. Minimum) Maximum Subsidy $1,000 per unit/ Mexirrturrf as defined by the Maxiinu Affordability Period 30 year affordability period for the second mortgages Security There will be a restrictive covenant and: mortgage on the property. Upon completion of the project, the total debt of the developer is transferred in pro rata share to each assisted unit. In the event of a developer default, the restrictive covenant will remain on the property and applicable interest rates will be due Developer Fee Minimum Ratio of City Funds to other Funds in the Project Up tol6% of total project costs, Disbursements based on p of construction completion. Desirable -on a project by project basis Type of Assistance Construction soft costs and hard costs or set aside forhimebuye r assistance after completion. Maximum Purchase PriceNalue of Property Income Household income carknot. exceed 150% of median income 5 EXHIBIT "A" (2) RENTAL DEVELOPMENTS Assisting developers with the construction, rehabilitation, preservation or refinancing of multifamily developments containing five (5) or more units. The financial assistance will be in the form of a loan conditioned on a cash flow analysis of the project as defined by the City. A mortgage will be placed on the property and a rent regulatory agreement controlling the allowable rent. The rent regulatory agreement would restrict the rent amounts, preserving the unit as an affordable housing unit. Repayment Requirements Minimum/Maximum Subsidy Affordability Period Security Default penalties Service Charge oan Terms will: include an interest rate between zero (o): to three (3) percent determined by the City on a project by project basis::. based on the projects feasibility study. A thirty (30) yea affordability; period will be required. $1,000 peruni chart Maximu defined by the um Subsidy Recorded mortgage on the property. In addition. affordability period to be enforced by a restrictive covenant that will run with the land. In the case of phased developments, the covenant will run with the land making up all phases of the development. In the case of a developer default, the restrictive covenant will continue throughout the affordability period Full payment of construction loan (total disbursed amount) and accrued default interest at the maximum rate allowed by law depending on loan amount. Developer and all principals with a minimum of 10% share in the development will be barred from participating in: any City `. of Miami programs for a minimum of five (5) years Recorded covenant will not be removed upon sale of the property. 1% of City Loan up to a maximum of $15,000 will be due and payable as good faith commitment fee for for -profit developers, 30 days after funding approvalNo commitment fee for non -profits Program Income Type of Assistance Maximum Rent Miscellaneous Gross income received by the project directly generated from the use of funds. When program income is generated by housing, the income shall be prorated to reflect the percentage of funds used. Construction soft costs, hard cost (predevelopment), or first mortgage refinancing Income of renters must be at or below 80% o Median Income as published by HUD Annual compliance monitoring for duration of affordability .'. period. 6 EXHIBIT "A" AFFORDABLE HOUSING GUIDELINES BA KGROUND OF THE AFFORDApLE HOUSING TRUST FUND A housing trust fund is a distinct fund established by legislation, ordinance or resolution to receive dedicated revenues, which can only be spent on affordable housing. Generally, affordable housing trust funds are established to provide financial resources to facilitate the del :iopment of housing for low to moderate income households. Affordable Housing rust funds have proven to be an effective tool in many municipalities through() t the United States for producing affordable housing. The City of Miami Affordable Housing Trust fund was established to receive financial contributions from private developers who desire to take advantage of the floor area bonus provisions allowed in he City of Miami Zoning Ordinance in exchange for financial contributions to the Affordably Housing Trust fund. The Zoning Ordinance allows for an increase in the floor area permitted uses for new developments located in special districts provided that the devoper contributes an approved specified amount to the Affordable Housing Trust fund fo ;every square foot of increase. STUDY ON AFFORDAng tiotaING TRUST FUNDS in an effort to effectively develop local policy and strategies that address the demand for affordable housing as well as, to estlish a program management system for its Affordable Housing Trust Fund, the City of Miami Department of Community Development requested a study conducted by Florida international University. The purpose of the Study was to provide progm guidelines and recommendations based on best practice case study examples. Theudy included an assessment of fourteen (14) cities housing trust fund programs fro across the country that had been in operation for many years and have proven successful in producing and preserving affordable housing. The study focused on three pecific areas of program management: (1) target market (2) program administration and () program revenue. TARGET MARK Et The Studies' affordability gap analysis concluded the following: (1) Homeownership Housing: Homeownership be nas more feasible with the support of manageable levels of gap financing for Individuals with household income up to 150% of the area median income. (2) ,der tel Housing: The high proportion of the workforce t` t fail below 80 percent of the AMI will require the formulation and design of rents' f housing production and preservation programs. The affordability gap for this large segment of the local workforce is extreme. Clearly, given the current shortagof affordable rental housing in the City and the persistent lack of production, the la a need to target the Affordable Housing Trust fund and other public and private esourr,,es to meet this pressing need. EXHIBIT "A" PROGRAM ADMINISTRATION Administrative staff capacity is essential for the effective management of housing trust funds, The \Study found that the administrative costs associated with a City's management of the Affordable Housing Trust fund range from 5%- 10%. Based on this recommendatloh, the City will utilize 1O% of the Affordable Housing Trust Fund for administrative cots, Administrative staff is responsible for: developing request for proposals (RFPs),`=Jocument preparation, loan underwriting, determining eligibility and affordability, loan rncnitoring, and servicing, marketing and providing education to developers and beneNiaries of the trust funds, The Administrative staff will work closely with local banking institutions, as well as for- profit and not -for -profit developers in the implementation of the Affordable Housing Trust Fund program. PROGRAM REVENUE in order to ensure the on -going \ olvency of the fund, Affordable Housing Trust funds receive revenue from dedicated sources including but not limited to fees from developers associated with Floor Area increases, interest paid on loans and any other appropriations as determined by legislation action of the City Commission. PURPOSE AND USE OF AFFORDABLE HOUSING TRUST FUND MONIES The Affordable Housing Trust fund shall bei,used solely for housing programs and the Trust's administrative support, to meet the hbueing needs of the community. Housing programs will include providing assistance tel \far -profit and not -for -profit developers, existing homeowners and first time homebuyerL `Ali projects requesting Affordable Housing Trust. Fund funding assistance must `e approved by the Housing and Commercial Loan Committee (HCLC). HCLC reconiendations can be appealed to the City of Miami Commission, PROCESS OF APPLYING FOR AFFORDABLE HO SING TRUST FUNDS The City of Miami Department of Community Development will award Affordable Housing Trust funds through one of the following two processes:,, 1. Through the issuance of a request for proposal (RFP); or 2, Through Commission directive Regardless of the process, all project funding must obtain approval by tlieeHousing and Commercial Loan Committee as to the terms and conditions of the loan,,¢ A project presented to the Housing end Commercial Loan Committee can be appeaied•to the City Commission as 10 the terms and conditions imposed by the HCLC. • 2 - EXHIBIT `A" PROGRAMS DEFINITIONS 1. Forgivable Loan — Funds provided in the form of a loan that is forgiven when certain conditions -ere met. 2. Rent Rec iiatory Agreement �- A written and recorded document limiting the borrowers rent levels by unit size and renter income. 3. Multifamily Protect — A residential property containing five (5) or more dwelling units. 4. Loan Term and Inte st Rate — Loans will be amortized for a period of up to thirty (30) years, with an interest r'te of 0% to 3%. Terms will be negotiated individually by project as per the feasibility study f the project. 5. Available Cash Flow — Th City will use the State of Florida's definition of Available Cash Flow which is defined Nes cash flow of a development as calculated in the statement of cash flows prepared in accordance with generally accepted accounting principles and as adjusted for item' . including but not limited to extraordinary fees and expenses, payments on debt subordinate to the superior loan(s) and capital expenditures. \\ 6. Re -Sale Provision — The borrower is rec4red to sell the unit to another income eligible borrower approved by the City. 7. Share on Gain- The City shall be entitled 't a pro- rated share in any gain by a borrower when affordability restrictions are violated. The amount of gain is determined by the numbers of years the borrower resides inlhe unit which is a percentage pre approved by the City Commission through resolution\ 8. 150 % of Area Median income — Applicant's houset ild income can not exceed the limits specified below: (See chart) # of persona in the household 1 2 9 150% income limit $58,688 $67,031 $75,469 ; 83,813 Households in excess of 4 members will be calculated using the some Income limit as reflected in the table " Income limits are established by HUD and are subject to change on a yearly basis \ 9, Maximum Subjidv- See chart below # of bedrooms 1 2 3 Non- Elevator Building $52,470 $63,279 $80,998 Elevator Building $54,697 $66,755 586.358 -3- EXHIBIT "A" ASSISTANCE FOR HOMEBUYERS Assisting low income homebuyers in the purchase of a home by providing down payment, dosing costs and/ or second mortgage financial assistance for the purchase of a newly constructed or existing residential property within the City of Miami. First Time Homebuyers'•are eligible to receive this assistance in the form of a forgivable loan, after the affordability, period of thirty (30) years. Resale restrictions apply. ' HOMEOWNERSHIP POLICY- BUYERS Repayment Requirements 1, in the case of sale or transfer of the property, the borrower will be required to sell the unit to an Income eligible borrower approved by the City, 2. \in the case of sate or transfer of the unit the City will share in ` the gain realized by the borrower. ` 0 to 3 years — City receives 100% of the City's pro rata share of the gain generated, b. — 20 years — On the 3rtl year, City receives 05% of t City's pro rata share of the gain generated epd ' bo wet* receives 10%, Thereafter. the borrower receiires an additional 5% of the City's prorated share per yea reducing the City's share by the same percentage until year 20. c. Year 20 andabove: The borrower receive* 100% of the gain. The above Hain sharing proposal will terminate In forsclosurl,: however, the oily will require lenders to provide us a right oiliest refusal to purchase the loan at'a negotiated price. 3. Forgivable loan after the affadebillty period of 30 years a w Mlnimuml Maximum Subsidy �1,0001540,. Affordability Period 30 Years,_ Security Affordablllry period to be enforced by e restrictive covenant that will run with the land as well es a reortgape. Income Household income cannot exceed 160% of rnedlan income Minimum Down Payment $500.00 . Type of Assistance Down payment assistance and closing costa\ Maximum Purchase PrlaeNelue of Property $300,000 - ; -4- EXHIBIT "A" ASSISTANCE FOR DEVELOPERS: (1) HOMEOWNERSHIP DEVELOPMENTS Assisting develop s with the construction of new affordable homeownership units. Units can be condominiu c, town homes or single family scattered site developments. The financial assistance wit, be a forgivable loan converted to a second mortgage for the buyers once project is crtpleted. Second mortgage to buyers will have the same terms as the Homeownership Policy- Buyers, as approved by City Commission. There is a 30 year affordability period Rule restrictions and Share on Gain provisions apply. %HOMEOWNERSHIP POLICY- DEVELOPER Repayment Requirements Forgivable Loa converted to a forgivable second mortgagee for the buyers once proj t i8 completed. in the case of a Developer default {incomplete pro' full payment of construction loan end accrued default interest at thatnaxlmum rate allowed by law. N. • In addition, the develop and all principels with a minimum of •10% share In the developrnenniill be barred from participating in.arty,City of Miami Housing program or a minimum of five (5) years. Second mortgage to buyer wiIkhave the same terms as the Homeownership Policy- Buyers approved by the City Commission. Max mium Subsidy 51,000 par unit/ Maximum as def€rsd by the Maximum Subsidy chart Affordability Period 30 year affordability period forh second mortgagee. Security There will be a restrictive covenant and rtgage on the property.. Upon completion of the project, the total bt of the developer -Is transferred in pro rata share to each assists nit. In the event:of a developer default, the restrictive covenant will r�in on the property and applicable interest rates will b ue. Developer Fee Up to16% of tote) project costa. disbursements bee'ed on percentage of construction completion. Minimum Ratio of City Funds to other Funds in the Project ti 1:2 Desirable on a project by project basis \ . Type of Assistance Construction soft costs and hard costs or set -aside for homebu = r assistance after completion. s Maximum Purchase PrlceNalue of Property $300,000 Income Household income cannot exceed 150% of median income -5- EXHIBIT (2) F NTAL DEVELOPMENTS Assisting developers with the construction, rehabilitation, preservation or refinancing of multifamil developments containing five (5) or more units. The financial assistance will be in the fvrgl of a loan conditioned on a cash flow analysis of the project as defined by the City, A r`rtgage will be placed on the property and a rent regulatory agreement controlling the allowable rent. The rent regulatory agreement would restrict the rent amounts, preserng the unit as an affordable housing unit. °\ Repayment '} Requirements Loan Terms wilt include an interest rate between zero (0) to three (3) percent determined by the City on a project by project basis based an the project's feasibility study. A thirty (30) year affordability period will be required. MinirnumlMaximum Subsidy 1,000 per unit! Maximum as defined by the Maximum Subsidy art Affordability Period 30 years Security Record d mortgage on the property. In addition, affordability period to a enforced by a restrictive covenant that will run with the land. the case of phased developments, the covenant will run with the' and making up ell phases of the development. In the case of a deeeloper default, the restrictive covenant will continue throughout the`rtfordabllity period. Default penalties I, Full payme t of construction loan (total disbursed amount) and accrueefaull interest of the maximum rate allowed by law dependln on loan amount. IL Developer and principals with a minimum of 10% share in the development IA be barred'from participating in any City of Miami programs r a minimum of five (5) years lli. Recorded covenant II not be removed upon sale of the property. Service Charge 1 % of City Loan up to a maxi rr't m of $15,000 will be due and payable as good faith commltm 1 fee for for -profit developers, 30 days after funding approval. No mitment fee for non-profrts Program Income Gross income received by the proje dlrectly generated from the use of funds. When program income generated by housing, the income shall be prorated to reflect the rcentage of funds used. Type of Assistance Construction soft costa, hard cost (prieveiopment), or first mortgage refinancin Maximum Rent Fair Market Rent Miscellaneous 1, Income of renters must be at or below 8of Area Median income as published by HUD 2. Annual compliance monitoring for duration of tiordebility period.